(Bloomberg) — Teladoc Health Inc., the digital health provider that’s backed by Cathie Wood’s ARK Investment Management LLC, cratered after slashing its forecast on cost inflation and a slowdown in sales.
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The shares tumbled as much as 48% on Thursday — the biggest selloff since the company went public in 2015 — after full-year revenue and profit guidance fell short of analyst expectations. Teladoc, a former stay-at-home winner, extends a slump that’s wiped out roughly 90% of its value from a record high in February last year.
ARK is Teladoc’s largest shareholder, with a 12% stake that was worth about $1.1 billion as of the close Wednesday, according to Bloomberg data. Teladoc — which is the third largest holding in the ARK Innovation ETF — adds to the woes for Cathie Wood’s flagship fund, which hit a two-year low this week.
Wood’s funds added to their positions in Teladoc on Monday and Tuesday ahead of the telemedicine provider’s report.
Teladoc was hit by higher advertising expenses in the mental health market, as well as an “elongated sales cycle” in chronic conditions as employers and providers of healthcare plans evaluate strategies, Chief Executive Jason Gorevic said in the earnings statement.
The company is part of a group of pandemic winners backed by Wood, with others including Zoom Video Communications Inc. The sector has been hit by the ending of lockdowns and concerns around rising interest rates that have weighed on growth stocks.
Teladoc also faces mounting rivalry in the telemedicine space. While the company has “the most robust virtual health platform, it is clear that competitive intensity has increased significantly and, in our view, is unlikely to abate any time soon,” Citi analyst Daniel Grosslight said in a research note slashing his price target to $43 from $115.
With the stock’s forward-looking sales multiple now at an all-time low, it is ripe for buyers in managed care, big tech or other telemedicine platforms to consider an acquisition, Grosslight said.
At least six analysts downgraded the stock after the report and Teladoc now has an 19 neutral and 11 buy-equivalent ratings, though the shares still have no sell recommendations among firms tracked by Bloomberg.
(Updates share price, analyst ratings.)
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