Teladoc Health, Inc 10-Q for FY2022 Q3

Teladoc Health, Inc. (TDOC)

10-Q 2022-11-02 For: 2022-09-30

Added on April 07, 2026

About this 10-Q

Teladoc Health, Inc filed this 10-Q on November 2, 2022, covering the quarter ended September 30, 2022 (FY2022 Q3).

Headline figures

Quarter ended September 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $611.4M; up 17.2% from $521.66M a year earlier
Net loss: $73.48M; compared with a net loss of $84.34M a year earlier
Diluted EPS: -$0.45; compared with -$0.53 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
	Condensed Consolidated Balance Sheets as of September 30, 2022 (unaudited) and December 31, 2021	2
	Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited) for the quarters and nine months ended September 30, 2022 and 2021	3
	Condensed Consolidated Statements of Stockholders’ Equity (unaudited) for the quarters and nine months ended September 30, 2022 and 2021	4
	Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2022 and 2021	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	33
PART II	Other Information	34
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 6.	Exhibits	35
Exhibit Index		35
Signatures		36


	September 30,		December 31,
	2022		2021
Assets
Current assets:
Cash and cash equivalents	$	899,631	$	893,480
Short-term investments		0		2,537
Accounts receivable, net of allowance of $15,311 and $12,384, respectively		201,701		168,956
Inventories		59,344		73,079
Prepaid expenses and other current assets		126,912		87,387
Total current assets		1,287,588		1,225,439
Property and equipment, net		27,270		27,234
Goodwill		4,846,001		14,504,174
Intangible assets, net		1,854,263		1,910,278
Operating lease - right-of-use assets		45,187		46,780
Other assets		43,656		20,703
Total assets	$	8,103,965	$	17,734,608
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	70,783	$	47,257
Accrued expenses and other current liabilities		177,111		102,933
Accrued compensation		63,211		91,941
Deferred revenue-current		90,210		75,569
Advances from financing companies		10,086		13,313
Total current liabilities		411,401		331,013
Other liabilities		1,632		1,492
Operating lease liabilities, net of current portion		41,080		41,773
Deferred revenue, net of current portion		3,146		3,834
Advances from financing companies, net of current portion		7,855		9,291
Deferred taxes, net		51,742		75,777
Convertible senior notes, net		1,534,448		1,225,671
Commitments and contingencies (Note 10)
Stockholders’ equity:
Common stock, $0.001 par value; 300,000,000 shares authorized; 162,195,790 shares and 160,469,325 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		162		160
Additional paid-in capital		17,299,981		17,473,336
Accumulated deficit		(11,198,216)		(1,421,454)
Accumulated other comprehensive loss		(49,266)		(6,285)
Total stockholders’ equity		6,052,661		16,045,757
Total liabilities and stockholders’ equity	$	8,103,965	$	17,734,608


	Quarter Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Revenue	$	611,402	$	521,658	$	1,769,131	$	1,478,472
Expenses:
Cost of revenue (exclusive of depreciation and amortization, which is shown separately below)		185,619		169,041		555,114		475,273
Operating expenses:
Advertising and marketing		178,920		111,078		477,094		303,738
Sales		54,634		62,602		170,893		191,251
Technology and development		87,815		80,250		256,053		239,017
General and administrative		112,542		103,016		328,333		319,404
Acquisition, integration, and transformation costs		1,594		4,340		8,993		22,084
Depreciation and amortization		62,008		51,907		180,312		151,907
Goodwill impairment		0		0		9,630,000		0
Total expenses		683,132		582,234		11,606,792		1,702,674
Loss from operations		(71,730)		(60,576)		(9,837,661)		(224,202)
Loss on extinguishment of debt		0		850		0		43,728
Other expense (income), net		1,571		376		2,607		(5,493)
Interest expense, net		1,346		18,895		11,163		61,493
Net loss before provision for income taxes		(74,647)		(80,697)		(9,851,431)		(323,930)
Provision for income taxes		(1,171)		3,643		(1,971)		93,878
Net loss		(73,476)		(84,340)		(9,849,460)		(417,808)
Other comprehensive loss, net of tax:
Currency translation adjustment and other		(19,402)		(13,423)		(42,981)		(19,650)
Comprehensive loss	$	(92,878)	$	(97,763)	$	(9,892,441)	$	(437,458)

Net loss per share, basic and diluted	$	(0.45)	$	(0.53)	$	(61.09)	$	(2.68)

Weighted-average shares used to compute basic and diluted net loss per share		161,727,962		159,435,165		161,217,033		155,926,680


								Accumulated
				Additional				Other		Total
	Common Stock			Paid-In		Accumulated		Comprehensive		Stockholders’
	Shares	Amount		Capital		Deficit		Gain (Loss)		Equity
Balance as of June 30, 2022	161,892,008	$	162	$	17,239,092	$	(11,124,740)	$	(29,864)	$	6,084,650
Exercise of stock options	125,039		0		666		0		0		666
Issuance of common stock upon vesting of restricted stock units	178,743		0		0		0		0		0
Stock-based compensation	0		0		60,223		0		0		60,223
Other comprehensive loss, net of tax	0		0		0		0		(19,402)		(19,402)
Net loss	0		0		0		(73,476)		0		(73,476)
Balance as of September 30, 2022	162,195,790	$	162	$	17,299,981	$	(11,198,216)	$	(49,266)	$	6,052,661

Balance as of December 31, 2021	160,469,325	$	160	$	17,473,336	$	(1,421,454)	$	(6,285)	$	16,045,757
Cumulative effect adjustment due to adoption of ASU 2020-06 (see Note 2)	0		0		(363,731)		72,698		0		(291,033)
Exercise of stock options	552,400		1		5,645		0		0		5,646
Issuance of common stock upon vesting of restricted stock units	1,025,363		1		(1)		0		0		0
Issuance of stock under employee stock purchase plan	148,609		0		4,225		0		0		4,225
Issuance of common stock for 2025 Notes	93		0		7		0		0		7
Equity portion of extinguishment of 2025 Notes	0		0		(2)		0		0		(2)
Stock-based compensation	0		0		180,502		0		0		180,502
Other comprehensive loss, net of tax	0		0		0		0		(42,981)		(42,981)
Net loss	0		0		0		(9,849,460)		0		(9,849,460)
Balance as of September 30, 2022	162,195,790	$	162	$	17,299,981	$	(11,198,216)	$	(49,266)	$	6,052,661

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 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	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
Issuance of stock under employee stock purchase plan	82,088		0		10,539		0		0		10,539
Issuance of common stock for 2022 Notes	1,058,373		1		270,111		0		0		270,112
Equity portion of extinguishment of 2022 Notes	0		0		(224,081)		0		0		(224,081)
Issuance of common stock for 2025 Notes	5,182,656		5		920,514		0		0		920,519
Equity portion of extinguishment of 2025 Notes	0		0		(668,507)		0		0		(668,507)
Recovery of excess common stock issued for acquisition	(205,279)		0		(40,329)		0		0		(40,329)
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


	Quarter Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Access Fees Revenue
U.S.	$	465,692	$	386,181	$	1,337,264	$	1,085,325
International		74,387		62,737		212,882		176,764
Total		540,079		448,918		1,550,146		1,262,089

Visit Fee Revenue
U.S.		62,766		59,863		191,479		176,187
International		2,800		2,690		8,748		9,131
Total		65,566		62,553		200,227		185,318

Other
U.S.		5,555		9,583		17,856		29,617
International		202		604		902		1,448
Total		5,757		10,187		18,758		31,065

Total Revenues	$	611,402	$	521,658	$	1,769,131	$	1,478,472


	As of September 30,		As of December 31,
	2022		2021
Deferred device and contract costs, current	$	30,762	$	22,304
Deferred device and contract costs, noncurrent	$	9,488	$	6,249
Total deferred device and contract costs	$	40,250	$	28,553


	Deferred Device and Contract Costs
Beginning balance as of December 31, 2021	$	28,553
Additions	$	41,109
Cost of revenue recognized	$	(29,412)
Ending balance as of September 30, 2022	$	40,250


								Weighted
								Average
								Remaining
	Useful			Accumulated		Net Carrying		Useful Life
	Life	Gross Value		Amortization		Value		(Years)
September 30, 2022
Client relationships	2 to 20 years	$	1,451,374	$	(267,063)	$	1,184,311	13.9
Trademarks	2 to 15 years		324,098		(84,385)		239,713	7.1
Software	3 to 5 years		252,095		(61,709)		190,386	2.9
Technology	5 to 7 years		343,025		(103,172)		239,853	4.8
Intangible assets, net		$	2,370,592	$	(516,329)	$	1,854,263	10.7
December 31, 2021
Client relationships	2 to 20 years	$	1,465,926	$	(199,866)	$	1,266,060	14.5
Trademarks	3 to 15 years		326,392		(45,555)		280,837	9.5
Software	3 to 5 years		126,188		(40,767)		85,421	2.7
Technology	5 to 7 years		343,262		(65,302)		277,960	5.6
Intangible assets, net		$	2,261,768	$	(351,490)	$	1,910,278	12.0


Testing dates	Discount Rate	Peer Group Revenue Multiples (current year/subsequent year)	% Excess of Reporting Unit Fair Value over Carrying Value
December 1, 2021	10.5%	7.0x/5.5x	15.0%
March 31, 2022	12.0%	3.5x/3.0x	0% post impairment
June 30, 2022	16.0%	2.0x/1.8x	0% post impairment


	September 30, 2022
	Level 1		Level 2		Total
Cash and cash equivalents	$	899,631	$	0	$	899,631


	As of September 30,
Operating Leases:	2022
Remainder of 2022	$	4,339
2023		15,979
2024		10,856
2025		8,295
2026		7,224
2027 and thereafter		17,695
Total future minimum payments		64,388
Less: imputed interest		(10,444)
Present value of lease liabilities	$	53,944

Accrued expenses and other current liabilities	$	12,864
Operating lease liabilities, net of current portion	$	41,080



	2027 Notes			2025 Notes			Livongo Notes
Principal Amount Outstanding as of September 30, 2022 (in millions)	$	1,000.0		$	0.7		$	550.0
Interest Rate Per Year		1.25	%		1.375	%		0.875	%
Fair Value as of September 30, 2022 (in millions) (1)	$	731.3		$	0.3		$	458.7
Fair Value as of December 31, 2021 (in millions) (1)	$	940.0		$	1.3		$	605.0
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, 2022		4.1258			18.6621			13.94
Remaining Contractual Life as of September 30, 2022		4.7 years			2.6 years			2.7 years


	Nine Months Ended September 30,
	2022		2021
Operating activities:
Net loss	$	(9,849,460)	$	(417,808)
Adjustments to reconcile net loss to net cash provided by operating activities:
Goodwill impairment		9,630,000		0
Depreciation and amortization		180,312		151,907
Depreciation of rental equipment		2,185		2,500
Amortization of right-of-use assets		9,266		8,185
Provision for allowances		8,867		11,353
Stock-based compensation		167,098		240,971
Deferred income taxes		(5,942)		91,414
Accretion of interest		2,496		46,843
Loss on extinguishment of debt		0		40,631
Gain on sale of investment		0		(5,901)
Other, net		3,677		38
Changes in operating assets and liabilities:
Accounts receivable		(45,267)		(19,407)
Prepaid expenses and other current assets		(39,177)		(34,566)
Inventory		13,709		(2,661)
Other assets		(22,854)		(3,432)
Accounts payable		24,067		(11,115)
Accrued expenses and other current liabilities		70,046		15,880
Accrued compensation		(32,028)		(17,352)
Deferred revenue		12,311		20,002
Operating lease liabilities		(8,111)		(8,202)
Other liabilities		2,548		1,502
Net cash provided by operating activities		123,743		110,782
Investing activities:
Capital expenditures		(10,285)		(5,611)
Capitalized software		(108,588)		(35,402)
Proceeds from marketable securities		2,507		50,000
Proceeds from the sale of investment		0		10,901
Acquisitions of businesses, net of cash acquired		0		(75,944)
Other, net		2,514		3,150
Net cash used in investing activities		(113,852)		(52,906)
Financing activities:
Net proceeds from the exercise of stock options		5,646		22,956
Repurchase of 2022 Notes		0		(139)


	As of September 30,		As of December 31,
	2022		2021
Raw materials and purchased parts	$	27,565	$	28,540
Work in process		1,187		597
Finished goods		36,803		49,146
Inventory reserve		(6,211)		(5,204)
Total inventories	$	59,344	$	73,079


	As of September 30,		As of December 31,
	2022		2021
Professional fees	$	13,424	$	7,124
Consulting fees/provider fees		17,243		19,010
Client performance guarantees		4,896		3,034
Interest payable		5,810		1,480
Income tax payable		4,511		3,098
Insurance		8,568		3,884
Marketing		39,075		2,958
Operating lease liabilities – current		12,864		12,687
Franchise and sales taxes		11,454		9,965
Device replacement cost		5,925		6,263
Accrued rebates		12,581		4,619
Staff augmentation		7,582		1,858
Other		33,178		26,953
Total	$	177,111	$	102,933


				Weighted-
		Weighted-		Average
	Number of	Average		Remaining	Aggregate
	Shares	Exercise		Contractual	Intrinsic
	Outstanding	Price		Life in Years	Value
Balance at December 31, 2021	3,426,978	$	22.88	5.32	$	242,569
Stock option grants	1,407,809	$	34.33	N/A
Stock options exercised	(552,400)	$	10.22	N/A	$	(23,208)
Stock options forfeited	(69,761)	$	57.38	N/A
Balance at September 30, 2022	4,212,626	$	27.81	6.25	$	23,805
Vested or expected to vest at September 30, 2022	4,212,626	$	27.81	6.25	$	23,805
Exercisable at September 30, 2022	2,770,160	$	22.06	4.50	$	23,805


	Quarters Ended							Nine Months Ended
	September 30,							September 30,
2027 Notes:		2022			2021			2022		2021
Contractual interest expense	$	3,125		$	3,125		$	9,375		$	9,375
Amortization of debt discount		838			9,370			2,502			27,592
Total	$	3,963		$	12,495		$	11,877		$	36,967
Effective interest rate		1.6	%		3.4	%		1.6	%		3.4	%

	Quarters Ended						Nine Months Ended
	September 30,						September 30,
2025 Notes:		2022			2021			2022		2021
Contractual interest expense	$	2		$	10		$	7		$	1,080
Amortization of debt discount		1			48			2			4,546
Total	$	3		$	58		$	9		$	5,626
Effective interest rate		1.8	%		4.7	%		1.8	%		4.7	%

	Quarters Ended						Nine Months Ended
	September 30,						September 30,
Livongo Notes:		2022			2021			2022		2021
Contractual interest expense	$	1,203		$	1,203		$	3,609		$	3,609
Amortization of debt discount		0			4,858			0			14,389
Total	$	1,203		$	6,061		$	3,609		$	17,998
Effective interest rate		0.9	%		5.2	%		0.9	%		5.2	%


		Weighted-Average
		Grant Date
	RSUs	Fair Value Per RSU
Balance at December 31, 2021	2,133,501	$	168.43
Granted	5,649,470	$	51.94
Vested and issued	(826,297)	$	155.01
Forfeited	(814,313)	$	112.22
Balance at September 30, 2022	6,142,361	$	70.72
Vested and unissued at September 30, 2022	23,878	$	92.15
Non-vested at September 30, 2022	6,118,483	$	70.77

	TELADOC HEALTH, INC.

Date: November 2, 2022	By:	/s/ JASON GOREVIC
	Name:	Jason Gorevic
	Title:	Chief Executive Officer

Date: November 2, 2022	By:	/s/ MALA MURTHY
	Name:	Mala Murthy
	Title:	Chief Financial Officer

	TELADOC HEALTH, INC.

	/s/ Arnnon Geshuri
	Arnnon Geshuri
	Chief People Officer


	EXECUTIVE

	/s/ Michael Waters
	Michael Waters