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PRESS RELEASE: Paid content from Globe Newswire
Press release content from Globe Newswire. The AP news staff was not involved in its creation.

Teladoc Health Reports Fourth-Quarter and Full-Year 2019 Results

February 26, 2020 GMT

Year-over-year Q4 revenue grows 27% to $156.5 million and total visits increase 44% to 1.2 million

Year-over-year full year revenue grows 32% to $553.3 million and total visits increase 57% to 4.1 million

Issues Initial 2020 guidance

PURCHASE, NY, Feb. 26, 2020 (GLOBE NEWSWIRE) -- Teladoc Health, Inc. (NYSE: TDOC), the global leader in virtual care, today reported financial results for the fourth quarter and full year ending December 31, 2019.

“We demonstrated outstanding performance in the fourth quarter and full year of 2019 as we reported record results that were at the high end or exceeded our expectations on all key metrics. Our diversified growth strategies are driving strong growth across our channels,” said Jason Gorevic, chief executive officer. “Looking forward, we are well positioned with significant momentum to extend our leadership position and to meet the increasing demand for our comprehensive service offering.”

Financial Highlights for the Fourth Quarter and Full Year Ended December 31, 2019

Revenue ($ thousands) Quarter Ended Year over Year Year Ended Year over Year December 31, Growth December 31, Growth -------------------- -------------- -------------------- -------------- 2019 2018 2019 2018 --------- --------- --------- --------- Subscription Access Fees Revenue U.S. $ 98,052 $ 78,340 25% $ 356,656 $ 277,091 29% International 28,924 24,362 19% 106,640 73,693 45% - ------- - ------- - ------- - ------- Total 126,976 102,702 24% 463,296 350,784 32% Visit Fee Revenue U.S. Paid Visits 21,265 15,752 35% 68,738 53,074 30% U.S. Visit Fee Only 7,957 3,751 112% 19,931 12,508 59% International Paid Visits 291 536 (46)% 1,342 1,541 (13)% - ------- - ------- - ------- - ------- Total 29,513 20,039 47% 90,011 67,123 34% - ------- - ------- - ------- - ------- Total Revenue* $ 156,489 $ 122,741 27% $ 553,307 $ 417,907 32% - ------- - ------- - ------- - ------- *Organic fourth-quarter 2019 revenue, excluding MedecinDirect, increased by 27 percent year over year. Organic full year ended 2019 revenue, excluding Advance Medical and MedecinDirect, increased by 24 percent year over year.

Membership & Visit Fee Only Access (millions) Year Year Ended over Year December Growth 31, ---------- ------- 2019 2018 ---- ---- Total U.S. Paid Membership 36.7 22.8 61.1 % Total U.S. Visit Fee Only Access 19.3 9.5 104.2 %

Visits (thousands) Quarter Full Year Year over Year Year over Year 2019 2018 Growth Growth ----------------------------------- - ----------------------------------- - --------- -------- Q1 Q2 Q3 Q4 YTD Q1 Q2 Q3 Q4 YTD ------- ------ ------ ------- ------- ------- ------ ------ ------- ------- Paid Visits from U.S. 365 291 278 441 1,375 298 218 202 302 1,020 46 % 35 % Paid Membership Percent of Paid Visits from U.S. 51 % 48 % 45 % 52 % 49 % 54 % 50 % 46 % 50 % 50 % 4 % (2 ) % Paid Membership Visits Included from 353 319 344 409 1,425 256 218 237 305 1,016 34 % 40 % U.S. Paid Membership Total Visits from U.S. 718 610 622 850 2,800 554 436 439 607 2,036 40 % 38 % Paid Membership U.S. Visit 63 54 62 125 304 51 37 36 49 173 154 % 76 % Fee Only International 282 244 244 264 1,034 1 60 166 205 432 29 % 139 % Visits ----- - ---- - ---- - ----- - ----- - ----- - ---- - ---- - ----- - ----- - Total Visits 1,063 908 928 1,239 4,138 606 533 641 861 2,641 44 % 57 % ----- - ---- - ---- - ----- - ----- - ----- - ---- - ---- - ----- - ----- - Utilization 11.00 % 9.10 % 7.98 % 9.49 % 9.34 % 10.90 % 8.04 % 7.81 % 10.75 % 9.35 % (126 ) pt 1 pt

-- Net loss was $(19.0) million for the fourth quarter 2019 compared to $(24.9) million for the fourth quarter 2018. Net loss was $(98.9) million for the full year 2019 compared to $(97.1) million for the full year 2018. -- Net loss per basic and diluted share was $(0.26) for the fourth quarter 2019 compared to $(0.35) for the fourth quarter 2018. Net loss per basic and diluted share was $(1.38) for the full year 2019 compared to $(1.47) for the full year 2018. -- Gross margin was 64.6 percent for the fourth quarter 2019 compared to 67.4 percent for the fourth quarter 2018. Gross margin was 66.7 percent for the full year 2019 compared to 69.2 percent for the full year 2018. -- EBITDAwas $(5.7) million for the fourth quarter 2019 compared to $(8.3) million for the fourth quarter 2018. EBITDA was $(41.5) million for the full year 2019 compared to $(35.3) million for the full year 2018. -- Adjusted EBITDA was a positive $15.2 million for the fourth quarter 2019 compared to a positive $5.8 million for the fourth quarter 2018. Adjusted EBITDA was a positive $31.8 million for the full year 2019 compared to a positive $13.4 million for the full year 2018.

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.

For the first-quarter 2020, we expect:

-- Total revenue to be in the range of $169 million to $172 million. -- EBITDA loss to be in the range of $(9) million to $(7) million. -- Adjusted EBITDA to be in the range of $9 million to $11 million. -- Total U.S. paid membership to be approximately 40 million to 41 million members and visit-fee-only access to be available to approximately 19.2 million individuals. -- Total visits to be between 1.4 million and 1.6 million. -- Net loss per share, based on 73.1 million weighted average shares outstanding, to be between $(0.37) and $(0.34).

For the full-year 2020, we expect:

-- Total revenue to be in the range of $695 million to $710 million. -- EBITDA loss to be in the range of $(15) million to $(5) million. -- Adjusted EBITDA to be in the range of positive $60 million to $70 million. -- Total U.S. paid membership to be approximately 43 million to 45 million members and visit-fee-only access to be available to approximately 19 to 20 million individuals. -- Total visits to be between 5.5 million to 5.9 million. -- Net loss per share, based on 73.7 million weighted average shares outstanding, to be between $(1.19) and $(1.06).

Quarterly Conference Call

The fourth quarter and full year 2019 earnings conference call and webcast will be held Wednesday, February 26, 2020 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: 8784129 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 2,400 employees, the organization delivers care in more than 175 countries and in more than 40 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) December 31, December 31, 2019 2018 ------------- ------------- Assets Current assets: Cash and cash equivalents $ 514,353 $ 423,989 Short-term investments 2,711 54,545 Accounts receivable, net of allowance of $3,787 and $3,382, respectively 56,948 43,571 Prepaid expenses and other current assets 13,990 10,631 - --------- - - --------- - Total current assets 588,002 532,736 Property and equipment, net 10,296 10,148 Goodwill 746,079 737,197 Intangible assets, net 225,453 247,394 Operating lease - right-of-use assets 26,452 0 Other assets 6,545 1,401 - --------- - - --------- - Total assets $ 1,602,827 $ 1,528,876 - --------- - - --------- - Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 9,075 $ 7,769 Accrued expenses and other current liabilities 49,848 26,801 Accrued compensation 31,258 27,869 - --------- - - --------- - Total current liabilities 90,181 62,439 Other liabilities 11,539 6,191 Operating lease liabilities, net of current portion 24,994 0 Deferred taxes 21,678 32,444 Convertible senior notes, net 440,410 414,683 Commitments and contingencies Stockholders’ equity: Common stock, $0.001 par value; 150,000,000 shares authorized as of December 31, 2019 73 70 and 2018; 72,761,941 shares and 70,516,249 shares issued and outstanding as of December 31, 2019 and 2018, respectively Additional paid-in capital 1,538,716 1,434,780 Accumulated deficit (507,525 ) (408,661 ) Accumulated other comprehensive loss (17,239 ) (13,070 ) - --------- - - --------- - Total stockholders’ equity 1,014,025 1,013,119 - --------- - - --------- - Total liabilities and stockholders’ equity $ 1,602,827 $ 1,528,876 - --------- - - --------- -

CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share and per share data, unaudited) Quarter Ended December 31, Year Ended December 31, ------------------------------ ------------------------------ 2019 2018 2019 2018 ------------ - ------------ - ------------ - ------------ - Revenue $ 156,489 $ 122,741 $ 553,307 $ 417,907 Expenses: Cost of revenue (exclusive of depreciation and 55,355 40,028 184,465 128,735 amortization shown separately below) Operating expenses: Advertising and marketing 25,356 23,555 109,697 85,109 Sales 16,751 14,509 64,915 59,154 Technology and development 16,246 13,544 64,644 54,373 Legal and regulatory 1,523 1,490 6,762 3,981 Acquisition and integration related costs 2,477 1,434 6,620 10,391 Gain on sale 0 0 0 (5,500 ) General and administrative 44,482 36,461 157,694 116,916 Depreciation and amortization 9,887 9,557 38,952 35,602 - ---------- - - ---------- - - ---------- - - ---------- - Total expenses 172,077 140,578 633,749 488,761 - ---------- - - ---------- - - ---------- - - ---------- - Loss from operations (15,588 ) (17,837 ) (80,442 ) (70,854 ) Interest expense, net 7,581 6,663 29,013 26,112 - ---------- - - ---------- - - ---------- - - ---------- - Net loss before taxes (23,169 ) (24,500 ) (109,455 ) (96,966 ) Income tax benefit (4,125 ) 379 (10,591 ) 118 - ---------- - - ---------- - - ---------- - - ---------- - Net loss $ (19,044 ) $ (24,879 ) $ (98,864 ) $ (97,084 ) - ---------- - - ---------- - - ---------- - - ---------- - Net loss per share, basic and diluted $ (0.26 ) $ (0.35 ) $ (1.38 ) $ (1.47 ) - ---------- - - ---------- - - ---------- - - ---------- - Weighted-average shares used to compute basic 72,564,855 70,239,511 71,844,535 65,844,908 and diluted net loss per share - ---------- - - ---------- - - ---------- - - ---------- -

CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands, unaudited) Year Ended December 31, ------------------------- 2019 2018 ----------- ------------ Cash flows provided by (used in) operating activities: Net loss $ (98,864 ) $ (97,084 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 44,952 35,602 Allowance for doubtful accounts 2,665 2,243 Stock-based compensation 66,702 43,769 Deferred income taxes (10,868 ) (2,247 ) Accretion of interest 25,438 19,487 Gain on sale 0 (5,500 ) Changes in operating assets and liabilities: Accounts receivable (15,884 ) (10,931 ) Prepaid expenses and other current assets (2,685 ) (2,612 ) Other assets (105 ) (414 ) Accounts payable 905 (391 ) Accrued expenses and other current liabilities 14,841 3,993 Accrued compensation 4,546 8,480 Operating lease liabilities (2,417 ) 0 Other liabilities 643 745 - ------- - - -------- - Net cash provided by (used in) operating activities 29,869 (4,860 ) Cash flows provided by (used in) investing activities: Purchase of property and equipment (3,510 ) (4,011 ) Purchase of internal-use software (7,390 ) (4,396 ) Purchase of marketable securities 0 (56,347 ) Proceeds from marketable securities 52,100 84,170 Sale of assets (0 ) 5,530 Investment in securities (5,000 ) 0 Acquisition of business, net of cash acquired (11,187 ) (282,442 ) - ------- - - -------- - Net cash provided by (used in) investing activities 25,013 (257,496 ) Cash flows provided by financing activities: Net proceeds from the exercise of stock options 33,283 31,322 Proceeds from issuance of convertible notes 0 279,152 Proceeds from borrowing under bank and other debt 0 10 Proceeds from issuance of common stock 0 330,843 Proceeds from employee stock purchase plan 3,380 2,564 Cash (paid) received for withholding taxes on stock-based compensation, net (1,569 ) 1,721 - ------- - - -------- - Net cash provided by financing activities 35,094 645,612 - ------- - - -------- - Net increase in cash and cash equivalents 89,976 383,256 Foreign exchange difference 388 (2,084 ) Cash and cash equivalents at beginning of the period 423,989 42,817 - ------- - - -------- - Cash and cash equivalents at end of the period $ 514,353 $ 423,989 - ------- - - -------- - Income taxes paid $ 1,310 $ 441 - ------- - - -------- - Interest paid $ 12,224 $ 10,303 - ------- - - -------- -

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 gross margin, EBITDA and Adjusted EBITDA, which are non-U.S. GAAP financial measures to clarify and enhance an understanding of past performance. We believe that the presentation of these financial measures enhances an investor’s understanding of our financial performance. We further believe that these financial measures are useful financial metrics to assess our operating performance from period-to-period by excluding certain items that we believe are not representative of our core business. We use certain financial measures for business planning purposes and in measuring our performance relative to that of our competitors. We utilize Adjusted EBITDA as the primary measure of our performance.

Gross margin is our total revenue minus our total cost of revenue (exclusive of depreciation and amortization shown separately) 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, 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, stock-based compensation, gain on sale 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 gross margin, 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.

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:

-- 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; -- 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; -- Adjusted EBITDA does not reflect the significant gain on sale of certain non-core business contracts; -- 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 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 gross margin, EBITDA and Adjusted EBITDA do not reflect any expenditures for such replacements.

We compensate for these limitations by using 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 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.

Reconciliation of EBITDA and Adjusted EBITDA to Net Loss (In thousands, unaudited) Quarter Ended Year Ended December 31, December 31, ------------------------ ------------------------ 2019 2018 2019 2018 --------- - --------- - --------- - --------- - Net loss $ (19,043 ) $ (24,879 ) $ (98,864 ) $ (97,084 ) Add: Interest expense, net 7,581 6,663 29,013 26,112 Income tax benefit (4,125 ) 379 (10,591 ) 118 Depreciation expense 682 939 3,382 4,057 Amortization expense 9,205 8,618 35,570 31,545 - ------- - - ------- - - ------- - - ------- - EBITDA (5,700 ) (8,280 ) (41,490 ) (35,252 ) Stock-based compensation 18,457 12,683 66,702 43,769 Gain on sale 0 0 0 (5,500 ) Acquisition and integration related costs 2,477 1,434 6,620 10,391 - ------- - - ------- - - ------- - - ------- - Adjusted EBITDA $ 15,234 $ 5,837 $ 31,832 $ 13,408 - ------- - - ------- - - ------- - - ------- -

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

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