Teladoc Announces Second Quarter 2018 Results

August 01, 2018

2Q 2018 Revenue of $94.6 million, growth of 112%

Total Paid Membership of 22.5 million, growth of 48%

2Q 2018 Total Visits of 533,000, growth of 72%

PURCHASE, NY, Aug. 01, 2018 (GLOBE NEWSWIRE) -- Teladoc, Inc. (NYSE:TDOC), the global leader in virtual care, today announced results for the second quarter ended June 30, 2018.

“Teladoc saw another strong quarter financially and operationally as we met or exceeded our expectations across the board. I’m particularly pleased that we made significant early progress on the integration of Advance Medical, which empowers consumers to access high quality healthcare seamlessly around the world,” said Jason Gorevic, Teladoc’s chief executive officer. “As we enter the second half of the year, I am excited by the breadth of our pipeline, our prospects’ level of enthusiasm around our full clinical suite, and the changes coming out of Washington D.C. which all serve as further evidence that virtual care is an invaluable component of the healthcare delivery system of the future."                          

Financial Performance for the Second Quarter Ended June 30, 2018

All comparisons are to the second quarter ended June 30, 2017. Organic growth figures are calculated removing the effect of the Best Doctors and Advance Medical acquisitions.

  • Total revenue was $94.6 million (including $26.7 million from Best Doctors and $6.2 million from Advance Medical) for the second quarter 2018 compared to $44.6 million, an increase of 112%. Organic revenue growth was 39%.
    • Revenue from Subscription Access Fees was $79.8 million for the second quarter 2018 compared to $37.5 million, an increase of 113%.
      • Revenue from U.S. Subscription Access Fees for the second quarter 2018 was $65.1 million compared to $37.5 million, an increase of 74%. Organic U.S. Subscription Access Fee revenue growth for the second quarter 2018 compared to the same period last year was 35%.
      • Revenue from International Subscription Access Fees for the second quarter 2018 was $14.7 million compared to none in the same period last year. 
    • Revenue from Visits was $14.8 million for the second quarter 2018 compared to $7.1 million, an increase of 107%.
      • Revenue from General Medical Visits (including dermatology and behavioral health) was $12.9 million for the second quarter 2018 compared to $7.1 million in the same period last year.
      • Revenue from Other Specialty Visits (principally expert medical opinions) was $1.9 million for the second quarter 2018 compared to none in the same period last year.
  • Total visits from U.S. Paid Membership were 436,000 for the second quarter 2018 compared to 309,000, an increase of 41%.
    • Second quarter 2018 paid visits totaled 218,000, or 50% of total visits from U.S. paid membership, compared to 170,000 second quarter 2017 paid visits, or 55% of total visits from U.S. paid membership.
  • Total visits from U.S. Visit Fee Only Access, which was launched on January 1, 2018, were 36,000.
    Total U.S. paid membership was 22.5 million, an increase of 48% compared to the second quarter 2017 U.S. paid membership of 15.2 million (adjusted for 5.3 million Aetna and Amerigroup visit fee only lives). Organic U.S. paid membership growth for the second quarter 2018 was 23%.
  • Total U.S. Visit Fee Only access, which was launched on January 1, 2018, was available to 9.6 million individuals.
  • Gross margin was 70.7% for the second quarter 2018 compared to 77.5% for the second quarter 2017.
  • Net loss was $(25.1) million for the second quarter 2018 compared to $(15.4) million for the second quarter 2017.
  • Net loss per basic and diluted share was $(0.40) for the second quarter 2018 compared to a net loss per share of $(0.28) for the second quarter 2017.
  • EBITDA was a loss of $(10.1) million for the second quarter 2018 compared to a loss of $(11.8) million for the second quarter 2017.
  • Adjusted EBITDA improved to a positive $2.7 million for the second quarter 2018 compared to a loss of $(5.1) million for the second quarter 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”.

Business Outlook

Third Quarter 2018 Guidance: Revenue for the third quarter 2018 is expected to be in the range of $106 million to $108 million. EBITDA is expected to be in the range of a loss of $(7) million to a loss of $(9) million. Adjusted EBITDA is expected to be positive in the range of $4 million to $6 million. Total U.S. paid membership is expected to be in the range of 23.0 million to 23.5 million and visit fee only access is expected to be in the range of 9.6 million to 9.7 million individuals at September 30, 2018. Total visits are projected to be between 600,000 and 650,000 visits. Third quarter net loss per share, based on 68.3 million weighted average shares outstanding, is expected to be between $(0.37) and $(0.39).

Full Year 2018 Guidance: Revenue for 2018 is expected to be in the range of $405 million to $410 million. EBITDA is expected to be in the range of a loss of $(36) million to a loss of $(40) million. Adjusted EBITDA is expected to be positive in the range of $11 million to $13 million. Total U.S. paid membership is expected to be in the range of 23 million to 24 million and visit fee only access is expected to be available to approximately 10 million individuals. Total visits are projected to be between 2.5 million to 2.6 million visits. Net loss per share, based on 66 million weighted average shares outstanding, is expected to be between $(1.48) and $(1.52).

Quarterly Conference Call

The second quarter 2018 earnings conference call and webcast will be held Wednesday, August 1, 2018 at 5:00 p.m. ET. 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: 3399134 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.

2018 Investor Day

The company will host Investor Day on Thursday, September 27, 2018 at 10:00 AM ET in New York, NY. To RSVP or for further information, please contact Kelsey Turcotte at [email protected] or 914-265-6706.

About Teladoc, Inc.

Teladoc, Inc. (NYSE:TDOC) is the global leader in virtual care. A mission-driven organization, Teladoc is successfully expanding access to high quality healthcare, lowering costs and improving outcomes around the world. The company’s award winning, integrated clinical solutions are inclusive of telehealth, expert medical opinions, 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.teladoc.com or follow @Teladoc 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)

             
    June 30,   December 31,
    2018
  2017
           
Assets            
Current assets:            
Cash and cash equivalents   $ 105,804     $ 42,817  
Short-term investments     26,559       79,489  
Accounts receivable, net of allowance of $3,045 and $2,422, respectively     38,100       27,094  
Prepaid expenses and other current assets     8,396       6,839  
Total current assets     178,859       156,239  
Property and equipment, net     10,034       8,963  
Goodwill     745,280       498,520  
Intangible assets, net     264,677       159,811  
Other assets     1,059       858  
Total assets   $ 1,199,909     $ 824,391  
Liabilities and stockholders’ equity            
Current liabilities:            
Accounts payable   $ 5,545     $ 3,884  
Accrued expenses and other current liabilities     27,936       19,357  
Accrued compensation     23,538       17,089  
Total current liabilities     57,019       40,330  
Other liabilities     5,579       4,882  
Deferred taxes     35,175       12,906  
Convertible senior notes, net     402,755       207,370  
Commitments and contingencies            
Stockholders’ equity:            
Common stock, $0.001 par value; 150,000,000 and 100,000,000 shares authorized as of June 30, 2018 and December 31, 2017, respectively; 64,303,938 shares and 61,534,101 shares issued and outstanding as of June 30, 2018 and December 31, 2017, respectively     64       61  
Additional paid-in capital     1,062,362       866,330  
Accumulated deficit     (360,517)       (311,577)  
Accumulated other comprehensive income (loss)     (2,528)       4,089  
Total stockholders’ equity     699,381       558,903  
Total liabilities and stockholders’ equity   $ 1,199,909     $ 824,391  
                 

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

                           
    Quarters Ended June 30,   Six Months Ended June 30,  
    2018     2017     2018     2017    
Revenue   $ 94,560     $ 44,591     $ 184,204     $ 87,489    
Cost of revenue     27,684       10,026       54,540       22,165    
Gross profit     66,876       34,565       129,664       65,324    
Operating expenses:                          
Advertising and marketing     19,561       12,278       39,886       24,894    
Sales     14,559       7,324       28,342       15,312    
Technology and development     14,348       7,537       27,252       14,049    
Legal     108       277       589       620    
Regulatory     531       987       1,095       1,994    
Acquisition and integration related costs     5,800       2,113       7,369       2,113    
Gain on sale     (4,070 )           (4,070 )        
General and administrative     26,140       15,873       50,141       30,361    
Depreciation and amortization     8,046       2,668       16,299       5,275    
Loss from operations     (18,147)       (14,492)       (37,239)       (29,294)    
Interest expense, net     6,910       774       11,783       1,476    
Net loss before taxes     (25,057)       (15,266)       (49,022)       (30,770)    
Income tax (benefit) provision     22       149       (81)       299    
Net loss   $ (25,079)     $ (15,415)     $ (48,941)     $ (31,069)    
Net loss per share, basic and diluted   $ (0.40)     $ (0.28)     $ (0.78)     $ (0.58)    
                           
Weighted-average shares used to compute basic and diluted net loss per share     62,975,535       54,572,862       62,389,902       53,389,435    
                           

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)

             
    Six Months Ended June 30,
    2018     2017  
Cash flows used in operating activities:            
Net loss   $ (48,941)     $ (31,069)  
Adjustments to reconcile net loss to net cash used in operating activities:            
Depreciation and amortization     16,299       5,275  
Allowance for doubtful accounts     1,258       764  
Stock-based compensation     18,891       7,662  
Deferred income taxes     (1,258)       299  
Accretion of interest     7,627       28  
Gain on sale     (4,070)        
Changes in operating assets and liabilities:            
Accounts receivable     (4,027)       (1,186)  
Prepaid expenses and other current assets     (540)       700  
Other assets     (73)       107  
Accounts payable     1,371       (1,085)  
Accrued expenses and other current liabilities     (287)       1,703  
Accrued compensation     (3,812)       (264)  
Other liabilities     45       1,645  
Net cash used in operating activities     (17,517)       (15,421)  
Cash flows provided by (used in) investing activities:            
Purchase of property and equipment     (2,015)       (1,299)  
Purchase of internal-use software     (1,388)       (285)  
Purchase of marketable securities     (12,141)       (34,954)  
Proceeds from marketable securities     67,970       19,677  
Sale of assets     5,500        
Acquisition of business, net of cash acquired     (273,535)        
Net cash used in investing activities     (215,609)       (16,861)  
Cash flows provided by financing activities:            
Net proceeds from the exercise of stock options     15,765       4,316  
Proceeds from issuance of convertible notes     279,126       263,722  
Repayment of debt           (2,000)  
Proceeds from issuance of common stock           123,928  
Proceeds from employee stock purchase plan     1,423       1,265  
Proceeds from cash received for withholding taxes on stock-based compensation, net     500       260  
Net cash provided by financing activities     296,814       391,491  
Net increase in cash and cash equivalents     63,688       359,209  
Foreign exchange difference     (701)        
Cash and cash equivalents at beginning of the period     42,817       50,015  
Cash and cash equivalents at end of the period   $ 105,804     $ 409,224  
             
Income taxes paid   $ 59     $  
             
Interest paid   $ 4,125     $ 1,847  
                 

Operating Metrics
(In million, except for visits, unaudited)

                           
    Quarters Ended   Six Months Ended   
    June 30,   June 30,  
    2018   2017   2018   2017  
Subscription Access Fees:                          
  U.S.   $  65,066   $  37,476   $  126,086   $  71,819  
  International      14,731      —      25,440      —  
Visit Fee Revenue:                          
  U.S. General Medical, Dermatology and Behavioral Health      10,194      7,115      22,949      15,670  
  Other Specialty Visit (Expert Medical Opinion and Other)                          
U.S.      1,601      —      3,055      —  
International      258      —      425      —  
Visit Fee Only Revenue:                          
  U.S. - General Medical      2,710      —      6,249      —  
  Total Revenues   $  94,560   $  44,591   $  184,204   $  87,489  
                           

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, 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 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    Six Months Ended 
    June 30,   June 30,
    2018     2017     2018   2017
Net loss   $ (25,079)     $ (15,415)     $ (48,941)   $ (31,069)
Add:                        
Interest expense, net     6,910       774       11,783     1,476
Income tax (benefit) provision     22       149       (81)     299
Depreciation expense     733       696       2,264     1,354
Amortization expense     7,313       1,972       14,036     3,921
EBITDA     (10,101)       (11,824)       (20,939)     (24,019)
Stock-based compensation     11,060       4,565       18,891     7,662
Gain on sale     (4,070)             (4,070)    
Acquisition and integration related costs     5,800       2,113       7,369     2,113
Adjusted EBITDA   $ 2,689     $ (5,146)     $ 1,251   $ (14,244)
                             

Media:
Courtney McLeod
914-265-6789
[email protected]

Investors:
Kelsey Turcotte
914-265-6706
[email protected]

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Source: Teladoc, Inc.

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