Teladoc Health’s acquisition of Livongo continues to haunt its balance sheets as New York-based Purchase suffered significant losses in the first half of 2022.
Teladoc said it recorded a net loss of $3.1 billion in the second quarter of 2022 and a loss of $9.7 billion for the first half. The loss is primarily attributable to a non-cash goodwill impairment loss related to the Livongo acquisition, which amounted to $9.6 billion in the first half of 2022.
In October 2020, the company acquired Livongo for $18 billion. The merger fell short of Teladoc’s expectations, and major insurance companies abandoned Livongo as the digital health tool of choice for chronic disease management.
Teladoc’s revenue increased 18% from $503.1 million in the second quarter last year to $592.4 million this year. In the first six months of the year, revenue increased 21% from $956 million to $1.1 billion.
However, the company said broader economic factors and an unexpected slowdown in its transactions remain concerns. He expects future earnings forecasts to be close to the lower end of his annual estimates.
In response to the second-quarter earnings report, Teladoc CEO Jason Gorevich said that the increase in advertising spending will slow down their overall spending in the fourth quarter of this year.
“We don’t turn off ads completely,” Gorevich said. “But this reduction is due to the high cost of advertising. So we want to make sure we’re making the right economic decisions.”
Teladoc also lowered its membership growth expectations. The company currently serves 56.6 million paying members, up 9% from last year, but it has changed its original estimates that membership growth would come in the second half of the year. The company said it expects no more than one million new members by the end of the year.
After hours, Teladoc traded at $36.21 a share, down 16% from Wednesday’s closing price of $43.24. After the April report, the company’s shares fell 40%, and it was the biggest one-day sell-off since the company went public in 2015.
In June, Teladoc was sued by investors after its share price plunged.