GlobeNewswire Inc | Oct 28, 2020 04:06PM EDT

October 28, 2020

Year-over-year Q3 revenue grows 109% to $288.8 million and total visits increase 206% to 2.8 million

Year-over-year nine months revenue grows 79% to $710.6 million and total visits increase 163% to 7.6 million

Issues 2020 fourth-quarter guidance, raises full-year expectations

PURCHASE, N.Y., Oct. 28, 2020 (GLOBE NEWSWIRE) -- Teladoc Health, Inc. (NYSE: TDOC), the global leader in virtual care, today reported strong financial results for the quarter ending September 30, 2020.

Our strong third quarter results exceeded expectations, driven by broad-based strength across the business and building on the momentum we saw in the first half of the year, commented Jason Gorevic, chief executive officer of Teladoc Health. We are seeing significant market success and consistent growth in member visits throughout all of our commercial channels. With the addition of Livongo later this year, we will be creating a new category of whole person virtual care that will transform how people live healthier lives.

Teladoc Health recently entered new and expanded client partnerships with industry leaders including GuideWell, Johns Hopkins and Telefonica. The company highlighted continued, sustainable growth bolstered by increases in specialty visits and registrations together with ongoing diversity of visit diagnoses.

Financial Highlights for the Third Quarter and Nine Months Ended September 30, 2020

Revenue ($ thousands) QuarterEnded Year over NineMonthsEnded Year over Year Year September30, Growth September30, Growth 2020 2019 2020 2019 Access Fees RevenueU.S. $ 194,622 $ 92,095 111 % $ 454,582 $ 258,604 76 % International 31,997 27,030 18 % 91,261 77,716 17 % Total 226,619 119,125 90 % 545,843 336,320 62 % Visit Fee RevenueU.S. Paid 35,074 14,142 148 % 105,013 47,473 121 % VisitsU.S. Visit 15,874 4,307 269 % 47,931 11,974 300 % Fee OnlyInternational 96 395 (76 ) % 705 1,051 (33 ) % Paid VisitsTotal 51,044 18,844 171 % 153,649 60,498 154 % Other U.S. 10,299 0 N/M % 10,299 0 N/M % International 850 0 N/M % 850 0 N/M % Total 11,149 0 N/M % 11,149 0 N/M % Total Revenue $ 288,812 $ 137,969 109 % $ 710,641 $ 396,818 79 %

Membership and Visit Fee Only Access(millions except for care locations) Quarter Ended Year over Year September30, Growth 2020 2019 Total U.S. Paid 51.5 35.0 47 % Membership Total U.S. Visit Fee 21.8 19.0 15 % Only Access

Visits (thousands) Year Year QuarterEnded over NineMonthsEnded over Year Year September30, Growth September30, Growth 2020 2019 2020 2019 Paid Visits fromU.S. Paid 682 278 145 % 2,127 934 128 % MembershipPercent of PaidVisits from U.S. 32 % 45 % 39 % 48 % Paid MembershipVisits Includedfrom U.S. Paid 1,447 344 321 % 3,384 1,016 233 % Membership Total Visitsfrom U.S. Paid 2,129 622 242 % 5,511 1,950 183 % Membership U.S. Visit Fee 261 62 318 % 794 179 343 % Only International 445 244 83 % 1,331 770 73 % VisitsTotal Visits 2,835 928 206 % 7,636 2,899 163 % Utilization 16.5 % 8.0 % 854 pt 15.4 % 9.3 % 615 pt Platform-Enabled 986 - N/M % - - N/M % Sessions*

* Platform-Enabled Session is a unique instance in which our licensed software platform has facilitated a virtual voice or video encounter between a care provider and our clients patient, or between care providers. We believe platform enabled sessions are an indicator of the value our clients derive from the platform they license from us in order to facilitate virtual care.

-- Net loss was $(35.9) million for the third quarter 2020 compared to $(20.3) million for the third quarter 2019. Excluding $16.0 million of transaction costs related to the pending Livongo merger, net loss was $(19.9) million for the third quarter of 2020. Excluding $25.2 million of transaction costs related to the pending Livongo merger and the acquisition of InTouch Health, which closed on July 1st, net loss was $(10.7) million for the third quarter of 2020. -- Net loss per basic and diluted share was $(0.43) for the third quarter 2020 compared to $(0.28) for the third quarter 2019. Excluding transaction costs of $0.19 per share related to the pending Livongo merger, net loss per share was $(0.24). Excluding transaction costs of $0.30 per share related to the pending Livongo merger and the acquisition of InTouch Health, which closed on July 1st, net loss per share was $(0.13) for the third quarter of 2020. -- GAAP Gross margin which includes depreciation and amortization was 63.3 percent for the third quarter 2020 and 68.1 percent for the third quarter 2019. -- Adjusted Gross margin was 63.7 percent for the third quarter 2020 compared to 69.0 percent for the third quarter 2019. -- EBITDA was a loss of $(6.8) million for the third quarter 2020 compared to a loss of $(10.3) million for the third quarter 2019. Excluding $16.0 million of transaction costs related to the pending Livongo merger, EBITDA was $9.2 million. Excluding $25.2 million of transaction costs related to the pending Livongo merger and the acquisition of InTouch Health, which closed on July 1st, EBITDA was $18.4 million for the third quarter of 2020. -- Adjusted EBITDA was a positive $39.5 million for the third quarter 2020 compared to a positive $9.0 million for the third 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 fourth-quarter 2020, we expect:

-- Total revenue to be in the range of $294 million to $304 million. -- EBITDA (loss), excluding transaction costs related to the pending Livongo merger, to be in the range of $(1) million to $2 million. -- Adjusted EBITDA to be in the range of $21 million to $24 million. -- Total U.S. paid membership to be in the range of 50 million to 51 million members and visit-fee-only access to be available to 21 to 22 million individuals, including 2 to 3 million members on a temporary basis. -- Total visits to be between 2.8 million and 3.0 million. -- Net loss per share, excluding all transaction costs related to the pending Livongo merger, based on 84.4 million weighted average shares outstanding, to be between $(0.36) and $(0.33).

For the full-year 2020, we expect:

-- Total revenue to be in the range of $1,005 million to $1,015 million. -- EBITDA (loss), excluding all transaction costs related to the pending Livongo merger, to be in the range of $(1) million to $2 million. -- Adjusted EBITDA to be in the range of $97 million to $100 million. -- Total U.S. paid membership to be in the range of 50 million to 51 million members and visit-fee-only access to be available to 21 to 22 million individuals, including 2 to 3 million members on a temporary basis. -- Total visits to be between 10.4 million to 10.6 million. -- Net loss per share, excluding all transaction costs related to the pending Livongo merger, based on 79.4 million weighted average shares outstanding, to be between $(1.36) and $(1.32).

Quarterly Conference Call

The third quarter 2020 earnings conference call and webcast will be held Wednesday, October 28, 2020 at 4:30 p.m. EDT. The conference call can be accessed by dialing 1-888-869-1189 for U.S. participants, or 1-706-643-5902 for international participants, and including the following Conference ID Number: 2684889 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 Best in KLAS for Virtual Care Platforms in 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.comor follow@TeladocHealthon 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)

September30, December31, 2020 2019 Assets Current assets: Cash and cash equivalents $ 1,187,299 $ 514,353 Short-term investments 3,070 2,711 Accounts receivable, net of allowance 85,803 56,948 of $4,661 and $3,787, respectivelyInventories 11,578 0 Prepaid expenses and other current 22,293 13,990 assetsTotal current assets 1,310,043 588,002 Property and equipment, net 20,364 10,296 Goodwill 1,691,355 746,079 Intangible assets, net 386,573 225,453 Operating lease - right-of-use assets 33,933 26,452 Other assets 7,117 6,545 Total assets $ 3,449,385 $ 1,602,827 Liabilities and stockholders? equity Current liabilities: Accounts payable $ 21,408 $ 9,075 Accrued expenses and other current 65,130 34,439 liabilitiesAccrued compensation 53,957 34,201 Deferred revenue-current 46,721 12,466 Advances from financing companies 13,609 0 Total current liabilities 200,825 90,181 Other liabilities 1,033 9,239 Operating lease liabilities, net of 30,326 24,994 current portionDeferred revenue, net of current 4,884 2,300 portionAdvances from financing companies, net 9,901 0 of current portionDeferred taxes 17,896 21,678 Convertible senior notes, net 953,484 440,410 Commitments and contingencies Stockholders? equity: Common stock, $0.001 par value;150,000,000 shares authorized as ofSeptember 30, 2020 and December 31,2019; 84,358,345 shares and 72,761,941 84 73 shares issued and outstanding as ofSeptember 30, 2020 and December 31,2019, respectivelyAdditional paid-in capital 2,835,274 1,538,716 Accumulated deficit (598,694 ) (507,525 )Accumulated other comprehensive loss (5,628 ) (17,239 )Total stockholders? equity 2,231,036 1,014,025 Total liabilities and stockholders? $ 3,449,385 $ 1,602,827 equity

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

Quarter Ended September30, NineMonthsEndedSeptember30, 2020 2019 2020 2019 Revenue $ 288,812 $ 137,969 $ 710,641 $ 396,818 Expenses: Cost ofrevenue(exclusive ofdepreciation and 104,725 42,799 267,887 129,110 amortizationshown separatelybelow)Operating expenses:Advertising and 52,302 31,321 132,395 84,341 marketingSales 23,483 16,120 60,110 48,164 Technology and 29,958 15,746 72,244 48,398 developmentLegal and 2,812 1,634 6,266 5,239 regulatoryAcquisition andintegration 25,395 1,995 30,686 4,143 related costsGeneral and 56,930 38,681 156,433 113,212 administrativeDepreciation and 12,932 9,617 32,535 29,065 amortizationTotal expenses 308,537 157,913 758,556 461,672 Loss from (19,725 ) (19,944 ) (47,915 ) (64,854 ) operationsLoss onextinguishment 1,227 0 8,978 0 of debtInterest 17,222 7,700 39,676 21,432 expense, netNet loss before (38,174 ) (27,644 ) (96,569 ) (86,286 ) taxesIncome tax(benefit) (2,290 ) (7,298 ) (5,400 ) (6,466 ) expenseNet loss $ (35,884 ) $ (20,346 ) $ (91,169 ) $ (79,820 ) Net loss pershare, basic and $ (0.43 ) $ (0.28 ) $ (1.17 ) $ (1.11 ) diluted Weighted-averageshares used tocompute basic 83,607,902 72,151,094 77,821,073 71,601,790 and diluted netloss per share

CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands, unaudited)

NineMonthsEndedSeptember30, 2020 2019 Cash flows used inoperating activities:Net loss $ (91,169 ) $ (79,820 ) Adjustments toreconcile net lossto net cash provided byoperatingactivities:Depreciation and 38,029 33,860 amortizationAllowance for 2,320 1,717 doubtful accountsStock-based 61,151 48,245 compensationDeferred income (4,096 ) (10,288 ) taxesAccretion of 29,459 19,422 interestLoss onextinguishment of 8,978 0 debtChanges inoperating assets and liabilities:Accounts (16,450 ) (12,386 ) receivablePrepaid expensesand other current (5,906 ) (2,219 ) assetsInventory (2,392 ) 0 Other assets 140 73 Accounts payable 6,584 (1,976 ) Accrued expensesand other current 17,269 14,304 liabilitiesAccrued 9,329 (1,813 ) compensationDeferred Revenue 15,348 6,708 Operating lease (4,360 ) (1,481 ) liabilitiesOther liabilities (2,809 ) (2,599 ) Net cash providedby operating 61,425 11,747 activitiesCash flows (usedin) provided by investingactivities:Purchase ofproperty and (2,872 ) (2,847 ) equipmentPurchase ofinternal-use (14,515 ) (4,658 ) softwareProceeds frommarketable 0 39,165 securitiesSale of assets 0 10 Investment in (0 ) (5,000 ) securitiesAcquisition ofbusiness, net of (159,663 ) (11,204 ) cash acquiredNet cash (used in)provided by (177,050 ) 15,466 investingactivitiesCash flowsprovided by financingactivities:Net proceeds fromthe exercise of 40,627 24,820 stock optionsProceeds fromissuance of 2027 1,000,000 0 NotesIssuance costs of (24,070 ) 0 2027 NotesRepurchase of 2022 (228,153 ) 0 NotesProceeds fromadvances from 1,924 0 financingcompaniesPayment fromcustomers againstadvances from (4,427 ) 0 financingcompaniesProceeds fromemployee stock 2,473 1,875 purchase planCash received(paid) forwithholding taxes 326 (1,642 ) on stock-basedcompensation, netNet cash providedby financing 788,700 25,053 activitiesNet increase incash and cash 673,075 52,266 equivalentsForeign exchange (129 ) (1,013 ) differenceCash and cashequivalents at 514,353 423,989 beginning of theperiodCash and cashequivalents at end $ 1,187,299 $ 475,242 of the period Income taxes paid $ 786 $ 846 Interest paid $ 5,612 $ 6,112

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 income (loss) and adjusted EBITDA income (loss), 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 investors 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 NineMonthsEnded September30, September30, 2020 2019 2020 2019 Revenue $ 288,812 $ 137,969 $ 710,641 $ 396,818 Cost ofrevenue(exclusiveofdepreciation ) (42,799 ) ) ) and (104,725 (267,887 (129,110amortizationshownseparatelybelow)Depreciationandamortization (1,149 ) (1,187 ) (4,078 ) (3,279 ) ofintangibleassetsGross Profit 182,938 93,983 438,676 264,429 Depreciationandamortization 1,149 1,187 4,078 3,279 ofintangibleassetsAdjusted $ 184,087 $ 95,170 $ 442,754 $ 267,708 gross profit Gross margin 63.3 % 68.1 % 61.7 % 66.6 %Adjusted 63.7 % 69.0 % 62.3 % 67.5 %gross margin

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

Quarter Ended NineMonthsEnded September30, September30, 2020 2019 2020 2019 Net loss $ ) $ ) $ ) $ ) (35,884 (20,346 (91,169 (79,820Add: Loss onextinguishment 1,227 0 8,978 0 of debtInterest 17,222 7,700 39,676 21,432 expense, netIncome tax (2,290 ) (7,298 ) (5,400 ) (6,466 ) benefitDepreciation 1,272 982 2,983 2,701 expenseAmortization 11,660 8,635 29,552 26,364 expenseEBITDA (6,793 ) ) ) ) (10,327 (15,380 (35,789Stock-based 20,908 17,354 61,151 48,245 compensationAcquisitionand 25,395 1,995 30,686 4,143 integrationrelated costsAdjusted $ 39,510 $ 9,022 $ 76,457 $ 16,599 EBITDA

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

Media:Chris Stenrud860-491-8821pr@teladochealth.com