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Teladoc Health Reports Second-Quarter 2020 Results
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Teladoc Health Reports Second-Quarter 2020 Results

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Year-over-year Q2 revenue grows 85% to $241.0 million and total visits increase 203% to 2.8 million

Year-over-year six months revenue grows 63% to $421.8 million and total visits increase 144% to 4.8 million

Issues 2020 third-quarter guidance, raises full-year expectations, and provides preliminary 2021 revenue growth outlook

PURCHASE, NY, July 29, 2020 (GLOBE NEWSWIRE) -- Teladoc Health, Inc. (NYSE: TDOC), the global leader in virtual care, today reported strong financial results for the quarter ending June 30, 2020, citing sustained momentum across its diversified portfolio. In its U.S. market, the brief period of national COVID-19 containment in late May and early June provided visibility into continuing demand for virtual care, with utilization stabilizing at a level 40 percent higher than before COVID. Greater awareness and acceptance of virtual care, in addition to continued lower cost sharing, are helping to drive this sustained growth. Demand for specialty care including virtual mental health visits also continued to show rapid acceleration while InTouch Health, acquired by Teladoc Health on July 1st, has solidified the company’s leadership in hospital-based telemedicine and is projected to grow over 35 percent in 2020.

“Even as we continue to battle the coronavirus in the U.S. and other hard-hit countries, we are also seeing sustained demand in areas that are no longer considered hotspots. In some states where the curve has flattened, we are still seeing twice as many patient visits as last year,” said Jason Gorevic, CEO of Teladoc Health. “While COVID-19 has accelerated the virtual care needs of consumers and providers alike, our broad based momentum in 2020 and beyond is rooted in the satisfaction and trust our partners have in our ability to transform the healthcare experience.”

Financial Highlights for the Second Quarter and Six Months Ended June 30, 2020

Revenue ($ thousands) Year Year Quarter Ended over Six Months Ended over Year Year June 30, Growth June 30, Growth -------------------- ------- -------------------- ------- 2020 2019 2020 2019 --------- --------- --------- --------- Subscription Access Fees Revenue U.S. $ 152,021 $ 85,530 78 % $ 259,960 $ 166,509 56 % International 30,150 25,711 17 % 59,264 50,686 17 % - ------- - ------- - ------- - ------- Total 182,171 111,241 64 % 319,224 217,195 47 % Visit Fee Revenue U.S. Paid Visits 39,041 15,083 159 % 69,939 33,331 110 % U.S. Visit Fee Only 19,471 3,546 449 % 32,057 7,667 318 % International Paid Visits 347 406 (14 ) % 609 656 (7 ) % - ------- - ------- - ------- - ------- Total 58,859 19,035 209 % 102,605 41,654 146 % - ------- - ------- - ------- - ------- Total Revenue $ 241,030 $ 130,276 85 % $ 421,829 $ 258,849 63 % - ------- - ------- - ------- - -------

Membership & Visit Fee Only Access (millions) Quarter Ended Year over Year June 30, Growth ---------------- -------------- 2020 2019 ----- - ----- - Total U.S. Paid Membership 51.5 26.8 92 % Total U.S. Visit Fee Only Access 21.8 9.7 125 % Visits (thousands) Year Quarter Ended over Six Months Ended Year over Year Year June 30, Growth June 30, Growth -------------- ------ ---------------- ----------------- 2020 2019 2020 2019 ------- ----- ------- ------- Paid Visits from U.S. Paid Membership 797 291 174 % 1,445 656 120 % Percent of Paid Visits from U.S. Paid Membership 40 % 48 % 43 % 49 % Visits Included from U.S. Paid Membership 1,199 319 276 % 1,938 672 188 % ----- - --- - ----- - ----- - Total Visits from U.S. Paid Membership 1,996 610 227 % 3,383 1,328 155 % U.S. Visit Fee Only 306 54 468 % 533 116 358 % International Visits 453 244 85 % 885 527 68 % ----- - --- - ----- - ----- - Total Visits 2,755 908 203 % 4,801 1,971 144 % ----- - --- - ----- - ----- - Utilization 16.0 % 9.1 % 690 pt 14.7 % 8.0 % 663 pt

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-- Net loss was $(25.7) million for the second quarter 2020 compared to $(29.3) million for the second quarter 2019. -- Net loss per basic and diluted share was $(0.34) for the second quarter 2020 compared to $(0.41) for the second quarter 2019. The net loss per share includes a 10 cent net impact associated with our May 2020 convertible debt offering which includes a charge associated with a loss on extinguishment of a portion of our previously outstanding debt that was to mature in 2022. -- GAAP Gross marginwhich includes depreciation and amortization was 61.7 percent for the second quarter 2020 and 67.2% for the second quarter 2019. -- Adjusted Gross margin was 62.3 percent for the second quarter 2020 compared to 68.0 percent for the second quarter 2019. -- EBITDAwas a positive $2.7 million for the second quarter 2020 compared to a loss of $(12.2) million for the second quarter 2019. -- Adjusted EBITDA was a positive $26.3 million for the second quarter 2020 compared to a positive $6.3 million for the second quarter 2019.

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 outbreak as well as the broader economic impact, our updated guidance is based on what we know today. As this is an emerging situation, circumstances are likely to change in the coming weeks and months, but we believe our guidance ranges provide a reasonable baseline for 2020 financial performance.

For the third-quarter 2020, we expect:

-- Total revenue to be in the range of $275 million to $285 million. -- EBITDA to be in the range of $(3) million to $1 million. -- Adjusted EBITDA to be in the range of $27 million to $31 million. -- Total U.S. paid membership to be approximately 50 million to 51 million members and visit-fee-only access to be available to approximately 21 to 22 million individuals, including 2 to 3 million members on a temporary basis. -- Total visits to be between 2.5 million and 2.7 million. -- Net loss per share, based on 83.4 million weighted average shares outstanding, to be between $(0.35) - $(0.30).

For the full-year 2020, we expect:

-- Total revenue to be in the range of $980 million to $995 million. -- EBITDA loss to be in the range of $(13) million to $(6) million. -- Adjusted EBITDA to be in the range of positive $85 million to $92 million. -- Total U.S. paid membership to be at least 50 million members and visit-fee-only access to be available to approximately 19 to 20 million individuals. -- Total visits to be between 9.8 million to 10.3 million. -- Net loss per share, based on 79.6 million weighted average shares outstanding, to be between $(1.45) - $(1.36).

Anticipated results for the full-year 2020 include approximately $63 million of revenue, net of an anticipated $2 million to $3 million purchase accounting reduction to deferred revenue, for the acquisition of InTouch Health, which closed on July 1, 2020.

Preliminary outlook for 2021:

Given the significant level of change in the marketplace, Teladoc Health is providing a preliminary outlook for expected revenue growth in 2021. For the full-year 2021, the company anticipates year-over-year revenue growth to be in the range of 30% to 40%.

Quarterly Conference Call

The second quarter 2020 earnings conference call and webcast will be held Wednesday, July 29, 2020 at 4:30 p.m. EDT. 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 including the following Conference ID Number: 4085218 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

Teladoc Health is transforming how people access and experience healthcare. Recognized as the world leader in virtual care, Teladoc Health directly delivers millions of medical visits across 175 countries each year through the Teladoc Health Medical Group and enables millions of patient and provider touchpoints for thousands of hospitals, health systems and physician practices globally. Ranked #1 among direct-to-consumer telehealth providers in the J.D. Power 2019 U.S. Telehealth Satisfaction Study and Best in KLAS for Virtual Care Platforms for 2020, Teladoc Health leverages more than a decade of expertise and real-time insights to meet the growing virtual care needs of consumers, healthcare professionals, employers and health plans. 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, 2020 2019 ----------- - ----------- - Assets Current assets: Cash and cash equivalents $ 1,308,843 $ 514,353 Short-term investments 2,932 2,711 Accounts receivable, net of allowance of $5,113 and $3,787, respectively 76,902 56,948 Prepaid expenses and other current assets 14,433 13,990 - --------- - - --------- - Total current assets 1,403,110 588,002 Property and equipment, net 9,606 10,296 Goodwill 742,314 746,079 Intangible assets, net 213,474 225,453 Operating lease - right-of-use assets 30,440 26,452 Other assets 19,884 6,545 - --------- - - --------- - Total assets $ 2,418,828 $ 1,602,827 - --------- - - --------- - Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 10,816 $ 9,075 Accrued expenses and other current liabilities 75,153 46,905 Accrued compensation 37,579 34,201 - --------- - - --------- - Total current liabilities 123,548 90,181 Other liabilities 5,257 11,539 Operating lease liabilities, net of current portion 27,940 24,994 Deferred taxes 18,976 21,678 Convertible senior notes, net 948,178 440,410 Commitments and contingencies Stockholders’ equity: Common stock, $0.001 par value; 150,000,000 shares authorized as of June 30, 2020 and December 31, 2019; 79,099,433 shares and 72,761,941 shares issued and 79 73 outstanding as of June 30, 2020 and December 31, 2019, respectively Additional paid-in capital 1,879,573 1,538,716 Accumulated deficit (562,810 ) (507,525 ) Accumulated other comprehensive loss (21,913 ) (17,239 ) - --------- - - --------- - Total stockholders’ equity 1,294,929 1,014,025 - --------- - - --------- - Total liabilities and stockholders’ equity $ 2,418,828 $ 1,602,827 - --------- - - --------- -

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

Quarter Ended June 30, Six Months Ended June 30, ------------------------------ ------------------------------ 2020 2019 2020 2019 ------------ - ------------ - ------------ - ------------ - Revenue $ 241,030 $ 130,276 $ 421,829 $ 258,849 Expenses: Cost of revenue (exclusive of depreciation and 90,780 41,634 163,162 86,311 amortization shown separately below) Operating expenses: Advertising and marketing 47,578 26,616 80,093 53,020 Sales 18,687 15,832 36,627 32,044 Technology and development 23,029 16,665 42,286 32,652 Legal and regulatory 2,232 2,019 3,454 3,605 Acquisition and integration related costs 1,627 1,136 5,291 2,148 General and administrative 54,383 38,549 99,503 74,531 Depreciation and amortization 9,893 9,848 19,603 19,448 - ---------- - - ---------- - - ---------- - - ---------- - Total expenses 248,209 152,299 450,019 303,759 - ---------- - - ---------- - - ---------- - - ---------- - Loss from operations (7,179 ) (22,023 ) (28,190 ) (44,910 ) Loss on extinguishment of debt 7,751 0 7,751 0 Interest expense, net 13,151 7,211 22,454 13,732 - ---------- - - ---------- - - ---------- - - ---------- - Net loss before taxes (28,081 ) (29,234 ) (58,395 ) (58,642 ) Income tax (benefit) expense (2,399 ) 90 (3,110 ) 832 - ---------- - - ---------- - - ---------- - - ---------- - Net loss $ (25,682 ) $ (29,324 ) $ (55,285 ) $ (59,474 ) - ---------- - - ---------- - - ---------- - - ---------- - Net loss per share, basic and diluted $ (0.34 ) $ (0.41 ) $ (0.74 ) $ (0.83 ) - ---------- - - ---------- - - ---------- - - ---------- - Weighted-average shares used to compute basic 76,512,870 71,721,246 74,919,194 71,322,586 and diluted net loss per share - ---------- - - ---------- - - ---------- - - ---------- -

CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands, unaudited)

Six Months Ended June 30, -------------------------- 2020 2019 ----------- - --------- - Cash flows used in operating activities: Net loss $ (55,285 ) $ (59,474 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 22,655 22,443 Allowance for doubtful accounts 2,290 1,014 Stock-based compensation 40,243 30,891 Deferred income taxes (3,457 ) (1,472 ) Accretion of interest 16,576 12,347 Loss on extinguishment of debt 7,751 0 Changes in operating assets and liabilities: Accounts receivable (24,773 ) (7,237 ) Prepaid expenses and other current assets 1,595 1,251 Other assets 36 74 Accounts payable 1,844 374 Accrued expenses and other current liabilities 25,208 10,358 Accrued compensation (1,818 ) (9,133 ) Operating lease liabilities (2,788 ) (794 ) Other liabilities (847 ) (2,385 ) - --------- - - ------- - Net cash provided by (used) in operating activities 29,230 (1,743 ) Cash flows (used in) provided by investing activities: Purchase of property and equipment (1,641 ) (1,248 ) Purchase of internal-use software (6,449 ) (2,975 ) Proceeds from marketable securities 0 22,695 Sale of assets 0 7 Investment in securities 0 (5,000 ) Pre-funding associated with the pending acquisition (13,500 ) (11,207 ) - --------- - - ------- - Net cash (used in) provided by investing activities (21,590 ) 2,272 Cash flows provided by financing activities: Net proceeds from the exercise of stock options 33,513 15,701 Proceeds from issuance of 2027 Notes 1,000,000 0 Issuance costs of 2027 Notes (24,070 ) 0 Contingent consideration fair value adjustment 0 210 Repurchase of 2022 Notes (228,130 ) 0 Proceeds from employee stock purchase plan 2,473 1,875 Cash received (paid) for withholding taxes on stock-based compensation, net 4,492 (1,886 ) - --------- - - ------- - Net cash provided by financing activities 788,278 15,900 - --------- - - ------- - Net increase in cash and cash equivalents 795,918 16,429 Foreign exchange difference (1,428 ) 25 Cash and cash equivalents at beginning of the period 514,353 423,989 - --------- - - ------- - Cash and cash equivalents at end of the period $ 1,308,843 $ 440,443 - --------- - - ------- - Income taxes paid $ 59 $ 309 - --------- - - ------- - Interest paid $ 5,609 $ 6,102 - --------- - - ------- -

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 adjusted gross profit, adjusted gross margin, 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.

Adjusted gross profit is our total revenue minus our total cost of revenue (exclusive of depreciation and amortization shown separately) and adjusted gross margin is adjusted gross profit as a percentage of our total revenue. We believe that it 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.

EBITDA consists of net loss before interest, foreign exchange gain or loss, taxes, loss on extinguishment of debt, 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, foreign exchange gain or loss, taxes, loss on extinguishment of debt, 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 the above financial measures are commonly used by investors to evaluate our performance and that of our competitors. However, our use of the term adjusted gross profit, adjusted gross margin, EBITDA and adjusted EBITDA may vary from that of others in our industry. Neither adjusted gross profit, adjusted gross margin, 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.

Adjusted gross profit, adjusted gross margin, 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:

-- Adjusted gross margin has been and will continue to be affected by a number of factors, including the fees we charge our clients, the number of visits and cases we complete the costs paid to Providers and medical experts as well as the costs of our provider network operations center;

-- Adjusted gross margin does not reflect the significant depreciation and amortization to cost of revenue;

-- 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;

-- EBITDA and Adjusted EBITDA do not reflect the loss on extinguishment of debt;

-- 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 adjusted gross profit, adjusted gross margin, EBITDA and adjusted EBITDA differently than we do, limiting the usefulness of adjusted gross profit, adjusted gross margin, 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 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 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 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.

The following is a reconciliation of gross profit, the most directly comparable GAAP financial measure, to adjusted gross profit:

Reconciliation of GAAP Gross Profit to Adjusted Gross Profit and Adjusted Gross Margin(In thousands, unaudited)

Quarter Ended Six Months Ended June 30, June 30, -------------------------- ----------------------------- 2020 2019 2020 2019 --------- - ----------- - ------------ - ----------- - Revenue $ 241,030 $ 130,276 $ 421,829 $ 258,849 Expenses: Cost of revenue (exclusive of depreciation and (90,780 ) (41,634 ) (163,162 ) (86,311 ) amortization) Depreciation and amortization (1,538 ) (1,076 ) (3,026 ) (2,092 ) - ------- - - - ------- - - - -------- - - - ------- - GAAP Gross Profit 148,712 87,566 255,641 170,446 Depreciation and amortization 1,538 1,076 3,026 2,092 - ------- - - - ------- - - - -------- - - - ------- - Adjusted Gross Profit $ 150,250 $ 88,642 $ 258,667 $ 172,538 - ------- - - - ------- - - - -------- - - - ------- - GAAP Gross Margin (Gross Profit as a % of Revenue) 61.7 % 67.2 % 60.6 % 65.8 % - ------- - - - ------- - - - -------- - - - ------- - Adjusted Gross Margin (Adjusted Gross Profit as a % 62.3 % 68.0 % 61.3 % 66.7 % of Revenue) - ------- - - - ------- - - - -------- - - - ------- -

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

Quarter Ended Six Months Ended June 30, June 30, ------------------------ ------------------------ 2020 2019 2020 2019 --------- - --------- - --------- - --------- - Net loss $ (25,682 ) $ (29,324 ) $ (55,285 ) $ (59,474 ) Add: Loss on extinguishment of debt 7,751 0 7,751 0 Interest expense, net 13,151 7,211 22,454 13,732 Income tax (expense)/benefit (2,399 ) 90 (3,110 ) 832 Depreciation expense 860 856 1,711 1,719 Amortization expense 9,033 8,992 17,892 17,729 - ------- - - ------- - - ------- - - ------- - EBITDA 2,714 (12,175 ) (8,587 ) (25,462 ) Stock-based compensation 21,928 17,368 40,243 30,891 Acquisition and integration related costs 1,627 1,136 5,291 2,148 - ------- - - ------- - - ------- - - ------- - Adjusted EBITDA $ 26,269 $ 6,329 $ 36,947 $ 7,577 - ------- - - ------- - - ------- - - ------- -

Media:Courtney McLeod914-265-6789 cmcleod@teladochealth.com

Investors: Patrick Feeley914-265-7925 pfeeley@teladochealth.com

Copyright 2020 GlobeNewswire, Inc.

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