You may recall how I mock some of the insane IPO valuations and acquisition activity in health care. Here is an example of why. TelaDoc, a large telehealth provider which went public at an absurd valuation, and then wasted huge amounts of money on acquisitions that made no sense, like Livongo, a supposed disruptive care management company, is taking a $6.8 billion impairment charge to write down the value of those acquisitions. The stock price, already socked over the last few months, sunk to an even more depressed, and for shareholders, depressing, level, but at least it is getting closer to its actual value as a company, which might be zero. Don't ever buy hype, especially in health care.
The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.
Teladoc is required by accounting rules to writedown the value of an acquisition when it is clear it no longer is worth what was paid for it. This is a stunning admission that just about 18 months after the deal, it is worth a third less than was paid, and the reality is that this is only a partial reckoning. Livongo isn’t worth much of anything and neither is Teladoc. And of course the supposedly so smart stock analysts cheered the deal and pimped the company, when anyone with a brain could see what the issues were. I just wish I had the courage to short some of these stocks
I gotta ask why. Is this setting up something else? These moves seems foolish.
Teladoc is required by accounting rules to writedown the value of an acquisition when it is clear it no longer is worth what was paid for it. This is a stunning admission that just about 18 months after the deal, it is worth a third less than was paid, and the reality is that this is only a partial reckoning. Livongo isn’t worth much of anything and neither is Teladoc. And of course the supposedly so smart stock analysts cheered the deal and pimped the company, when anyone with a brain could see what the issues were. I just wish I had the courage to short some of these stocks