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
                
  • Net loss was $(20.3) million for the third quarter 2019 compared to $(23.3) million for the third quarter 2018.
  • Net loss per basic and diluted share was $(0.28) for the third quarter 2019 compared to $(0.34) for the third quarter 2018. The third quarter 2019 includes a $0.11 per share non-cash income tax benefit.
  • Gross margin was 69.0 percent for the third quarter 2019 compared to 69.2 percent for the third quarter 2018.
  • EBITDA was $(10.3) million for the third quarter 2019 compared to $(6.0) million for the third quarter 2018.
  • Adjusted EBITDA was a positive $9.0 million for the third quarter 2019 compared to $6.3 million for the third quarter 2018.

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:

  • Total revenue to be in the range of $149 million to $153 million.
  • EBITDA loss to be in the range of $(9) million to $(5) million.
  • Adjusted EBITDA to be in the range of $11.5 million to $15.5 million.
  • Total U.S. paid membership to be approximately 35 million members and visit-fee-only access to be available to approximately 19 million individuals.
  • Total visits to be between 1.0 million and 1.2 million.
  • Net loss per share, based on 72.5 million weighted average shares outstanding, to be between $(0.37) and $(0.31).

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

  • Total revenue to be in the range of $546 million to $550 million.
  • EBITDA loss to be in the range of $(45) million to $(41) million.
  • Adjusted EBITDA to be in the range of positive $28 million to $32 million.
  • Total U.S. paid membership to be approximately 35 million members and visit-fee-only access to be available to approximately 19 million individuals.
  • Total visits to be between 3.9 million to 4.1 million.
  • Net loss per share, based on 71.9 million weighted average shares outstanding, to be between $(1.49) and $(1.43).

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:

  • EBITDA and Adjusted EBITDA do not reflect the significant interest expense on our debt;

  • EBITDA and Adjusted EBITDA eliminate the impact of income taxes on our results of operations;

  • Adjusted EBITDA does not reflect the significant gain on sale of certain non-core business contracts;

  • Adjusted EBITDA does not reflect the significant acquisition and integration related costs related to mergers and acquisitions;

  • Adjusted EBITDA does not reflect the significant non-cash stock compensation expense which should be viewed as a component of recurring operating costs; and

  • other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than we do, limiting the usefulness of EBITDA and Adjusted EBITDA as comparative measures.

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
cmcleod@teladochealth.com

Investors:
Westwicke Partners
Jordan E. Kohnstam
Office: 443-450-4189
Jordan.kohnstam@westwicke.com 

 

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