Teladoc Health, Inc 10-Q for FY2020 Q3

Teladoc Health, Inc. (TDOC)

10-Q 2020-11-06 For: 2020-09-30

Added on April 07, 2026

About this 10-Q

Teladoc Health, Inc filed this 10-Q on November 6, 2020, covering the quarter ended September 30, 2020 (FY2020 Q3).

Headline figures

Quarter ended September 30, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $288.81M; up 109.3% from $137.97M a year earlier
Net loss: $35.88M; compared with a net loss of $20.35M a year earlier

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Delaware		04-3705970
(State of incorporation)		(I.R.S. Employer Identification No.)

2 Manhattanville Road, Suite 203
Purchase, New York		10577
(Address of principal executive office)		(Zip code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	TDOC	The New York Stock Exchange


Large accelerated filer	⌧	Accelerated filer	◻	Non-accelerated filer	◻	Smaller reporting company	☐
Emerging growth company	☐

		Page Number

PART I	Financial Information	2
Item 1.	Financial Statements	2
	Consolidated Balance Sheets as of September 30, 2020 (unaudited) and December 31, 2019	2
	Consolidated Statements of Operations (unaudited) for the quarters and nine months ended September 30, 2020 and 2019	3
	Consolidated Statements of Comprehensive Loss (unaudited) for the quarters and nine months ended September 30, 2020 and 2019	4
	Consolidated Statements of Stockholders’ Equity (unaudited) for the quarters and nine months ended September 30, 2020 and 2019	5
	Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2020 and 2019	6
	Notes to Unaudited Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	40
PART II	Other Information	41
Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	42
Item 6.	Exhibits	44
Exhibit Index		44
Signatures		46


	September 30,		December 31,
	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 of $4,661 and $3,787, respectively		85,803		56,948
Inventories		11,578		0
Prepaid expenses and other current assets		22,293		13,990
Total 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 liabilities		65,130		34,439
Accrued 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 current portion		30,326		24,994
Deferred revenue, net of current portion		4,884		2,300
Advances from financing companies, net of current portion		9,901		0
Deferred 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 of September 30, 2020 and December 31, 2019; 84,358,345 shares and 72,761,941 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively		84		73
Additional 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’ equity	$	3,449,385	$	1,602,827


	Quarter Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Revenue	$	288,812	$	137,969	$	710,641	$	396,818
Expenses:
Cost of revenue (exclusive of depreciation and amortization shown separately below)		104,725		42,799		267,887		129,110
Operating expenses:
Advertising and marketing		52,302		31,321		132,395		84,341
Sales		23,483		16,120		60,110		48,164
Technology and development		29,958		15,746		72,244		48,398
Legal and regulatory		2,812		1,634		6,266		5,239
Acquisition and integration related costs		25,395		1,995		30,686		4,143
General and administrative		56,930		38,681		156,433		113,212
Depreciation and amortization		12,932		9,617		32,535		29,065
Total expenses		308,537		157,913		758,556		461,672
Loss from operations		(19,725)		(19,944)		(47,915)		(64,854)
Loss on extinguishment of debt		1,227		0		8,978		0
Interest expense, net		17,222		7,700		39,676		21,432
Net loss before taxes		(38,174)		(27,644)		(96,569)		(86,286)
Income tax (benefit) expense		(2,290)		(7,298)		(5,400)		(6,466)
Net loss	$	(35,884)	$	(20,346)	$	(91,169)	$	(79,820)

Net loss per share, basic and diluted	$	(0.43)	$	(0.28)	$	(1.17)	$	(1.11)

Weighted-average shares used to compute basic and diluted net loss per share		83,607,902		72,151,094		77,821,073		71,601,790


								Accumulated
				Additional				Other		Total
	Common Stock			Paid-In		Accumulated		Comprehensive		Stockholders’
	Shares	Amount		Capital		Deficit		Loss		Equity
Balance of December 31, 2019	72,761,941	$	73	$	1,538,716	$	(507,525)	$	(17,239)	$	1,014,025
Exercise of stock options	671,279		0		14,830		0		0		14,830
Issuance of common stock upon vesting of restricted stock units	642,411		1		(1)		0		0		0
Issuance of common stock for 2022 Notes	655		0		58		0		0		58
Stock-based compensation	0		0		18,421		0		0		18,421
Other comprehensive loss, net of tax	0		0		0		0		(17,554)		(17,554)
Net loss	0		0		0		(29,603)		0		(29,603)
Balance as of March 31, 2020	74,076,286		74		1,572,024		(537,128)		(34,793)		1,000,177
Exercise of stock options	927,684		1		18,682		0		0		18,683
Issuance of common stock upon vesting of restricted stock units	109,768		0		(0)		0		0		0
Issuance of stock under employee stock purchase plan	35,901		0		2,473		0		0		2,473
Issuance of common stock for 2022 Notes	3,949,794		4		693,802		0		0		693,806
Equity portion of extinguishment of 2022 Notes	0		0		(715,151)		0		0		(715,151)
Equity component of 2027 Notes, net of issuance costs	0		0		285,601		0		0		285,601
Stock-based compensation	0		0		22,142		0		0		22,142
Other comprehensive loss, net of tax	0		0		0		0		12,880		12,880
Net loss	0		0		0		(25,682)		0		(25,682)
Balance as of June 30, 2020	79,099,433		79		1,879,573		(562,810)		(21,913)		1,294,929
Exercise of stock options	400,555		0		7,113		0		0		7,113
Issuance of common stock upon vesting of restricted stock units	49,396		0		(0)		0		0		0
Issuance of common stock for 2022 Notes	950		0		187		0		0		187
Equity portion of extinguishment of 2022 Notes	0		0		(44)		0		0		(44)
Issuance of common stock for 2025 Notes	187,346		0		37,780		0		0		37,780
Equity portion of extinguishment of 2025 Notes	0		0		(29,326)		0		0		(29,326)
Issuance of common stock in acquisition	4,620,665		5		918,813		0		0		918,818
Stock-based compensation	0		0		21,178		0		0		21,178
Other comprehensive loss, net of tax	0		0		0		0		16,285		16,285
Net loss	0		0		0		(35,884)		0		(35,884)
Balance as of September 30, 2020	84,358,345	$	84	$	2,835,274	$	(598,694)	$	(5,628)	$	2,231,036

Balance as of December 31, 2018	70,516,249	$	70	$	1,434,780	$	(408,661)	$	(13,070)	$	1,013,119
Exercise of stock options	564,102		1		8,853		0		0		8,854
Issuance of common stock upon vesting of restricted stock units	383,060		0		0		0		0		0
Stock-based compensation	0		0		13,523		0		0		13,523
Other comprehensive loss, net of tax	0		0		0		0		(3,788)		(3,788)
Net loss	0		0		0		(30,150)		0		(30,150)
Balance as of March 31, 2019	71,463,411		71		1,457,156		(438,811)		(16,858)		1,001,558
Exercise of stock options	350,219		1		6,846		0		0		6,847
Issuance of restricted stock units	85,035		0		0		0		0		0
Issuance of stock under employee stock purchase plan	35,716		0		1,875		0		0		1,875
Stock-based compensation	0		0		17,368		0		0		17,368
Other comprehensive loss, net of tax	0		0		0		0		4,316		4,316
Net loss	0		0		0		(29,324)		0		(29,324)
Balance as of June 30, 2019	71,934,381		72		1,483,245		(468,135)		(12,542)		1,002,640
Exercise of stock options	356,691		0		9,119		0		0		9,119
Issuance of restricted stock units	65,622		0		0		0		0		0
Issuance of common stock for 2022 Notes	155		0		8		0		0		8
Stock-based compensation	0		0		17,833		0		0		17,833
Other comprehensive loss, net of tax	0		0		0		0		(15,516)		(15,516)
Net loss	0		0		0		(20,346)		0		(20,346)
Balance as of September 30, 2019	72,356,849	$	72	$	1,510,205	$	(488,481)	$	(28,058)	$	993,738


	Quarter Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Access Fees:
U.S.	$	194,622	$	92,095	$	454,582	$	258,604
International		31,997		27,030		91,261		77,716
Visit Fee Revenue:
U.S. Paid Visits		35,074		14,142		105,013		47,473
U.S. Visit Fee Only		15,874		4,307		47,931		11,974
International Paid Visits		96		395		705		1,051
Other:
U.S.		10,299		0		10,299		0
International		850		0		850		0
Total Revenues	$	288,812	$	137,969	$	710,641	$	396,818


	InTouch Health
Purchase price, net of cash acquired	$	1,078,480
Less:
Accounts receivable		16,517
Inventory		9,444
Property and equipment, net		11,366
Others assets		7,506
Client relationships		110,240
Technology		29,190
Trademarks		32,630
Advances from financing companies		(26,012)
Accounts payable		(5,589)
Deferred revenue		(21,271)
Other liabilities		(23,004)
Goodwill	$	937,463


	Unaudited Pro Forma				Unaudited Pro Forma
	Quarters Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2020		2019		2020		2019
Revenue	$	288,812	$	159,965	$	762,995	$	457,093
Net loss	$	(27,772)	$	(27,734)	$	(100,990)	$	(100,287)


								Weighted
								Average
	Useful			Accumulated		Net Carrying		Remaining
	Life	Gross Value		Amortization		Value		Useful Life
September 30, 2020
Client relationships	2 to 20 years	$	350,600	$	(80,528)	$	270,072	15.1
Non-compete agreements	1.5 to 5 years		5,025		(4,682)		343	0.7
Trademarks	3 to 15 years		75,738		(9,919)		65,819	13.4
Patents	3 years		200		(200)		0	0
Internal-use software and other	3 to 5 years		80,301		(29,962)		50,339	3.9
Intangible assets, net		$	511,864	$	(125,291)	$	386,573	12.6
December 31, 2019
Client relationships	2 to 20 years	$	237,182	$	(60,647)	$	176,535	13.1
Non-compete agreements	1.5 to 5 years		4,958		(4,260)		698	1.4
Trademarks	3 to 15 years		42,606		(7,143)		35,463	12.9
Patents	3 years		200		(200)		0	0
Internal-use software and other	3 to 5 years		34,850		(22,093)		12,757	2.3
Intangible assets, net		$	319,796	$	(94,343)	$	225,453	12.4


	As of September 30,			As of December 31,
	2020		2019
Beginning balance	$	746,079	$	737,197
Additions associated with acquisitions		937,463		10,604
Cumulative translation adjustment		7,813		(1,722)
Goodwill	$	1,691,355	$	746,079


	2020		2019
Professional fees	$	3,011	$	1,535
Consulting fees/provider fees		19,255		10,618
Client performance guarantees		3,575		3,298
Legal fees		2,364		1,077
Interest payable		6,492		838
Income tax payable		2,704		2,859
Insurance		3,205		1,263
Marketing		5,983		2,810
Operating lease liabilities - current		7,276		5,088
Earnout		4,552		0
Other		6,713		5,053
Total	$	65,130	$	34,439


	September 30, 2020
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	1,187,299	$	0	$	0	$	1,187,299
Short-term investments	$	0	$	3,070	$	0	$	3,070
Contingent liability	$	0	$	0	$	4,552	$	4,552


Fair value at December 31, 2019	$	4,769
Payments		0
Change in fair value		(432)
Currency translation adjustment		215
Fair value at September 30, 2020	$	4,552


	As of
Operating Leases:	September 30, 2020
2020	$	4,712
2021		13,161
2022		6,533
2023		962
Total receipts on noncancelable operating leases	$	25,368


	As of September 30,
Liability component	2020
Principal	$	1,000,000
Less: Debt discount, net (1)		(296,760)
Net carrying amount	$	703,240


	As of September 30,		As of December 31,
Liability component	2020		2019
Principal	$	277,557	$	287,500
Less: Debt discount, net (2)		(69,262)		(81,207)
Net carrying amount	$	208,295	$	206,293


	Quarters Ended						Nine Months Ended
	September 30,						September 30,
	2020			2019			2020			2019
Contractual interest expense	$	971		$	988		$	2,947		$	2,965
Amortization of debt discount		3,170			2,949			9,379			8,677
Total	$	4,141		$	3,937		$	12,326		$	11,642
Effective interest rate of the liability component		7.9	%		7.9	%		7.9	%		7.9	%


				Weighted-
		Weighted-		Average
	Number of	Average		Remaining	Aggregate
	Shares	Exercise		Contractual	Intrinsic
	Outstanding	Price		Life in Years	Value
Balance at December 31, 2019	5,206,980	$	24.47	7.03	$	308,538
Stock option grants	344,413	$	32.60	N/A
Stock options exercised	(1,999,518)	$	20.49	N/A	$	(288,909)
Stock options forfeited	(162,161)	$	33.14	N/A
Balance at September 30, 2020	3,389,714	$	27.58	6.34	$	649,682
Vested or expected to vest at September 30, 2020	3,389,714	$	27.58	6.34	$	649,682
Exercisable at September 30, 2020	2,610,779	$	22.18	6.19	$	514,480


		Weighted-Average
		Grant Date
	RSUs	Fair Value Per RSU
Balance at December 31, 2019	1,483,558	$	54.13
Granted	400,894	$	137.01
Vested and issued	(615,123)	$	52.33
Forfeited	(97,771)	$	58.48
Balance at September 30, 2020	1,171,558	$	58.82
Vested and unissued at September 30, 2020	13,755	$	50.90
Non-vested at September 30, 2020	1,157,803	$	58.91


	Payment Due by Period
			Less than		1 to 3		4 to 5		More than
	Total		1 Year		Years		Years		5 Years
Operating leases	$	44,465	$	2,499	$	17,970	$	15,488	$	8,508
Debt obligations under the Convertible Notes		1,324,322		0		46,765		277,557		1,000,000
Interest associated with the Convertible Notes		107,240		17,719		33,669		32,633		23,219
Total	$	1,476,027	$	20,218	$	98,404	$	325,678	$	1,031,727


		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File No.	Exhibit	Filing Date	Filed Herewith


2.1	Agreement and Plan of Merger, dated January 11, 2020, by and among Teladoc Health, Inc., Jonata Sub One, Inc., Jonata Sub Two, Inc., InTouch Technologies, Inc. and Fortis Advisors LLC, as equity holder representative	8-K	001-37477	2.1	1/13/20

2.2	Agreement and Plan of Merger, dated as of August 5, 2020, by and among Teladoc Health, Inc., Tempranillo Merger Sub, Inc. and Livongo Health, Inc.	8-K	001-37477	2.1	8/6/20

3.1	Sixth Amended and Restated Certificate of Incorporation of Teladoc, Inc.	8-K	001-37477	3.1	5/31/17

3.2	Certificate of Amendment to the Sixth Amended and Restated Certificate of Incorporation of Teladoc, Inc.	8-K	001-37477	3.1	6/1/18

3.3	Second Certificate of Amendment to the Sixth Amended and Restated Certificate of Incorporation of Teladoc, Inc.	8-K	001-37477	3.1	8/10/18

3.4	Certificate of Amendment to the Sixth Amended and Restated Certificate of Incorporation of Teladoc Health, Inc.	8-K	001-37477	3.1	10/30/20

3.5	Fourth Amended and Restated Bylaws of Teladoc Health, Inc.	8-K	001-37477	3.1	2/25/19

10.1	Voting Agreement, dated as of August 5, 2020, by and among Teladoc Health, Inc., Tempranillo Merger Sub, Inc., General Catalyst Group VI, L.P., General Catalyst Group VIII, L.P., General Catalyst Group VIII Supplemental, L.P., GC Venture LH Manager, LLC, Kinnevik Internet Lux S.a.r.l., 7Wire Ventures LLC, Glen Tullman and Lee Shapiro.	8-K	001-37477	10.1	8/6/20

31.1	Chief Executive Officer—Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					*

31.2	Chief Financial Officer—Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					*

	TELADOC HEALTH, INC.

Date: November 6, 2020	By:	/s/ JASON GOREVIC
	Name:	Jason Gorevic
	Title:	Chief Executive Officer

Date: November 6, 2020	By:	/s/ MALA MURTHY
	Name:	Mala Murthy
	Title:	Chief Financial Officer