Stock Story -
What Happened: Shares of digital medical services platform Teladoc Health (NYSE:TDOC) fell 19.6% in the pre-market session after the company reported second-quarter earnings results. Its revenue growth regrettably slowed and missed Wall Street's estimates. Its EPS also fell short as the company recorded a goodwill impairment charge of $790 million. Perhaps the most negative news from the quarter was management retracted its full-year guidance, which is typically a bad sign. Zooming out, we think this was a tough quarter.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Teladoc? Find out by reading the original article on StockStory, it's free.
What is the market telling us: Teladoc's shares are very volatile and over the last year have had 18 moves greater than 5%. But moves this big are very rare even for Teladoc and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was 5 months ago, when the stock dropped 24.7% on the news that the company reported fourth-quarter results that missed analysts' revenue estimates. Looking ahead, revenue guidance for the next quarter and full year also missed consensus estimates. While adjusted EBITDA guidance for the next quarter fell below expectations, full-year guidance came in ahead. The company provided a three-year growth outlook with expectations for low to mid-single-digit top-line growth, driven by mid-single-digit growth in the IC (Integrated Care) segment and low single-digit growth in the BetterHelp business. Teladoc acknowledged that with most U.S. customers already accessing virtual healthcare services, revenue growth from the U.S. virtual care business, which represents half of the Integrate Care segment, will be in the low single-digits range. This implied that Teladoc expects most of the revenue growth in its IC segment to be driven by its chronic care products. Overall, this was a weaker quarter for the company, with markets likely worried given the underwhelming growth outlook.
Teladoc is down 60.5% since the beginning of the year, and at $8.67 per share it is trading 68.8% below its 52-week high of $27.75 from July 2023. Investors who bought $1,000 worth of Teladoc's shares 5 years ago would now be looking at an investment worth $121.20.
