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Teladoc Health Reports Third-Quarter 2021 Results

October 27, 2021 4:05 PM

PURCHASE, NY, Oct. 27, 2021 (GLOBE NEWSWIRE) -- Teladoc Health, Inc. (NYSE: TDOC), the global leader in whole-person virtual care, today reported financial results for the quarter ended September 30, 2021.

“Our strong performance in the third quarter reflects our continued success in leading the transformation of healthcare delivery and expanding access for all,” said Jason Gorevic, chief executive officer at Teladoc Health. “By leveraging our unique combination of data, analytics, technology and dedicated healthcare professionals, we are driving growth across our business. The third quarter was notable in expanding relationships with a number of leading national health plans with the successful launch of our Primary360 offering which reimagines the primary care model and delivers increased access and engagement to members.”

“As we look ahead to the rest of 2021 and into 2022, we are confident in our ability to innovate, anticipate and solve for the evolving whole-person health needs of consumers and healthcare professionals globally," Gorevic added.

Financial Results for the Third Quarter and Nine Months Ended September 30, 2021

Revenue
($ thousands, unaudited)
Quarter Ended Year over Year Nine Months Ended Year over Year
September 30, Growth September 30, Growth
2021 2020 2021 2020
Access Fees Revenue
U.S. $413,594 $194,622 113 % $1,161,084 $454,582 155 %
International 37,989 31,997 19 % 112,699 91,261 23 %
Total 451,583 226,619 99 % 1,273,783 545,843 133 %
Visit Fee Revenue
U.S. 59,863 50,948 18 % 173,399 152,944 13 %
International 116 96 22 % 368 705 (48)%
Total 59,979 51,044 18 % 173,767 153,649 13 %
Other
U.S. 9,583 10,299 (7)% 29,617 10,299 188 %
International 513 850 (40)% 1,305 850 54 %
Total 10,096 11,149 (9)% 30,922 11,149 177 %
Total Revenue $521,658 $288,812 81 % $1,478,472 $710,641 108 %

n/m – Not meaningful

Membership and Visit Fee Only Access
(millions)
Quarter Ended
September 30, Growth
2021 2020
U.S. Paid Membership 52.5 51.5 2%
U.S. Visit Fee Only Access 23.6 21.8 8%
Chronic Care Enrollment 0.725 - n/m

Visits
(thousands)
Quarter Ended Year over Year Nine Months Ended Year over Year
September 30, Growth September 30, Growth
2021 2020 2021 2020
U.S. Visits 3,354 2,390 40 % 9,114 6,306 45%
International Visits 531 445 19 % 1,475 1,330 11%
Total Visits 3,885 2,835 37 % 10,589 7,636 39%
Utilization 23.7% 16.5% 713 pt 21.6% 15.4% 620pt
Platform-Enabled Sessions* 969 986 (2)% 3,078 986 212%
Total Visits & Sessions Provided & Enabled 4,854 3,821 27 % 13,667 8,622 59%

* Platform-Enabled Sessions are a unique instance in which our licensed software platform has facilitated a virtual voice or video encounter between a care provider and our client’s patient, or between care providers. We believe platform-enabled sessions are an indicator of the value our clients derive from the platform they license from us in order to facilitate virtual care.

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 OutlookTeladoc Health provides guidance based on current market conditions and expectations. Given the uncertainty of the expected path of the COVID-19 pandemic as well as the broader economic impact, our updated guidance is based on what we know today. As this is an evolving situation, circumstances are likely to change, but we believe our guidance ranges provide a reasonable baseline for 2021 financial performance.

For the fourth-quarter 2021, we expect:

For the full-year 2021, we expect:

Quarterly Conference Call

The third quarter 2021 earnings conference call and webcast will be held Wednesday, October 27, 2021 at 4:30 p.m. E.T. The conference call can be accessed by dialing 1-833-968-2101 for U.S. participants, or 1-236-714-2089 for international participants, and referencing Conference ID Number: 3489052; 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, and will remain available for approximately 90 days.

About Teladoc Health

Teladoc Health empowers all people everywhere to live their healthiest lives by transforming the healthcare experience. As the world leader in whole-person virtual care, Teladoc Health uses proprietary health signals and personalized interactions to drive better health outcomes across the full continuum of care, at every stage in a person’s health journey. Ranked best in KLAS for Virtual Care Platforms in 2020 and #1 among direct-to-consumer telehealth providers in the J.D. Power 2021 U.S. Telehealth Satisfaction Study, Teladoc Health leverages more than a decade of expertise and data-driven insights to meet the growing virtual care needs of consumers and healthcare professionals. 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 condition.

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; (v) changes to our abilities to recruit and retain qualified providers into our network; and (vi) the impact of the COVID-19 pandemic on our operations, demand for our services and general economic conditions, as well as orders, directives and legislative action by local, state, federal and foreign governments in response to the spread of COVID-19. 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.

TELADOC HEALTH, INC.CONSOLIDATED BALANCE SHEETS(In thousands, except share and per share data, unaudited)
September 30, December 31,
2021 2020
Assets
Current assets:
Cash and cash equivalents $823,828 $733,324
Short-term investments 2,538 53,245
Accounts receivable, net of allowance of $11,277 and $6,412, respectively 178,072 169,281
Inventories 56,937 56,498
Prepaid expenses and other current assets 95,941 47,259
Total current assets 1,157,316 1,059,607
Property and equipment, net 27,027 28,551
Goodwill 14,470,399 14,581,255
Intangible assets, net 1,932,012 2,020,864
Operating lease - right-of-use assets 47,935 46,647
Other assets 17,890 18,357
Total assets $17,652,579 $17,755,281
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable $34,655 $46,030
Accrued expenses and other current liabilities 106,252 83,657
Accrued compensation 75,891 94,593
Deferred revenue-current 72,865 52,356
Advances from financing companies 12,442 13,453
Current portion of long-term debt 0 42,560
Total current liabilities 302,105 332,649
Other liabilities 1,328 1,616
Operating lease liabilities, net of current portion 42,729 43,142
Deferred revenue, net of current portion 4,075 2,449
Advances from financing companies, net of current portion 9,561 9,926
Deferred taxes 93,824 102,103
Convertible senior notes, net 1,211,375 1,379,592
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value; 300,000,000 shares authorized as of September 30, 2021 and December 31, 2020; 160,013,751 shares and 150,281,099 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively 160 150
Additional paid-in capital 17,399,023 16,857,797
Accumulated deficit (1,410,469) (992,661)
Accumulated other comprehensive (loss) gain (1,132) 18,518
Total stockholders’ equity 15,987,582 15,883,804
Total liabilities and stockholders’ equity $17,652,579 $17,755,281

TELADOC HEALTH, INC.CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except share and per share data, unaudited)
Quarter Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Revenue $521,658 $288,812 $1,478,472 $710,641
Expenses:
Cost of revenue (exclusive of depreciation and amortization, which is shown separately below) 169,041 104,725 475,273 267,887
Operating expenses:
Advertising and marketing 111,078 52,302 303,738 132,395
Sales 62,602 23,483 191,251 60,110
Technology and development 80,250 29,958 239,017 72,244
Acquisition, integration and transformation costs 4,340 25,395 22,084 30,686
General and administrative 103,016 59,742 319,404 162,699
Depreciation and amortization 51,907 12,932 151,907 32,535
Total expenses 582,234 308,537 1,702,674 758,556
Loss from operations (60,576) (19,725) (224,202) (47,915)
Loss on extinguishment of debt 850 1,227 43,728 8,978
Other expense (income), net 376 252 (5,493) 827
Interest expense, net 18,895 16,970 61,493 38,849
Net loss before taxes (80,697) (38,174) (323,930) (96,569)
Income tax expense (benefit) 3,643 (2,290) 93,878 (5,400)
Net loss $(84,340) $(35,884) $(417,808) $(91,169)
Net loss per share, basic and diluted $(0.53) $(0.43) $(2.68) $(1.17)
Weighted-average shares used to compute basic and diluted net loss per share 159,435,165 83,607,902 155,926,680 77,821,073

TELADOC HEALTH, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands, unaudited)
Nine Months Ended September 30,
2021 2020
Cash flows provided by operating activities:
Net loss $(417,808) $(91,169)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 151,907 32,535
Depreciation of rental equipment 2,500 851
Amortization of right-of-use assets 8,185 4,643
Allowance for doubtful accounts 11,353 2,320
Stock-based compensation 240,971 61,151
Deferred income taxes 91,414 (4,096)
Accretion of interest 46,843 29,459
Loss on extinguishment of debt 40,631 8,978
Gain on sale of investment (5,901) 0
Other, net 38 216
Changes in operating assets and liabilities:
Accounts receivable (19,407) (16,450)
Prepaid expenses and other current assets (34,566) (5,906)
Inventory (2,661) (2,392)
Other assets (3,432) 140
Accounts payable (11,115) 6,584
Accrued expenses and other current liabilities 15,880 17,269
Accrued compensation (17,352) 9,329
Deferred revenue 20,002 15,348
Operating lease liabilities (8,202) (4,360)
Other liabilities 1,502 (3,025)
Net cash provided by operating activities 110,782 61,425
Cash flows used in investing activities:
Capital expenditures (5,611) (2,872)
Capitalized software development costs (35,402) (14,515)
Proceeds from marketable securities 50,000 0
Proceeds from the sale of investment 10,901 0
Acquisitions of business, net of cash acquired (75,944) (159,663)
Other, net 3,150 0
Net cash used in investing activities (52,906) (177,050)
Cash flows provided by financing activities:
Net proceeds from the exercise of stock options 22,956 40,627
Proceeds from issuance of 2027 Notes 0 1,000,000
Payment of issuance costs of 2027 Notes 0 (24,070)
Repurchase of 2022 Notes (139) (228,153)
Proceeds from advances from financing companies 10,677 1,924
Payment against advances from financing companies (12,053) (4,427)
Proceeds from employee stock purchase plan 13,996 2,473
Cash received for withholding taxes on stock-based compensation, net 3,109 326
Other, net (4,224) 0
Net cash provided by financing activities 34,322 788,700
Net increase in cash and cash equivalents 92,198 673,075
Foreign exchange difference (1,694) (129)
Cash and cash equivalents at beginning of the period 733,324 514,353
Cash and cash equivalents at end of the period $823,828 $1,187,299
Income taxes paid $3,114 $786
Interest paid $7,973 $5,612

Stock-based Compensation Summary

Total compensation costs for stock-based awards were recorded as follows (in thousands):

Quarter Ended Nine Months Ended
September 30, September 30,
2021 2020 2021 2020
Cost of revenue (exclusive of depreciation and amortization, which is shown separately) $2,162 $128 $6,310 $128
Advertising and marketing 5,244 1,644 15,141 4,447
Sales 17,518 3,275 57,638 9,465
Technology and development 22,910 2,622 77,335 7,285
General and administrative 23,867 13,239 84,547 39,826
Total stock-based compensation expense (1) $71,701 $20,908 $240,971 $61,151

(1) Excluding the amount capitalized related to internal software development projects.

Non-GAAP Financial Measures:

To supplement our financial information presented in accordance with GAAP, we use adjusted gross profit, adjusted gross margin, EBITDA and adjusted EBITDA, which are non-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.

Adjusted gross profit is our total revenue minus our total cost of revenue (exclusive of depreciation and amortization, which is shown separately) and adjusted gross margin is adjusted gross profit as a percentage of our total revenue. We believe that these measures provide investors meaningful information to understand our results of operations and the ability to analyze financial and business trends on a period-to-period basis.

EBITDA consists of net loss before interest; other expense (income), net, including foreign exchange gain or loss; taxes; depreciation and amortization; and loss on extinguishment of debt. Adjusted EBITDA consists of net loss before interest; other expense (income), net, including foreign exchange gain or loss; taxes; depreciation and amortization; loss on extinguishment of debt; stock-based compensation; and acquisition, integration and transformation costs. We believe that making such adjustments 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 the above financial measures are commonly used by investors to evaluate our performance and that of our competitors. However, our use of the terms adjusted gross profit, adjusted gross margin, EBITDA and adjusted EBITDA may vary from that of others in our industry. None of adjusted gross profit, adjusted gross margin, EBITDA nor adjusted EBITDA should be considered as an alternative to net loss before taxes, net loss, net loss per share or any other performance measures derived in accordance with GAAP.

Adjusted gross profit, adjusted gross margin, EBITDA and adjusted EBITDA have important limitations as analytical tools and you should not consider them in isolation or as a substitute for analysis of our results as reported under 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 adjusted gross profit, adjusted gross margin, EBITDA and adjusted EBITDA do not reflect any expenditures for such replacements.

We compensate for these limitations by using adjusted gross profit, adjusted gross margin, EBITDA and adjusted EBITDA along with other comparative tools, together with GAAP measurements, to assist in the evaluation of operating performance. Such 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 adjusted gross profit, adjusted gross margin, EBITDA and adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items.

We have not reconciled EBITDA or adjusted EBITDA guidance to GAAP net loss because we do not provide guidance on the individual reconciling items between EBITDA and adjusted EBITDA and GAAP net loss. This is due to the uncertainty as to timing, and the potential variability, of the individual reconciling items such as the tax impact of share-based compensation, the effect of which may be significant. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measure is not available without unreasonable effort.

The following is a reconciliation of gross profit and gross margin, the most directly comparable GAAP financial measures, to adjusted gross profit and adjusted gross margin, respectively:

Reconciliation of GAAP Gross Profit to Adjusted Gross Profit and Adjusted Gross Margin(In thousands, unaudited)
Quarter Ended Nine Months Ended
September 30, September 30,
2021 2020 2021 2020
Revenue $521,658 $288,812 $1,478,472 $710,641
Cost of revenue (exclusive of depreciation and amortization, which is shown separately below) (169,041) (104,725) (475,273) (267,887)
Depreciation and amortization of intangible assets (2,545) (1,149) (8,233) (4,078)
Gross Profit 350,072 182,938 994,966 438,676
Depreciation and amortization of intangible assets 2,545 1,149 8,233 4,078
Adjusted gross profit $352,617 $184,087 $1,003,199 $442,754
Gross margin 67.1 % 63.3 % 67.3 % 61.7 %
Adjusted gross margin 67.6 % 63.7 % 67.9 % 62.3 %

The following is a reconciliation of Net Loss, the most directly comparable GAAP financial measure, to EBITDA and adjusted EBITDA:

Reconciliation of GAAP Net Loss to EBITDA and Adjusted EBITDA(In thousands, unaudited)
Quarter Ended Nine Months Ended
September 30, September 30,
2021 2020 2021 2020
Net loss $(84,340) $(35,884) $(417,808) $(91,169)
Add:
Loss on extinguishment of debt 850 1,227 43,728 8,978
Other expense (income), net 376 252 (5,493) 827
Interest expense, net 18,895 16,970 61,493 38,849
Income tax expense (benefit) 3,643 (2,290) 93,878 (5,400)
Depreciation and amortization 51,907 12,932 151,907 32,535
EBITDA (8,669) (6,793) (72,295) (15,380)
Stock-based compensation 71,701 20,908 240,971 61,151
Acquisition, integration and transformation costs 4,340 25,395 22,084 30,686
Adjusted EBITDA $67,372 $39,510 $190,760 $76,457

Investors:Patrick Feeley914-265-7925[email protected]

Media:Chris Stenrud860-491-8821[email protected]

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Source: Teladoc Health, Inc.

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