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Second class action lawsuit filed against Teladoc for alleged misleading statements
Mental Health Tech
May 20, 2024
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Mental Health Tech

Mental Health Tech

May 20, 2024

Second class action lawsuit filed against Teladoc for alleged misleading statements

Management news

  • Virtual telehealth provider Teladoc Health is facing another prospective class action lawsuit related to allegedly false or misleading information and undisclosed increased marketing spending, specifically for BetterHelp, its mental health service.

  • This lawsuit comes after Teladoc’s CEO, Jason Gorevic, resigned in April after a 22% drop in the company's stock price due to missed fourth-quarter earnings estimates and a forecast of reduced revenue in 2024. The lawsuit alleges that despite public admissions that heightened marketing spending would be inefficient, the company inflated its advertising spend on BetterHelp throughout 2023.

  • The defendants, Jason Gorevic and CFO Mala Murthy, are also alleged to have made optimistic public statements about BetterHelp's membership growth, which, according to the lawsuit, remained stagnant or shrunk throughout last year.

  • Analyst Quicktake: This marks the second time a class action lawsuit has been filed against Teladoc Health in recent history. In June 2022 , similar accusations were made against the company, allegedly misleading investors. The lawsuit, which was eventually dismissed in July 2023 , similarly named Jason Gorevic and Mala Murthy as defendants and alleged that they had misled shareholders about the challenges Teladoc Health would face after its merger with Livongo in 2020.

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