Does Teladoc's $65 Million Acquisition of Catapult Health Make the Stock a Buy?

Core Viewpoint - Teladoc Health has struggled as an investment over the past three years, with a significant slowdown in revenue and visit growth following the pandemic boom, while remaining unprofitable [1] Company Developments - Teladoc is attempting to improve its situation through leadership changes and the planned acquisition of Catapult Health, a virtual health provider focused on preventive care [2] - The acquisition of Catapult Health, costing $65 million with potential additional payments, aims to enhance Teladoc's service offerings in at-home preventive care and chronic health management [3] Financial Impact - Catapult Health generated $30 million in revenue over the 12 months ending September 2024, which is minimal compared to Teladoc's $2.6 billion revenue in 2024 [3] - Under Teladoc, Catapult will connect to a chronic care network of 1.2 million members, potentially increasing its patient coverage to over 3 million [4] Market Potential - Teladoc aims to cross-sell Catapult's services to its 93.8 million integrated care members, with Catapult's at-home checkups offering significant cost savings of over $1,400 over three years [5] Challenges Ahead - Teladoc faces difficulties in cross-selling its existing chronic care services, with only slightly over a million chronic care patients among its vast network [6] - The core business, including the BetterHelp virtual therapy unit, continues to struggle, with a 1% decline in revenue year-over-year in 2024 and a drop in paying users by 11% [7] - Teladoc remains unprofitable, with a net loss per share of $5.87 in the last year, significantly worse than the $1.34 reported in 2023 [8] Long-term Outlook - While Teladoc's long-term strategy for Catapult could potentially lead to increased revenue and earnings, current performance raises concerns about its attractiveness as an investment [10]