Teladoc Health Reports First Quarter 2019 Results

30-04-2019

Year-over-year revenue grows 43% to $128.6 million and total visits increase 75% to 1,063,000

Issues 2019 second quarter guidance; reaffirms full-year expectations

PURCHASE, NY, April 30, 2019 (GLOBE NEWSWIRE) -- Teladoc Health, Inc. (NYSE: TDOC), the global leader in virtual care, today reported financial results for the first quarter ending March 31, 2019.

“Our first quarter 2019 delivered excellent results across all key financial and operational metrics and set a very positive tone for the year. The strong revenue and visit momentum during the quarter underscores the accelerating pace of adoption across our portfolio of clinical services and diversification of our business,” said Jason Gorevic, chief executive officer, Teladoc Health. “As we exit the quarter with a robust pipeline, continued international expansion and favorable Medicare Advantage regulation, I am more confident than ever that we are uniquely positioned to capitalize on the enormous global market opportunity for virtual care.”

Financial Highlights for the First Quarter Ended March 31, 2019
                 
Revenue                
($ thousands)                
  Quarter Ended   Year over Year
  March 31,   Growth
  2019   2018    
Subscription Access Fees Revenue                
U.S. $ 80,979   $ 61,020   33 %
International   24,975     10,709   133 %
Total   105,954     71,729   48 %
                 
Visit Fee Revenue                
U.S. Paid Visits   18,248     14,209   28 %
U.S. Visit Fee Only   4,121     3,539   16 %
International Paid Visits   250     167   50 %
Total   22,619     17,915   26 %
                 
Total Revenue* $ 128,573   $ 89,644   43 %
                 
*Organic first quarter 2019 revenue, excluding Advance Medical, increased by 23 percent year over year.


             
Membership & Visit Fee Only Access            
(millions)            
  Quarter Ended   Year over Year
  March 31,   Growth
  2019   2018    
Total U.S. Paid Membership*  26.7    20.8    28.2 %
             
Total U.S. Visit Fee Only Access  10.2    9.5    7.3 %
             
*Organic first-quarter 2019 U.S. Paid Membership, excluding Advance Medical, was 25.7 million, up 23 percent year over year. 
 


Visits                
(thousands)                
  Quarter Ended     Year over Year  
  March 31,     Growth  
  2019     2018        
Paid Visits from U.S. Paid Membership 365     298     22 %
Percent of Paid Visits from U.S. Paid Membership 51 %   54 %   (6 )%
Visits Included from U.S. Paid Membership 353     256     38 %
                 
Total Visits from U.S. Paid Membership 718     554     30 %
                 
U.S. Visit Fee Only 63     51     22 %
                 
International Visits 282     1     NM  
Total Visits 1,063     606     75 %
                 
  • Gross margin was 65.3 percent for the first quarter 2019 compared to 70.0 percent for the first quarter 2018.
  • Net loss was $(30.2) million for the first quarter 2019 compared to $(23.9) million for the first quarter 2018.
  • Net loss per basic and diluted share was $(0.43) for the first quarter 2019 compared to $(0.39) for the first quarter 2018.
  • EBITDA was $(13.3) million for the first quarter 2019 compared to $(10.8) million for the first quarter 2018.
  • Adjusted EBITDA was a positive $1.2 million for the first quarter 2019 compared to an adjusted EBITDA loss $(1.4) million for the first quarter 2018.

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 second-quarter 2019, we expect:

  • Total revenue to be in the range of $128 million to $131 million.
  • EBITDA loss to be in the range of $(13) million to $(15) million.
  • Adjusted EBITDA to be in the range of $5 million to $7 million.
  • Total U.S. paid membership to be in the range of 27 million to 28 million and visit-fee-only access to be available to approximately 10 million individuals.
  • Total visits to be between 775,000 and 875,000.
  • Net loss per share, based on 72.4 million weighted average shares outstanding, to be between $(0.42) and $(0.44).

For the full-year 2019, we are reaffirming expectations as follows:

  • 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 10 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 first quarter 2019 earnings conference call and webcast will be held Tuesday, April 30, 2019, at 4:30 p.m. EDT. 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: 5178989 to expedite caller registration; or via a live audio webcast available online at https://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 130 countries and in more than 30 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)
 
  March 31,   December 31,
  2019   2018
         
Assets          
Current assets:          
Cash and cash equivalents $  433,958     $  423,989  
Short-term investments    45,745        54,545  
Accounts receivable, net of allowance of $3,577 and $3,382, respectively    50,583        43,571  
Prepaid expenses and other current assets    10,503        10,631  
Total current assets    540,789        532,736  
Property and equipment, net    9,841        10,148  
Goodwill    734,459        737,197  
Intangible assets, net    238,314        247,394  
Operating lease - right-of-use assets    26,850        —  
Other assets    1,372        1,401  
Total assets $  1,551,625     $  1,528,876  
Liabilities and stockholders’ equity          
Current liabilities:          
Accounts payable $  7,738     $  7,769  
Accrued expenses and other current liabilities    45,733        26,801  
Accrued compensation    18,231        27,869  
Total current liabilities    71,702        62,439  
Other liabilities    4,788        6,191  
Operating lease liabilities, net of current portion    22,936        —  
Deferred taxes    29,748        32,444  
Convertible senior notes, net    420,893        414,683  
Commitments and contingencies          
Stockholders’ equity:          
Common stock, $0.001 par value; 150,000,000 and 100,000,000 shares authorized as of March 31, 2019 and December 31, 2018, respectively; 71,463,411 shares and 70,516,249 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively    71        70  
Additional paid-in capital    1,457,156        1,434,780  
Accumulated deficit    (438,811 )      (408,661 )
Accumulated other comprehensive (loss) income    (16,858 )      (13,070 )
Total stockholders’ equity    1,001,558        1,013,119  
Total liabilities and stockholders’ equity $  1,551,625     $  1,528,876  


CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data, unaudited)
 
  Quarter Ended March 31,
  2019   2018
Revenue $  128,573     $  89,644  
Cost of revenue    44,677        26,856  
Gross profit    83,896        62,788  
Operating expenses:          
Advertising and marketing    26,404        20,325  
Sales    16,212        13,783  
Technology and development    15,987        12,904  
Legal    1,097        481  
Regulatory    489        564  
Acquisition and integration related costs    1,012        1,569  
General and administrative    35,982        24,001  
Depreciation and amortization    9,600        8,253  
Loss from operations    (22,887 )      (19,092 )
Interest expense, net    6,521        4,873  
Net loss before taxes    (29,408 )      (23,965 )
Income tax (benefit) provision    742        (103 )
Net loss $  (30,150 )   $  (23,862 )
           
Net loss per share, basic and diluted $  (0.43 )   $  (0.39 )
           
Weighted-average shares used to compute basic and diluted net loss per share    70,919,496        61,797,762  


CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
 
  Quarter Ended March 31,
  2019   2018
Cash flows used in operating activities:          
Net loss $  (30,150 )   $  (23,862 )
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation and amortization    11,563        8,253  
Allowance for doubtful accounts    783        1,148  
Stock-based compensation    13,523        7,832  
Deferred income taxes    (2,672 )      (585 )
Accretion of interest    6,060        3,018  
Changes in operating assets and liabilities:          
Accounts receivable    (8,251 )      (4,738 )
Prepaid expenses and other current assets    350        599  
Other assets    30        31  
Accounts payable    (28      (533 )
Accrued expenses and other current liabilities    14,530        1,836  
Accrued compensation    (11,737 )      (7,917 )
Operating lease liabilities    (479 )      —  
Other liabilities    (1,414      1,047  
Net cash used in operating activities    (7,892 )      (13,871 )
Cash flows provided by investing activities:          
Purchase of property and equipment    (571 )      (557 )
Purchase of internal-use software    (1,099 )      (471 )
Proceeds from marketable securities    9,000        25,000  
Sale of assets    6        —  
Net cash provided by investing activities    7,336        23,972  
Cash flows provided by financing activities:          
Net proceeds from the exercise of stock options    8,854        8,643  
Proceeds from cash received for withholding taxes on stock-based compensation, net    1,848        3,555  
Net cash provided by financing activities    10,702        12,198  
Net increase in cash and cash equivalents    10,146        22,299  
Foreign exchange difference    (177 )      63  
Cash and cash equivalents at beginning of the period    423,989        42,817  
Cash and cash equivalents at end of the period $  433,958     $  65,179  
           
Income taxes paid $  23     $  52  
           
Interest paid $  —     $  2  

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, 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:

  • EBITDA and Adjusted EBITDA do not reflect the significant interest expense on our debt;

  • EBITDA 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 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)
 
  Quarter Ended 
  March 31,
  2019   2018
Net loss $ (30,150 )   $ (23,862 )
Add:          
Interest expense, net   6,521       4,873  
Income tax (benefit) provision   742       (103 )
Depreciation expense   863       1,531  
Amortization expense   8,737       6,722  
EBITDA   (13,287 )     (10,839 )
Stock-based compensation   13,523       7,832  
Acquisition and integration related costs   1,012       1,569  
Adjusted EBITDA $ 1,248     $ (1,438 )
               

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

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

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