Teladoc Health Reports Fourth-Quarter and Full-Year 2018 Results

February 27, 2019

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 

 

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Source: Teladoc Health, Inc.

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Bob East, Asher Dewhurst, Jordan Kohnstam

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