Teladoc Rolling Telemedicine Cart, which allows doctors to meet patients remotely on October 8, 2021.
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This week’s earnings details include some well-known calculations on the value of high-growth, high-tech, and high-risk companies. Ford and Amazon have written down a stake in electric car maker Rivian.Alphabet and Microsoft pay attention to some Equity bets of reduced value.. But the biggest, and in its own microscopic way, rating hits may speak loudest about the tech start-ups’ valuation improvements over the last decade compared to the dot-com bubble. Hmm. It comes from the healthcare sector.
Healthcare was a marquee trade in the pandemic market. This may seem obvious. Given the global healthcare crisis that stagnates the economy, the world should awaken to the need for more healthcare investment. There was a big winner where the business was directly related to the risk of a pandemic and investors proved their foresighted value: Moderna Therapeutics. But at the broader stock market level, digital health transactions are in the home stock category, telemedicine is growing rapidly, patients need to seek de facto care, and as digital services are adopted across sectors, Recorded a significant increase. A year of evolution over a period of several months.
This theme is currently sparse, and the business model these messers plan to use to turn a pandemic play into a long-term healthcare winner is less certain.Much of the technology, from the enterprise cloud to biotechnology and fintech, has been hit since last fall, but this week’s disastrous revenue from telemedicine leaders. Terra dock Marked the lowest point of the healthcare version of this recent tech bubble transaction. After booking more than $ 6 billion in costs associated with the acquisition of chronic medical company Livongo, Teladoc’s stake became a crater, down more than 80% from a year ago.That 40% dive on Thursday completely reassured what was a year-long train wreck for a public assessment of digital health: competitors. AmWell When 1 Life Healthcare Consumer healthcare companies have fallen by more than 80% over the past year His and her health 60% or more down.
Among AmWell’s investors was Google. Investing $ 100 million in the company In 2020.
Impairment costs of $ 6.6 billion have been excluded from revenue indicators, a blockbuster directly related to Teladoc’s plans to bridge home trade to post-pandemic businesses. Teladoc purchased Livongo for $ 18.5 billion in cash and stock in late 2020, the largest digital health transaction to date.
Looking at how bad the $ 6.6 billion impairment cost is, it was bigger than Teladoc’s market capitalization after Thursday’s fall in stock prices.
Bob Pisani of CNBC pointed out AOL-Time Warner, an ominous market similarity. Within a year of the transaction, the company’s biggest headline after the merger wasn’t synergies, but rather “impairment of goodwill” as the value of AOL, the milestone of the original dot-com bubble transaction, plummeted.
AOL-Time Warner’s write-down was several times the size of Teladoc (before and after the crash). However, the collateral damage caused by the Terradock disaster extends to the recent era of devastating investment and one of its starstock pickers. Ark Invest’s Cathie Wood was one of the only funds to invest in Terradock’s “falling knife” earlier this year. Has grown to be the largest shareholder. This was her third-largest holding in her largest fund, after Tesla and another home-based play, Zoom Video Communications.
Wood’s money was solid, buying more Terra Dock on Thursday, and the stock bounced back a bit on Friday morning, despite other tech stocks for sale.But as a sign of how much success she has achieved from the destructive trading theme, her flagship ARK Innovation Fund Now it suffers from the fate familiar to the majority of investment managers. Even a hot-started investment company hasn’t outperformed the S & P 500 since its inception. Sold out with the need to survive the dot-com bubble and have parents who are old enough or old enough to diverge from core equity to sector fund bets on health sciences, telecommunications and technology funds. The lesson was learned long ago for investors.
The big question for Terradock was not only whether it was in a period when the ratings were reset before Terradock and Ribbongo and others rose again, but also whether the cracks in the foundation of the business model were exposed as the pandemic euphoria was eroded. How is it? One analyst is concerned that Wall Street, which bought the stake on Thursday morning, is writing about “a crack in TDOC’s overall health base as intensifying competition is squeezing growth and profit margins.” ..
And Wall Street occurred in an area where these cracks were planned to grow beyond commoditized core telemedicine services into direct-to-consumer mental health and Livongo’s chronic care space. It states that it is.
“We are hesitant to make drastic changes to our dissertation based on a poor quarter, but the competition-led headwinds will not soon subside,” said one stock downgrade analyst.
Employers’ focus on wellness was seen as a tailwind for this sector, but there are growing doubts about how much corporate buyers will pay for these services. Sales cycles are being pushed out, employers are paying very high wages, addressing labor shortages and reassessing expenses. Jason Golevich, CEO of Terradock, said, “Because so much is happening about returning to the office to deal with mass layoffs and all recruitment and resource allocations for talent acquisition and retention. The HR department is under pressure. “
This week’s write-down of Rivian stocks shows that investors seemed logical enough in the bubble talk after they were piled up in EV stocks. Increased ratings often reflect one of the components of the bubble. It is an imbalance between the supply of certain investment needs and demands, and the formation of market bubbles when over-investing in certain areas of lack of supply. Rivian was one of the only public market options to bet on EVs other than Tesla.
But in digital healthcare, it’s not just the transactions that are crowded, but the players, and Teladoc hints at their bottom line. “Clients are flooded with many new little point solutions, which are creating noise in the market,” Golevich said.
That’s why companies like Teladoc were actively looking for scale-ups across their services in M & As like dealings with Livongo. Castlight Health has been integrated with Vera Whole Health. Virgin Pulse has partnered with Welltalk. Accolade I bought Plush Care. The Grand Round and Doctor’s On Demand have been integrated.They are also facing the threat of Amazon monsters that launched this year Its health service For national corporate planning. Partnerships with acclaimed digital health companies can be evaluated far ahead of evidence that transactions work in markets that are under pressure in every aspect.
The latest comparison is not the dot-com bubble. Nasdaq is in the worst month Since the pandemic crash in March 2020. Amazon showed the biggest decline in eight years on Friday.
“Current market performance threatens the transition from long and painful” fixes “to more annoying ones,” said Michael Shaoul, Chairman of Marketfield Asset Management, quoted by CNBC. “What tends to be more important than price declines is the length of time it takes to repair a deep drawdown.”
Amazon falls more than 10% On Friday, there’s nothing in the big picture of a $ 1 trillion company. But in the early days, it took Amazon 10 years to recover stock prices after the dot-com bubble burst.
It could have reached the bottom of a pandemic trade bubble, or something deeper — Nasdaq The beginning of the worst year in history, worse than 2001 and 2002, at the worst month pace since March 2020, but also since 2008, According to Bespoke..
In a CNBC interview on Friday afternoon Cathie Wood compared Terra Dock and Amazon directlyThey say they are in the “same league” and claim that investors are missing out.
Golevich told Wall Street analysts that Terradock’s “holistic” strategy is the right strategy, and that pipelines can take longer to turn into sales, rather than through insurance partners rather than direct corporate purchases. He said he was confident that many transactions could take place. Terradock is undoubtedly the market leader.
However, the CEO of Teladoc also said, “The integration is on the verge of completion and there is no evidence behind it. So people are waiting and anxious to see, and although they are buying early adopters, I We haven’t hit much of the market yet. “
That is, the test results have not yet returned from the lab. Investors, unlike patients, do not have to wait.
— —CNBC’s Ari Levy contributed to this report.