Virtual health provider stocks Teladoc Health (NYSE:TDOC) The stock fell nearly 5% in early trading on Friday, but then reversed and rose again. The company announced this morning that CEO Jason Gorevich will be leaving the company “immediately” and will be replaced by current CFO Mara Murthy as acting CEO.
As of 11:10 a.m. ET, Teladoc stock was up about 0.2%.
Teladoc's CEO has left the building
Teladoc did not provide a clear explanation as to why Gorevic, who has led Teladoc since June 2009, is leaving. The fact that he is stepping down “with immediate effect” and that there is no clear succession plan (the company's board is currently hiring an executive search firm to find a successor) adds to investors' concerns. I'm sure he did.
The board tried to allay concerns by thanking Ms. Gorevic for her “many accomplishments” and praising interim CEO Murthy as a “seasoned industry leader,” but the board did not believe she was fully qualified to be the next CEO. There's no indication (yet) that we think there is. She is a long-term CEO.
Is Teladoc stock a sell?
In other words, Teladoc has never been profitable, and just two years ago it reported a staggering net loss of $13.7 billion (which is significant for a company with a market capitalization of $2.4 billion). !) Now virtually rudderless. So is it time to take a cue from the CEO and abandon ship?
necessarily.
In fact, while Teladoc is technically “unprofitable,” the company generated $339 million in positive free cash flow last year. This is almost double the cash profit generated in 2022, when the company had a huge “loss” of $13.7 billion.
Debt levels are moderate, net of cash on hand, around $472 million, and while this year's free cash flow levels may not match last year's numbers, they are expected to be $212 million. For this reason, the company's Price to FCF ratio of just 11.2 seems very high. It's reasonable to me.
Simply put, this ship is sound. What Teladoc stock needs to succeed is a great new captain.
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Rich Smith has no position in any stocks mentioned. The Motley Fool owns a position in and recommends Teladoc Health. The Motley Fool has a disclosure policy.
Why Teladoc Health's Stock Flowed, But Now It's Back Today'' was originally published by The Motley Fool.
