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A federal judge has dismissed a securities class action lawsuit filed against a virtual care company Teladoc Health relating to his $18.5 billion merger with chronic care company Livongo.
The complaint, originally filed by shareholder Jeremy Schneider in 2022 on behalf of the parties who bought Teladoc between February 2021 and July 2022, alleged that representatives of the virtual care company misled investors by downplaying the challenges it faced integrating Livongo after acquiring the chronic care company.
The lawsuit also claimed that the company’s misleading statements “artificially inflated Teladoc’s stock price” during those 17 months.
Teladoc filed a motion to dismiss, and on Wednesday, U.S. District Judge Denise Cote in New York granted the motion closing the case.
The judge cited Teladoc S-4 Registration Statement filed with the United States Securities and Exchange Commission in connection with the Livongo merger as part of the reason for termination.
In the SEC filing, the virtual care company reported that “combining the businesses of Teladoc and Livongo may be more difficult, costly, or time-consuming than expected” and “failure to successfully integrate the businesses and operations of Teladoc and Livongo within the expected timeframe may adversely affect the future results of the combined company.”
THE GREAT TREND
Teladoc’s inventory gradually rose after its acquisition of Livongo, from around $81 in 2020 to a high of $223 in 2021. It has since fallen and now trades around $23 per share.
The company recorded an increase in revenue of $629.2 million in first quarter 2023an 11% increase from $565.4 million in the first quarter of 2022. Its net loss was $69.2 million, or $0.42 per share, from $6.7 billion, or a loss of $41.58 per share, in the first quarter of 2022.
Revenue for BetterHelp, the virtual care giant’s direct-to-consumer mental health division, grew 21% year-over-year, while paying users grew 22%. Revenue from the company’s enterprise integrated care segment also increased 5%.
In January, the company announced layoffs of about 300 employees, or about 6% of its non-clinical workforce, as part of a broader restructuring plan to reduce operating costs.
In a letter to staff, CEO Jason Gorevic said the company is eliminating roles made superfluous by its Merger 2020 with Livongo. He also said the virtual care giant is focused on sustainable revenue growth and profitability.
Teladoc announced today that it will release its second quarter 2023 results on July 25.
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