Telehealth giant Teladoc said Wednesday it will take a charge of $6.6 billion to write down the value of its Livongo acquisition.
The impairment charge pushed the company to a record loss of $6.7 billion, or a loss of $41.58 per share, in the first quarter of 2022, compared to $199.6 million, or a loss of $1.31 per share, in the first quarter of 2021, according to its first-quarter 2022 earnings press release (PDF).
The company recorded a "non-cash goodwill impairment charge," which does not impact the company's cash or liquidity. Companies opt for impairment when the value of assets or goodwill on their books is no longer fully recoverable.
Teladoc shares plummeted 33% after-hours Wednesday and opened Thursday at $31.52. On Wednesday, Teladoc shares opened at $56.96.
Teladoc completed its massive $18.5 billion acquisition of digital chronic condition management company Livongo in October 2020, creating a health technology giant just as the demand for virtual care began to soar during the COVID-19 pandemic.
The company also acquired InTouch Health in a $600 million deal in early 2020. InTouch Health provides enterprise telehealth solutions for hospitals and health systems.
The company's sizable net loss included a noncash goodwill impairment charge of $6.6 billion, or a loss of $41.11 per share, a stock-based compensation expense of $60.4 million and amortization of acquired intangibles of $49.4 million. The company also reported stock-based compensation expense of $86.3 million, amortization of acquired intangibles of $43.7 million and a noncash income tax charge of $87 million.
The company revised its 2022 guidance down and now expects full-year revenue between $2.4 billion to $2.5 billion. At the end of 2021, Teladoc projected full-year revenue between $2.55 billion and $2.65 billion.
The company expects a net loss of $7 billion to $6.9 billion in 2022 and adjusted EBITDA to fall between $240 million and $265 million.
The revised 2022 outlook reflects dynamics the virtual care company is experiencing in the direct-to-consumer mental health and chronic condition markets, Jason Gorevic, CEO of Teladoc Health, said in a first-quarter earnings press release issued Wednesday afternoon.
In the direct-to-consumer mental health market, higher advertising costs in some channels are generating a lower-than-expected yield on Teladoc's marketing spend, he said.
Teladoc continues to see strong growth in its direct-to-consumer mental health platform, called BetterHelp, with more than 30% growth among consumers.
In the chronic condition market, Teladoc is seeing an elongated sales cycle "as employers and health plans evaluate their long-term strategies to deliver the benefits and care that their populations need," Gorevic said.
"Despite the revision to our 2022 outlook, we are confident in our strategy, along with our breadth and depth of capabilities, which empower people everywhere to live healthier lives,” he said.
Teladoc's shares suffered considerably in 2021, plummeting 54% compared with the S&P 500’s 27% gain. Since the start of 2022, Teladoc’s shares have fallen more than 40%.
Teladoc's first-quarter revenue grew 25% to $565.4 million from $453.7 million in the first quarter of 2021. The company missed analysts' revenue projections of $571.5 million in the first quarter.
The company's access fees revenue grew 29% to $491.3 million, and visit fee revenue grew 12% to $67.9 million. U.S. revenues grew 24% to $491.2 million and international revenues grew 27% to $74.2 million.
Adjusted EBITDA during the quarter decreased 4% to $54.5 million, compared to $56.6 million in the first quarter of 2021.
In the earnings press release, Gorevic called out the company's "significant progress" in a number of strategic initiatives such as successfully launching multiple clients on its innovative services including Primary360 and its stepped-care chronic condition programs.