Impairing $6.6 Billion in Goodwill Sees the Ceiling of Digital Therapeutics from Teladoc

With the release of the first quarterly report of 2022, Teladoc's share price ushered in the largest one-day drop in history, which is related to the significant impairment of the goodwill generated by the acquisition of Livongo in the first quarter of 2022

As previously emphasized, digital health care, especially online consultation, has been ripened by the epidemic.

In October 2020, Teladoc finally completed the acquisition of Livongo at a transaction price of US$13.

Although the growth rate of chronic disease management has been lowered to about 30%, Teladoc still regards it as an important growth point

The reason for Teladoc's failure in the field of chronic diseases is that it greatly overestimates the scale of convertible users, which in turn depends on two points: the need for users to be managed is not high and the selectivity of the B-end customer base is strong

First, the need for chronic disease population management is not strong, which leads to the constant overestimation of the market size

Employees and their families who have discontinued Livongo Diabetes Management since joining

employees who have left

Have employees who have not used Livongo Diabetes Management for 4 to 6 months after joining

Therefore, the population of chronic diseases is not as large as the market imagines.

Secondly, Livongo's main customer groups are enterprises and insurance companies.

For example, although Aetna will provide Teladoc chronic disease management services to its self-insured users, its own group insurance is its main share

Therefore, although Teladoc's customers overlap with Livongo's only 25%, its scalable user scale is theoretically large, but practice has proved that it is difficult to achieve sustainable growth in the scale of chronic disease management

Judging from the development after Teladoc acquired Livongo, chronic disease management of a single disease faces a clear market size ceiling, considering that the use of digital therapy is more complicated than chronic disease management and generally lacks the continuous supervision of online coaches (Coach), Neither acquiring customers nor reducing dropout rates is more likely to break through the ceiling than chronic disease management