Based in New York, Teladoc Health (NYSE:TDOC) specializes in the niche market known as telemedicine or telehealth. Investors might feel optimistic overall about the telemedicine market, but there are too many company-specific problems going on to recommend TDOC stock.
When the Covid-19 lockdowns occurred in 2020, Teladoc Health suddenly became a darling on Wall Street. The hype phase ran its course quickly, but for a while, investors were ultra-bullish on Teladoc.
Fast-forward to mid-2022, and Teladoc is facing financial issues and, potentially, legal problems as well. After getting the scoop on recent developments surrounding Teladoc Health, prospective investors will likely choose to stay out of the trade.
What’s Happening with TDOC Stock?
It seems like a long time ago now, but within the past year, TDOC stock once traded at $174.32. More recently, though, the stock tumbled to the $30 area.
This should provide a lesson to anyone who’s thinking about loading up on a so-called “growth stock” without conducting their due diligence on the company. Teladoc might have had a growth period, but those days are now in the rear-view mirror.
Suffice it to say that Teladoc Health isn’t growing its bottom-line results. If anything, the company is digging itself into a deeper financial hole.
As they say, the numbers don’t lie. During the first quarter of 2021, Teladoc Health incurred a $199.65 million net earnings loss. A year later, in 2022’s first quarter, the company’s net loss was roughly $6.67 billion. Clearly, there are cracks in Teladoc’s fiscal foundation.
Was the Data “Doctored”?
On a per-share basis, Teladoc Health’s earnings loss widened year-over-year from $1.31 to a staggering $41.58. During the same time frame, Teladoc’s adjusted EBITDA decreased 4% — not quite as shocking a result, but still disappointing.
Hence, the data shows that Teladoc Health has deep financial problems. Moreover, a number of Wall Street analysts have reduced their price targets and/or downgraded their ratings on TDOC stock. On top of all that, it appears that Teladoc may be facing legal battles this year.
It didn’t take long — just some cursory research — to unearth several reports of class-action lawsuits against Teladoc Health. Feel free to go here, here and here for further details on some of the legal filings.
Reportedly, at least one class-action lawsuit alleges that Teladoc CEO Jason Gorevic and CFO Mala Murthy misled investors about the company’s business/financial prospects amid increasing competition in the telehealth space.
“Despite recent market concerns over new entrants to the telehealth field… the company has continued to assure investors of the company’s dominant market position in the industry,” the lawsuit reportedly alleges. Furthermore, the lawsuit claims that certain specified stakeholders have “suffered significant losses and damages.” Anyone who has held Teladoc shares since November of 2021 might understand what those “losses and damages” feel like.
What You Can Do Now
There’s no way to predict the outcomes of the aforementioned legal actions. As a cautious investor, it’s wise to simply sidestep these issues by avoiding TDOC stock altogether.
Besides, Teladoc’s bottom-line results don’t justify a long position. So, regardless of your outlook on telemedicine as a market segment, the most sensible choice is not to invest Teladoc Health.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
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