> Teladoc had revenue of $2.4 billion last year, with about $1 billion coming from the BetterHelp.
The fine does not seem like a large enough fraction of their revenue to deter future abuse.
They had a $429 million net loss in 2021.
I'll be honest, I don't understand what "non-cash goodwill impairment" is that leads to losses that are almost 6x revenue. In any case, the company seems to already be losing plenty of money without the FTC needing to lift a finger...?
[1] https://ir.teladochealth.com/news-and-events/investor-news/p...
All of which seems to me like a good argument for penalties being based on revenue rather than profits.
https://www.investopedia.com/terms/g/goodwill-impairment.asp
In real life, an acquired firm is worth more than that because it's a "going concern." Even if you're buying a factory, it's worth more than the machinery and inventory because it's a business that will generate cash in the future.
The point of the GOODWILL asset is a sort of hack to represent this intangible value that you're going to get from operating the business you bought, which theoretically is exactly the difference between the net assets and the acquisition price. By putting in a goodwill amount, the acquisition isn't considered a net gain or loss at the moment that it happens; the books assume that the correct price was paid with no impact on company value.
When you realize that the business is actually a bit of a dud, you can take a GOODWILL IMPAIRMENT which basically means "eh, I guess running this business isn't worth as much as we thought." You reduce the value of the goodwill asset and recognize an expense, reducing your profit for the year where you realized there was an issue. There's therefore an incentive to recognize goodwill impairments when (or before) you make a lot of profit, so that you can reduce your profit and therefore your taxes.
(Side note - accrual accounting makes a lot more sense once you start thinking of assets as "cash that's missing but we aren't admitting it yet" and liabilities as "cash that's there but we aren't admitting it yet"; admitting or "recognizing" these things turns assets into expenses and liabilities into revenues.)
This gets really funny in software. Software startups live in their own world, based on a handful of them working out and dominating the entire economy, where the value of a firm is whatever you want it to be because it's basically infinity or zero.
So in these cases, goodwill represents the massive gap between "the amount we paid for our computers plus some percent of the amount we've spent on engineering salaries" and "I bet this thing will make use worth $50B one day so let's pay $2B for this capability." It's Schrodinger's accounting entry, waiting for the acquisition team to be proven right or wrong (usually wrong) one day. And most importantly, it's a mouth-watering chunk of tax avoidance that can be written down whenever needed to offset profits. Legitimately, because you really did lose that money making a bad business decision.
And it's basically incapable of handling IP-based businesses like software and pharmaceutical R&D. Those tend to be one-shot gambles on R&D, where you have absolutely no clue if your investment will pay off, and if it does the margins are nearly 100%. But they have to try anyway, leading to many clever-but-imperfect patches on the GAAP system.
It's a bit cynical, but if true, would be a good centerpiece of a populist campaign.