Fourth-quarter revenue grows 59% to $122.7 million; Full-year 2018 revenue grows 79% to $417.9 million

Fourth-quarter total visits up 86% to 861,000; 2018 total visits up 80% to 2.6 million

Issues Initial 2019 Guidance

PURCHASE, N.Y., Feb. 27, 2019 (GLOBE NEWSWIRE) -- Teladoc Health, Inc. (NYSE: TDOC), the global leader in virtual care, today reported financial results for the fourth quarter and full year ending December 31, 2018.

“We had an exceptional 2018 with solid performance across all of our key financial and operational metrics, enabling us to enter 2019 with significant momentum.  As virtual care becomes mainstream, we are uniquely positioned across all of our channels as the only global comprehensive virtual healthcare solution,” said Jason Gorevic, chief executive officer, Teladoc Health.  “We continue to extend our leadership position by delivering the highest quality care, successfully engaging consumers, broadening our scope of services, and expanding our global geographic reach.” 

Financial Highlights for the Fourth Quarter and Full Year Ended December 31, 2018

Revenue                
($ million)                
  Quarters Ended  Year over Year Year Ended  Year over Year
  December 31,  Growth December 31,  Growth
  2018 2017   2018 2017  
Subscription Access Fees Revenue                
U.S. $ 78,340 $ 55,409  41% $ 277,091 $ 179,184  55%
International   24,362   9,963  145%   73,693   18,338  302%
Total   102,702   65,372  57%   350,784   197,522  78%
                 
Visit Fee Revenue                
U.S. Paid Visits   15,752   11,558  36%   53,074   35,294  50%
U.S. Visit Fee Only   3,751   — NM   12,508   — NM
International Paid Visits   536   210  155%   1,541   463  233%
Total   20,039   11,768  70%   67,123   35,757  88%
                 
Total Revenue* $ 122,741 $ 77,140  59% $ 417,907 $ 233,279  79%
                 
*Organic full-year and fourth-quarter 2018 revenue, excluding Advance Medical, increased by 36 percent and 33 percent, respectively, year over year.
       
Membership & Visit Fee Only Access      
(millions)      
 Quarters Ended  Year over Year
 December 31,  Growth
 2018 2017  
Total U.S. Paid Membership* 22.8  19.6**  16%
       
Total U.S. Visit Fee Only Access 9.5  — NM 

*Organic full-year and fourth-quarter 2018 U.S. Paid Membership, excluding Advance Medical, was 21.8 million, up 11 percent year over year. 
**Adjusted for 3.6 million Aetna visit fee only lives.

                  
Visits                 
(thousands)                 
  Quarters Ended   Year over Year Years Ended   Year over Year
  December 31,   Growth December 31,   Growth
  2018  2017    2018  2017   
Paid Visits from U.S. Paid Membership  302   251   20%  1,020   793   29 %
Percent of Paid Visits from U.S. Paid Membership  50%  54%  (9)%  50%  54%  (8)%
Visits Included from U.S. Paid Membership  305   211   45%  1,016   667   52%
                 
Total Visits from U.S. Paid Membership  607   462   31%  2,036   1,461   39%
                 
U.S. Visit Fee Only  49   —  NM  172   —  NM 
                 
International Visits  205   1  NM  432   3  NM 
Total Visits  861   464   86%  2,640   1,463   80%
  • Gross margin was 67.4 percent for the fourth quarter 2018 compared to 70.6 percent for the fourth quarter 2017. Gross margin was 69.2 percent for the full year 2018 compared to 73.6 percent for the full year 2017.
  • Net loss was $(24.9) million for the fourth quarter 2018 compared to $(44.4) million for the fourth quarter 2017. Net loss was $(97.1) million for the full year 2018 compared to $(106.8) million for the full year 2017.
  • Net loss per basic and diluted share was $(0.35) for the fourth quarter 2018 compared to $(0.76) for the fourth quarter 2017. Net loss per basic and diluted share was $(1.47) for the full year 2018 compared to $(1.93) for the full year 2017.
  • EBITDA was $(8.3) million for the fourth quarter 2018 compared to $(17.2) million for the fourth quarter 2017. EBITDA was $(35.3) million for the full year 2018 compared to $(70.4) million for the full year 2017.
  • Adjusted EBITDA was a positive $5.8 million for the fourth quarter 2018 compared to $2.4 million for the fourth quarter 2017. Adjusted EBITDA was a positive $13.4 million for the full year 2018 compared to a loss of $(12.5) million for the full year 2017.

A reconciliation of generally accepted accounting principles (“GAAP”) in the United States to non-GAAP results has been provided in this press release in the accompanying tables. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures”.

Financial Outlook
Teladoc Health provides guidance based on current market conditions and expectations.

For the first-quarter 2019, we expect:

  • Total revenue to be in the range of $126 million to $129 million.
  • EBITDA loss to be in the range of $(14) million to $(16) million.
  • Adjusted EBITDA to be in the range of $0 million to positive $2 million.
  • Total U.S. paid membership to be in the range of 26 million to 26.5 million and visit-fee-only access to be available to approximately 9.8 million individuals.
  • Total visits to be between 950,000 and 1,050,000.
  • Net loss per share, based on 70.8 million weighted average shares outstanding, to be between $(0.44) and $(0.46).

For the full-year 2019, we expect:

  • Total revenue to be in the range of $535 million to $545 million.
  • EBITDA loss to be in the range of $(40) million to $(50) million.
  • Adjusted EBITDA to be in the range of positive $25 million to $35 million.
  • Total U.S. paid membership to be in the range of 27 million to 29 million members and visit-fee-only access to be available to approximately 9.8 million individuals.
  • Total visits to be between 3.6 million to 3.9 million.
  • Net loss per share, based on 71.9 million weighted average shares outstanding, to be between $(1.52) and $(1.66).

Quarterly Conference Call

The full-year and fourth-quarter 2018 earnings conference call and webcast will be held Wednesday, February 27, 2019, at 4:30 p.m. EST. The conference call can be accessed by dialing 1-833-241-4255 for U.S. participants, or 1-647-689-4206 for international participants, and including the following Conference ID Number: 3386008 to expedite caller registration; or via a live audio webcast available online at http://ir.teladoc.com/news-and-events/events-and-presentations/. A webcast replay will be available for on-demand listening shortly after the completion of the call at the same web link.

About Teladoc Health

A mission-driven organization, Teladoc Health, Inc. is successfully transforming how people access and experience healthcare, with a focus on high quality, lower costs, and improved outcomes around the world. The company’s award-winning, integrated clinical solutions are inclusive of telehealth, expert medical services, AI and analytics, and licensable platform services. With more than 2,000 employees, the organization delivers care in 125 countries and in more than 20 languages, partnering with employers, hospitals and health systems, and insurers to transform care delivery. For more information, please visit www.teladochealth.com or follow @TeladocHealth on Twitter.

Cautionary Note Regarding Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “believe,” “project,” “estimate,” “expect,” “may,” “should,” “will” and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding future revenues, future earnings, future numbers of members or clients, litigation outcomes, regulatory developments, market developments, new products and growth strategies, and the effects of any of the foregoing on our future results of operations or financial conditions.
           
Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: (i) changes in laws and regulations applicable to our business model; (ii) changes in market conditions and receptivity to our services and offerings; (iii) results of litigation; (iv) the loss of one or more key clients; and (v) changes to our abilities to recruit and retain qualified providers into our network. For a detailed discussion of the risk factors that could affect our actual results, please refer to the risk factors identified in our SEC reports, including, but not limited to our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, as filed with the SEC.

Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data, unaudited)

       
  December 31,  December 31,
  2018  2017 
      
Assets      
Current assets:      
Cash and cash equivalents $ 423,989  $ 42,817 
Short-term investments   54,545    79,489 
Accounts receivable, net of allowance of $3,382 and $2,422, respectively   43,571    27,094 
Prepaid expenses and other current assets   10,631    6,839 
Total current assets   532,736    156,239 
Property and equipment, net   10,148    8,963 
Goodwill   737,197    498,520 
Intangible assets, net   247,394    159,811 
Other assets   1,401    858 
Total assets $ 1,528,876  $ 824,391 
Liabilities and stockholders’ equity      
Current liabilities:      
Accounts payable $ 7,769  $ 3,884 
Accrued expenses and other current liabilities   26,801    19,357 
Accrued compensation   27,869    17,089 
Total current liabilities   62,439    40,330 
Other liabilities   6,191    4,882 
Deferred taxes   32,444    12,906 
Convertible senior notes, net   414,683    207,370 
Commitments and contingencies      
Stockholders’ equity:      
Common stock, $0.001 par value; 150,000,000 and 100,000,000 shares authorized as of December 31, 2018 and December 31, 2017, respectively; 70,516,249 shares and 61,534,101 shares issued and outstanding as of December 31, 2018 and December 31, 2017, respectively   70    61 
Additional paid-in capital   1,434,780    866,330 
Accumulated deficit   (408,661)   (311,577)
Accumulated other comprehensive (loss) income   (13,070)   4,089 
Total stockholders’ equity   1,013,119    558,903 
Total liabilities and stockholders’ equity $ 1,528,876  $ 824,391 


CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data, unaudited)

             
  Quarters Ended December 31,  Year Ended December 31,
  2018  2017  2018  2017 
Revenue $ 122,741  $ 77,140  $ 417,907  $ 233,279 
Cost of revenue   40,028    22,716    128,735    61,623 
Gross profit   82,713    54,424    289,172    171,656 
Operating expenses:            
Advertising and marketing   23,555    18,441    85,109    57,663 
Sales   14,509    11,279    59,154    37,984 
Technology and development   13,544    10,446    54,373    34,459 
Legal   1,023    760    1,866    1,485 
Regulatory   467    616    2,115    3,387 
Acquisition and integration related costs   1,434    2,557    10,391    13,196 
Gain on sale   —    —    (5,500)   — 
General and administrative   36,461    27,482    116,916    79,781 
Depreciation and amortization   9,557    7,402    35,602    19,095 
Loss from operations   (17,837)   (24,559)   (70,854)   (75,394)
Amortization of warrants and loss on extinguishment of debt   —    12,665    —    14,122 
Interest expense, net   6,663    7,813    26,112    17,491 
Net loss before taxes   (24,500)   (45,037)   (96,966)   (107,007)
Income tax (benefit) provision   379    (654)   118    (225)
Net loss $ (24,879) $ (44,383) $ (97,084) $ (106,782)
Net loss per share, basic and diluted $ (0.35) $ (0.76) $ (1.47) $ (1.93)
             
Weighted-average shares used to compute basic and diluted net loss per share   70,239,511    58,371,458    65,844,908    55,427,460 


CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

        
        
  2018  2017  
Cash flows used in operating activities:       
Net loss $ (97,084) $ (106,782) 
Adjustments to reconcile net loss to net cash used in operating activities:       
Depreciation and amortization   35,602    19,095  
Allowance for doubtful accounts   2,243    1,731  
Stock-based compensation   43,769    30,597  
Deferred income taxes   (2,247)   (306) 
Accretion of interest   19,487    6,382  
Amortization of warrants and loss on extinguishment of debt   —    14,122  
Gain on sale   (5,500)   —  
Changes in operating assets and liabilities:       
Accounts receivable   (10,931)   (3,659) 
Prepaid expenses and other current assets   (2,612)   (2,003) 
Other assets   (414)   98  
Accounts payable   (391)   1,534  
Accrued expenses and other current liabilities   3,993    4,292  
Accrued compensation   8,480    3,768  
Other liabilities   745    (3,310) 
Net cash used in operating activities   (4,860)   (34,441) 
Cash flows used in investing activities:       
Purchase of property and equipment   (4,011)   (2,633) 
Purchase of internal-use software   (4,396)   (2,882) 
Purchase of marketable securities   (56,347)   (149,261) 
Proceeds from marketable securities   84,170    85,753  
Sale of assets   5,530    —  
Acquisition of business, net of cash acquired   (282,442)   (379,356) 
Net cash used in investing activities   (257,496)   (448,379) 
Cash flows provided by financing activities:       
Net proceeds from the exercise of stock options   31,322    10,837  
Proceeds from issuance of convertible notes   279,152    263,722  
Proceeds from borrowing under bank and other debt   10    166,679  
Repayment of debt   —    (226,440) 
Proceeds from issuance of common stock   330,843    258,554  
Proceeds from employee stock purchase plan   2,564    2,153  
Proceeds from cash received for withholding taxes on stock-based compensation, net   1,721    (74) 
Net cash provided by financing activities   645,612    475,431  
Net increase (decrease) in cash and cash equivalents   383,258    (7,389) 
Foreign exchange difference   (2,084)   191  
Cash and cash equivalents at beginning of the period   42,817    50,015  
Cash and cash equivalents at end of the period $ 423,989  $ 42,817  
        
Income taxes paid $ 441  $ 137  
        
Interest paid $ 10,303  $ 9,450  


Operating Metrics

(In million, except for visits, unaudited)

             
  Quarters Ended  Year Ended 
  December 31,  December 31,
  2018 2017 2018 2017
Subscription Access Fees:            
U.S. $ 78,340 $ 55,409 $ 277,091 $ 179,184
International   24,362   9,963   73,693   18,338
Visit Fee Revenue:            
U.S. Paid Visits   15,752   11,558   53,074   35,294
U.S. Visit Fee Only   3,751   —   12,508   —
International Paid Visits   536   210   1,541   463
Total Revenues $ 122,741 $ 77,140 $ 417,907 $ 233,279

Non-GAAP Financial Measures:

To supplement our financial information presented in accordance with generally accepted accounting principles in the United States, or U.S. GAAP, we use EBITDA and Adjusted EBITDA, which are non-U.S. GAAP financial measures to clarify and enhance an understanding of past performance. We believe that the presentation of these financial measures enhances an investor’s understanding of our financial performance. We further believe that these financial measures are useful financial metrics to assess our operating performance from period-to-period by excluding certain items that we believe are not representative of our core business. We use certain financial measures for business planning purposes and in measuring our performance relative to that of our competitors. We utilize Adjusted EBITDA as the primary measure of our performance.

EBITDA consists of net loss before interest, taxes, depreciation and amortization. We believe that making such adjustment provides investors meaningful information to understand our results of operations and the ability to analyze financial and business trends on a period-to-period basis.

Adjusted EBITDA consists of net loss before interest, taxes, depreciation, amortization, gain on sale of certain contracts, amortization of warrants and loss on extinguishment of debt, stock-based compensation and acquisition and integration related costs. We believe that making such adjustment provides investors meaningful information to understand our results of operations and the ability to analyze financial and business trends on a period-to-period basis.

We believe both financial measures are commonly used by investors to evaluate our performance and that of our competitors. However, our use of the term EBITDA and Adjusted EBITDA may vary from that of others in our industry. Neither EBITDA nor Adjusted EBITDA should be considered as an alternative to net loss before taxes, net loss, loss per share or any other performance measures derived in accordance with U.S. GAAP as measures of performance.

EBITDA and Adjusted EBITDA have important limitation as analytical tools and you should not consider them in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Some of these limitations are:

  • EBTIDA and Adjusted EBITDA do not reflect the significant interest expense on our debt;
  • EBTIDA and Adjusted EBITDA eliminate the impact of income taxes on our results of operations;
  • Adjusted EBITDA does not reflect the significant acquisition and integration related costs related to mergers and acquisitions;
  • Adjusted EBITDA does not reflect the significant gain on sale of certain non-core business contracts;
  • Adjusted EBITDA does not reflect the significant amortization of warrants and loss on extinguishment of debt;
  • Adjusted EBITDA does not reflect the significant non-cash stock compensation expense which should be viewed as a component of recurring operating costs; and
  • other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than we do, limiting the usefulness of EBITDA and Adjusted EBITDA as comparative measures.

In addition, although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any expenditures for such replacements.

We compensate for these limitations by using EBITDA and Adjusted EBITDA along with other comparative tools, together with U.S. GAAP measurements, to assist in the evaluation of operating performance. Such U.S. GAAP measurements include gross profit, net loss, net loss per share and other performance measures.

In evaluating these financial measures, you should be aware that in the future we may incur expenses similar to those eliminated in this presentation. Our presentation of EBITDA and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items.

Reconciliation of EBITDA and Adjusted EBITDA to Net Loss
(In thousands, unaudited)

             
  Three Months Ended  Year Ended 
  December 31,  December 31,
  2018  2017  2018  2017 
Net loss $ (24,879) $ (44,383) $ (97,084) $ (106,782)
Add:            
Interest expense, net   6,663    7,813    26,112    17,491 
Income tax (benefit) provision   379    (654)   118    (225)
Depreciation expense   939    1,305    4,057    3,771 
Amortization expense   8,618    6,097    31,545    15,324 
EBITDA(1)   (8,280)   (29,822)   (35,252)   (70,421)
Stock-based compensation   12,683    16,969    43,769    30,597 
Amortization of warrants and loss on extinguishment of debt   —    12,665    —    14,122 
Gain on sale   —    —    (5,500)   — 
Acquisition and integration related costs   1,434    2,557    10,391    13,196 
Adjusted EBITDA(1) $ 5,837  $ 2,369  $ 13,408  $ (12,506)

Media:
Courtney McLeod
914-265-6789
cmcleod@teladochealth.com

Investors:
Valerie Haertel
914-265-6706
vhaertel@teladochealth.com