Teladoc continues to be rocked by wake turbulence from the Livongo acquisition. The company recorded a goodwill impairment charge of $3 billion in the second quarter, adding to the $6.3 billion impairment charge in the first quarter. The total writedown of $9.3 billion accounted for the bulk of the nearly $10 billion loss in the first half. While their revenue of $592.4 million beat analysts’ forecasts of $588 million, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $46.7 million was barely above forecast. and down from $66.8 million the previous year. Losses per share were $19.22, compared to $0.86 in Q2 2021.
Another weak point is their online therapy service, BetterHelp, which leads a major television campaign in the United States. CEO Jason Gorevic in the Press release pointed to competitors buying the business at low margins and declines in consumer spending. Teladoc’s forward projections are bolstered by Primary360 and Chronic Care Complete. Projected revenue for the third quarter is $600-620 million. Shares on Thursday took a 24% hit, adding to the misery of more than 50% since the start of the year. At best, Teladoc will hold its own throughout the year, if it’s lucky. MarketWatch, MobihealthnewsFierceHealth
Health plans also present a mixed picture.
- Humana reported a healthy earnings picture for the quarter and year-to-date. It posted a profit of $696 million in the second quarter, up nearly 20% year-over-year. For the first half, Humana earned $1.6 billion, an increase of 14.8% from $1.4 billion in 2021. Growth in their primary care clinics, Medicaid enrollment and investment in Medicare Advantage were cited. Earnings beat Wall Street projections and Humana raised its forecast to $24.75 in earnings per share. At the same time, they announced a reorganization of its operating units that separates their insurance services (retail and related health plans) and CenterWell for health services, including home health. Some key executives will leave, including the current head of retail health plans who will stay on until early 2023, ending a 30-year career at Humana. FierceHealth, Health Diving
- Under new management, Centene posted a loss of $172 million in the second quarter which is a significant improvement from the $535 million in Q2 2021. Their ‘value creation plan’ sold its two specialty pharmacy businesses to multiple investors, using third-party vendors going forward, and agreed this week to sell its international holdings in Spain and Central Europe – Ribera Salud, Torrejón Salud and Pro Diagnostics Group – to Vivalto Santé, France’s third-largest private hospital. Medicaid, their largest line of business, grew 7%. Centene continues to divest much of its considerable real estate, which marks a dramatic departure from the late CEO’s “complex of edifices” to house his “cubic culture”. As a result, it takes an impairment charge of $1.45 billion. Health Diving. Centene’s Medicare Advantage CMS Star quality ratings for 2023 will be “disappointing”, which was attributed to the acquisition of WellCare (representing most MA plans), remote workforce and two models of different operations between companies. Health Diving
- One of the few “pure” health plans without a division of services, Molina Health, is also embarking on the path of real estate divestment since it is going virtual for its workforce. Their real estate assets will be reduced by around two-thirds for owned and rented buildings. Molina does business in 19 states and owns or leases space across the United States. Second-quarter net income rose 34% to $248 million on revenue up $8 billion. Health Diving
Many of last year’s fast-growing health tech companies are shrinking growth as quickly as they grew in last year’s greenhouse and are sharing the trajectory of other tech companies as well as telehealth :
- Health included, the virtual health company created from the merger of Grand Rounds and Doctor on Demand as well as the subsequent acquisition of the care concierge service Include Health, rebranded under that name, has reduced its workforce by 6%. The two main companies continued to operate separately because their markets and accounts were very different: Grand Rounds for second opinion services for employees and Doctor on Demand for around 3 million telehealth consultations in the first half of 2020. FierceHealth
- Unicorns backed by big sports personalities aren’t immune either. Shout, a Boston-based wearable fitness tech startup with a $3.6 billion valuation, is laying off 15% of its staff. (Link above)
- Digital pharmacy/telemedicine Capsule frees up 13% of its 900-plus staff, putting a distinct damper on the already depressed NYC Silicon Alley. FierceHealth also notes layoffs to weight loss program Calibrate (24%), the estimated $7 billion Ro for telehealth for everything from hair loss to fertility (18%), Cedar in health care payments (24%), and constantly advertising Name weight loss (495 people). Buried in the List is based in Stockholm Krybetter known as Livi in the UK, US and France, with 100 employees (10%).
- Layoffs.fyi, a tracker, also lists Babylon Health like laying off 100 people of its current 2,500 in a bid to save $100 million in the third quarter. Bloomberg
Calibrate, Capsule, Cedar, Centene, Doctor On Demand, Grand Rounds, Humana, Included Health, Kry, Livi, Molina Healthcare, Noom, Ro, Teladoc and Whoop.