This year has been an absolute nightmare Tilladock Health (TDOC 3.51%), a telehealth provider that aims to disrupt the traditional healthcare industry. Year-to-date, the stock is down 62%, most recently down due to its second-quarter earnings report it published on July 27.
To make matters worse, the tech giant Amazon.com (AMZN 10.36%) It recently announced its plan to acquire One Medical for $3.9 billion in an all-cash deal. Although the deal has not yet been approved, the acquisition of One Medical, which falls under 1 Live Healthcare (ONEME -0.12%) Umbrella, can greatly enhance the e-commerce leader’s push into the virtual healthcare arena.
Now with its back on the wall, is Teladoc Health a stock that investors should consider pouncing at current price levels?
Teladoc’s Financial Statements and the Possible Amazon Acquisition
In the second quarter, Teladoc Health grew its revenue 17.7% year-over-year, to $592.4 million, but what baffled investors was its net loss of $19.22 per share, which was driven by a $3 billion non-cash goodwill impairment charge. . This follows a $6.6 billion impairment of goodwill in the first quarter, resulting in a net loss of $41.58 per share. In terms of other key operating metrics, total visits to the platform increased 27.6% year over year to 4.7 million, and average revenue increased from 56.6 million paid US members 12.6% to $2.60 per member.
Although management maintained its previous guidance for earnings and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), it now expects results to be toward the lower end of those ranges due to ongoing macro conditions. Thus, for the full year, management expects total revenue of $2.4 billion to $2.5 billion, indicating 18.1% year-over-year growth if it meets the bottom line. It expects $240 million in adjusted EBITDA to reach $265 million, which would be a decrease of 10.4% if, again, it hit the bottom line.
While these aren’t necessarily shocking growth rates, management’s lack of insight into the company’s business in recent quarters should be a major concern for investors moving forward.
To add fuel to the fire, Amazon on July 21 announced a plan to acquire One Medical for $3.9 billion in an all-cash deal. One Medical is a membership-based primary care provider with approximately 200 locations and approximately 770,000 patients nationwide. If the deal is approved, Amazon’s healthcare footprint will become significantly larger, which could be a major threat to Teladoc.
Is now the best time to buy Teladoc shares?
For several quarters now, Teladoc’s management has lacked business insight, which is very concerning from an investor’s point of view. And while buying at today’s lows could lead to massive returns below the line, I would like to see more consistency on the operational front before pulling the trigger.
So even though the leading telehealth company is trading at just 3.2 times sales at the moment, its new poor performance, combined with stiff competition from the well-funded tech giant, is making it a tough game right now. . While the opportunity in the telehealth market is huge, I believe there are better investments available to investors now.
John Mackie, CEO of Whole Foods Market, an Amazon company, is a member of The Motley Fool’s Board of Directors. Luke Meindl holds positions at Teladoc Health. Motley Fool has positions at Amazon and Teladoc Health and recommends it. Motley Fool has a disclosure policy.