Teladoc Health, Inc 10-Q for FY2020 Q2

Teladoc Health, Inc. (TDOC)

10-Q 2020-07-29 For: 2020-06-30

Added on April 07, 2026

About this 10-Q

Teladoc Health, Inc filed this 10-Q on July 29, 2020, covering the quarter ended June 30, 2020 (FY2020 Q2).

Headline figures

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

Revenue: $241.03M; up 85.0% from $130.28M a year earlier
Net loss: $25.68M; compared with a net loss of $29.32M 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 June 30, 2020 (unaudited) and December 31, 2019	2
	Consolidated Statements of Operations (unaudited) for the quarters and six months ended June 30, 2020 and 2019	3
	Consolidated Statements of Comprehensive Loss (unaudited) for the quarters and six months ended June 30, 2020 and 2019	4
	Consolidated Statements of Stockholders’ Equity (unaudited) for the quarters and six months ended June 30, 2020 and 2019	5
	Consolidated Statements of Cash Flows (unaudited) for the six months ended June 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	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	33
PART II	Other Information	35
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 6.	Exhibits	37
Exhibit Index		37
Signatures		39


	June 30,		December 31,
	2020		2019

Assets
Current assets:
Cash and cash equivalents	$	1,308,843	$	514,353
Short-term investments		2,932		2,711
Accounts receivable, net of allowance of $5,113 and $3,787, respectively		76,902		56,948
Prepaid expenses and other current assets		14,433		13,990
Total current assets		1,403,110		588,002
Property and equipment, net		9,606		10,296
Goodwill		742,314		746,079
Intangible assets, net		213,474		225,453
Operating lease - right-of-use assets		30,440		26,452
Other assets		19,884		6,545
Total assets	$	2,418,828	$	1,602,827
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	10,816	$	9,075
Accrued expenses and other current liabilities		75,153		46,905
Accrued compensation		37,579		34,201
Total current liabilities		123,548		90,181
Other liabilities		5,257		11,539
Operating lease liabilities, net of current portion		27,940		24,994
Deferred taxes		18,976		21,678
Convertible senior notes, net		948,178		440,410
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value; 150,000,000 shares authorized as of June 30, 2020 and December 31, 2019; 79,099,433 shares and 72,761,941 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively		79		73
Additional paid-in capital		1,879,573		1,538,716
Accumulated deficit		(562,810)		(507,525)
Accumulated other comprehensive loss		(21,913)		(17,239)
Total stockholders’ equity		1,294,929		1,014,025
Total liabilities and stockholders’ equity	$	2,418,828	$	1,602,827


	Quarter Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Revenue	$	241,030	$	130,276	$	421,829	$	258,849
Expenses:
Cost of revenue (exclusive of depreciation and amortization shown separately below)		90,780		41,634		163,162		86,311
Operating expenses:
Advertising and marketing		47,578		26,616		80,093		53,020
Sales		18,687		15,832		36,627		32,044
Technology and development		23,029		16,665		42,286		32,652
Legal and regulatory		2,232		2,019		3,454		3,605
Acquisition and integration related costs		1,627		1,136		5,291		2,148
General and administrative		54,383		38,549		99,503		74,531
Depreciation and amortization		9,893		9,848		19,603		19,448
Total expenses		248,209		152,299		450,019		303,759
Loss from operations		(7,179)		(22,023)		(28,190)		(44,910)
Loss on extinguishment of debt		7,751		0		7,751		0
Interest expense, net		13,151		7,211		22,454		13,732
Net loss before taxes		(28,081)		(29,234)		(58,395)		(58,642)
Income tax (benefit) expense		(2,399)		90		(3,110)		832
Net loss	$	(25,682)	$	(29,324)	$	(55,285)	$	(59,474)

Net loss per share, basic and diluted	$	(0.34)	$	(0.41)	$	(0.74)	$	(0.83)

Weighted-average shares used to compute basic and diluted net loss per share		76,512,870		71,721,246		74,919,194		71,322,586


								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 Convertible 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

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


	Quarter Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Subscription Access Fees:
U.S.	$	152,021	$	85,530	$	259,960	$	166,509
International		30,150		25,711		59,264		50,686
Visit Fee Revenue:
U.S. Paid Visits		39,041		15,083		69,939		33,331
U.S. Visit Fee Only		19,471		3,546		32,057		7,667
International Paid Visits		347		406		609		656
Total Revenues	$	241,030	$	130,276	$	421,829	$	258,849


								Weighted
								Average
	Useful			Accumulated		Net Carrying		Remaining
	Life	Gross Value		Amortization		Value		Useful Life
June 30, 2020
Client relationships	2 to 20 years	$	235,906	$	(72,523)	$	163,383	12.8
Non-compete agreements	1.5 to 5 years		4,960		(4,508)		452	0.9
Trademarks	3 to 15 years		42,319		(8,524)		33,795	12.2
Patents	3 years		200		(200)		0	0
Internal-use software and other	3 to 5 years		42,546		(26,702)		15,844	2.6
Intangible assets, net		$	325,931	$	(112,457)	$	213,474	11.4
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 June 30,			As of December 31,
	2020		2019
Beginning balance	$	746,079	$	737,197
Additions associated with acquisitions		0		10,604
Cumulative translation adjustment		(3,765)		(1,722)
Goodwill	$	742,314	$	746,079


	June 30, 2020
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	1,308,843	$	0	$	0	$	1,308,843
Short-term investments	$	0	$	2,932	$	0	$	2,932
Contingent liability	$	0	$	0	$	4,990	$	4,990


Fair value at December 31, 2019	$	4,769
Payments		0
Change in fair value		215
Currency translation adjustment		6
Fair value at June 30, 2020	$	4,990


	As of June 30,
Liability component	2020
Principal	$	1,000,000
Less: Debt discount, net (1)		(305,639)
Net carrying amount	$	694,361


	Quarters Ended						Six Months Ended
	June 30,						June 30,
	2020			2019			2020			2019
Contractual interest expense	$	989		$	1,002		$	1,977		$	1,977
Amortization of debt discount		3,142			2,892			6,218			5,728
Total	$	4,131		$	3,894		$	8,195		$	7,705
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	5,206,981	$	24.47	7.03	$	308,538
Stock option grants	10,832	$	125.65	0	$	0
Stock options exercised	(1,598,963)	$	21.00	0	$	0
Stock options forfeited	(148,655)	$	32.82	0	$	0
Balance at June 30, 2020	3,470,195	$	25.97	6.62	$	575,590
Vested or expected to vest at June 30, 2020	3,470,194	$	25.97	6.62	$	575,590
Exercisable at June 30, 2020	2,439,319	$	20.94	6.28	$	414,445


	As of June 30,		As of December 31,
	2020		2019
Professional fees	$	1,838	$	1,535
Consulting fees/provider fees		18,430		10,618
Client performance guarantees		3,121		3,298
Legal fees		1,820		1,077
Interest payable		2,046		838
Income tax payable		1,790		2,859
Insurance		2,480		1,263
Marketing		3,090		2,810
Operating lease liabilities - current		5,763		5,088
Earnout		5,216		0
Deferred revenue		24,813		12,466
Other		4,746		5,053
Total	$	75,153	$	46,905


		Weighted-Average
		Grant Date
	RSUs	Fair Value Per RSU
Balance at December 31, 2019	1,483,558	$	54.13
Granted	342,383	$	125.69
Vested and issued	(565,724)	$	52.11
Forfeited	(73,072)	$	52.17
Balance at June 30, 2020	1,187,145	$	58.82
Vested and unissued at June 30, 2020	13,755	$	50.90
Non-vested at June 30, 2020	1,173,390	$	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	$	40,457	$	7,750	$	14,696	$	11,822	$	6,189
Debt obligations under the Convertible Notes		1,334,271		0	$	46,771	$	287,500	$	1,000,000
Interest associated with the Convertible Notes		112,474		17,857	$	34,294	$	32,906	$	27,417
Total	$	1,487,202	$	25,607	$	95,761	$	332,228	$	1,033,606


		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

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

4.1	Indenture, dated as of May 19, 2020, by and between Teladoc Health, Inc. and Wilmington Trust, National Association.	8-K	001-37477	4.1	5/19/20

4.2	Form of Global 1.25% Convertible Senior Note due 2027 (included as Exhibit A to Exhibit 4.1).	8-K	001-37477	4.2	5/19/20

10.1	Separation and Release of Claims Agreement, dated January 3, 2020, by and between Teladoc Health, Inc. and Peter McClennen.	10-Q	001-3747	10.1	4/29/20

10.2	Form of Performance Restricted Stock Unit Agreement under the Teladoc Health, Inc. 2015 Incentive Award Plan.	10-Q	001-3747	10.2	4/29/20

10.3	Teladoc Health, Inc. Senior Leader Severance Plan, dated May 1, 2020.	8-K	001-37477	10.1	5/7/20

10.4	Amendment No. 3 to Credit Agreement by and among Teladoc Health, Inc., Jefferies Finance LLC, as administrative agent and issuing bank, and the lenders party thereto, dated as of May 13, 2020.	8-K	001-37477	10.1	5/15/20

21.1	Subsidiaries of the Registrant.					*

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.					*

	TELADOC HEALTH, INC.

Date: July 29, 2020	By:	/s/ JASON GOREVIC
	Name:	Jason Gorevic
	Title:	Chief Executive Officer

Date: July 29, 2020	By:	/s/ MALA MURTHY
	Name:	Mala Murthy
	Title:	Chief Financial Officer