Teladoc Health, Inc 10-Q for FY2021 Q3

Teladoc Health, Inc. (TDOC)

10-Q 2021-11-01 For: 2021-09-30

Added on April 07, 2026

About this 10-Q

Teladoc Health, Inc filed this 10-Q on November 1, 2021, covering the quarter ended September 30, 2021 (FY2021 Q3).

Headline figures

Quarter ended September 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $521.66M; up 80.6% from $288.81M a year earlier
Net loss: $84.34M; compared with a net loss of $35.88M 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, 2021 (unaudited) and December 31, 2020	2
	Consolidated Statements of Operations and Comprehensive Loss (unaudited) for the quarters and nine months ended September 30, 2021 and 2020	3
	Consolidated Statements of Stockholders’ Equity (unaudited) for the quarters and nine months ended September 30, 2021 and 2020	4
	Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2021 and 2020	5
	Notes to Unaudited Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	35
PART II	Other Information	37
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 6.	Exhibits	38
Exhibit Index		38
Signatures		40


	September 30,		December 31,
	2021		2020

Assets
Current assets:
Cash and cash equivalents	$	823,828	$	733,324
Short-term investments		2,538		53,245
Accounts receivable, net of allowance of $11,277 and $6,412, respectively		178,072		169,281
Inventories		56,937		56,498
Prepaid expenses and other current assets		95,941		47,259
Total current assets		1,157,316		1,059,607
Property and equipment, net		27,027		28,551
Goodwill		14,470,399		14,581,255
Intangible assets, net		1,932,012		2,020,864
Operating lease - right-of-use assets		47,935		46,647
Other assets		17,890		18,357
Total assets	$	17,652,579	$	17,755,281
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	34,655	$	46,030
Accrued expenses and other current liabilities		106,252		83,657
Accrued compensation		75,891		94,593
Deferred revenue-current		72,865		52,356
Advances from financing companies		12,442		13,453
Current portion of long-term debt		0		42,560
Total current liabilities		302,105		332,649
Other liabilities		1,328		1,616
Operating lease liabilities, net of current portion		42,729		43,142
Deferred revenue, net of current portion		4,075		2,449
Advances from financing companies, net of current portion		9,561		9,926
Deferred taxes		93,824		102,103
Convertible senior notes, net		1,211,375		1,379,592
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value; 300,000,000 shares authorized as of September 30, 2021 and December 31, 2020; 160,013,751 shares and 150,281,099 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		160		150
Additional paid-in capital		17,399,023		16,857,797
Accumulated deficit		(1,410,469)		(992,661)
Accumulated other comprehensive (loss) gain		(1,132)		18,518
Total stockholders’ equity		15,987,582		15,883,804
Total liabilities and stockholders’ equity	$	17,652,579	$	17,755,281


	Quarter Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenue	$	521,658	$	288,812	$	1,478,472	$	710,641
Expenses:
Cost of revenue (exclusive of depreciation and amortization, which is shown separately below)		169,041		104,725		475,273		267,887
Operating expenses:
Advertising and marketing		111,078		52,302		303,738		132,395
Sales		62,602		23,483		191,251		60,110
Technology and development		80,250		29,958		239,017		72,244
Acquisition, integration and transformation costs		4,340		25,395		22,084		30,686
General and administrative		103,016		59,742		319,404		162,699
Depreciation and amortization		51,907		12,932		151,907		32,535
Total expenses		582,234		308,537		1,702,674		758,556
Loss from operations		(60,576)		(19,725)		(224,202)		(47,915)
Loss on extinguishment of debt		850		1,227		43,728		8,978
Other expense (income), net		376		252		(5,493)		827
Interest expense, net		18,895		16,970		61,493		38,849
Net loss before taxes		(80,697)		(38,174)		(323,930)		(96,569)
Income tax expense (benefit)		3,643		(2,290)		93,878		(5,400)
Net loss		(84,340)		(35,884)		(417,808)		(91,169)
Other comprehensive (loss) gain, net of tax:
Cumulative translation adjustment		(13,423)		16,285		(19,650)		11,610
Comprehensive loss	$	(97,763)	$	(19,599)	$	(437,458)	$	(79,559)

Net loss per share, basic and diluted	$	(0.53)	$	(0.43)	$	(2.68)	$	(1.17)

Weighted-average shares used to compute basic and diluted net loss per share		159,435,165		83,607,902		155,926,680		77,821,073


								Accumulated
				Additional				Other		Total
	Common Stock			Paid-In		Accumulated		Comprehensive		Stockholders’
	Shares	Amount		Capital		Deficit		Gain (Loss)		Equity
Balance as of June 30, 2021	159,462,978	$	159	$	17,314,749	$	(1,326,129)	$	12,291	$	16,001,070
Exercise of stock options	216,882		1		5,174		0		0		5,175
Issuance of common stock upon vesting of restricted stock units	235,674		0		(0)		0		0		0
Issuance of common stock for conversion/exchange of 2025 Notes	98,217		0		14,868		0		0		14,868
Equity portion of extinguishment of 2025 Notes	0		0		(10,079)		0		0		(10,079)
Stock-based compensation	0		0		74,311		0		0		74,311
Other comprehensive loss, net of tax	0		0		0		0		(13,423)		(13,423)
Net loss	0		0		0		(84,340)		0		(84,340)
Balance as of September 30, 2021	160,013,751	$	160	$	17,399,023	$	(1,410,469)	$	(1,132)	$	15,987,582

Balance as of December 31, 2020	150,281,099	$	150	$	16,857,797	$	(992,661)	$	18,518	$	15,883,804
Exercise of stock options, net	2,123,935		3		22,953		0		0		22,956
Issuance of common stock upon vesting of restricted stock units	1,490,879		1		(1)		0		0		0
ESPP	82,088		0		10,539		0		0		10,539
Issuance of common stock for 2022 Convertible Notes	1,058,373		1		270,111		0		0		270,112
Issuance of common stock for 2025 Notes	5,182,656		5		920,514		0		0		920,519
Recovery of excess common stock issued for acquisition (see Note 4)	(205,279)		(0)		(40,329)		0		0		(40,329)
Equity portion of extinguishment of 2025 Notes	0		0		(668,507)		0		0		(668,507)
Equity portion of extinguishment of 2022 Notes	0		0		(224,081)		0		0		(224,081)
Stock-based compensation	0		0		250,027		0		0		250,027
Other comprehensive loss, net of tax	0		0		0		0		(19,650)		(19,650)
Net loss	0		(0)		0		(417,808)		0		(417,808)
Balance as of September 30, 2021	160,013,751	$	160	$	17,399,023	$	(1,410,469)	$	(1,132)	$	15,987,582

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 conversion/redemption of 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 conversion/exchange of 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 gain, 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, 2019	72,761,941	$	73	$	1,538,716	$	(507,525)	$	(17,239)	$	1,014,025
Exercise of stock options, net	1,999,518		1		40,625		0		0		40,626
Issuance of common stock upon vesting of restricted stock units	801,575		1		(1)		0		0		0
ESPP	35,901		0		2,473		0		0		2,473
Issuance of common stock for 2022 Convertible Notes	3,951,399		4		694,047		0		0		694,051
Issuance of common stock for 2025 Notes	187,346		0		37,780		0		0		37,780
Issuance of common stock in acquisition	4,620,665		5		918,813		0		0		918,818
Equity portion of extinguishment of 2022 Notes	0		0		(715,195)		0		0		(715,195)
Equity portion of extinguishment of 2025 Notes	0		0		(29,326)		0		0		(29,326)
Equity component of 2027 Notes, net of issuance costs	0		0		285,601		0		0		285,601
Stock-based compensation	0		0		61,741		0		0		61,741
Other comprehensive gain, net of tax	0		0		0		0		11,611		11,611
Net loss	0		0		0		(91,169)		0		(91,169)
Balance as of September 30, 2020	84,358,345	$	84	$	2,835,274	$	(598,694)	$	(5,628)	$	2,231,036


	Quarter Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Access Fees Revenue
U.S.	$	413,594	$	194,622	$	1,161,084	$	454,582
International		37,989		31,997		112,699		91,261
Total		451,583		226,619		1,273,783		545,843

Visit Fee Revenue
U.S.		59,863		50,948		173,399		152,944
International		116		96		368		705
Total		59,979		51,044		173,767		153,649

Other
U.S.		9,583		10,299		29,617		10,299
International		513		850		1,305		850
Total		10,096		11,149		30,922		11,149

Total Revenues	$	521,658	$	288,812	$	1,478,472	$	710,641


	As of		As of
	September 30,		December 31,
	2021		2020
Deferred costs and other, current	$	20,243	$	3,468
Deferred costs and other, noncurrent		7,788		2,179
Total deferred costs and other	$	28,031	$	5,647


	Deferred Costs and Other
Beginning balance as of December 31, 2020	$	5,647
Additions		34,554
Cost of revenue recognized		(12,170)
Ending balance as of September 30, 2021	$	28,031


	Livongo		InTouch
Purchase price, net of cash acquired	$	13,876,931	$	1,069,759
Less:
Accounts receivable		80,084		16,986
Short term investment		52,500		0
Inventory		24,299		8,492
Property and equipment, net		8,952		11,366
Right of use assets		15,056		4,965
Other assets		17,337		2,541
Client relationships		1,050,000		164,580
Technology		300,000		29,190
Trademarks		250,000		32,630
Advances from financing companies		0		(26,012)
Accounts payable		(119,302)		(5,589)
Deferred revenue		(997)		(20,729)
Convertible notes		(453,417)		0
Deferred taxes		(37,980)		(30,102)
Lease liabilities		(18,834)		(5,495)
Other liabilities		(46,606)		(13,042)
Goodwill	$	12,755,839	$	899,978


	Unaudited Pro Forma
	Quarter Ended		Nine Months Ended
	September 30,		September 30,
(in thousands)	2020		2020
Revenue	$	395,519	$	1,026,957
Net loss	$	(93,149)	$	(778,287)


	As of September 30,		As of December 31,
	2021		2020
Raw materials and purchased parts	$	21,836	$	19,591
Work in process		501		1,431
Finished goods		34,600		35,476
Total inventories	$	56,937	$	56,498


									Weighted
									Average
									Remaining
	Useful			Accumulated		Net Carrying			Useful Life
	Life	Gross Value		Amortization		Value			(Years)
September 30, 2021
Client relationships	2 to 20 years	$	1,467,396	$	(174,523)	$	1,292,873		14.8
Non-compete agreements	1.5 to 5 years		5,008		(5,008)		0
Trademarks	3 to 15 years		326,594		(38,075)		288,519		9.7
Patents	3 years		200		(200)		0
Capitalized software development costs	3 to 5 years		97,779		(35,717)		62,062		2.7
Technology	5 to 7 years		342,039		(53,481)		288,558		5.9
Intangible assets, net		$	2,239,016	$	(307,004)	$	1,932,012		12.3
December 31, 2020
Client relationships	2 to 20 years	$	1,460,648	$	(100,844)	$	1,359,804	`	15.4
Non-compete agreements	1.5 to 5 years		5,097		(4,872)		225		0.4
Trademarks	3 to 15 years		326,786		(15,576)		311,210		10.5
Patents	3 years		200		(200)		0
Capitalized software development costs	3 to 5 years		52,518		(24,771)		27,747		2.8
Technology	5 to 7 years		338,150		(16,272)		321,878		6.6
Intangible assets, net		$	2,183,399	$	(162,535)	$	2,020,864		13.1


	September 30, 2021
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	823,828	$	0	$	0	$	823,828
Short-term investments	$	0	$	2,538	$	0	$	2,538


	Nine Months Ended September 30,
	2021		2020
Cash flows provided by operating activities:
Net loss	$	(417,808)	$	(91,169)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		151,907		32,535
Depreciation of rental equipment		2,500		851
Amortization of right-of-use assets		8,185		4,643
Allowance for doubtful accounts		11,353		2,320
Stock-based compensation		240,971		61,151
Deferred income taxes		91,414		(4,096)
Accretion of interest		46,843		29,459
Loss on extinguishment of debt		40,631		8,978
Gain on sale of investment		(5,901)		0
Other, net		38		216
Changes in operating assets and liabilities:
Accounts receivable		(19,407)		(16,450)
Prepaid expenses and other current assets		(34,566)		(5,906)
Inventory		(2,661)		(2,392)
Other assets		(3,432)		140
Accounts payable		(11,115)		6,584
Accrued expenses and other current liabilities		15,880		17,269
Accrued compensation		(17,352)		9,329
Deferred revenue		20,002		15,348
Operating lease liabilities		(8,202)		(4,360)
Other liabilities		1,502		(3,025)
Net cash provided by operating activities		110,782		61,425
Cash flows used in investing activities:
Capital expenditures		(5,611)		(2,872)
Capitalized software development costs		(35,402)		(14,515)
Proceeds from marketable securities		50,000		0
Proceeds from the sale of investment		10,901		0
Acquisitions of business, net of cash acquired		(75,944)		(159,663)
Other, net		3,150		0
Net cash used in investing activities		(52,906)		(177,050)
Cash flows provided by financing activities:
Net proceeds from the exercise of stock options		22,956		40,627
Proceeds from issuance of 2027 Notes		0		1,000,000
Payment of issuance costs of 2027 Notes		0		(24,070)


	As of September 30,		As of December 31,
	2021		2020
Professional fees	$	2,726	$	4,717
Consulting fees/provider fees		16,253		23,167
Client performance guarantees		8,817		7,215
Interest payable		5,811		2,049
Income tax payable		1,385		1,627
Insurance		6,272		3,139
Marketing		5,733		2,815
Operating lease liabilities - current		13,148		11,438
Earnout		0		4,514
Acquisition & Integration		4,212		1,036
Franchise and Sales Taxes		5,802		2,099
Device Replacement Cost		6,263		0
Other		29,831		19,841
Total	$	106,252	$	83,657


Fair value and historical cost basis at December 31, 2020	$	5,000
Upward adjustment due to observable price change in identical securities		5,901
Sale of investment		(10,901)
Fair value at September 30, 2021	$	0


	As of
Operating Leases:	September 30, 2021
2021	$	14,594
2022		14,872
2023		10,927
2024		7,233
2025		6,028
2026 and thereafter		13,997
Total future minimum payments	$	67,651


Fair value at December 31, 2020	$	4,514
Payments		(4,367)
Change in fair value		0
Currency translation adjustment		(147)
Fair value at September 30, 2021	$	0



	2027 Notes			2025 Notes			Livongo Notes
Interest Rate Per Year		1.25	%		1.375	%		0.875	%
Fair Value as of September 30, 2021 (in millions)	$	970.5		$	2.1		$	710.6
Maturity Date		June 1, 2027			May 15, 2025			June 1, 2025
Optional Redemption Date		June 5, 2024			May 22, 2022			June 5, 2023
Conversion Date		December 1, 2026			November 15, 2024			March 1, 2025
Conversion Rate Per $1,000 Principal Amount as of September 30, 2021		4.1258			18.6621			13.94
Remaining Contractual Life as of September 30, 2021		5.7 years			3.6 years			3.7 years


	Quarters Ended							Nine Months Ended
	September 30,							September 30,
2027 Notes:		2021			2020			2021		2020
Contractual interest expense	$	3,125		$	3,125		$	9,375		$	4,618
Amortization of debt discount		9,370			8,989			27,592			12,911
Total	$	12,495		$	12,114		$	36,967		$	17,529
Effective interest rate of the liability component		3.4	%		3.4	%		3.4	%		3.4	%

	Quarters Ended						Nine Months Ended
	September 30,						September 30,
2025 Notes:		2021			2020			2021		2020
Contractual interest expense	$	10		$	971		$	1,080		$	2,947
Amortization of debt discount		48			3,170			4,546			9,379
Total	$	58		$	4,141		$	5,626		$	12,326
Effective interest rate of the liability component		4.7	%		7.9	%		4.7	%		7.9	%

	Quarters Ended						Nine Months Ended
	September 30,						September 30,
Livongo Notes:	2021							2021
Contractual interest expense	$	1,203					$	3,609
Amortization of debt discount		4,858						14,389
Total	$	6,061					$	17,998
Effective interest rate of the liability component		5.2	%					5.2	%

	Quarters Ended						Nine Months Ended
	September 30,						September 30,
2022 Notes:		2021			2020			2021		2020
Contractual interest expense	$	0		$	351		$	116		$	3,696
Amortization of debt discount		0			650			316			6,940
Total	$	0		$	1,001		$	432		$	10,636
Effective interest rate of the liability component					10.0	%		3.0	%		10.0	%


				Weighted-
		Weighted-		Average
	Number of	Average		Remaining	Aggregate
	Shares	Exercise		Contractual	Intrinsic
	Outstanding	Price		Life in Years	Value
Balance at December 31, 2020	5,826,685	$	17.19	5.31	$	1,064,944
Stock option grants	35,740	$	162.38	N/A
Stock options exercised	(2,120,943)	$	10.79	N/A	$	(409,182)
Stock options forfeited	(90,583)	$	30.03	N/A
Balance at September 30, 2021	3,650,899	$	21.96	5.57	$	386,390
Vested or expected to vest at September 30, 2021	3,650,899	$	21.96	7.10	$	35,607
Exercisable at September 30, 2021	3,243,849	$	18.84	5.37	$	350,848


		Weighted-Average
		Grant Date
	RSUs	Fair Value Per RSU
Balance at December 31, 2020	3,550,595	$	162.11
Granted	650,335	$	192.86
Vested and issued	(1,222,550)	$	131.65
Forfeited	(681,510)	$	183.98
Balance at September 30, 2021	2,296,870	$	175.60
Vested and unissued at September 30, 2021	13,755	$	50.90
Non-vested at September 30, 2021	2,283,115	$	175.60


	Payment Due by Period
			Less than		1 to 3		4 to 5		More than
	Total		1 Year		Years		Years		5 Years
Operating leases	$	67,650	$	14,594	$	25,799	$	13,260	$	13,997
Non-cancelable purchase commitments		6,366		4,040		2,326		0		0
Debt obligations under the Convertible Notes		1,550,882		0		0		550,882		1,000,000
Interest associated with the Convertible Notes		88,790		17,325		34,916		28,216		8,333
Total	$	1,713,688	$	35,959	$	63,041	$	592,358	$	1,022,330

	TELADOC HEALTH, INC.

Date: November 1, 2021	By:	/s/ JASON GOREVIC
	Name:	Jason Gorevic
	Title:	Chief Executive Officer

Date: November 1, 2021	By:	/s/ MALA MURTHY
	Name:	Mala Murthy
	Title:	Chief Financial Officer