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Teladoc Health Reports Third Quarter 2019 Results

October 30, 2019 4:06 PM

Year-over-year Q3 revenue grows 24% to $138.0 million and total visits increase 45% to 928,000

Year-over-year nine months revenue grows 34% to $396.8 million and total visits increase 63% to 2,899,000

Issues 2019 fourth-quarter guidance and updates full-year expectations

PURCHASE, NY, Oct. 30, 2019 (GLOBE NEWSWIRE) -- Teladoc Health, Inc. (NYSE: TDOC), the global leader in virtual care, today reported financial results for the third quarter ending September 30, 2019.

“The third quarter marked a continuation of Teladoc Health’s very strong momentum from the first half of the year, as we delivered at the high end of our growth expectations and made progress on our path to profitability,” said Jason Gorevic, chief executive officer, Teladoc Health. As we close out the year, we are confident in our positive momentum and are raising revenue and visit guidance for the full year. Our results serve as yet another affirmation of the expanding role of virtual care globally, and our proven ability to execute at scale.”

Financial Highlights for the Third Quarter and Nine Months Ended September 30, 2019

Revenue
($ thousands)
Quarter Ended Year over Year Nine Months Ended Year over Year
September 30, Growth September 30, Growth
2019 2018 2019 2018
Subscription Access Fees Revenue
U.S. $ 92,095 $ 72,521 27% $ 258,604 $ 198,607 30%
International 27,030 24,040 12% 77,716 49,480 57%
Total 119,125 96,561 23% 336,320 248,087 36%
Visit Fee Revenue
U.S. Paid Visits 14,142 11,330 25% 47,473 37,334 27%
U.S. Visit Fee Only 4,307 2,509 72% 11,974 8,758 37%
International Paid Visits 395 562 (30)% 1,051 987 7%
Total 18,844 14,401 31% 60,498 47,079 29%
Total Revenue* $ 137,969 $ 110,962 24% $ 396,818 $ 295,166 34%
*Organic third-quarter 2019 revenue, excluding MedecinDirect, increased by 24 percent year over year.
Organic nine months ended 2019 revenue, excluding Advance Medical and MedecinDirect, increased by 23 percent year over year.


Membership & Visit Fee Only Access
(millions)
Quarter Ended Year over Year
September 30, Growth
2019 2018
Total U.S. Paid Membership 35.0 22.6 54.6%
Total U.S. Visit Fee Only Access 19.0 9.4 101.0%


Visits
(thousands) Quarter Nine Months
Year over Year Year over Year
2019 2018 Growth Growth
Q1Q2Q3YTD Q1Q2Q3YTD
Paid Visits from U.S. Paid Membership 365 291 278 934 298 218 202 718 38 % 30 %
Percent of Paid Visits from U.S. Paid Membership51% 48% 45% 48% 54% 50% 46% 50% (3)% (5)%
Visits Included from U.S. Paid Membership 353 319 344 1,016 256 218 237 711 45 % 43 %
Total Visits from U.S. Paid Membership 718 610 622 1,950 554 436 439 1,429 42 % 36 %
U.S. Visit Fee Only 63 54 62 179 51 37 36 124 75 % 45 %
International Visits 282 244 244 770 1 60 166 227 46 % 239 %
Total Visits 1,063 908 928 2,899 606 533 641 1,780 45 % 63 %
Utilization11.00% 9.10% 7.98% 9.27% 10.90% 8.04% 7.81% 8.86% 17 pt 41 pt

A reconciliation of generally accepted accounting principles (“GAAP”) in the United States to non-GAAP results has been provided in this press release in the accompanying tables. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures”.

Financial Outlook
Teladoc Health provides guidance based on current market conditions and expectations.

For the fourth-quarter 2019, we expect:

For the full-year 2019, we have updated our expectations as follows:

Quarterly Conference Call

The third quarter 2019 earnings conference call and webcast will be held Wednesday, October 30, 2019 at 4:30 p.m. EDT. The conference call can be accessed by dialing 1-833-241-4255 for U.S. participants, or 1-647-689-4206 for international participants, and including the following Conference ID Number: 5049316 to expedite caller registration; or via a live audio webcast available online at http://ir.teladoc.com/news-and-events/events-and-presentations/. A webcast replay will be available for on-demand listening shortly after the completion of the call at the same web link.

About Teladoc Health

A mission-driven organization, Teladoc Health, Inc. is successfully transforming how people access and experience healthcare, with a focus on high quality, lower costs, and improved outcomes around the world. The company’s award-winning, integrated clinical solutions are inclusive of telehealth, expert medical services, AI and analytics, and licensable platform services. With more than 2,000 employees, the organization delivers care in 130 countries and in more than 30 languages, partnering with employers, hospitals and health systems, and insurers to transform care delivery. For more information, please visit www.teladochealth.com or follow @TeladocHealth on Twitter.

Cautionary Note Regarding Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “believe,” “project,” “estimate,” “expect,” “may,” “should,” “will” and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding future revenues, future earnings, future numbers of members or clients, litigation outcomes, regulatory developments, market developments, new products and growth strategies, and the effects of any of the foregoing on our future results of operations or financial conditions.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: (i) changes in laws and regulations applicable to our business model; (ii) changes in market conditions and receptivity to our services and offerings; (iii) results of litigation; (iv) the loss of one or more key clients; and (v) changes to our abilities to recruit and retain qualified providers into our network. For a detailed discussion of the risk factors that could affect our actual results, please refer to the risk factors identified in our SEC reports, including, but not limited to our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, as filed with the SEC.

Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.


CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data, unaudited)

September 30, December 31,
2019 2018
Assets
Current assets:
Cash and cash equivalents $ 475,242 $ 423,989
Short-term investments 15,633 54,545
Accounts receivable, net of allowance of $3,287 and $3,382, respectively 53,669 43,571
Prepaid expenses and other current assets 13,416 10,631
Total current assets 557,960 532,736
Property and equipment, net 10,021 10,148
Goodwill 737,647 737,197
Intangible assets, net 228,838 247,394
Operating lease - right-of-use assets 27,596 —
Other assets 6,367 1,401
Total assets $ 1,568,429 $ 1,528,876
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable $ 6,068 $ 7,769
Accrued expenses and other current liabilities 53,822 26,801
Accrued compensation 25,312 27,869
Total current liabilities 85,202 62,439
Other liabilities 7,156 6,191
Operating lease liabilities, net of current portion 25,853 —
Deferred taxes 22,720 32,444
Convertible senior notes, net 433,760 414,683
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value; 150,000,000 shares authorized as of September 30, 2019 and December 31, 2018; 72,356,849 shares and 70,516,249 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively 72 70
Additional paid-in capital 1,510,205 1,434,780
Accumulated deficit (488,481) (408,661)
Accumulated other comprehensive loss (28,058) (13,070)
Total stockholders’ equity 993,738 1,013,119
Total liabilities and stockholders’ equity $ 1,568,429 $ 1,528,876


CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data, unaudited)

Quarter Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Revenue $ 137,969 $ 110,962 $ 396,818 $ 295,166
Expenses:
Cost of revenue 42,799 34,167 129,110 88,707
Operating expenses:
Advertising and marketing 31,321 21,668 84,341 61,554
Sales 16,120 16,303 48,164 44,645
Technology and development 15,746 13,577 48,398 40,829
Legal and regulatory 1,634 807 5,239 2,491
Acquisition and integration related costs 1,995 1,588 4,143 8,957
Gain on sale — (1,430) — (5,500)
General and administrative 38,681 30,314 113,212 80,455
Depreciation and amortization 9,617 9,746 29,065 26,045
Total expenses 157,913 126,740 461,672 348,183
Loss from operations (19,944) (15,778) (64,854) (53,017)
Interest expense, net 7,700 7,666 21,432 19,449
Net loss before taxes (27,644) (23,444) (86,286) (72,466)
Income tax benefit (7,298) (180) (6,466) (261)
Net loss $ (20,346) $ (23,264) $ (79,820) $ (72,205)
Net loss per share, basic and diluted $ (0.28) $ (0.34) $ (1.11) $ (1.12)
Weighted-average shares used to compute basic and diluted net loss per share 72,151,094 68,247,655 71,601,790 64,363,943
Note: The third quarter 2019 includes a $0.11 per share non-cash income tax benefit.


CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)

Nine Months Ended September 30,
2019 2018
Cash flows provided by (used in) operating activities:
Net loss $ (79,820) $ (72,205)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization 33,860 26,045
Allowance for doubtful accounts 1,717 1,535
Stock-based compensation 48,245 31,086
Deferred income taxes (10,288) (1,907)
Accretion of interest 19,422 13,593
Gain on sale — (5,500)
Changes in operating assets and liabilities:
Accounts receivable (12,386) (7,535)
Prepaid expenses and other current assets (2,219) (1,656)
Other assets 73 (327)
Accounts payable (1,976) (357)
Accrued expenses and other current liabilities 21,012 7,561
Accrued compensation (1,813) 1,991
Operating lease liabilities (1,481) —
Other liabilities (2,599) 340
Net cash provided by (used in) operating activities 11,747 (7,336)
Cash flows provided by (used in) investing activities:
Purchase of property and equipment (2,847) (2,732)
Purchase of internal-use software (4,658) (2,758)
Purchase of marketable securities — (12,141)
Proceeds from marketable securities 39,165 79,470
Sale of assets 10 5,500
Investment in securities (5,000) —
Acquisition of business, net of cash acquired (11,204) (282,487)
Net cash provided by (used in) investing activities 15,466 (215,148)
Cash flows provided by financing activities:
Net proceeds from the exercise of stock options 24,820 26,198
Proceeds from issuance of convertible notes — 279,147
Proceeds from issuance of common stock — 330,856
Proceeds from employee stock purchase plan 1,875 1,423
Cash (paid) received for withholding taxes on stock-based compensation, net (1,642) 539
Net cash provided by financing activities 25,053 638,163
Net increase in cash and cash equivalents 52,266 415,679
Foreign exchange difference (1,013) (942)
Cash and cash equivalents at beginning of the period 423,989 42,817
Cash and cash equivalents at end of the period $ 475,242 $ 457,554
Income taxes paid $ 846 $ 238
Interest paid $ 6,112 $ 4,125


Non-GAAP Financial Measures:

To supplement our financial information presented in accordance with generally accepted accounting principles in the United States, or U.S. GAAP, we use EBITDA and Adjusted EBITDA, which are non-U.S. GAAP financial measures to clarify and enhance an understanding of past performance. We believe that the presentation of these financial measures enhances an investor’s understanding of our financial performance. We further believe that these financial measures are useful financial metrics to assess our operating performance from period-to-period by excluding certain items that we believe are not representative of our core business. We use certain financial measures for business planning purposes and in measuring our performance relative to that of our competitors. We utilize Adjusted EBITDA as the primary measure of our performance.

EBITDA consists of net loss before interest, taxes, depreciation and amortization. We believe that making such adjustment provides investors meaningful information to understand our results of operations and the ability to analyze financial and business trends on a period-to-period basis.

Adjusted EBITDA consists of net loss before interest, taxes, depreciation, amortization, stock-based compensation, gain on sale and acquisition and integration related costs. We believe that making such adjustment provides investors meaningful information to understand our results of operations and the ability to analyze financial and business trends on a period-to-period basis.

We believe both financial measures are commonly used by investors to evaluate our performance and that of our competitors. However, our use of the term EBITDA and Adjusted EBITDA may vary from that of others in our industry. Neither EBITDA nor Adjusted EBITDA should be considered as an alternative to net loss before taxes, net loss, loss per share or any other performance measures derived in accordance with U.S. GAAP as measures of performance.

EBITDA and Adjusted EBITDA have important limitation as analytical tools and you should not consider them in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Some of these limitations are:

In addition, although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any expenditures for such replacements.

We compensate for these limitations by using EBITDA and Adjusted EBITDA along with other comparative tools, together with U.S. GAAP measurements, to assist in the evaluation of operating performance. Such U.S. GAAP measurements include net loss, net loss per share and other performance measures.

In evaluating these financial measures, you should be aware that in the future we may incur expenses similar to those eliminated in this presentation. Our presentation of EBITDA and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items.


Reconciliation of EBITDA and Adjusted EBITDA to Net Loss
(In thousands, unaudited)

Quarter Ended Nine Months Ended
September 30, September 30,
2019 2018 2019 2018
Net loss $ (20,346) $ (23,264) $ (79,820) $ (72,205)
Add:
Interest expense, net 7,700 7,666 21,432 19,449
Income tax benefit (7,298) (180) (6,466) (261)
Depreciation expense 982 854 2,701 3,118
Amortization expense 8,635 8,892 26,364 22,927
EBITDA (10,327) (6,032) (35,789) (26,972)
Stock-based compensation 17,354 12,195 48,245 31,086
Gain on sale — (1,430) — (5,500)
Acquisition and integration related costs 1,995 1,588 4,143 8,957
Adjusted EBITDA $ 9,022 $ 6,321 $ 16,599 $ 7,571

Media:
Courtney McLeod
914-265-6789
[email protected]

Investors:
Westwicke Partners
Jordan E. Kohnstam
Office: 443-450-4189
[email protected]


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