Teladoc Health, Inc 10-Q for FY2020 Q1

Teladoc Health, Inc. (TDOC)

10-Q 2020-04-29 For: 2020-03-31

Added on April 07, 2026

About this 10-Q

Teladoc Health, Inc filed this 10-Q on April 29, 2020, covering the quarter ended March 31, 2020 (FY2020 Q1).

Headline figures

Quarter ended March 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $180.8M; up 40.6% from $128.57M a year earlier
Net loss: $29.6M; compared with a net loss of $30.15M 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 March 31, 2020 (unaudited) and December 31, 2019	2
	Consolidated Statements of Operations (unaudited) for the quarters ended March 31, 2020 and 2019	3
	Consolidated Statements of Comprehensive Loss (unaudited) for the quarters ended March 31, 2020 and 2019	4
	Consolidated Statements of Stockholders’ Equity (unaudited) for the quarters ended March 31, 2020 and 2019	5
	Consolidated Statements of Cash Flows (unaudited) for the quarters ended March 31, 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	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30
PART II	Other Information	31
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 5.	Other Information	31
Item 6.	Exhibits	33
Exhibit Index		33
Signatures		35


	March 31,		December 31,
	2020		2019

Assets
Current assets:
Cash and cash equivalents	$	507,956	$	514,353
Short-term investments		2,819		2,711
Accounts receivable, net of allowance of $4,651 and $3,787, respectively		70,721		56,948
Prepaid expenses and other current assets		14,932		13,990
Total current assets		596,428		588,002
Property and equipment, net		10,092		10,296
Goodwill		734,386		746,079
Intangible assets, net		214,666		225,453
Operating lease - right-of-use assets		32,175		26,452
Other assets		15,330		6,545
Total assets	$	1,603,077	$	1,602,827
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	8,142	$	9,075
Accrued expenses and other current liabilities		71,927		49,848
Accrued compensation		17,095		31,258
Total current liabilities		97,164		90,181
Other liabilities		10,237		11,539
Operating lease liabilities, net of current portion		29,430		24,994
Deferred taxes		18,848		21,678
Convertible senior notes, net		447,221		440,410
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value; 150,000,000 shares authorized as of March 31, 2020 and December 31, 2019; 74,076,286 shares and 72,761,941 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively		74		73
Additional paid-in capital		1,572,024		1,538,716
Accumulated deficit		(537,128)		(507,525)
Accumulated other comprehensive loss		(34,793)		(17,239)
Total stockholders’ equity		1,000,177		1,014,025
Total liabilities and stockholders’ equity	$	1,603,077	$	1,602,827


	Quarter Ended March 31,
	2020		2019
Revenue	$	180,799	$	128,573
Expenses:
Cost of revenue (exclusive of depreciation and amortization shown separately below)		72,382		44,677
Operating expenses:
Advertising and marketing		32,515		26,404
Sales		17,940		16,212
Technology and development		19,257		15,987
Legal and regulatory		1,222		1,586
Acquisition and integration related costs		3,664		1,012
General and administrative		45,120		35,982
Depreciation and amortization		9,710		9,600
Total expenses		201,810		151,460
Loss from operations		(21,011)		(22,887)
Interest expense, net		9,303		6,521
Net loss before taxes		(30,314)		(29,408)
Income tax (benefit) expense		(711)		742
Net loss	$	(29,603)	$	(30,150)

Net loss per share, basic and diluted	$	(0.40)	$	(0.43)

Weighted-average shares used to compute basic and diluted net loss per share		73,278,857		70,919,496


									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 Convertible 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

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


	Quarter Ended
	March 31,
	2020		2019
Subscription Access Fees:
U.S.	$	107,939	$	80,979
International		29,114		24,975
Visit Fee Revenue:
U.S. Paid Visits		30,898		18,248
U.S. Visit Fee Only		12,586		4,121
International Paid Visits		262		250
Total Revenues	$	180,799	$	128,573


								Weighted
								Average
	Useful			Accumulated		Net Carrying		Remaining
	Life	Gross Value		Amortization		Value		Useful Life
March 31, 2020
Client relationships	2 to 20 years	$	232,987	$	(65,733)	$	167,254	13.0
Non-compete agreements	1.5 to 5 years		4,930		(4,366)		564	1.2
Trademarks	3 to 15 years		41,764		(7,727)		34,037	12.6
Patents	3 years		200		(200)		0	0
Internal-use software and other	3 to 5 years		37,219		(24,408)		12,811	2.4
Intangible assets, net		$	317,100	$	(102,434)	$	214,666	12.3
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	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 March 31,
	2020
Beginning balance	$	746,079
Cumulative translation adjustment		(11,693)
Goodwill	$	734,386


	As of March 31,		As of December 31,
	2020		2019
Professional fees	$	1,567	$	1,535
Consulting fees/provider fees		16,668		10,618
Client performance guarantees		3,087		3,298
Legal fees		1,549		1,077
Interest payable		3,889		838
Income tax payable		5,478		2,859
Insurance		1,587		1,263
Marketing		3,052		2,810
Operating lease liabilities - current		5,836		5,088
Deferred revenue		17,872		12,466
Other		11,342		7,996
Total	$	71,927	$	49,848


	March 31, 2020
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	507,956	$	0	$	0	$	507,956
Short-term investments	$	0	$	2,819	$	0	$	2,819
Contingent liability	$	0	$	0	$	4,782	$	4,782


Fair value at December 31, 2019	$	4,769
Payments		0
Change in fair value		105
Currency translation adjustment		(92)
Fair value at March 31, 2020	$	4,782


	As of March 31,		As of December 31,
Liability component	2020		2019
Principal	$	287,500	$	287,500
Less: Debt discount, net (1)		(78,131)		(81,207)
Net carrying amount	$	209,369	$	206,293


	Quarters Ended
	March 31,
	2020			2019
Contractual interest expense	$	988		$	975
Amortization of debt discount		3,076			2,836
Total	$	4,064		$	3,811
Effective interest rate of the liability component		7.9	%		7.9	%


	Quarter Ended March 31,
	2020		2019
Cash flows used in operating activities:
Net loss	$	(29,603)	$	(30,150)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		11,228		11,563
Allowance for doubtful accounts		1,247		783
Stock-based compensation		18,315		13,523
Deferred income taxes		(2,820)		(2,672)
Accretion of interest		6,859		6,060
Changes in operating assets and liabilities:
Accounts receivable		(17,219)		(8,251)
Prepaid expenses and other current assets		101		350
Other assets		137		30
Accounts payable		(502)		(28)
Accrued expenses and other current liabilities		21,565		14,530
Accrued compensation		(13,798)		(11,737)
Operating lease liabilities		(1,287)		(479)
Other liabilities		(543)		(1,414)
Net cash used in operating activities		(6,320)		(7,892)
Cash flows (used in) provided by investing activities:
Purchase of property and equipment		(962)		(571)
Purchase of internal-use software		(1,966)		(1,099)
Proceeds from marketable securities		0		9,000
Sale of assets		0		6
Pre-funding associated with the pending acquisition		(9,000)		0
Net cash (used in) provided by investing activities		(11,928)		7,336
Cash flows provided by financing activities:
Net proceeds from the exercise of stock options		14,889		8,854
Cash received for withholding taxes on stock-based compensation, net		164		1,848
Net cash provided by financing activities		15,053		10,702
Net (decrease) increase in cash and cash equivalents		(3,195)		10,146
Foreign exchange difference		(3,202)		(177)
Cash and cash equivalents at beginning of the period		514,353		423,989
Cash and cash equivalents at end of the period	$	507,956	$	433,958

Income taxes paid	$	0	$	23

Interest paid	$	0	$	0


				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	7,441	$	106.25	0	$	0
Stock options exercised	(671,279)	$	22.10	0	$	(65,192)
Stock options forfeited	(126,577)	$	34.48	0	$	0
Balance at March 31, 2020	4,416,566	$	24.67	6.77	$	575,408
Vested or expected to vest at March 31, 2020	4,414,765	$	24.67	6.77	$	575,408
Exercisable at March 31, 2020	3,055,075	$	19.80	6.41	$	413,071


	Quarters Ended March 31,
	2020		2019
Volatility		46.1% – 47.9%		47.5% – 47.6%
Expected life (in years)		4.3		5.4
Risk-free interest rate		0.87% - 1.64%		2.50% - 2.55%
Dividend yield		–		–
Weighted-average fair value of underlying stock options	$	42.06	$	27.87


		Weighted-Average
		Grant Date
	Shares	Fair Value Per Share
Balance at December 31, 2019	1,483,558	$	54.13
Granted	321,311	$	122.96
Vested and issued	(455,956)	$	51.79
Forfeited	(54,476)	$	48.78
Balance at March 31, 2020	1,294,437	$	58.82
Vested and unissued at March 31, 2020	13,755	$	50.90
Non-vested at March 31, 2020	1,280,682	$	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	$	42,428	$	6,107	$	14,694	$	13,120	$	8,507
Debt obligations under the Convertible Notes		562,470		0	$	274,970	$	0	$	287,500
Interest associated with the Convertible Notes		38,728		12,202	$	18,126	$	7,906	$	494
Total	$	643,626	$	18,309	$	307,790	$	21,026	$	296,501

	TELADOC HEALTH, INC.

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

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