Teladoc Health, Inc. (NYSE: TDOC), the global leader in
whole-person virtual care, today reported financial results for the
third quarter ended September 30, 2023.
"Our third quarter financial and operating
performance reinforces the fundamental strength of our business and
our success in making better health available to more than 90
million members," said Jason Gorevic, CEO of Teladoc Health. "Each
day, we partner and innovate with the largest healthcare payers and
partners globally to offer unrivaled whole person care, offering
the broadest range of integrated health services available together
virtually. Our solid balance sheet enables us to invest in
innovation, supported by the deepest bench of medical
professionals.
"As we look into 2024, we will continue to advance
virtual care in ways large and small. We've seen the positive
impact of our unified app, which allows members for the first time
to access complex states of care on a single device. We will
accelerate our efforts to drive value through improved business
performance across the enterprise, undertaking a comprehensive
operational review of the business to further improve our
efficiency. We are committed to building an even stronger company
that continues to deliver on balanced growth, while keeping our
promises to clients and caring for our members."
Key Financial Data |
($ in thousands, except per share data, unaudited) |
|
Quarter Ended |
|
Year-over-Year |
|
Nine Months Ended |
|
Year-over-Year |
|
September 30, |
|
Change |
|
September 30, |
|
Change |
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
2023 |
|
|
|
2022 |
|
|
|
Revenue |
$ |
660,238 |
|
|
$ |
611,402 |
|
|
8 |
% |
|
$ |
1,941,888 |
|
|
$ |
1,769,131 |
|
|
10 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
$ |
(57,073 |
) |
|
$ |
(73,476 |
) |
|
22 |
% |
|
$ |
(191,478 |
) |
|
$ |
(9,849,460 |
) |
|
98 |
% |
Net loss per share, basic and diluted |
$ |
(0.35 |
) |
|
$ |
(0.45 |
) |
|
22 |
% |
|
$ |
(1.17 |
) |
|
$ |
(61.09 |
) |
|
98 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (1) |
$ |
88,757 |
|
|
$ |
51,211 |
|
|
73 |
% |
|
$ |
213,677 |
|
|
$ |
152,419 |
|
|
40 |
% |
See note (1) in the Notes section that follows.
Third Quarter 2023
Revenue increased 8% to $660.2
million from $611.4 million in the third quarter of 2022. Access
fees revenue grew 8% to $582.1 million and other revenue grew 10%
to $78.2 million. U.S. revenue grew 7% to $569.3 million and
International revenue grew 17% to $90.9 million.
Teladoc Health Integrated Care ("Integrated Care")
segment revenue increased 9% to $374.4 million in the third quarter
of 2023 and BetterHelp segment revenue increased 8% to $285.8
million.
Net loss totaled
$57.1 million, or $0.35 per share, for the third quarter of
2023, compared to $73.5 million, or $0.45 per share, for the
third quarter of 2022. Results for the third quarter of 2023
included stock-based compensation expense of $52.9 million, or
$0.32 per share, and amortization of acquired intangibles of
$69.2 million, or $0.42 per share. The amortization of
acquired intangibles increased over the prior year period
reflecting a change in the useful lives of certain intangibles.
Results for the third quarter of 2022 primarily
included stock-based compensation expense of $55.7 million, or
$0.34 per share, and amortization of acquired intangibles of
$48.7 million, or $0.30 per share. Net loss for the third
quarter of 2022 also included $3.7 million, or $0.02 per share, of
restructuring costs related to the abandonment of certain excess
leased office space.
Adjusted EBITDA(1) increased 73%
to $88.8 million, compared to $51.2 million for the third quarter
of 2022. Integrated Care segment adjusted EBITDA increased 62% to
$62.8 million in the third quarter of 2023 and BetterHelp segment
adjusted EBITDA increased 133% to $26.0 million in the third
quarter of 2023.
GAAP gross margin, which includes
depreciation and amortization, was 68.6% for the third quarter of
2023, compared to 68.3% for the third quarter of 2022.
Adjusted gross margin(1) was 71.8%
for the third quarter of 2023, compared to 69.6% for the third
quarter of 2022.
Nine Months Ended September 30,
2023
Revenue increased 10% to $1,941.9
million from $1,769.1 million in the first nine months of 2022.
Access fees revenue grew 10% to $1,708.6 million, and other revenue
grew 7% to $233.3 million. U.S. revenue grew 8% to $1,672.8
million, and International revenue grew 21% to $269.1 million for
the first nine months of 2023.
Revenue increased 7% to $1,084.4 million for the
Integrated Care segment in the first nine months of 2023 and
increased 15% to $857.5 million for the BetterHelp segment.
Net loss totaled
$191.5 million, or $1.17 per share, for the first nine months
of 2023, compared to $9,849.5 million, or $61.09 per share,
for the first nine months of 2022. Results for the first nine
months of 2023 included stock-based compensation expense of
$154.7 million, or $0.94 per share, restructuring costs of
$16.0 million, or $0.10 per share, and amortization of acquired
intangibles of $172.2 million, or $1.05 per share.
Results for the first nine months of 2022 included
non-cash goodwill impairment charges of $9,630.0 million, or
$59.73 per share, as well as stock-based compensation expense of
$167.1 million, or $1.04 per share, and amortization of
acquired intangibles of $148.3 million, or $0.92 per share.
Net loss for the first nine months of 2022 also included $3.7
million, or $0.02 per share, of restructuring costs related to the
abandonment of certain excess leased office space.
Adjusted EBITDA(1) increased 40%
to $213.7 million, compared to $152.4 million for the first
nine months of 2022. Integrated Care segment adjusted EBITDA
increased 49% to $135.9 million in the first nine months of
2023 and BetterHelp segment adjusted EBITDA increased 27% to $77.8
million in the first nine months of 2023.
GAAP gross margin, which includes
depreciation and amortization, was 68.0% for the first nine months
of 2023, compared to 67.5% for the first nine months of 2022.
Adjusted gross margin(1) was 70.8%
for the first nine months of 2023, compared to 68.6% for the first
nine months of 2022.
Capex and Cash Flow
Cash flow from operations was $105.6 million
in the third quarter of 2023, compared to $63.0 million in the
third quarter of 2022, and was $219.9 million in the first
nine months of 2023, compared to $123.7 million in the first
nine months of 2022. Capitalized expenditures and capitalized
software (together, “Capex”) was $37.6 million in the third
quarter of 2023, compared to $43.2 million in the third
quarter of 2022, and was $119.8 million for the first nine
months of 2023, compared to $118.9 million for the first nine
months of 2022. Free cash flow was $68.0 million in the third
quarter of 2023, compared to $19.8 million in the third
quarter of 2022, and was $100.1 million for the first nine
months of 2023, compared to $4.9 million for the first nine
months of 2022.
Financial Outlook
Teladoc Health provides an outlook based on current
market conditions and expectations and what we know today. Based on
what we know today, we believe our outlook ranges provide a
reasonable baseline for 2023 financial performance.
For the fourth quarter of
2023, we expect:
|
|
|
4Q 2023 Outlook Range |
Revenue |
$658 - $683 million |
Adjusted EBITDA |
$107 - $117 million |
Net loss per share |
($0.33) - ($0.23) |
U.S. Integrated Care Members (2) |
89 - 90 million |
For the year ending
December 31, 2023, we
expect:
|
|
|
Full Year 2023 Outlook Range |
Revenue |
$2,600 - $2,625 million |
Adjusted EBITDA |
$320 - $330 million |
Net loss per share |
($1.50) - ($1.40) |
U.S. Integrated Care Members (2) |
89 - 90 million |
See note (2) in the Notes section that follows.
Earnings Conference Call
The third quarter 2023 earnings conference call and
webcast will be held Tuesday, October 24, 2023 at 4:30 p.m.
E.T. The conference call can be accessed by dialing 1-833-470-1428
for U.S. participants and using the access code # 612441. For
international participants, please visit the following link for
global dial-in numbers:
https://www.netroadshow.com/events/global-numbers?confId=55509. A
live audio webcast will also be available online at
http://ir.teladoc.com/news-and-events/events-and-presentations/. A
replay of the call will be available via webcast 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.
Teladoc Health leverages more than two decades 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.
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 financial or operating
results, 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, including our
ability to effectively compete; (iii) results of litigation or
regulatory actions; (iv) the loss of one or more key clients or the
loss of a significant number of members or BetterHelp paying users;
(v) changes in valuations or useful lives of our assets; (vi)
changes to our abilities to recruit and retain qualified providers
into our network; and (vii) the impact of and risk related to
impairment losses with respect to goodwill or other assets. 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. |
|
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(In thousands, except share and per share data,
unaudited) |
|
|
|
|
|
Quarter EndedSeptember 30, |
|
Nine Months EndedSeptember
30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenue |
$ |
660,238 |
|
|
$ |
611,402 |
|
|
$ |
1,941,888 |
|
|
$ |
1,769,131 |
|
Expenses: |
|
|
|
|
|
|
|
Cost of revenue (exclusive of depreciation and amortization, which
is shown separately below) |
|
185,960 |
|
|
|
185,619 |
|
|
|
566,607 |
|
|
|
555,114 |
|
Operating expenses: |
|
|
|
|
|
|
|
Advertising and marketing |
|
186,152 |
|
|
|
178,920 |
|
|
|
541,698 |
|
|
|
477,094 |
|
Sales |
|
52,309 |
|
|
|
54,634 |
|
|
|
160,329 |
|
|
|
170,893 |
|
Technology and development |
|
84,289 |
|
|
|
84,590 |
|
|
|
258,583 |
|
|
|
250,698 |
|
General and administrative |
|
115,716 |
|
|
|
112,090 |
|
|
|
355,702 |
|
|
|
330,011 |
|
Acquisition, integration, and transformation costs |
|
5,824 |
|
|
|
1,594 |
|
|
|
16,848 |
|
|
|
8,993 |
|
Restructuring costs |
|
411 |
|
|
|
3,677 |
|
|
|
16,043 |
|
|
|
3,677 |
|
Depreciation and amortization |
|
94,302 |
|
|
|
62,008 |
|
|
|
239,550 |
|
|
|
180,312 |
|
Goodwill impairment |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
9,630,000 |
|
Total expenses |
|
724,963 |
|
|
|
683,132 |
|
|
|
2,155,360 |
|
|
|
11,606,792 |
|
Loss from operations |
|
(64,725 |
) |
|
|
(71,730 |
) |
|
|
(213,472 |
) |
|
|
(9,837,661 |
) |
Interest income |
|
(12,606 |
) |
|
|
(4,803 |
) |
|
|
(33,075 |
) |
|
|
(6,192 |
) |
Interest expense |
|
5,646 |
|
|
|
6,149 |
|
|
|
16,744 |
|
|
|
17,355 |
|
Other expense (income), net |
|
1,792 |
|
|
|
1,571 |
|
|
|
(2,908 |
) |
|
|
2,607 |
|
Loss before provision for income taxes |
|
(59,557 |
) |
|
|
(74,647 |
) |
|
|
(194,233 |
) |
|
|
(9,851,431 |
) |
Provision for income taxes |
|
(2,484 |
) |
|
|
(1,171 |
) |
|
|
(2,755 |
) |
|
|
(1,971 |
) |
Net loss |
$ |
(57,073 |
) |
|
$ |
(73,476 |
) |
|
$ |
(191,478 |
) |
|
$ |
(9,849,460 |
) |
|
|
|
|
|
|
|
|
Net loss per share, basic and diluted |
$ |
(0.35 |
) |
|
$ |
(0.45 |
) |
|
$ |
(1.17 |
) |
|
$ |
(61.09 |
) |
|
|
|
|
|
|
|
|
Weighted-average shares used to compute basic and diluted net loss
per share |
|
165,119,379 |
|
|
|
161,727,962 |
|
|
|
164,079,194 |
|
|
|
161,217,033 |
|
Stock-based Compensation
Summary
Compensation costs for stock-based awards were
classified as follows (in thousands):
|
Quarter EndedSeptember 30, |
|
Nine Months EndedSeptember
30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Cost of revenue (exclusive of depreciation and amortization, which
is shown separately) |
$ |
1,464 |
|
|
$ |
675 |
|
|
$ |
4,060 |
|
|
$ |
4,994 |
|
Advertising and marketing |
|
4,399 |
|
|
|
3,614 |
|
|
|
11,527 |
|
|
|
10,523 |
|
Sales |
|
9,110 |
|
|
|
11,064 |
|
|
|
27,055 |
|
|
|
33,845 |
|
Technology and development |
|
14,566 |
|
|
|
16,936 |
|
|
|
42,984 |
|
|
|
50,116 |
|
General and administrative |
|
23,406 |
|
|
|
23,373 |
|
|
|
69,082 |
|
|
|
67,620 |
|
Total stock-based compensation expense (3) |
$ |
52,945 |
|
|
$ |
55,662 |
|
|
$ |
154,708 |
|
|
$ |
167,098 |
|
See note (3) in the Notes section that follows.
Revenues
($ in thousands, unaudited) |
Quarter EndedSeptember 30, |
|
Year-over-Year Change |
|
Nine Months EndedSeptember
30, |
|
Year-over-Year Change |
|
|
2023 |
|
|
2022 |
|
|
|
|
2023 |
|
|
2022 |
|
|
Revenue by Type |
|
|
|
|
|
|
|
|
|
|
|
Access fees |
$ |
582,070 |
|
$ |
540,079 |
|
8 |
% |
|
$ |
1,708,601 |
|
$ |
1,550,146 |
|
10 |
% |
Other |
|
78,168 |
|
|
71,323 |
|
10 |
% |
|
|
233,287 |
|
|
218,985 |
|
7 |
% |
Total Revenue |
$ |
660,238 |
|
$ |
611,402 |
|
8 |
% |
|
$ |
1,941,888 |
|
$ |
1,769,131 |
|
10 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue by Geography |
|
|
|
|
|
|
|
|
|
|
|
U.S. Revenue |
$ |
569,322 |
|
$ |
534,013 |
|
7 |
% |
|
$ |
1,672,770 |
|
$ |
1,546,599 |
|
8 |
% |
International Revenue |
|
90,916 |
|
|
77,389 |
|
17 |
% |
|
|
269,118 |
|
|
222,532 |
|
21 |
% |
Total Revenue |
$ |
660,238 |
|
$ |
611,402 |
|
8 |
% |
|
$ |
1,941,888 |
|
$ |
1,769,131 |
|
10 |
% |
Summary Operating Metrics
(In millions, except revenue per member) |
Quarter EndedSeptember 30, |
|
Year-over-Year Change |
|
2023 |
|
2022 |
|
|
U.S. Integrated Care Members (2) |
90.2 |
|
81.9 |
|
10 |
% |
BetterHelp Paying Users (4) |
0.459 |
|
0.437 |
|
5 |
% |
Chronic Care Program Enrollment (5) |
1.122 |
|
0.993 |
|
13 |
% |
|
Quarter EndedSeptember 30, |
|
Year-over-Year Change |
|
Nine Months EndedSeptember
30, |
|
Year-over-Year Change |
|
|
2023 |
|
|
2022 |
|
|
|
|
2023 |
|
|
2022 |
|
|
Total Visits |
|
4.4 |
|
|
4.6 |
|
(4 |
)% |
|
|
14.0 |
|
|
13.7 |
|
2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Average Monthly Revenue Per U.S. Integrated Care Member (6) |
$ |
1.41 |
|
$ |
1.40 |
|
0 |
% |
|
$ |
1.40 |
|
$ |
1.42 |
|
(1 |
) % |
See notes (2), (4), (5), and (6) in the Notes
section that follows.
Operating Results by Segment (see note (7)
in the Notes section that follows)
The following table presents operating results by
reportable segment for the periods indicated:
($ in thousands, unaudited) |
Quarter EndedSeptember 30, |
|
Year-over-Year Change |
|
Nine Months EndedSeptember
30, |
|
Year-over-Year Change |
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
2023 |
|
|
|
2022 |
|
|
|
Teladoc Health Integrated Care |
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
374,416 |
|
|
$ |
342,817 |
|
|
9 |
% |
|
$ |
1,084,438 |
|
|
$ |
1,016,800 |
|
|
7 |
% |
Adjusted EBITDA |
$ |
62,805 |
|
|
$ |
38,880 |
|
|
62 |
% |
|
$ |
135,900 |
|
|
$ |
91,467 |
|
|
49 |
% |
Adjusted EBITDA Margin % |
|
16.8 |
% |
|
|
11.3 |
% |
|
543 |
bps |
|
|
12.5 |
% |
|
|
9.0 |
% |
|
354 |
bps |
|
|
|
|
|
|
|
|
|
|
|
|
BetterHelp |
|
|
|
|
|
|
|
|
|
|
|
Therapy Services |
$ |
281,204 |
|
|
$ |
263,208 |
|
|
7 |
% |
|
$ |
845,420 |
|
|
$ |
738,079 |
|
|
15 |
% |
Other Wellness Services |
|
4,618 |
|
|
|
1,942 |
|
|
138 |
% |
|
|
12,030 |
|
|
|
4,559 |
|
|
164 |
% |
Total Revenue |
$ |
285,822 |
|
|
$ |
265,150 |
|
|
8 |
% |
|
$ |
857,450 |
|
|
$ |
742,638 |
|
|
15 |
% |
Adjusted EBITDA |
$ |
25,952 |
|
|
$ |
11,150 |
|
|
133 |
% |
|
$ |
77,777 |
|
|
$ |
61,270 |
|
|
27 |
% |
Adjusted EBITDA Margin % |
|
9.1 |
% |
|
|
4.2 |
% |
|
487 |
bps |
|
|
9.1 |
% |
|
|
8.3 |
% |
|
82 |
bps |
|
TELADOC HEALTH, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(In thousands, unaudited) |
|
|
Nine Months EndedSeptember
30, |
|
|
2023 |
|
|
|
2022 |
|
Cash flows from operating activities: |
|
|
|
Net loss |
$ |
(191,478 |
) |
|
$ |
(9,849,460 |
) |
Adjustments to reconcile net loss to net cash flows from operating
activities: |
|
|
|
Goodwill impairment |
|
— |
|
|
|
9,630,000 |
|
Depreciation and amortization |
|
239,550 |
|
|
|
180,312 |
|
Depreciation of rental equipment |
|
1,965 |
|
|
|
2,185 |
|
Amortization of right-of-use assets |
|
8,325 |
|
|
|
9,266 |
|
Provision for allowances for doubtful accounts |
|
4,935 |
|
|
|
8,867 |
|
Stock-based compensation |
|
154,727 |
|
|
|
167,098 |
|
Deferred income taxes |
|
(6,658 |
) |
|
|
(5,942 |
) |
Accretion of interest |
|
2,545 |
|
|
|
2,496 |
|
Other, net |
|
5,251 |
|
|
|
3,677 |
|
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable |
|
(696 |
) |
|
|
(45,267 |
) |
Prepaid expenses and other current assets |
|
14,070 |
|
|
|
(39,177 |
) |
Inventory |
|
18,246 |
|
|
|
13,709 |
|
Other assets |
|
(18,362 |
) |
|
|
(22,854 |
) |
Accounts payable |
|
(21,670 |
) |
|
|
24,067 |
|
Accrued expenses and other current liabilities |
|
17,075 |
|
|
|
70,046 |
|
Accrued compensation |
|
433 |
|
|
|
(32,028 |
) |
Deferred revenue |
|
(1,261 |
) |
|
|
12,311 |
|
Operating lease liabilities |
|
(7,133 |
) |
|
|
(8,111 |
) |
Other liabilities |
|
75 |
|
|
|
2,548 |
|
Net cash provided by operating activities |
|
219,939 |
|
|
|
123,743 |
|
Cash flows from investing activities: |
|
|
|
Capital expenditures |
|
(10,060 |
) |
|
|
(10,285 |
) |
Capitalized software |
|
(109,781 |
) |
|
|
(108,588 |
) |
Proceeds from marketable securities |
|
— |
|
|
|
2,507 |
|
Other, net |
|
— |
|
|
|
2,514 |
|
Net cash used in investing activities |
|
(119,841 |
) |
|
|
(113,852 |
) |
Cash flows from financing activities: |
|
|
|
Net proceeds from the exercise of stock options |
|
1,423 |
|
|
|
5,646 |
|
Proceeds from employee stock purchase plan |
|
8,597 |
|
|
|
3,386 |
|
Cash received for withholding taxes on stock-based compensation,
net |
|
2,609 |
|
|
|
594 |
|
Other, net |
|
— |
|
|
|
(7,510 |
) |
Net cash provided by financing activities |
|
12,629 |
|
|
|
2,116 |
|
Net increase in cash and cash equivalents |
|
112,727 |
|
|
|
12,007 |
|
Effect of foreign currency exchange rate changes |
|
(382 |
) |
|
|
(5,856 |
) |
Cash and cash equivalents at beginning of the period |
|
918,182 |
|
|
|
893,480 |
|
Cash and cash equivalents at end of the period |
$ |
1,030,527 |
|
|
$ |
899,631 |
|
The following table presents the selected cash flow
information for the following quarters (in thousands,
unaudited):
|
Quarter EndedSeptember 30, |
|
2023 |
|
|
|
2022 |
|
Net cash provided by operating activities |
$ |
105,601 |
|
|
$ |
63,021 |
|
Net cash used in investing activities |
|
(37,647 |
) |
|
|
(41,448 |
) |
Net cash provided by financing activities |
|
5,068 |
|
|
|
634 |
|
Effect of foreign currency exchange rate changes |
|
(1,190 |
) |
|
|
(3,737 |
) |
Net increase in cash and cash equivalents |
$ |
71,832 |
|
|
$ |
18,470 |
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
(In thousands, except share and per share data,
unaudited) |
|
|
|
|
|
September 30,2023 |
|
December 31,2022 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
1,030,527 |
|
|
$ |
918,182 |
|
Accounts receivable, net of allowance for doubtful accounts of
$7,695 and $4,324, respectively |
|
205,866 |
|
|
|
210,554 |
|
Inventories |
|
35,916 |
|
|
|
56,342 |
|
Prepaid expenses and other current assets |
|
114,782 |
|
|
|
130,310 |
|
Total current assets |
|
1,387,091 |
|
|
|
1,315,388 |
|
Property and equipment, net |
|
32,887 |
|
|
|
29,641 |
|
Goodwill |
|
1,073,190 |
|
|
|
1,073,190 |
|
Intangible assets, net |
|
1,728,302 |
|
|
|
1,836,765 |
|
Operating lease - right-of-use assets |
|
32,051 |
|
|
|
41,831 |
|
Other assets |
|
74,452 |
|
|
|
48,540 |
|
Total assets |
$ |
4,327,973 |
|
|
$ |
4,345,355 |
|
Liabilities and stockholders’ equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
25,998 |
|
|
$ |
47,690 |
|
Accrued expenses and other current liabilities |
|
192,553 |
|
|
|
168,693 |
|
Accrued compensation |
|
84,897 |
|
|
|
81,554 |
|
Deferred revenue-current |
|
99,192 |
|
|
|
101,832 |
|
Total current liabilities |
|
402,640 |
|
|
|
399,769 |
|
Other liabilities |
|
1,693 |
|
|
|
1,618 |
|
Operating lease liabilities, net of current portion |
|
34,353 |
|
|
|
38,042 |
|
Deferred revenue, net of current portion |
|
13,152 |
|
|
|
11,954 |
|
Deferred taxes, net |
|
44,252 |
|
|
|
50,939 |
|
Convertible senior notes, net |
|
1,537,833 |
|
|
|
1,535,288 |
|
Commitments and contingencies |
|
|
|
Stockholders’ equity: |
|
|
|
Common stock, $0.001 par value; 300,000,000 shares authorized;
165,557,305 shares and 162,840,360 shares issued and outstanding as
of September 30, 2023 and December 31, 2022, respectively |
|
166 |
|
|
|
163 |
|
Additional paid-in capital |
|
17,535,169 |
|
|
|
17,358,645 |
|
Accumulated deficit |
|
(15,199,765 |
) |
|
|
(15,008,287 |
) |
Accumulated other comprehensive loss |
|
(41,520 |
) |
|
|
(42,776 |
) |
Total stockholders’ equity |
|
2,294,050 |
|
|
|
2,307,745 |
|
Total liabilities and stockholders’ equity |
$ |
4,327,973 |
|
|
$ |
4,345,355 |
|
Non-GAAP Financial Measures:
To supplement our financial information presented
in accordance with generally accepted accounting principles in the
United States (“GAAP”), we use adjusted gross profit, adjusted
gross margin, EBITDA, adjusted EBITDA, and free cash flow, 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, and are commonly used by investors to
evaluate our performance and that of our competitors. We further
believe that these financial measures are useful financial metrics
to assess our operating performance and financial and business
trends from period-to-period by excluding certain items that we
believe are not representative of our core business, and that free
cash flow reflects an additional way of viewing our liquidity that,
when viewed together with GAAP results, provides management,
investors, and other users of our financial information with a more
complete understanding of factors and trends affecting our cash
flows. We use these non-GAAP financial measures for business
planning purposes and in measuring our performance relative to that
of our competitors. We utilize adjusted EBITDA as a key 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.
EBITDA consists of net loss before interest income;
interest expense; other income, net, including foreign exchange
gains or losses; provision for income taxes; depreciation and
amortization; and goodwill impairment. Adjusted EBITDA consists of
net loss before interest income; interest expense; other income,
net, including foreign exchange gains or losses; provision for
income taxes; depreciation and amortization; goodwill impairment;
stock-based compensation; restructuring costs; and acquisition,
integration, and transformation costs.
Free cash flow is net cash (used in) provided by
operating activities less capital expenditures and capitalized
software development costs.
Our use of these non-GAAP terms may vary from that
of others in our industry, and other companies may calculate such
measures differently than we do, limiting their usefulness as
comparative measures.
Non-GAAP measures have important limitations as
analytical tools and you should not consider them in isolation, and
they should not be considered as an alternative to net loss before
provision for income taxes, net loss, net loss per share, net cash
from operating activities or any other measures derived in
accordance with 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 eliminate the impact of the provision for income taxes on
our results of operations, and they do not reflect goodwill
impairment, interest income, interest expense or other income,
net;
- adjusted EBITDA does
not reflect restructuring costs. Restructuring costs may include
certain lease impairment costs, certain losses related to early
lease terminations, and severance;
- adjusted EBITDA does
not reflect significant acquisition, integration, and
transformation costs. Acquisition, integration and transformation
costs include investment banking, financing, legal, accounting,
consultancy, integration, fair value changes related to contingent
consideration, and certain other transaction costs related to
mergers and acquisitions. It also includes costs related to certain
business transformation initiatives focused on integrating and
optimizing various operations and systems, including upgrading our
customer relationship management (CRM) and enterprise resource
planning (ERP) systems. These transformation cost adjustments made
to our results do not represent normal, recurring, operating
expenses necessary to operate the business but, rather, incremental
costs incurred in connection with our acquisition and integration
activities; and
- adjusted EBITDA does
not reflect the significant non-cash stock-based compensation
expense which should be viewed as a component of recurring
operating costs.
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 these
non-GAAP measures 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, net cash provided by operating activities, 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 these non-GAAP
measures 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
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 EndedSeptember 30, |
|
Nine Months EndedSeptember
30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenue |
$ |
660,238 |
|
|
$ |
611,402 |
|
|
$ |
1,941,888 |
|
|
$ |
1,769,131 |
|
Cost of revenue (exclusive of depreciation and amortization, which
is shown separately below) |
|
(185,960 |
) |
|
|
(185,619 |
) |
|
|
(566,607 |
) |
|
|
(555,114 |
) |
Depreciation and amortization |
|
(21,088 |
) |
|
|
(8,482 |
) |
|
|
(55,094 |
) |
|
|
(19,768 |
) |
Gross Profit |
|
453,190 |
|
|
|
417,301 |
|
|
|
1,320,187 |
|
|
|
1,194,249 |
|
Depreciation and amortization |
|
21,088 |
|
|
|
8,482 |
|
|
|
55,094 |
|
|
|
19,768 |
|
Adjusted gross profit |
$ |
474,278 |
|
|
$ |
425,783 |
|
|
$ |
1,375,281 |
|
|
$ |
1,214,017 |
|
|
|
|
|
|
|
|
|
Gross margin |
|
68.6 |
% |
|
|
68.3 |
% |
|
|
68.0 |
% |
|
|
67.5 |
% |
Adjusted gross margin |
|
71.8 |
% |
|
|
69.6 |
% |
|
|
70.8 |
% |
|
|
68.6 |
% |
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, except for outlook data,
unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outlook in millions (8) |
|
Quarter EndedSeptember 30, |
|
Nine Months EndedSeptember
30, |
|
Fourth Quarter |
|
Full Year |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
2023 |
|
2023 |
Net loss |
$ |
(57,073 |
) |
|
$ |
(73,476 |
) |
|
$ |
(191,478 |
) |
|
$ |
(9,849,460 |
) |
|
$(55) - (38) |
|
$(247) - (230) |
Add: |
|
|
|
|
|
|
|
|
|
|
|
Goodwill impairment |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
9,630,000 |
|
|
|
|
|
Other expense (income), net |
|
1,792 |
|
|
|
1,571 |
|
|
|
(2,908 |
) |
|
|
2,607 |
|
|
|
|
|
Interest income |
|
(12,606 |
) |
|
|
(4,803 |
) |
|
|
(33,075 |
) |
|
|
(6,192 |
) |
|
|
|
|
Interest expense |
|
5,646 |
|
|
|
6,149 |
|
|
|
16,744 |
|
|
|
17,355 |
|
|
|
|
|
Provision for income taxes |
|
(2,484 |
) |
|
|
(1,171 |
) |
|
|
(2,755 |
) |
|
|
(1,971 |
) |
|
|
|
|
Depreciation and amortization |
|
94,302 |
|
|
|
62,008 |
|
|
|
239,550 |
|
|
|
180,312 |
|
|
|
|
|
Total Adjustments |
|
86,650 |
|
|
|
63,754 |
|
|
|
217,556 |
|
|
|
9,822,111 |
|
|
|
|
|
Consolidated EBITDA |
|
29,577 |
|
|
|
(9,722 |
) |
|
|
26,078 |
|
|
|
(27,349 |
) |
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
52,945 |
|
|
|
55,662 |
|
|
|
154,708 |
|
|
|
167,098 |
|
|
|
|
|
Acquisition, integration, and transformation costs |
|
5,824 |
|
|
|
1,594 |
|
|
|
16,848 |
|
|
|
8,993 |
|
|
|
|
|
Restructuring costs |
|
411 |
|
|
|
3,677 |
|
|
|
16,043 |
|
|
|
3,677 |
|
|
|
|
|
Total Adjustments |
|
59,180 |
|
|
|
60,933 |
|
|
|
187,599 |
|
|
|
179,768 |
|
|
145 - 172 |
|
550 - 577 |
Consolidated Adjusted EBITDA |
$ |
88,757 |
|
|
$ |
51,211 |
|
|
$ |
213,677 |
|
|
$ |
152,419 |
|
|
$107 - 117 |
|
$320 - 330 |
|
|
|
|
|
|
|
|
|
|
|
|
Segment Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
Teladoc Health Integrated Care |
$ |
62,805 |
|
|
$ |
38,880 |
|
|
$ |
135,900 |
|
|
$ |
91,467 |
|
|
|
|
|
BetterHelp |
|
25,952 |
|
|
|
11,150 |
|
|
|
77,777 |
|
|
|
61,270 |
|
|
|
|
|
Other |
|
— |
|
|
|
1,181 |
|
|
|
— |
|
|
|
(318 |
) |
|
|
|
|
Consolidated Adjusted EBITDA |
$ |
88,757 |
|
|
$ |
51,211 |
|
|
$ |
213,677 |
|
|
$ |
152,419 |
|
|
|
|
|
See note (8) in the Notes section that follows.
The following is a reconciliation of net cash
provided by operating activities, the most directly comparable GAAP
financial measure, to free cash flow:
Reconciliation of GAAP Net Cash Provided by Operating
Activities to Free Cash Flow |
(In thousands, unaudited) |
|
|
|
|
|
Quarter EndedSeptember 30, |
|
Nine Months EndedSeptember
30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net cash provided by operating activities |
$ |
105,601 |
|
|
$ |
63,021 |
|
|
$ |
219,939 |
|
|
$ |
123,743 |
|
Capital expenditures |
|
(5,793 |
) |
|
|
(3,830 |
) |
|
|
(10,060 |
) |
|
|
(10,285 |
) |
Capitalized software |
|
(31,854 |
) |
|
|
(39,375 |
) |
|
|
(109,781 |
) |
|
|
(108,588 |
) |
Free Cash Flow |
$ |
67,954 |
|
|
$ |
19,816 |
|
|
$ |
100,098 |
|
|
$ |
4,870 |
|
Notes:
- A reconciliation of each non-GAAP measure to the most
comparable measure under GAAP has been provided in this press
release in the accompanying tables. An explanation of these
non-GAAP measures is also included under the heading “Non-GAAP
Financial Measures.”
- U.S. Integrated Care Members represent the number of unique
individuals who have paid access and visit fee only access to our
suite of integrated care services in the U.S. at the end of the
applicable period.
- Excluding the amount capitalized related to software
development projects.
- BetterHelp Paying Users represent the average number of global
monthly paying users of our BetterHelp therapy services during the
applicable period.
- Chronic Care Program Enrollment represents the total number of
enrollees across our suite of chronic care programs at the end of a
given period.
- Average monthly revenue per U.S. Integrated Care member is
calculated by dividing the total revenue generated from the
Integrated Care segment by the average number of U.S. Integrated
Care Members (see note 2) during the applicable period.
- We have two segments: Teladoc Health Integrated Care
(“Integrated Care”) and BetterHelp. The Integrated Care segment
includes a suite of global virtual medical services including
general medical, expert medical services, specialty medical,
chronic condition management, mental health, and enabling
technologies and enterprise telehealth solutions for hospitals and
health systems. The BetterHelp segment includes virtual therapy and
other wellness services provided on a global basis which are
predominantly marketed and sold on a direct-to-consumer basis.Other
includes certain revenues and charges not related to ongoing
segment operations.
- We have not provided a full line-item reconciliation for net
loss to adjusted EBITDA outlook because we do not provide outlook
on the individual reconciling items between net loss and adjusted
EBITDA. This is due to the uncertainty as to timing, and the
potential variability, of the individual reconciling items such as
impairments, stock-based compensation and the related tax impact,
provision for income taxes, acquisition, integration, and
transformation costs, and restructuring costs, the effect of which
may be significant. Accordingly, a full line-item reconciliation of
the GAAP measure to the corresponding non-GAAP financial measure
outlook is not available without unreasonable effort.
Investors:Patrick
Feeley914-265-7925IR@teladochealth.com
Media:Chris
Stenrud860-491-8821pr@teladochealth.com
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