--- title: Why Teladoc’s stock is on life support - The Hustle description: Teladoc’s stock tanked due to an $6.6B impairment charge. What’s that? image: https://hs-sbup.thehustle.co/hubfs/The%20Hustle%20News/Assets/Images/884394196-HS-News-Brief_2022-05-03T012424.988Z.webp --- # Why Teladoc’s stock is on life support ![Juliet Bennett Rylah](https://53.fs1.hubspotusercontent-na1.net/hubfs/53/assets/hubspot.com/web-team/WBZ/HubSpot%20Media/Blog%202021/Images/Nav/Optimized/TheHustle_Icon_Dark.svg) [Juliet Bennett Rylah](https://hs-sbup.thehustle.co/author/juliet-bennett-rylah) [Juliet Bennett Rylah Twitter profile ](https://twitter.com/JBRylah) Published: May 03, 2022 Updated: October 11, 2023 Teladoc Health, a leader in telemedicine, probably wishes it could phone in the rest of 2022. Its stock [tanked](https://www.cnbc.com/2022/04/29/the-market-just-posted-an-unhealthy-aol-time-warner-bubble-comparison.html) 40% last week, now down 80%+ from 2021. ![Why Teladoc’s stock is on life support](https://hs-sbup.thehustle.co/hs-fs/hubfs/The%20Hustle%20News/Assets/Images/884394196-HS-News-Brief_2022-05-03T012424.988Z.webp?width=595&height=400&name=884394196-HS-News-Brief_2022-05-03T012424.988Z.webp) One reason is that many patients are returning to physical waiting rooms, but another is a “goodwill impairment charge.” #### **First of all, what’s goodwill?** A business’s value includes not just its physical stuff, but also its intangible assets — brand recognition, customer loyalty, talent, etc. So, when one company buys another, it often pays *more* than that company’s [book value](https://www.investopedia.com/terms/b/bookvalue.asp) (AKA what it’s worth on paper). That difference is called [goodwill](https://www.youtube.com/watch?v=yq9qjCmUfS4). It appears in a buyer’s books as an intangible asset, meaning it can increase the buyer’s valuation. But goodwill can change, and companies must conduct an annual [goodwill impairment test](https://blog.embarkwithus.com/goodwill-impairment-testing-guide-examples-accounting-tips) — essentially, an audit to determine its current value. #### **So, what’s up with Teladoc?** In 2020, Teladoc [bought](https://www.fiercehealthcare.com/finance/teladoc-finalizes-blockbuster-deal-livongo-less-than-three-months) Livongo, a platform for managing chronic conditions, as an opportunity to expand its offerings amid a boom in virtual care. The deal was valued at $18.5B, netting Teladoc [$12.9B in goodwill](https://s21.q4cdn.com/672268105/files/doc_financials/2020/ar/2020-Annual-Report-(1).pdf). Except it didn’t go well: - More competitors flooded the virtual care space - Teladoc [struggled](https://www.businessinsider.com/teladoc-livongo-insiders-describe-how-the-merger-is-going-2021-11) to integrate and several Livongo leaders left - People are returning to IRL appointments, which is bad for virtual health care (the valuations of some platforms like AmWell and 1Life Healthcare [fell](https://www.cnbc.com/2022/04/29/the-market-just-posted-an-unhealthy-aol-time-warner-bubble-comparison.html) 80%+ in the past year) The result? Teladoc took a **$6.6B **impairment charge, rattling investors while its shares dropped. Now, that charge is higher than Teladoc’s market cap. But hey, it could have been worse. In 2002, AOL took a nearly [$99B goodwill impairment ](https://www.cbsnews.com/news/att-time-warner-deal-raises-the-specter-of-aol-time-warner-worst-merger-in-history/)on Time Warner, reducing its market value from $226B to ~$20B. 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