Shares of Teladoc Health (TDOC) plunged in morning trading following a report that the company's chief financial officer engaged in a relationship with a former employee, violating the company's policies. The company issued a statement refuting the report, and an analyst said he doesn't expect the CFO will be replaced or the business to be affected.

SIRF REPORT: Roddy Boyd, the chief executive officer of non-profit Southern Investigative Reporting Foundation, or SIRF, issued a report on Wednesday on Teladoc Health, questioning the behavior of the company's Chief Financial Officer Mark Hirschhorn. According to Boyd's report, Hirschhorn engaged in a workplace relationship in 2016 with Charece Griffin, an employee of Teladoc, violating company policy. In addition to their relationship, SIRF says Griffin told her ex-colleagues that she and Hirschhorn "liked to trade Teladoc Health's stock together," which they viewed as unfair. Griffin resigned from Teledoc quietly in 2017, the matter was settled confidentially and terms of her severance agreement were not disclosed. A complaint was not filed with the Equal Employment Opportunity Commission, or EEOC, about the matter. Andrew Dunlap, an attorney who represented Griffin during the negotiation over her exit from Teladoc Health, commented that "My own work led me to conclude that at the very least, this was a violation of a bunch of [Teladoc Health's] own employee conduct clauses... I'm not sure why they tolerated the CFO doing that."

TELEDOC REFUTES SIRF'S CLAIMS: Teladoc Health issued a statement on Wednesday refuting SIRF's claims, saying it takes workplace conduct matters "very seriously." Teledoc said that the SIRF report contains "several factual inaccuracies," adding that an outside law firm was engaged to investigate the allegations against Mark Hirschhorn in 2016 when it was made aware of the claims. It added that the probe found violations "solely of our workplace relationship policy," and its board of directors took "swift and appropriate disciplinary action" to address the violations. The company concluded, "This matter was handled in a prompt, thorough and fair manner. We are deeply committed to ensuring a safe, respectful work environment where all individuals are treated fairly and equally."

ANALYST COMMENTARY:  Piper Jaffray analyst Sean Wieland said that for violating company policy, Hirschhorn was penalized financially by deferring his stock vesting by one year and forfeiting his 2016 bonus and he believes his replacement is unlikely given the company's earlier investigation. While he believes it is important for the company to take steps to promote a fair, inclusive and equitable workplace, Wieland noted that alleged actions of the CFO don't impact either the telehealth market or the company's product offerings. The analyst recommended buying on weakness and kept an Overweight rating and $88 price target on Teladoc shares.

PRICE ACTION: In early trading, shares of Teladoc Health dropped 5.3% to $56.60.