GlobeNewswire Inc | Feb 24, 2021 04:05PM EST

February 24, 2021

Q4 revenue grows 145% year-over-year to $383.3 million and total visits increase 139% to 3.0 million

Full year revenue grows 98% year-over-year to $1,094.0 million and total visits increase 156% to 10.6 million

Issues 2021 first-quarter and full-year guidance

PURCHASE, NY, Feb. 24, 2021 (GLOBE NEWSWIRE) -- Teladoc Health, Inc. (NYSE: TDOC), the global leader in whole-person virtual care, today reported strong financial results for the fourth quarter and full year ended December 31, 2020.

As virtual care shifted to become a consumer expectation in 2020, Teladoc Health not only met the rapidly growing demand, but we transformed our company to define a new category of whole-person virtual care, said Jason Gorevic, chief executive officer of Teladoc Health. By accelerating our mission to transform the health care experience, we exceeded our fourth-quarter and full-year 2020 expectations and see strong momentum across our global business in 2021 as the market embraces the breadth and depth of our unique capabilities.

Financial Highlights for the Fourth Quarter and Full Year Ended December 31, 2020

Revenue ($ thousands, unaudited) QuarterEnded Year over YearEnded Year over Year Year December31, Growth December31, Growth 2020 2019 2020 2019 Access Fees RevenueU.S. $ 282,826 $ 98,052 188 % $ 737,408 $ 356,656 107 % International 33,131 28,924 15 % 124,392 106,640 17 % Total 315,957 126,976 149 % 861,800 463,296 86 % Visit Fee RevenueU.S. 53,149 29,222 82 % 206,093 88,669 132 % International 113 291 (61 ) % 818 1,342 (39 ) % Total 53,262 29,513 80 % 206,911 90,011 130 % Other U.S. 13,589 0 N/M 23,888 0 N/M International 513 0 N/M 1,363 0 N/M Total 14,102 0 N/M 25,251 0 N/M Total Revenue $ 383,321 $ 156,489 145 % $ 1,093,962 $ 553,307 98 %

N/M Not meaningful

Membership and Visit Fee Only Access (millions) December31, Growth 2020 2019 U.S. Paid Membership 51.8 36.7 41 % U.S. Visit Fee Only Access 21.3 19.3 10 % Chronic Care Enrollment 0.6 ? N/M

Visits (thousands) Year Year QuarterEnded over Year Ended over Year Year December31, Growth December31, Growth 2020 2019 2020 2019 U.S. Visits 2,515 975 158 % 8,820 3,104 184 % International 440 264 67 % 1,771 1,034 71 % VisitsTotal Visits 2,955 1,239 139 % 10,591 4,138 156 % Utilization 17.7 % 9.5 % 826 pt 16.0 % 9.3 % 664 pt Platform-Enabled 1,089 ? N/M 2,076 ? N/M Sessions* Total Visits &Sessions 4,044 1,239 226 % 12,667 4,138 206 % Provided &Enabled

* 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 $(394.0) million for the fourth quarter 2020 compared to $(19.0) million for the fourth quarter 2019. Net loss was $(485.1) million for the full year 2020 compared to $(98.9) million for the full year 2019. The fourth quarter and full year 2020 includes $57.6 million and $88.2 million, respectively, of acquisition and integration related costs as well as $331.7 million of accelerated stock-based awards expense related to the merger with Livongo. Net loss for the fourth quarter and full year 2020 also includes $54.7 million of stock-based compensation related to Livongo stock awards that continue to vest after the merger. Net loss also includes an income tax benefit of $85.5 million for the fourth quarter 2020 and $90.9 million for the full year 2020. -- Net loss per basic and diluted share was $(3.07) for the fourth quarter 2020 compared to $(0.26) for the fourth quarter 2019. Net loss per basic and diluted share was $(5.36) for the full year 2020 compared to $(1.38) for the full year 2019. The fourth quarter and full year 2020 includes $0.45 and $0.97 per share, respectively, of acquisition and integration related costs as well as $2.59 and $3.66 per share, respectively, of accelerated stock-based awards expense related to the merger with Livongo. Net loss per basic and diluted share for the fourth quarter and full year 2020 also includes $0.43 and $0.60 per share, respectively, of stock-based compensation related to Livongo stock awards that continue to vest after the merger. Net loss per basic and diluted share for the fourth quarter and full year 2020 also includes an income tax benefit of $0.67 and $1.00 per share, respectively. -- GAAP Gross margin, which includes depreciation and amortization, was 67.2 percent for the fourth quarter 2020 and 63.8 percent for the fourth quarter 2019. GAAP Gross margin which includes depreciation and amortization, was 63.1 percent for the full year 2020 and 65.8 percent for the full year 2019. -- Adjusted Gross margin was 67.9 percent for the fourth quarter 2020 compared to 64.6 percent for the fourth quarter 2019. Adjusted Gross margin was 64.3 percent for the full year 2020 compared to 66.7 percent for the full year 2019. -- EBITDA was a loss of $(421.5) million for the fourth quarter 2020 compared to a loss of $(5.7) million for the fourth quarter 2019. EBITDA for the fourth quarter 2020 includes $57.6 million of acquisition and integration related costs as well as $331.7 million of accelerated stock-based awards expense related to the merger with Livongo. EBITDA was a loss of $(436.9) million for the full year 2020 compared to a loss of $(41.5) million for the full year 2019. EBITDA for the full year 2020 includes $88.2 million of acquisition and integration related costs as well as $331.7 million of accelerated stock-based awards expense related to the merger with Livongo. EBITDA for the fourth quarter and full year 2020 also includes $54.7 million of stock-based compensation related to Livongo stock awards that continue to vest after the merger. -- Adjusted EBITDA was $50.4 million for the fourth quarter 2020 compared to $15.2 million for the fourth quarter 2019. Adjusted EBITDA was $126.8 million for the full year 2020 compared to $31.8 million for the full year 2019. Adjusted EBITDA was higher by $5.4 million in the fourth quarter and full year 2020, primarily related to lower expenses on Livongo devices as a result of the merger.

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 pandemic as well as the broader economic impact, our updated guidance is based on what we know today. As this is an evolving situation, circumstances are likely to change, but we believe our guidance ranges provide a reasonable baseline for 2021 financial performance.

For the first-quarter 2021, we expect:

-- Total revenue to be in the range of $445 million to $455 million. -- EBITDA to be in the range of $(46) million to $(43) million. -- Adjusted EBITDA to be in the range of $45 million to $48 million, including an estimated $7 million in lower expenses primarily related to Livongo devices as a result of the merger. -- Total U.S. paid membership to be in the range of 51 million to 52 million members and visit fee only access to be available to 22 to 23 million individuals, including 2 to 3 million individuals on a temporary basis. -- Total visits to be between 2.9 million and 3.1 million.

For the full-year 2021, we expect:

-- Total revenue to be in the range of $1.95 billion to $2.0 billion. -- EBITDA to be in the range of $(110) million to $(90) million. -- Adjusted EBITDA to be in the range of $255 million to $275 million, including an estimated $20 million in lower expenses primarily related to Livongo devices as a result of the merger. -- Total U.S. paid membership to be in the range of 52 million to 54 million members and visit fee only access to be available to 22 to 23 million individuals, including 2 to 3 million individuals on a temporary basis. -- Total visits to be between 12 million to 13 million.

Quarterly Conference Call

The fourth quarter and full year 2020 earnings conference call and webcast will be held Wednesday, February 24, 2021 at 4:30 p.m. E.T. 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 referencing Conference ID Number: 1127504; 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, 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 persons health journey. Ranked best in KLAS for Virtual Care Platforms in 2020, Teladoc Health leverages more than a decade 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.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 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; (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; and (vi) the impact of the COVID-19 pandemic on our operations, demand for our services and general economic conditions, as well as orders, directives and legislative action by local, state, federal and foreign governments in response to the spread of COVID-19. 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)

December31, December31, 2020 2019 Assets Current assets: Cash and cash equivalents $ 733,324 $ 514,353 Short-term investments 53,245 2,711 Accounts receivable, net of allowance of 169,281 56,948 $6,412 and $3,787, respectivelyInventories 56,498 0 Prepaid expenses and other current 47,259 13,990 assetsTotal current assets 1,059,607 588,002 Property and equipment, net 28,551 10,296 Goodwill 14,581,255 746,079 Intangible assets, net 2,020,864 225,453 Operating lease - right-of-use assets 46,647 26,452 Other assets 18,357 6,545 Total assets $ 17,755,281 $ 1,602,827 Liabilities and stockholders? equity Current liabilities: Accounts payable $ 46,030 $ 9,075 Accrued expenses and other current 83,657 34,440 liabilitiesAccrued compensation 94,593 34,201 Deferred revenue-current 52,356 12,465 Advances from financing companies 13,453 0 Current portion of long-term debt 42,560 0 Total current liabilities 332,649 90,181 Other liabilities 1,616 9,239 Operating lease liabilities, net of 43,142 24,994 current portionDeferred revenue, net of current portion 2,449 2,300 Advances from financing companies, net 9,926 0 of current portionDeferred taxes 102,103 21,678 Convertible senior notes, net 1,379,592 440,410 Commitments and contingencies Stockholders? equity: Common stock, $0.001 par value;300,000,000 shares and 150,000,000shares authorized as of December 31,2020 and December 31, 2019, 150 73 respectively; 150,281,099 shares and72,761,941 shares issued and outstandingas of December 31, 2020 and December 31,2019, respectivelyAdditional paid-in capital 16,857,797 1,538,716 Accumulated deficit (992,661 ) (507,525 )Accumulated other comprehensive loss 18,518 (17,239 )Total stockholders? equity 15,883,804 1,014,025 Total liabilities and stockholders? $ 17,755,281 $ 1,602,827 equity

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

Quarter Ended December31, YearEndedDecember31, 2020 2019 2020 2019 Revenue $ 383,321 $ 156,489 $ 1,093,962 $ 553,307 Expenses: Cost of revenue(exclusive ofdepreciation andamortization, 122,942 55,355 390,829 184,465 which is shownseparatelybelow)Operating expenses:Advertising and 93,751 25,356 226,146 109,697 marketingSales 93,942 16,751 154,052 64,915 Technology and 92,697 16,246 164,941 64,644 developmentLegal and 2,610 1,523 8,876 6,762 regulatoryAcquisition andintegration 57,550 2,477 88,236 6,620 related costsGeneral and 341,375 44,482 497,808 157,694 administrativeDepreciation and 36,960 9,887 69,495 38,952 amortizationTotal expenses 841,827 172,077 1,600,383 633,749 Loss from (458,506 ) (15,588 ) (506,421 ) (80,442 )operationsLoss onextinguishment 99 0 9,077 0 of debtInterest 20,819 7,581 60,495 29,013 expense, netNet loss before (479,424 ) (23,169 ) (575,993 ) (109,455 )taxesIncome tax (85,457 ) (4,125 ) (90,857 ) (10,591 )benefitNet loss $ (393,967 ) $ (19,044 ) $ (485,136 ) $ (98,864 ) Net loss pershare, basic and $ (3.07 ) $ (0.26 ) $ (5.36 ) $ (1.38 )diluted Weighted-averageshares used tocompute basic 128,298,005 72,564,855 90,509,229 71,844,535 and diluted netloss per share

CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands, unaudited)

YearEndedDecember31, 2020 2019 Cash flows (used in) provided by operating activities:Net loss $ (485,136 ) $ (98,864 )Adjustments to reconcile netloss to net cash (used in) provided by operatingactivities:Depreciation and amortization 69,495 38,952 Depreciation of rental 1,697 0 equipmentAmortization of right-of-use 6,895 6,000 assetsAllowance for doubtful accounts 5,284 2,665 Stock-based compensation 475,531 66,702 Deferred income taxes (90,158 ) (10,868 )Accretion of interest 45,296 25,438 Loss on extinguishment of debt 9,077 0 Change in fair value of (1,009 ) 1,248 contingent considerationChanges in operating assets and liabilities:Accounts receivable (21,091 ) (15,884 )Prepaid expenses and other (12,565 ) (2,685 )current assetsInventory (24,732 ) 0 Other assets (8,135 ) (105 )Accounts payable (87,995 ) 905 Accrued expenses and other 20,125 10,026 current liabilitiesAccrued compensation 34,819 4,546 Deferred Revenue 17,751 4,815 Operating lease liabilities (6,300 ) (2,417 )Other liabilities (2,360 ) (605 )Net cash (used in) provided by (53,511 ) 29,869 operating activitiesCash flows (used in) provided by investing activities:Capital expenditures (4,024 ) (3,510 )Capitalized software (22,018 ) (7,390 )development costsProceeds from marketable 2,496 52,100 securitiesInvestment in securities 0 (5,000 )Acquisitions of business, net (567,429 ) (11,187 )of cash acquiredNet cash (used in) provided by (590,975 ) 25,013 investing activitiesCash flows provided by financing activities:Net proceeds from the exercise 54,314 33,283 of stock optionsProceeds from issuance of 2027 1,000,000 0 NotesPayment of issuance costs of (24,070 ) 0 2027 NotesRepurchase of 2022 Notes (228,153 ) 0 Proceeds from the sale ofcapped call related to the 91,659 0 Livongo NotesProceeds from advances from 6,002 0 financing companiesPayment from customers againstadvances from financing (8,635 ) 0 companiesPayment of assumed indebtedness (10,000 ) 0 Proceeds from employee stock 4,722 3,380 purchase planCash paid for withholding taxeson stock-based compensation, (26,703 ) (1,569 )netNet cash provided by financing 859,136 35,094 activitiesNet increase in cash and cash 214,650 89,976 equivalentsForeign exchange difference 4,321 388 Cash and cash equivalents at 514,353 423,989 beginning of the periodCash and cash equivalents at $ 733,324 $ 514,353 end of the period Income taxes paid $ 1,324 $ 1,310 Interest paid $ 14,890 $ 12,224

Non-GAAP Financial Measures:

To supplement our financial information presented in accordance with GAAP, we use adjusted gross profit, adjusted gross margin, EBITDA and adjusted EBITDA, 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 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, which is shown separately) and adjusted gross margin is adjusted gross profit as a percentage of our total revenue. We believe that these measures provide 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, depreciation, amortization and loss on extinguishment of debt. 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. For presentation purposes, foreign exchange gain or loss is included in interest expense, net in our consolidated statement of operations.

Adjusted EBITDA consists of net loss before interest, foreign exchange gain or loss, taxes, depreciation, amortization, stock-based compensation, loss on extinguishment of debt 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. None of 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 GAAP as measures of performance.

Adjusted gross profit, adjusted gross margin, EBITDA and adjusted EBITDA have important limitations as analytical tools and you should not consider them in isolation or as a substitute for analysis of our results as reported under 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 these measures 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 GAAP measurements, to assist in the evaluation of operating performance. Such 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.

We have not reconciled EBITDA or adjusted EBITDA guidance to GAAP net income (loss) because we do not provide guidance on GAAP net income (loss) or the reconciling items between EBITDA and adjusted EBITDA and GAAP net income (loss) as a result of the uncertainty regarding, and the potential variability of, certain of these items, the effect of which may be significant. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measure is not available without unreasonable effort.

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 Ended YearEnded December31, December31, 2020 2019 2020 2019 Revenue $ 383,321 $ 156,489 $ 1,093,962 $ 553,307 Cost ofrevenue(exclusive ofdepreciationand (122,942 ) (55,355 ) (390,829 ) (184,465 ) amortization,which isshownseparatelybelow)Depreciationandamortization (2,846 ) (1,301 ) (12,394 ) (4,580 ) of intangibleassetsGross Profit 257,533 99,833 690,739 364,262 Depreciationandamortization 2,846 1,301 12,394 4,580 of intangibleassetsAdjusted $ 260,379 $ 101,134 $ 703,133 $ 368,842 gross profit Gross margin 67.2 % 63.8 % 63.1 % 65.8 %Adjusted 67.9 % 64.6 % 64.3 % 66.7 %gross margin

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, unaudited)

Quarter Ended YearEnded December31, December31, 2020 2019 2020 2019 Net loss $ (393,967 ) $ (19,044 ) $ (485,136 ) $ (98,864 ) Add: Loss onextinguishment 99 0 9,077 0 of debtInterest 20,819 7,581 60,495 29,013 expense, netIncome tax (85,457 ) (4,125 ) (90,857 ) (10,591 ) benefitDepreciation 1,783 682 4,766 3,382 expenseAmortization 35,177 9,205 64,729 35,570 expenseEBITDA (421,546 ) (5,701 ) (436,926 ) (41,490 ) Stock-based 414,380 18,457 475,531 66,702 compensationAcquisitionand 57,550 2,477 88,236 6,620 integrationrelated costsAdjusted $ 50,384 $ 15,233 $ 126,841 $ 31,832 EBITDA

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

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