Teladoc Health, Inc 10-Q for FY2022 Q2

Teladoc Health, Inc. (TDOC)

10-Q 2022-08-03 For: 2022-06-30

Added on April 07, 2026

About this 10-Q

Teladoc Health, Inc filed this 10-Q on August 3, 2022, covering the quarter ended June 30, 2022 (FY2022 Q2).

Headline figures

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

Revenue: $592.38M; up 17.7% from $503.14M a year earlier
Net loss: $3.1B; compared with a net loss of $133.82M a year earlier
Diluted EPS: -$19.22; compared with -$0.86 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 June 30, 2022 (unaudited) and December 31, 2021	2
	Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited) for the quarters and six months ended June 30, 2022 and 2021	3
	Condensed Consolidated Statements of Stockholders’ Equity (unaudited) for the quarters and six months ended June 30, 2022 and 2021	4
	Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended June 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	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	32
PART II	Other Information	33
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 6.	Exhibits	34
Exhibit Index		34
Signatures		35


	June 30,		December 31,
	2022		2021
Assets
Current assets:
Cash and cash equivalents	$	881,161	$	893,480
Short-term investments		2,539		2,537
Accounts receivable, net of allowance of $15,095 and $12,384, respectively		205,434		168,956
Inventories		60,260		73,079
Prepaid expenses and other current assets		107,875		87,387
Total current assets		1,257,269		1,225,439
Property and equipment, net		27,403		27,234
Goodwill		4,858,196		14,504,174
Intangible assets, net		1,872,172		1,910,278
Operating lease - right-of-use assets		49,795		46,780
Other assets		37,940		20,703
Total assets	$	8,102,775	$	17,734,608
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	94,371	$	47,257
Accrued expenses and other current liabilities		127,187		102,933
Accrued compensation		51,594		91,941
Deferred revenue-current		86,254		75,569
Advances from financing companies		12,073		13,313
Total current liabilities		371,479		331,013
Other liabilities		1,609		1,492
Operating lease liabilities, net of current portion		44,274		41,773
Deferred revenue, net of current portion		3,373		3,834
Advances from financing companies, net of current portion		7,855		9,291
Deferred taxes, net		55,926		75,777
Convertible senior notes, net		1,533,609		1,225,671
Commitments and contingencies (Note 10)
Stockholders’ equity:
Common stock, $0.001 par value; 300,000,000 shares authorized; 161,892,008 shares and 160,469,325 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively		162		160
Additional paid-in capital		17,239,092		17,473,336
Accumulated deficit		(11,124,740)		(1,421,454)
Accumulated other comprehensive loss		(29,864)		(6,285)
Total stockholders’ equity		6,084,650		16,045,757
Total liabilities and stockholders’ equity	$	8,102,775	$	17,734,608


	Quarter Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Revenue	$	592,379	$	503,139	$	1,157,729	$	956,814
Expenses:
Cost of revenue (exclusive of depreciation and amortization, which is shown separately below)		182,470		160,273		369,495		306,232
Operating expenses:
Advertising and marketing		164,574		103,221		298,174		192,660
Sales		57,930		63,856		116,259		128,649
Technology and development		80,826		80,759		168,238		158,767
General and administrative		110,868		111,216		215,791		216,388
Acquisition, integration, and transformation costs		2,892		11,421		7,399		17,744
Depreciation and amortization		59,371		51,341		118,304		100,000
Goodwill impairment		3,030,000		0		9,630,000		0
Total expenses		3,688,931		582,087		10,923,660		1,120,440
Loss from operations		(3,096,552)		(78,948)		(9,765,931)		(163,626)
Loss on extinguishment of debt		0		31,419		0		42,878
Other expense (income), net		1,760		(217)		1,036		(5,869)
Interest expense, net		4,337		20,473		9,817		42,598
Net loss before provision for income taxes		(3,102,649)		(130,623)		(9,776,784)		(243,233)
Provision for income taxes		(1,188)		3,196		(800)		90,235
Net loss		(3,101,461)		(133,819)		(9,775,984)		(333,468)
Other comprehensive (loss) income, net of tax:
Currency translation adjustment and other		(18,440)		7,265		(23,579)		(6,227)
Comprehensive loss	$	(3,119,901)	$	(126,554)	$	(9,799,563)	$	(339,695)

Net loss per share, basic and diluted	$	(19.22)	$	(0.86)	$	(60.72)	$	(2.16)

Weighted-average shares used to compute basic and diluted net loss per share		161,377,695		156,055,090		161,002,075		154,187,739


								Accumulated
				Additional				Other		Total
	Common Stock			Paid-In		Accumulated		Comprehensive		Stockholders’
	Shares	Amount		Capital		Deficit		Gain (Loss)		Equity
Balance as of March 31, 2022	161,434,513	$	161	$	17,177,152	$	(8,023,279)	$	(11,424)	$	9,142,610
Exercise of stock options	159,775		1		1,394		0		0		1,395
Issuance of common stock upon vesting of restricted stock units	149,018		0		(0)		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		56,316		0		0		56,316
Other comprehensive loss, net of tax	0		0		0		0		(18,440)		(18,440)
Net loss	0		0		0		(3,101,461)		0		(3,101,461)
Balance as of June 30, 2022	161,892,008	$	162	$	17,239,092	$	(11,124,740)	$	(29,864)	$	6,084,650

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	427,361		1		4,979		0		0		4,980
Issuance of common stock upon vesting of restricted stock units	846,620		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		120,279		0		0		120,279
Other comprehensive loss, net of tax	0		0		0		0		(23,579)		(23,579)
Net loss	0		0		0		(9,775,984)		0		(9,775,984)
Balance as of June 30, 2022	161,892,008	$	162	$	17,239,092	$	(11,124,740)	$	(29,864)	$	6,084,650

Balance as of March 31, 2021	154,406,164	$	154	$	17,016,628	$	(1,192,310)	$	5,026	$	15,829,498
Exercise of stock options	668,942		1		5,872		0		0		5,873
Issuance of common stock upon vesting of restricted stock units	278,206		0		(0)		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 2025 Notes	4,027,578		4		617,161		0		0		617,165
Equity portion of extinguishment of 2025 Notes	0		0		(421,167)		0		0		(421,167)
Stock-based compensation	0		0		85,716		0		0		85,716
Other comprehensive income, net of tax	0		0		0		0		7,265		7,265
Net loss	0		0		0		(133,819)		0		(133,819)
Balance as of June 30, 2021	159,462,978	$	159	$	17,314,749	$	(1,326,129)	$	12,291	$	16,001,070

Balance as of December 31, 2020	150,281,099	$	150	$	16,857,797	$	(992,661)	$	18,518	$	15,883,804
Exercise of stock options	1,907,054		2		17,779		0		0		17,781
Issuance of common stock upon vesting of restricted stock units	1,255,205		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	5,084,439		5		905,646		0		0		905,651
Equity portion of extinguishment of 2025 Notes	0		0		(658,428)		0		0		(658,428)
Recovery of excess common stock issued for acquisition	(205,280)		(0)		(40,329)		0		0		(40,329)
Stock-based compensation	0		0		175,716		0		0		175,716
Other comprehensive loss, net of tax	0		0		0		0		(6,227)		(6,227)
Net loss	0		0		0		(333,468)		0		(333,468)
Balance as of June 30, 2021	159,462,978	$	159	$	17,314,749	$	(1,326,129)	$	12,291	$	16,001,070


	Quarter Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Access Fees Revenue
U.S.	$	450,426	$	371,591	$	871,572	$	699,144
International		68,304		59,474		138,495		114,027
Total		518,730		431,065		1,010,067		813,171

Visit Fee Revenue
U.S.		64,240		59,196		128,713		116,324
International		2,493		3,058		5,948		6,441
Total		66,733		62,254		134,661		122,765

Other
U.S.		6,720		9,363		12,301		20,034
International		196		457		700		844
Total		6,916		9,820		13,001		20,878

Total Revenues	$	592,379	$	503,139	$	1,157,729	$	956,814


	As of June 30,		As of December 31,
	2022		2021
Deferred device and contract costs, current	$	30,013	$	22,304
Deferred device and contract costs, noncurrent		9,071		6,249
Total deferred device and contract costs	$	39,084	$	28,553


	Deferred Device and Contract Costs
Beginning balance as of December 31, 2021	$	28,553
Additions		29,161
Cost of revenue recognized		(18,630)
Ending balance as of June 30, 2022	$	39,084


								Weighted
								Average
								Remaining
	Useful			Accumulated		Net Carrying		Useful Life
	Life	Gross Value		Amortization		Value		(Years)
June 30, 2022
Client relationships	2 to 20 years	$	1,457,623	$	(245,112)	$	1,212,511	14.1
Trademarks	2 to 15 years		325,082		(71,717)		253,365	7.2
Software	3 to 5 years		206,845		(53,185)		153,660	2.8
Technology	5 to 7 years		343,215		(90,579)		252,636	5.0
Intangible assets, net		$	2,332,765	$	(460,593)	$	1,872,172	11.0
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


	June 30, 2022
	Level 1		Level 2		Total
Cash and cash equivalents	$	881,161	$	0	$	881,161
Short-term investments	$	0	$	2,539	$	2,539


	As of June 30,
Operating Leases:	2022
Remainder of 2022	$	8,221
2023		16,106
2024		10,925
2025		8,596
2026		7,074
2027 and thereafter		18,109
Total future minimum payments	$	69,031



	2027 Notes			2025 Notes			Livongo Notes
Interest Rate Per Year		1.25	%		1.375	%		0.875	%
Fair Value as of June 30, 2022 (in millions) (1)	$	732.5		$	0.4		$	462.6
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 June 30, 2022		4.1258			18.6621			13.94
Remaining Contractual Life as of June 30, 2022		4.9 years			2.9 years			2.9 years


	Six Months Ended June 30,
	2022		2021
Operating activities:
Net loss	$	(9,775,984)	$	(333,468)
Adjustments to reconcile net loss to net cash provided by operating activities:
Goodwill impairment		9,630,000		0
Depreciation and amortization		118,304		100,000
Depreciation of rental equipment		1,486		1,663
Amortization of right-of-use assets		6,540		5,858
Provision for allowances		5,857		7,534
Stock-based compensation		111,436		169,270
Deferred income taxes		(2,528)		83,823
Accretion of interest		1,659		32,566
Loss on extinguishment of debt		0		39,782
Gain on sale of investment		0		(5,901)
Other, net		0		38
Changes in operating assets and liabilities:
Accounts receivable		(43,948)		(16,573)
Prepaid expenses and other current assets		(20,195)		(26,758)
Inventory		11,974		(2,234)
Other assets		(17,453)		1,919
Accounts payable		47,417		(4,741)
Accrued expenses and other current liabilities		20,712		5,380
Accrued compensation		(38,328)		(35,606)
Deferred revenue		10,823		17,205
Operating lease liabilities		(7,266)		(5,833)
Other liabilities		216		267
Net cash provided by operating activities		60,722		34,191
Investing activities:
Capital expenditures		(6,455)		(4,405)
Capitalized software		(69,213)		(21,508)
Proceeds from marketable securities		0		50,000
Proceeds from the sale of investment		0		10,901
Acquisitions of businesses, net of cash acquired		(0)		(56,336)
Other, net		3,264		3,150
Net cash used in investing activities		(72,404)		(18,198)
Financing activities:
Net proceeds from the exercise of stock options		4,980		17,781
Repurchase of 2022 Notes		(0)		(137)


	As of June 30,		As of December 31,
	2022		2021
Raw materials and purchased parts	$	16,952	$	26,164
Work in process		484		313
Finished goods		42,824		46,602
Total inventories	$	60,260	$	73,079


	As of June 30,		As of December 31,
	2022		2021
Professional fees	$	12,029	$	7,124
Consulting fees/provider fees		15,258		19,010
Client performance guarantees		4,277		3,034
Interest payable		1,479		1,480
Income tax payable		3,745		3,098
Insurance		7,037		3,884
Marketing		4,378		2,958
Operating lease liabilities – current		12,983		12,687
Franchise and sales taxes		8,963		9,965
Device replacement cost		5,925		6,263
Accrued rebates		8,585		4,619
Staff augmentation		8,450		1,858
Other		34,078		26,953
Total	$	127,187	$	102,933


	As of June 30,		As of December 31,
2027 Notes	2022		2021
Principal	$	1,000,000	$	1,000,000
Less: Debt discount, net (1)		(17,107)		(250,846)
Net carrying amount		982,893		749,154

2025 Notes
Principal		725		730
Less: Debt discount, net (1)		(9)		(166)
Net carrying amount		716		564

Livongo Notes
Principal		550,000		550,000
Less: Debt discount, net (1)		0		(74,047)
Net carrying amount		550,000		475,953

Total net carrying amount	$	1,533,609	$	1,225,671


	Quarters Ended							Six Months Ended
	June 30,							June 30,
2027 Notes:		2022			2021			2022		2021
Contractual interest expense	$	3,125		$	3,125		$	6,250		$	6,250
Amortization of debt discount		833			9,163			1,664			18,222
Total	$	3,958		$	12,288		$	7,914		$	24,472
Effective interest rate		1.6	%		3.4	%		1.6	%		3.4	%

	Quarters Ended						Six Months Ended
	June 30,						June 30,
2025 Notes:		2022			2021			2022		2021
Contractual interest expense	$	2		$	255		$	5		$	1,068
Amortization of debt discount		1			1,778			2			4,498
Total	$	3		$	2,033		$	7		$	5,566
Effective interest rate		1.8	%		7.8	%		1.8	%		7.8	%

	Quarters Ended						Six Months Ended
	June 30,						June 30,
Livongo Notes:		2022			2021			2022		2021
Contractual interest expense	$	1,203		$	1,203		$	2,406		$	2,406
Amortization of debt discount		0			4,796			0			9,530
Total	$	1,203		$	5,999		$	2,406		$	11,936
Effective interest rate		0.9	%		5.2	%		0.9	%		5.2	%


				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	1,389,672	$	34.36	N/A
Stock options exercised	(427,361)	$	11.65	N/A	$	(19,557)
Stock options forfeited	(27,219)	$	52.13	N/A
Balance at June 30, 2022	4,362,070	$	27.47	6.43	$	44,902
Vested or expected to vest at June 30, 2022	4,362,070	$	27.47	6.43	$	44,902
Exercisable at June 30, 2022	2,893,202	$	21.30	4.70	$	44,110


		Weighted-Average
		Grant Date
	RSUs	Fair Value Per RSU
Balance at December 31, 2021	2,133,501	$	168.43
Granted	5,106,274	$	53.79
Vested and issued	(647,554)	$	150.67
Forfeited	(467,136)	$	135.95
Balance at June 30, 2022	6,125,085	$	77.42
Vested and unissued at June 30, 2022	23,878	$	92.15
Non-vested at June 30, 2022	6,101,207	$	77.36

	TELADOC HEALTH, INC.

Date: August 3, 2022	By:	/s/ JASON GOREVIC
	Name:	Jason Gorevic
	Title:	Chief Executive Officer

Date: August 3, 2022	By:	/s/ MALA MURTHY
	Name:	Mala Murthy
	Title:	Chief Financial Officer