After Teladoc Health’s disappointing Quarter 1 results, shares fell as low as 41% during premarket trading.

Teladoc reported a loss of $41.58, which includes a $6.6 billion goodwill impairment charge, in its Q1 quarter. This may be less than the expected 60 cent loss per share.

The adjusted EBITDA loss for the quarter was $54.5 million, which is a 56.6 million profit in that same period last year. Profit estimates were $53 million. Revenue was $565.4 Million, an increase of 25% YoY. However it missed the consensus estimate of $568.9 millions.

Teladoc is expecting revenue between $580 million and $600 million for Q2, which falls below analyst predictions of $616.2 millions. Expected adjusted EBITDA to range from $39million to $49million, which is significantly lower than consensus projections of $71 million.

TDOC predicts full-year revenue between $2.4 and $2.5 Billion, as opposed to the $2.55 to $2.65 billion range that it previously forecasted, when analysts had predicted $2.58 trillion.

According to analysts’ estimates, the company will expect adjusted EBITDA to be in the $240-$265 million range. This is down from the previous guidance, which was $330 to $355 millions.

“While we continue to see sustainable growth across our suite of products and services, we are revising our 2022 outlook to reflect dynamics we are currently experiencing in the direct-to-consumer mental health and chronic condition markets,” said CEO Jason Gorevic.

“In the chronic condition market, we are seeing an elongated sales cycle as employers and health plans evaluate their long-term strategies to deliver the benefits and care that their populations need,” Gorevic added.

Stan Berenshteyn and Stephen Baxter, Wells Fargo analysts, downgraded Teladoc from Overweight to Equal Weight with a $40.00 share price target (down 10% from $104.00).

“Our Overweight rating was predicated on the thesis that increasing competition in TDOC’s verticals would remain manageable and that the company would benefit from a trend away from point solutions, producing attractive organic revenue growth and gradual margin expansion. In our view, the Q1 update refutes that thesis and introduces significant uncertainty for the trajectory of revenue and margins over both the near and intermediate term,” the analysts wrote in a note.

Citi analyst Daniel Grosslight moved also to Neutral, with a target price of $43.00 per share. This is down from $115.00.

“1Q22 results (and our follow-up with mgmt.) reveal cracks in TDOC’s whole health foundation as increased competitive intensity is weighing on growth and margins. This is particularly apparent in TDOC’s fastest growing segments: DTC mental health and chronic care, which were supposed to drive growth over the next 3 years. Even though we’re hesitant to alter our thesis on the basis of one bad quarter, it is doubtful we will soon see competition-driven headwinds diminish. This will keep TDOC’s share price in a tight band over the next twelve months,” Grosslight wrote in a note.

By Senad Karaahmetovic