Teladoc Health, a leader in telemedicine, probably wishes it could phone in the rest of 2022. Its stock tanked 40% last week, now down 80%+ from 2021.

One reason is that many patients are returning to physical waiting rooms, but another is a “goodwill impairment charge.”

First of all, what’s goodwill?

A business’s value includes not just its physical stuff, but also its intangible assets — brand recognition, customer loyalty, talent, etc. So, when one company buys another, it often pays more than that company’s book value (AKA what it’s worth on paper).

That difference is called goodwill. It appears in a buyer’s books as an intangible asset, meaning it can increase the buyer’s valuation.

But goodwill can change, and companies must conduct an annual goodwill impairment test — essentially, an audit to determine its current value.

So, what’s up with Teladoc?

In 2020, Teladoc bought Livongo, a platform for managing chronic conditions, as an opportunity to expand its offerings amid a boom in virtual care. The deal was valued at $18.5B, netting Teladoc $12.9B in goodwill.

Except it didn’t go well:



  • More competitors flooded the virtual care space
  • Teladoc struggled to integrate and several Livongo leaders left
  • People are returning to IRL appointments, which is bad for virtual health care (the valuations of some platforms like AmWell and 1Life Healthcare fell 80%+ in the past year)

The result? Teladoc took a $6.6B impairment charge, rattling investors while its shares dropped. Now, that charge is higher than Teladoc’s market cap.

But hey, it could have been worse. In 2002, AOL took a nearly $99B goodwill impairment on Time Warner, reducing its market value from $226B to ~$20B.

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