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Teladoc Health Announces Third Quarter 2018 Financial Results

Third quarter revenue grows 62 percent year over year to $111.0 million

Total paid membership grows 18 percent year over year to 22.6 million

Third quarter total visits grow 110 percent year over year to 641,000

PURCHASE, NY, Nov. 01, 2018 (GLOBE NEWSWIRE) -- Teladoc Health, Inc. (NYSE: TDOC), the global leader in virtual care, today announced financial results for the third quarter ending September 30, 2018.

“Teladoc Health delivered very strong third quarter results. We carry significant momentum into the end of the year as demand for our comprehensive suite of virtual care services is robust across channels and geographies,” said Jason Gorevic, Teladoc Health’s chief executive officer. “We have a tremendous growth opportunity in front of us as the entry point into the health care system where individuals can go for guided access to a fully integrated, high-quality care experience."

Financial Results for the Third Quarter Ended September 30, 2018  
          
          
Revenue
($ million) 
 Quarters Ended
 Year over Year 
  September 30,
 Growth 
  2018
   2017
   
Subscription Access Fees Revenue         
U.S.$72,521  $51,956 40%
International 24,040   8,375 187%
Total 96,561   60,331 60%
          
Visit Fee Revenue         
U.S. 11,330   8,066 40%
International 562   253 122%
Total 11,892   8,319 43%
          
Visit Fee Only Revenue 2,509    NM 
Total Revenue*$110,962  $68,650 62%
          
*Organic third quarter 2018 revenue, excluding Advance Medical, was $88.3 million, up 29 percent year over year.
          
          
          
          
Membership & Visit Fee Only Access
(millions) 
 Quarters Ended 
 Year over Year 
  September 30, 
 Growth 
  2018   2017   
Total U.S. Paid Membership* 22.6   19.1**18%
          
Total U.S. Visit Fee Only Access 9.4    NM 
          
*Organic third quarter 2018 U.S. Paid Membership, excluding Advance Medical, was 21.4 million, up 12 percent year over year.
**Adjusted for 3.5 million Aetna visit fee only lives.         
          
          
Visits         
(thousands)         
  Quarters Ended 
 Year over Year 
  September 30, 
 Growth 
  2018
   2017   
Paid Visits from U.S. Paid Membership 202   155 31%
Percent of Paid Visits from U.S. Paid Membership 46%  51%-9%
Visits Included from U.S. Paid Membership 237   150 58%
          
Total Visits from U.S. Paid Membership 439   305 44%
          
U.S. Visit Fee Only 36    NM 
          
International Visits 166   1 NM 
Total Visits 641   306 110%
          
  • Gross margin was 69.2 percent for the third quarter 2018 compared to 75.6 percent for the third quarter 2017.
  • Net loss was $(23.3) million for the third quarter 2018 compared to $(31.3) million for the third quarter 2017.
  • Net loss per basic and diluted share was $(0.34) for the third quarter 2018 compared to $(0.55) for the third quarter 2017.
  • EBITDA was $(6.0) million for the third quarter 2018 compared to $(16.6) million for the third quarter 2017.
  • Adjusted EBITDA was a positive $6.3 million for the third quarter 2018 compared to a loss of $(0.6) million for the third quarter 2017.

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 2018, we expect :

  • Revenue to be in the range of $119 million to $121 million.
  • EBITDA to be in the range of a loss of $(9) million to a loss of $(11) million.
  • Adjusted EBITDA to be in the range of $4 million to $6 million.
  • Total visits to be between 720,000 and 820,000.
  • Net loss per share, based on 70.4 million weighted average shares outstanding, to be between $(0.36) and $(0.38).

For the full-year 2018, we expect:

  • Revenue to be in the range of $414 million to $416 million.
  • EBITDA to be in the range of a loss of $(36) million to a loss of $(38) million.
  • Adjusted EBITDA to be in the range of $12 million to $14 million.
  • Total U.S. paid membership to be in the range of 22.6 million to 23.5 million and visit fee only access to be available to approximately 9.4 million individuals at December 31, 2018.
  • Total visits to be between 2.5 million to 2.6 million.
  • Net loss per share, based on 65.9 million weighted average shares outstanding, to be between $(1.48) and $(1.50).

Quarterly Conference Call

The third quarter 2018 earnings conference call and webcast will be held Thursday, November 1, 2018 at 4:30 p.m. EST. 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: 5178989 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 125 countries and in more than 20 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,
  2018  2017 
      
Assets      
Current assets:      
Cash and cash equivalents $ 457,554  $ 42,817 
Short-term investments   14,974    79,489 
Accounts receivable, net of allowance of $3,103 and $2,422, respectively   39,965    27,094 
Prepaid expenses and other current assets   10,760    6,839 
Total current assets   523,253    156,239 
Property and equipment, net   9,717    8,963 
Goodwill   744,062    498,520 
Intangible assets, net   256,834    159,811 
Other assets   1,316    858 
Total assets $ 1,535,182  $ 824,391 
Liabilities and stockholders’ equity      
Current liabilities:      
Accounts payable $ 4,821  $ 3,884 
Accrued expenses and other current liabilities   32,586    19,357 
Accrued compensation   20,786    17,089 
Total current liabilities   58,193    40,330 
Other liabilities   5,601    4,882 
Deferred taxes   34,964    12,906 
Convertible senior notes, net   408,653    207,370 
Commitments and contingencies      
Stockholders’ equity:      
Common stock, $0.001 par value; 150,000,000 and 100,000,000 shares authorized as of September 30, 2018 and December 31, 2017, respectively; 70,034,851 shares and 61,534,101 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively   70    61 
Additional paid-in capital   1,415,840    866,330 
Accumulated deficit   (383,782)   (311,577)
Accumulated other comprehensive income (loss)   (4,357)   4,089 
Total stockholders’ equity   1,027,771    558,903 
Total liabilities and stockholders’ equity $ 1,535,182  $ 824,391 
         


 
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data, unaudited)
            
 Quarters Ended September 30,  Nine Months Ended September 30,
 2018 2017 2018 2017
Revenue$ 110,962  $ 68,650  $ 295,166  $ 156,139 
Cost of revenue  34,167    16,742    88,707    38,907 
Gross profit  76,795    51,908    206,459    117,232 
Operating expenses:           
Advertising and marketing  21,668    14,328    61,554    39,222 
Sales  16,303    11,393    44,645    26,705 
Technology and development  13,577    9,964    40,829    24,013 
Legal  254    105    843    725 
Regulatory  553    777    1,648    2,771 
Acquisition and integration related costs  1,588    8,526    8,957    10,639 
Gain on sale  (1,430)   —    (5,500)   — 
General and administrative  30,314    21,938    80,455    52,299 
Depreciation and amortization  9,746    6,418    26,045    11,693 
Loss from operations  (15,778)   (21,541)   (53,017)   (50,835)
Amortization of warrants and loss on extinguishment of debt  —    1,457    —    1,457 
Interest expense, net  7,666    8,202    19,449    9,678 
Net loss before taxes  (23,444)   (31,200)   (72,466)   (61,970)
Income tax (benefit) provision  (180)   130    (261)   429 
Net loss$ (23,264) $ (31,330) $ (72,205) $ (62,399)
Net loss per share, basic and diluted$ (0.34) $ (0.55) $ (1.12) $ (1.15)
            
Weighted-average shares used to compute basic and diluted net loss per share  68,247,655    56,493,054    64,363,943    54,435,343 
            


      
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
      
 Nine Months Ended September 30,
 2018 2017
Cash flows used in operating activities:     
Net loss$ (72,205) $ (62,399)
Adjustments to reconcile net loss to net cash used in operating activities:     
Depreciation and amortization  26,045    11,693 
Allowance for doubtful accounts  1,535    1,343 
Stock-based compensation  31,086    13,628 
Deferred income taxes  (1,907)   225 
Accretion of interest  13,593    3,262 
Amortization of warrants and loss on extinguishment of debt  —    1,457 
Gain on sale  (5,500)   — 
Changes in operating assets and liabilities:     
Accounts receivable  (7,535)   (3,186)
Prepaid expenses and other current assets  (1,656)   (2,717)
Other assets  (327)   (89)
Accounts payable  (357)   (782)
Accrued expenses and other current liabilities  7,561    9,432 
Accrued compensation  1,991    967 
Other liabilities  340    — 
Net cash used in operating activities  (7,336)   (27,166)
Cash flows used in investing activities:     
Purchase of property and equipment  (2,732)   (2,043)
Purchase of internal-use software  (2,758)   (1,473)
Purchase of marketable securities  (12,141)   (119,670)
Proceeds from marketable securities  79,470    45,820 
Sale of assets  5,500    — 
Acquisition of business, net of cash acquired  (282,487)   (379,355)
Net cash used in investing activities  (215,148)   (456,721)
Cash flows provided by financing activities:     
Net proceeds from the exercise of stock options  26,198    6,996 
Proceeds from issuance of convertible notes  279,147    263,722 
Proceeds from borrowing under bank and other debt  —    166,679 
Repayment of debt  —    (46,191)
Proceeds from issuance of common stock  330,856    123,928 
Proceeds from employee stock purchase plan  1,423    1,265 
Proceeds from cash received for withholding taxes on stock-based compensation, net  539    495 
Net cash provided by financing activities  638,163    516,894 
Net increase in cash and cash equivalents  415,679    33,007 
Foreign exchange difference  (942)   97 
Cash and cash equivalents at beginning of the period  42,817    50,015 
Cash and cash equivalents at end of the period$ 457,554  $ 83,119 
      
Income taxes paid$ 238  $ — 
      
Interest paid$ 4,125  $ 4,727 
        


 
Operating Metrics
(In million, except for visits, unaudited)
            
 Quarters Ended  Nine Months Ended 
 September 30,  September 30,
 2018 2017 2018 2017
Subscription Access Fees:           
U.S.$ 72,521 $ 51,956 $ 198,607 $ 123,775
International  24,040   8,375   49,480   8,375
Visit Fee Revenue:           
U.S.  11,330   8,066   37,334   23,736
International  562   253   987   253
Visit Fee Only Revenue:           
U.S.  2,509   —   8,758   —
Total Revenues$ 110,962 $ 68,650 $ 295,166 $ 156,139
            

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, gain on sale of certain contracts, amortization of warrants and loss on extinguishment of debt, 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:

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

  • EBTIDA 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 gain on sale of certain non-core business contracts;

  • Adjusted EBITDA does not reflect the significant amortization of warrants and loss on extinguishment of debt;

  • 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 gross profit, 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)
             
  Three Months Ended  Nine Months Ended 
  September 30,  September 30,
  2018  2017  2018  2017 
Net loss $ (23,264) $ (31,330) $ (72,205) $ (62,399)
Add:            
Interest expense, net   7,666    8,202    19,449    9,678 
Income tax (benefit) provision   (180)   130    (261)   429 
Depreciation expense   854    1,113    3,118    2,466 
Amortization expense   8,892    5,305    22,927    9,227 
EBITDA   (6,032)   (16,580)   (26,972)   (40,599)
Stock-based compensation   12,195    5,966    31,086    13,628 
Amortization of warrants and loss on extinguishment of debt   —    1,457    —    1,457 
Gain on sale   (1,430)   —    (5,500)   — 
Acquisition and integration related costs   1,588    8,526    8,957    10,639 
Adjusted EBITDA $ 6,321  $ (631) $ 7,571  $ (14,875)

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

Investors:
Kelsey Turcotte
914-265-6706
kturcotte@teladochealth.com 

Thursday, November 1, 2018 - 16:05