Teladoc Health Reports First Quarter 2022 Results

April 27, 2022
  • First quarter revenue grows 25% year-over-year to $565.4 million

  • Net loss per share of $41.58, primarily driven by non-cash goodwill impairment charge of $6.6 billion or $41.11 per share

  • Full year guidance ranges for 2022 revenue, net loss per share and adjusted EBITDA revised to $2.4 - $2.5 billion, ($43.50) per share - ($43.00) per share, and $240 - $265 million, respectively

PURCHASE, NY, April 27, 2022 (GLOBE NEWSWIRE) -- Teladoc Health, Inc. (NYSE: TDOC), the global leader in whole-person virtual care, today reported financial results for the first quarter ended March 31, 2022.  

“Teladoc Health continues to be the global leader in transforming healthcare, delivering personalized, flexible and efficient whole-person care at scale for millions of consumers and patients while meaningfully reducing costs across the healthcare system. During the first quarter, we demonstrated significant progress in a number of strategic initiatives, such as successfully launching multiple clients on our innovative services, including Primary360 and our stepped-care chronic condition programs,” said Jason Gorevic, chief executive officer of Teladoc Health.

“While we continue to see sustainable growth across our suite of products and services, we are revising our 2022 outlook to reflect dynamics we are currently experiencing in the direct-to-consumer (D2C) mental health and chronic condition markets. In the D2C mental health market, higher advertising costs in some channels are generating a lower-than-expected yield on our marketing spend. In the chronic condition market, we are seeing an elongated sales cycle as employers and health plans evaluate their long-term strategies to deliver the benefits and care that their populations need. Despite the revision to our 2022 outlook, we are confident in our strategy, along with our breadth and depth of capabilities, which empower people everywhere to live healthier lives,” Gorevic added.

                     
Key Financial Data                    
($ thousands, unaudited)                    
    Quarter Ended     Year over Year
    March 31,     Change
    2022     2021        
Revenue   $ 565,350     $ 453,675       25   %
                     
Net Loss   $ (6,674,523 )   $ (199,649 )     N/M    
Net Loss per share, basic and diluted   $ (41.58 )   $ (1.31 )     N/M    
                     
Adjusted EBITDA*   $ 54,497     $ 56,604       (4 ) %

* A reconciliation of each non-GAAP measure to the most comparable measure under GAAP has been provided in this press release in the accompanying tables. An explanation of these Non-GAAP measures is also included below under the heading “Non-GAAP Financial Measures.”
nm – Not meaningful

First Quarter 2022

Revenue increased 25% to $565.4 million, from $453.7 million in the first quarter of 2021. Access fees revenue grew 29% to $491.3 million and visit fee revenue grew 12% to $67.9 million. U.S. Revenues grew 24% to $491.2 million and International revenues grew 27% to $74.2 million.

Non-cash goodwill impairment charge of $6.6 billion was recorded in the first quarter of 2022. The non-cash charge had no impact on income taxes.

Net loss totaled $6,674.5 million, or $(41.58) per share, compared to $199.6 million, or $(1.31) per share, in the first quarter of 2021. Results for the first quarter of 2022 primarily included a non-cash goodwill impairment charge of $6,600.0 million, or $(41.11) per share, as well as stock-based compensation expense of $60.4 million, or $(0.38) per share, and amortization of acquired intangibles of $49.4 million, or $(0.31) per share.

Results for the first quarter of 2021 included stock-based compensation expense of $86.3 million, or $(0.57) per share, amortization of acquired intangibles of $43.7 million, or $(0.29) per share, and non-cash income tax charge of $87.0 million, or $(0.57) per share.

Adjusted EBITDA* decreased 4% to $54.5 million, compared to $56.6 million in the first quarter of 2021.

GAAP gross margin, which includes depreciation and amortization, was 66.0 percent for the first quarter of 2022 compared to 67.0 percent for the first quarter of 2021.

Adjusted gross margin* was 66.9 percent for the first quarter of 2022 compared to 67.8 percent for the first quarter of 2021.

Average revenue per U.S. paid member increased to $2.52 in the first quarter of 2022, from $2.09 in the first quarter of 2021 and $2.49 in the fourth quarter of 2021.

Financial Outlook
Teladoc Health provides guidance based on current market conditions and expectations and what we know today. In addition, given the uncertainty of the expected path of the COVID-19 pandemic as well as the broader economic impact, this is an evolving situation and circumstances may change. Based on what we know today, we believe our guidance ranges provide a reasonable baseline for 2022 financial performance.

For the second quarter of 2022, we expect:

   
  2Q 2022 Guidance Range
Revenue $580 - $600 million
EBITDA ($37) - ($22) million
Adjusted EBITDA $39 - $49 million
Net loss per share ($0.72) - ($0.60)
Total U.S. Paid Membership 54.0 - 55.0 million
Visit Fee Only Access ~25 million
Total Visits 4.4 - 4.6 million
   

For the full year 2022, we expect:

   
  Full Year 2022 Guidance Range
Revenue $2,400 - $2,500 million
EBITDA ($52) - ($7) million
Adjusted EBITDA $240 - $265 million
Net loss per share ($43.50) - ($43.00)
Total U.S. Paid Membership 54.0 - 56.0 million
Visit Fee Only Access ~25 million
Total Visits 18.5 - 19.5 million
   

Earnings Conference Call

The first quarter 2022 earnings conference call and webcast will be held Wednesday, April 27, 2022 at 4:30 p.m. E.T. The conference call can be accessed by dialing 1-844-200-6205 for U.S. participants, or 1-929-526-1599 for international participants, and referencing Conference ID Number: 843324; 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, and will remain available for approximately 90 days.

About Teladoc Health

Teladoc Health empowers all people everywhere to live their healthiest lives by transforming the healthcare experience. As the world leader in whole-person virtual care, Teladoc Health uses proprietary health signals and personalized interactions to drive better health outcomes across the full continuum of care, at every stage in a person’s health journey. Ranked best in KLAS for Virtual Care Platforms in 2021 and #1 among direct-to-consumer telehealth providers in the J.D. Power 2021 U.S. Telehealth Satisfaction Study, Teladoc Health leverages more than a decade of expertise and data-driven insights to meet the growing virtual care needs of consumers and healthcare professionals. 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 financial or operating results, future numbers of members or clients, future numbers of visits, 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 condition.

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; (v) changes in valuations or useful lives of our assets; (vi) changes to our abilities to recruit and retain qualified providers into our network; (vii) the impact of impairment losses; (viii) risks relating to impairment losses, including with respect to goodwill; and (ix) the impact of the COVID-19 pandemic on our operations, demand for our services and general economic conditions, as well as orders, directives and legislative action by local, state, federal and foreign governments in response to the spread of COVID-19. 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.



Revenues and Summary Operating Metrics

                       
Revenue
($ thousands, except Average U.S.
  Quarter Ended   Year over Year
Revenue Per Member)   March 31,   Growth
    2022   2021    
Access Fees Revenue                      
U.S.   $ 421,146     $ 327,553     29   %
International     70,191       54,553     29   %
Total     491,337       382,106     29   %
                       
Visit Fee Revenue                      
U.S.     64,473       57,128     13   %
International     3,455       3,383     2   %
Total     67,928       60,511     12   %
                       
Other                      
U.S.     5,581       10,671     (48 ) %
International     504       387     30   %
Total     6,085       11,058     (45 ) %
                       
Total Revenue   $ 565,350     $ 453,675     25   %
                       
U.S. Revenue   $ 491,200     $ 395,352     24   %
International Revenue     74,150       58,323     27   %
Total Revenue   $ 565,350     $ 453,675     25   %
                       
Average U.S. Revenue Per Member (1)   $ 2.52     $ 2.09     21   %

 

                   
Visits   Quarter Ended   Year over Year
(thousands)   March 31,   Growth
    2022     2021      
U.S. Visits     3,412       2,461     39 %
International Visits     1,098       881     25 %
Total Visits     4,510       3,342     35 %
                   
Utilization (2)     23.4 %     17.5 %   593 pt
                   
Platform-Enabled Sessions (3)     1,174       1,092     8 %
                   
Total Visits & Sessions Provided & Enabled     5,684       4,434     28 %

 

               
Membership and Visit Fee Only Access   Quarter Ended   Year over Year
(millions)   March 31,   Growth
    2022   2021    
U.S. Paid Membership   54.3   51.5   5 %
               
U.S. Visit Fee Only Access   25.2   22.0   14 %
               
Unique Chronic Care Members (4)   0.731   0.653   12 %
 

(1) Average U.S. Revenue Per Member measures the average amount of access revenue that the Company generates from a U.S. paid member for a particular period. It is calculated by dividing the U.S. access revenue generated from the Company’s U.S. paid members, excluding certain non-member based access fees, by the total average number of U.S. paid members during the applicable period.

(2) Utilization measures the ratio of visits to total U.S. paid members. It is calculated by dividing visits during a particular period (excluding visit fee only visits) by U.S. paid members in the applicable period and annualizing the result.

(3) Platform-Enabled Sessions are a unique instance in which our licensed software platform has facilitated a virtual voice or video encounter between a care provider and our client’s patient, or between care providers. We believe platform-enabled sessions are an indicator of the value our clients derive from the platform they license from us in order to facilitate virtual care.

(4) Unique Chronic Care Members represent the number of unique individuals enrolled in our suite of chronic care programs at the end of a given period.


TELADOC HEALTH, INC.

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

             
    Quarter Ended March 31,
    2022        2021  
Revenue   $ 565,350     $ 453,675  
Expenses:            
Cost of revenue (exclusive of depreciation and amortization,
which is shown separately below)
    187,025       145,959  
Operating expenses:            
Advertising and marketing     133,600       89,439  
Sales     58,329       64,793  
Technology and development     87,412       78,008  
General and administrative     104,923       105,172  
Acquisition, integration, and transformation costs     4,507       6,323  
Depreciation and amortization     58,933       48,659  
Goodwill impairment     6,600,000        
Total expenses     7,234,729       538,353  
Loss from operations     (6,669,379 )     (84,678 )
Loss on extinguishment of debt           11,459  
Other income, net     (724 )     (5,652 )
Interest expense, net     5,480       22,125  
Net loss before taxes     (6,674,135 )     (112,610 )
Income tax expense     388       87,039  
Net loss   $ (6,674,523 )   $ (199,649 )
             
Net loss per share, basic and diluted   $ (41.58 )   $ (1.31 )
             
Weighted-average shares used to compute basic
and diluted net loss per share
    160,532,301       152,167,606  
                 

Stock-based Compensation Summary

Compensation costs for stock-based awards were classified as follows (in thousands):

               
    Quarter Ended  
    March 31,  
    2022   2021  
Cost of revenue (exclusive of depreciation and amortization,
which is shown separately)
  $ 2,196   $ 2,362  
Advertising and marketing     3,711     5,082  
Sales     12,071     21,167  
Technology and development     18,087     26,726  
General and administrative     24,371     30,963  
Total stock-based compensation expense (1)   $ 60,436   $ 86,300  

(1) Excluding the amount capitalized related to internal software development projects.

TELADOC HEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)

             
    Quarter Ended March 31,
    2022     2021  
Operating activities:            
Net loss   $ (6,674,523 )   $ (199,649 )
Adjustments to reconcile net loss to net cash used in operating activities:            
Goodwill impairment     6,600,000        
Depreciation and amortization     58,933       48,659  
Depreciation of rental equipment     770       824  
Amortization of right-of-use assets     3,173       2,948  
Provision for doubtful accounts     4,591       3,074  
Stock-based compensation     60,436       86,300  
Deferred income taxes     (2,319 )     87,004  
Accretion of interest     826       16,829  
Loss on extinguishment of debt           11,459  
Gain on sale of investment           (5,852 )
Other, net           38  
Changes in operating assets and liabilities:            
Accounts receivable     (27,842 )     (11,717 )
Prepaid expenses and other current assets     (18,993 )     (12,799 )
Inventory     2,023       (2,877 )
Other assets     (6,047 )     1,244  
Accounts payable     492       (11,989 )
Accrued expenses and other current liabilities     11,706       (1,889 )
Accrued compensation     (48,819 )     (43,624 )
Deferred revenue     7,479       17,086  
Operating lease liabilities     (3,626 )     (3,076 )
Other liabilities     (7 )     (19 )
Net cash used in operating activities     (31,747 )     (18,026 )
Investing activities:            
Capital expenditures     (3,913 )     (2,115 )
Capitalized software     (26,918 )     (11,144 )
Proceeds from marketable securities           50,000  
Acquisitions of business, net of cash acquired           (55,921 )
Other, net     3,264       3,150  
Net cash used in investing activities     (27,567 )     (16,030 )
Financing activities:            
Net proceeds from the exercise of stock options     3,585       11,908  
Repurchase of 2022 Notes           (130 )
Proceeds from advances from financing companies     2,232       4,816  
Payment against advances from financing companies     (3,921 )     (4,098 )
Proceeds from employee stock purchase plan     3,680       8,648  
Cash received for withholding taxes on stock-based compensation, net     103       1,218  
Other, net     (2,863 )     (187 )
Net cash provided by financing activities     2,816       22,175  
Net decrease in cash and cash equivalents     (56,498 )     (11,881 )
Foreign exchange difference     (538 )     (1,339 )
Cash and cash equivalents at beginning of the period     893,480       733,324  
Cash and cash equivalents at end of the period   $ 836,444     $ 720,104  
             

TELADOC HEALTH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data, unaudited)

             
    March 31,   December 31,
       2022        2021  
Assets            
Current assets:            
Cash and cash equivalents   $ 836,444     $ 893,480  
Short-term investments     2,544       2,537  
Accounts receivable, net of provision of $13,056 and $12,384, respectively     191,528       168,956  
Inventories     70,654       73,079  
Prepaid expenses and other current assets     106,875       87,387  
Total current assets     1,208,045       1,225,439  
Property and equipment, net     28,419       27,234  
Goodwill     7,899,795       14,504,174  
Intangible assets, net     1,883,897       1,910,278  
Operating lease - right-of-use assets     45,552       46,780  
Other assets     26,629       20,703  
Total assets   $ 11,092,337     $ 17,734,608  
Liabilities and stockholders’ equity            
Current liabilities:            
Accounts payable   $ 47,412     $ 47,257  
Accrued expenses and other current liabilities     116,689       102,933  
Accrued compensation     46,075       91,941  
Deferred revenue-current     83,847       75,569  
Advances from financing companies     12,664       13,313  
Total current liabilities     306,687       331,013  
Other liabilities     1,445       1,492  
Operating lease liabilities, net of current portion     40,163       41,773  
Deferred revenue, net of current portion     2,884       3,834  
Advances from financing companies, net of current portion     8,252       9,291  
Deferred taxes, net     57,516       75,777  
Convertible senior notes, net     1,532,780       1,225,671  
Commitments and contingencies            
Stockholders’ equity:            
Common stock, $0.001 par value; 300,000,000 shares authorized as of March 31, 2022 and December 31, 2021; 161,434,513 shares and 160,469,325 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively     161       160  
Additional paid-in capital     17,177,152       17,473,336  
Accumulated deficit     (8,023,279 )     (1,421,454 )
Accumulated other comprehensive loss     (11,424 )     (6,285 )
Total stockholders’ equity     9,142,610       16,045,757  
Total liabilities and stockholders’ equity   $ 11,092,337     $ 17,734,608  
                 

Non-GAAP Financial Measures:

To supplement our financial information presented in accordance with GAAP, we use adjusted gross profit, adjusted gross margin, EBITDA, and adjusted EBITDA, which are non-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 and financial and business trends 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.

Adjusted gross profit is our total revenue minus our total cost of revenue (exclusive of depreciation and amortization, which is shown separately) and adjusted gross margin is adjusted gross profit as a percentage of our total revenue.

EBITDA consists of net loss before interest; other expense (income), net, including foreign exchange gain or loss; taxes; depreciation and amortization; goodwill impairment; and loss on extinguishment of debt. Adjusted EBITDA consists of net loss before interest; other expense (income), net, including foreign exchange gain or loss; taxes; depreciation and amortization; goodwill impairment; loss on extinguishment of debt; stock-based compensation; and acquisition, integration and transformation costs.

We believe the above financial measures are commonly used by investors to evaluate our performance and that of our competitors. However, our use of the terms adjusted gross profit, adjusted gross margin, EBITDA, and adjusted EBITDA may vary from that of others in our industry. None of adjusted gross profit, adjusted gross margin, EBITDA, nor adjusted EBITDA should be considered as an alternative to net loss before taxes, net loss, net loss per share or any other performance measures derived in accordance with GAAP.

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

  • Adjusted gross margin has been and will continue to be affected by a number of factors, including the fees we charge our clients, the number of visits and cases we complete, the costs paid to providers and medical experts, as well as the costs of our provider network operations center;
  • Adjusted gross margin does not reflect the significant depreciation and amortization to cost of revenue;
  • EBITDA and adjusted EBITDA do not reflect goodwill impairment;
  • EBITDA and adjusted EBITDA do not reflect the interest expense on our debt;
  • EBITDA and adjusted EBITDA eliminate the impact of income taxes on our results of operations;
  • EBITDA and adjusted EBITDA do not reflect the loss on extinguishment of debt;
  • EBITDA and adjusted EBITDA do not reflect other expense (income), net;
  • Adjusted EBITDA does not reflect the significant acquisition, integration and transformation costs. Acquisition, integration and transformation costs include investment banking, financing, legal, accounting, consultancy, integration, fair value changes related to contingent consideration and certain other transaction costs related to mergers and acquisitions. It also includes costs related to certain business transformation initiatives focused on integrating and optimizing various operations and systems, including upgrading our customer relationship management (CRM) and enterprise resource planning (ERP) systems. These transformation cost adjustments made to our results do not represent normal, recurring, operating expenses necessary to operate the business but rather, incremental costs incurred in connection with our acquisition and integration activities;
  • 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 adjusted gross profit, adjusted gross margin, EBITDA, and adjusted EBITDA differently than we do, limiting the usefulness of these measures 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 adjusted gross profit, adjusted gross margin, EBITDA and adjusted EBITDA do not reflect any expenditures for such replacements.

We compensate for these limitations by using adjusted gross profit, adjusted gross margin, EBITDA, and adjusted EBITDA along with other comparative tools, together with GAAP measurements, to assist in the evaluation of operating performance. Such GAAP measurements include 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 adjusted gross profit, adjusted gross margin, EBITDA, and adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items.

The following is a reconciliation of gross profit and gross margin, the most directly comparable GAAP financial measures, to adjusted gross profit and adjusted gross margin, respectively:

Reconciliation of GAAP Gross Profit to Adjusted Gross Profit and Adjusted Gross Margin
(In thousands, unaudited)

               
    Quarter Ended  
    March 31,  
       2022        2021       
Revenue   $ 565,350     $ 453,675    
Cost of revenue (exclusive of depreciation and amortization, which is shown separately below)     (187,025 )     (145,959 )  
Depreciation and amortization of intangible assets     (5,119 )     (3,576 )  
Gross Profit     373,206       304,140    
Depreciation and amortization of intangible assets     5,119       3,576    
Adjusted gross profit   $ 378,325     $ 307,716    
               
Gross margin     66.0   %   67.0   %
Adjusted gross margin     66.9   %   67.8   %
                   

The following is a reconciliation of Net Loss, the most directly comparable GAAP financial measure, to EBITDA and adjusted EBITDA:

Reconciliation of GAAP Net Loss to EBITDA and Adjusted EBITDA
(In thousands, except for guidance data, unaudited)

                             
    Quarter Ended     Guidance in millions (1)  
    March 31,     Second Quarter   Full Year  
     2022      2021         2022    2022  
Net loss   $ (6,674,523 )   $ (199,649 )     $ (116) - ($97)   $ (7,024) - ($6,944)  
Adjustments:                            
Goodwill impairment     6,600,000                        
Loss on extinguishment of debt           11,459                  
Other income, net     (724 )     (5,652 )                
Interest expense, net     5,480       22,125                  
Income tax expense     388       87,039                  
Depreciation and amortization     58,933       48,659                  
Total Adjustments     6,664,077       163,630         79 - 75     6,972 - 6,937  
EBITDA     (10,446 )     (36,019 )       (37) - (22)     (52) - (7)  
Adjustments:                            
Stock-based compensation     60,436       86,300                  
Acquisition, integration, and transformation costs     4,507       6,323                  
Total Adjustments     64,943       92,623         76 - 71     292 - 272  
Adjusted EBITDA   $ 54,497     $ 56,604       $ 39 - $49   $ 240 - $265  

(1) We have not provided a full line-item reconciliation for net loss to EBITDA or adjusted EBITDA guidance because we do not provide guidance on the individual reconciling items between net loss, EBITDA, and adjusted EBITDA. This is due to the uncertainty as to timing, and the potential variability, of the individual reconciling items such as goodwill impairment, stock-based compensation and the related tax impact, income taxes and acquisition, integration and transformation costs, the effect of which may be significant. Accordingly, a full line-item reconciliation of the GAAP measure to the corresponding non-GAAP financial measure guidance is not available without unreasonable effort.

Investors:
Patrick Feeley
914-265-7925
IR@teladochealth.com 

Media:
Chris Stenrud
860-491-8821
pr@teladochealth.com


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Source: Teladoc Health, Inc.

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