A federal judge on Wednesday granted Teladoc Health's motion to dismiss a securities class-action suit against the telehealth company stemming from its merger with Livongo.
The amended version of the complaint, originally filed as a putative class action against Teladoc in June 2022 by shareholder Jeremy Schneider, alleged that the company violated the Securities Act of 1934 by making misleading statements that masked the challenge it faced in integrating virtual chronic care company Livongo. It also alleged Teladoc downplayed its competition in the virtual care industry.
Judge Denise Cote of the Southern District of New York ruled that many of the statements made by Teladoc executives during the class period, between Feb. 11, 2021 and July 27, 2022, were opinions and general expressions of optimism. For this reason, none of the statements were intentionally misleading to investors, she ruled.
She also said that Teladoc repeatedly warned investors of the risks posed by its competition, despite what the plaintiffs alleged.
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Teladoc has faced challenges since buying Livongo for $18.5 billion in October 2020. The company recorded $13.4 billion in non-cash goodwill impairment charges in 2022 related to the acquisition, significantly contributing to a $13.6 billion loss. The company’s stock price has fallen from its high of $296.66 a share in February 2021 to $22.76 per share on Friday.
Equity fund Leadersel Innotech ESG was the lead plaintiff.
Representatives for Teladoc or the plaintiffs did not immediately respond to requests for comment.
