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Teladoc Health Reports Second Quarter 2019 Results

Year-over-year Q2 revenue grows 38% to $130.3 million and total visits increase 70% to 908,000

Year-over-year first half revenue grows 41% to $258.8 million and total visits increase 73% to 1,971,000

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

PURCHASE, NY, July 31, 2019 (GLOBE NEWSWIRE) -- Teladoc Health, Inc. (TDOC), the global leader in virtual care, today reported financial results for the second quarter ending June 30, 2019.

“The second quarter punctuated a strong first half of the year for Teladoc Health. Our robust engagement science strategies have allowed us to capitalize on the macro tailwinds we’re seeing globally to drive solid results across all of our markets and clinical specialties,” said Jason Gorevic, chief executive officer, Teladoc Health. “We built out our senior leadership team with two important additions during the quarter, and we made meaningful progress towards realizing the long-term benefits of our diversified growth strategy. The persistent strength in our visit volume and our accelerating sales pipeline serves as yet another affirmation of the broader acceptance and prevalence of virtual care in the healthcare system today.”

Financial Highlights for the Second Quarter and Six Months Ended June 30, 2019

Revenue                                  
($ thousands)                                  
  Quarter Ended   Year over Year   Six Months Ended    Year over Year
  June 30,   Growth   June 30,   Growth
  2019   2018       2019   2018    
Subscription Access Fees Revenue                                  
U.S. $  85,530   $  65,066    31 %   $  166,509   $  126,086    32 %
International    25,711      14,731    75 %      50,686      25,440    99 %
Total    111,241      79,797    39 %      217,195      151,526    43 %
                                   
Visit Fee Revenue                                  
U.S. Paid Visits    15,083      11,795    28 %      33,331      26,004    28 %
U.S. Visit Fee Only    3,546      2,710    31 %      7,667      6,249    23 %
International Paid Visits    406      258    57 %      656      425    54 %
Total    19,035      14,763    29 %      41,654      32,678    27 %
                                   
Total Revenue* $  130,276   $  94,560    38 %   $  258,849   $  184,204    41 %
                                   
*Organic second-quarter 2019 revenue, excluding Advance Medical, increased by 24 percent year over year.
 Organic six months ended 2019 revenue, excluding Advance Medical, increased by 23 percent year over year.
 


             
Membership & Visit Fee Only Access            
(millions)            
  Quarter Ended   Year over Year
  June 30,   Growth
  2019   2018    
Total U.S. Paid Membership*  26.8    22.5    19.0 %
             
Total U.S. Visit Fee Only Access  9.7    9.6    0.9 %
 


                                 
Visits                                
(thousands)                                
  Quarter Ended     Year over Year   Six Months Ended      Year over Year
  June 30,     Growth   June 30,     Growth
  2019     2018           2019     2018      
Paid Visits from U.S. Paid Membership  291      218      33 %    656      516      27 %  
Percent of Paid Visits from U.S. Paid Membership  48 %    50 %    (5 )%    49 %    52 %    (5 )%  
Visits Included from U.S. Paid Membership  319      218      46 %    672      474      42 %  
                                 
Total Visits from U.S. Paid Membership  610      436      40 %    1,328      990      34 %  
                                 
U.S. Visit Fee Only  54      37      47 %    116      88      33 %  
                                 
International Visits  244      60      309 %    527      60      771 %  
Total Visits  908      533      70 %    1,971      1,138      73 %  
                                     


  • Net loss was $(29.3) million for the second quarter 2019 compared to $(25.1) million for the second quarter 2018.
  • Net loss per basic and diluted share was $(0.41) for the second quarter 2019 compared to $(0.40) for the second quarter 2018.
  • Gross margin was 68.0 percent for the second quarter 2019 compared to 70.7 percent for the second quarter 2018.
  • EBITDA was $(12.2) million for the second quarter 2019 compared to $(10.1) million for the second quarter 2018.
  • Adjusted EBITDA was a positive $6.3 million for the second quarter 2019 compared to $2.7 million for the second 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 third-quarter 2019, we expect:

  • Total revenue to be in the range of $135 million to $138 million.
  • EBITDA loss to be in the range of $(10.5) million to $(12.5) million.
  • Adjusted EBITDA to be in the range of $7 million to $9 million.
  • Total U.S. paid membership to be in the range of 28.5 million to 29.5 million and visit-fee-only access to be available to approximately 10 million individuals.
  • Total visits to be between 800,000 and 900,000.
  • Net loss per share, based on 72.3 million weighted average shares outstanding, to be between $(0.40) and $(0.42).

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

  • Total revenue to be in the range of $538 million to $545 million.
  • EBITDA loss to be in the range of $(39) million to $(45) million.
  • Adjusted EBITDA to be in the range of positive $27 million to $33 million.
  • Total U.S. paid membership to be in the range of 29 million to 30 million members and visit-fee-only access to be available to approximately 10 million individuals.
  • Total visits to be between 3.7 million to 4.0 million.
  • Net loss per share, based on 72.0 million weighted average shares outstanding, to be between $(1.52) and $(1.60).

Quarterly Conference Call

The second quarter 2019 earnings conference call and webcast will be held Wednesday, July 31, 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)

           
    June 30,       December 31,  
    2019       2018  
         
Assets          
Current assets:          
Cash and cash equivalents $  440,443     $  423,989  
Short-term investments    32,161        54,545  
Accounts receivable, net of allowance of $3,351 and $3,382, respectively    49,778        43,571  
Prepaid expenses and other current assets    10,227        10,631  
Total current assets    532,609        532,736  
Property and equipment, net    9,722        10,148  
Goodwill    748,073        737,197  
Intangible assets, net    239,344        247,394  
Operating lease - right-of-use assets    29,220        —  
Other assets    6,376        1,401  
Total assets $  1,565,344     $  1,528,876  
Liabilities and stockholders’ equity          
Current liabilities:          
Accounts payable $  6,079     $  7,769  
Accrued expenses and other current liabilities    46,201        26,801  
Accrued compensation    18,141        27,869  
Total current liabilities    70,421        62,439  
Other liabilities    6,990        6,191  
Operating lease liabilities, net of current portion    26,386        —  
Deferred taxes    31,710        32,444  
Convertible senior notes, net    427,197        414,683  
Commitments and contingencies          
Stockholders’ equity:          
Common stock, $0.001 par value; 150,000,000 shares authorized as of June 30, 2019 and December 31, 2018; 71,934,381 shares and 70,516,249 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively    72        70  
Additional paid-in capital    1,483,245        1,434,780  
Accumulated deficit    (468,135 )      (408,661 )
Accumulated other comprehensive (loss) income    (12,542 )      (13,070 )
Total stockholders’ equity    1,002,640        1,013,119  
Total liabilities and stockholders’ equity $  1,565,344     $  1,528,876  
               


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

                       
  Quarter Ended June 30,   Six Months Ended June 30,
  2019     2018     2019     2018  
Revenue $  130,276     $  94,560     $  258,849     $  184,204  
Expenses:                      
Cost of revenue    41,634        27,684        86,311        54,540  
Operating expenses:                      
Advertising and marketing    26,616        19,561        53,020        39,886  
Sales    15,832        14,559        32,044        28,342  
Technology and development    16,665        14,348        32,652        27,252  
Legal and regulatory    2,019        639        3,605        1,684  
Acquisition and integration related costs    1,136        5,800        2,148        7,369  
Gain on sale    —        (4,070 )      —        (4,070 )
General and administrative    38,549        26,140        74,531        50,141  
Depreciation and amortization    9,848        8,046        19,448        16,299  
Total expenses    152,299        112,707        303,759        221,443  
Loss from operations    (22,023 )      (18,147 )      (44,910 )      (37,239 )
Interest expense, net    7,211        6,910        13,732        11,783  
Net loss before taxes    (29,234 )      (25,057 )      (58,642 )      (49,022 )
Income tax (benefit) provision    90        22        832        (81 )
Net loss $  (29,324 )   $  (25,079 )   $  (59,474 )   $  (48,941 )
                       
Net loss per share, basic and diluted $  (0.41 )   $  (0.40 )   $  (0.83 )   $  (0.78 )
                       
Weighted-average shares used to compute basic and diluted net loss per share    71,721,246        62,975,535        71,322,586        62,389,902  
                               


CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)

           
  Six Months Ended June 30,
  2019     2018  
Cash flows used in operating activities:          
Net loss $  (59,474 )   $  (48,941 )
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation and amortization    22,443        16,299  
Allowance for doubtful accounts    1,014        1,258  
Stock-based compensation    30,891        18,891  
Deferred income taxes    (1,472 )      (1,258 )
Accretion of interest    12,347        7,627  
Gain on sale    —        (4,070 )
Changes in operating assets and liabilities:          
Accounts receivable    (7,237 )      (4,027 )
Prepaid expenses and other current assets    1,251        (540 )
Other assets    74        (73 )
Accounts payable    374        1,371  
Accrued expenses and other current liabilities    10,358        (287 )
Accrued compensation    (9,133 )      (3,812 )
Operating lease liabilities    (794 )      —  
Other liabilities    (2,385 )      45  
Net cash used in operating activities    (1,743 )      (17,517 )
Cash flows provided by (used in) investing activities:          
Purchase of property and equipment    (1,248 )      (2,015 )
Purchase of internal-use software    (2,975 )      (1,388 )
Purchase of marketable securities    —        (12,141 )
Proceeds from marketable securities    22,695        67,970  
Sale of assets    7        5,500  
Investment in securities    (5,000 )      —  
Acquisition of business, net of cash acquired    (11,207 )      (273,535 )
Net cash provided by (used in) investing activities    2,272        (215,609 )
Cash flows provided by financing activities:          
Net proceeds from the exercise of stock options    15,701        15,765  
Proceeds from issuance of convertible notes    —        279,126  
Contingent consideration fair value adjustment    210        —  
Proceeds from employee stock purchase plan    1,875        1,423  
Cash (paid)/received for withholding taxes on stock-based compensation, net    (1,886 )      500  
Net cash provided by financing activities    15,900        296,814  
Net increase in cash and cash equivalents    16,429        63,688  
Foreign exchange difference    25        (701 )
Cash and cash equivalents at beginning of the period    423,989        42,817  
Cash and cash equivalents at end of the period $  440,443     $  105,804  
           
Income taxes paid $  309     $  59  
           
Interest paid $  6,102     $  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 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 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   Six Months Ended 
  June 30,   June 30,
  2019     2018     2019     2018  
Net loss $  (29,324 )   $  (25,079 )   $  (59,474 )   $  (48,941 )
Add:                      
Interest expense, net    7,211        6,910        13,732        11,783  
Income tax (benefit) provision    90        22        832        (81 )
Depreciation expense    856        733        1,719        2,264  
Amortization expense    8,992        7,313        17,729        14,036  
EBITDA    (12,175 )      (10,101 )      (25,462 )      (20,939 )
Stock-based compensation    17,368        11,060        30,891        18,891  
Amortization of warrants and loss on extinguishment of debt    —        —        —        —  
Gain on sale    —        (4,070 )      —        (4,070 )
Acquisition and integration related costs    1,136        5,800        2,148        7,369  
Adjusted EBITDA $  6,329     $  2,689     $  7,577     $  1,251  
                               

Media:
Courtney McLeod
914-265-6789
cmcleod@teladochealth.com

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