It has been a
stunning reversal and fall from grace for virtual healthcare provider Teladoc
(TDOC 50.44, -0.73, -1.43%). The stock hit all-time highs in early October when it neared the
$90/share mark, while gaining about 200% from its June 2015 IPO opening price.
Its consistent triple-digit top-line growth made it a popular name among growth
However, since hitting that high, TDOC shares have been almost cut in half. This is partially due to the heightened volatility in the stock market, which has hit high growth names with rich valuations particularly hard. There are other issues causing TDOC headaches.
Before the open today, the company announced that its CFO and COO, Mark Hirschhorn, has resigned. His resignation comes in the wake of a troubling report from "Southern Investigative Reporting Foundation" (SIRF) on December 6 in which it discussed Mr. Hirschhorn's workplace relationship with a subordinate at the company, and some questionable trading activities regarding TDOC stock. Click here to access that report.
While we're not going to get into great detail regarding Mr. Hirschhorn's reported extra-marital relationship, the SIRF report commented that he allegedly provided his girlfriend with information on opportune times to sell TDOC shares. And, that, at the very least, he likely violated several of TDOC's own employee conduct clauses.
Following the SIRF report last week, TDOC released its own press release, saying that it takes workplace conduct matters very seriously, and that the SIRF report contained several factual inaccuracies. And, that, when it learned of the allegations against Mr. Hirschhorn in 2016, it took appropriate and fast actions to address the violations.
That seemed to be the end of the story. Until, this morning, when the company announced that Hirschhorn would be stepping down and that it has initiated a formal search process to fill the roles of COO and CFO. In the meantime, President Peter McClennen will assume the role of Interim COO, while Senior Vice President and Chief Accounting Officer, Gabriel Cappucci, will coordinate all finance activity.
So, clearly, sometime between December 6 and this morning, TDOC changed its tune on this matter. Perhaps legal concerns, or perhaps public relations fall-out, or both, led to the company and Hirschhorn coming to this decision. In the short-term, the sudden loss of a key executive is likely to cause some internal chaos in the company. It also doesn't help from an investor sentiment standpoint. But, if the reports are accurate, the activities of Hirschhorn were causing some strife within the company and among some employees. So, for the overall health of the company, finding stability at the executive level certainly looks like the right decision.
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