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Teladoc Health Reports Third-Quarter 2022 Results

Teladoc Health, Inc.
Teladoc Health, Inc.
  • Third quarter revenue grows 17% year-over-year to $611.4 million

  • Net loss totaled $73.5 million, or $0.45 per share

  • Adjusted EBITDA totaled $51.2 million

  • Cash flow from operating activities was $63.0 million for the quarter and $123.7 million year-to-date

PURCHASE, NY, Oct. 26, 2022 (GLOBE NEWSWIRE) -- Teladoc Health, Inc. (NYSE: TDOC), the global leader in whole-person virtual care, today reported financial results for the third quarter ended September 30, 2022.

“Teladoc Health delivered strong third quarter results, including robust revenue growth, and adjusted EBITDA above the high end of expectations,” said Jason Gorevic, chief executive officer of Teladoc Health. “During the quarter we continued to make progress against our whole person care strategy as the market evolves towards integrated virtual and digital health solutions.”

Key Financial Data

($ thousands, unaudited)

 

Quarter Ended

 

Year over Year

 

Nine Months Ended

 

Year over Year

 

September 30,

 

Change

 

September 30,

 

Change

 

2022

 

2021

 

 

 

2022

 

2021

 

 

Revenue

$

611,402

 

 

$

521,658

 

 

17

 

%

 

$

1,769,131

 

 

$

1,478,472

 

 

20

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

$

(73,476

)

 

$

(84,340

)

 

13

 

%

 

$

(9,849,460

)

 

$

(417,808

)

 

N/M

 

 

Net Loss per share, basic and diluted

$

(0.45

)

 

$

(0.53

)

 

15

 

%

 

$

(61.09

)

 

$

(2.68

)

 

N/M

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA*

$

51,211

 

 

$

67,372

 

 

(24

)

%

 

$

152,419

 

 

$

190,760

 

 

(20

)

%

* 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.”
N/M – Not meaningful

Third Quarter 2022

Revenue increased 17% to $611.4 million from $521.7 million in the third quarter of 2021. Access fees revenue grew 20% to $540.1 million and visit fee revenue grew 5% to $65.6 million. U.S. Revenues grew 17% to $534.0 million and International revenues grew 17% to $77.4 million.

Net loss totaled $73.5 million, or ($0.45) per share, for the third quarter of 2022, compared to $84.3 million, or ($0.53) per share, for the third quarter of 2021. Results for the third quarter of 2022 primarily included stock-based compensation expense of $55.7 million, or ($0.34) per share, and amortization of acquired intangibles of $48.8 million, or ($0.30) per share. Net loss for the third quarter of 2022 also included $3.7 million, or ($0.02) per share, of lease abandonment costs related to the abandonment of certain excess leased office space.

Results for the third quarter of 2021 included stock-based compensation expense of $71.7 million, or ($0.45) per share, and amortization of acquired intangibles of $45.1 million, or ($0.28) per share.

Adjusted EBITDA* decreased 24% to $51.2 million, compared to $67.4 million for the third quarter of 2021.

GAAP gross margin, which includes depreciation and amortization, was 68.3 percent for the third quarter of 2022, compared to 67.1 percent for the third quarter of 2021.

Adjusted gross margin* was 69.6 percent for the third quarter of 2022, compared to 67.6 percent for the third quarter of 2021.

Average revenue per U.S. paid member increased to $2.61 in the third quarter of 2022, from $2.40 in the third quarter of 2021.

Nine Months Ended September 30, 2022

Revenue increased 20% to $1,769.1 million from $1,478.5 million in the first nine months of 2021. Access fees revenue grew 23% to $1,550.1 million, and visit fee revenue grew 8% to $200.2 million for the first nine months of 2022. U.S. Revenues grew 20% to $1,546.6 million, and International revenues grew 19% to $222.5 million for the first nine months of 2022.

Non-cash goodwill impairment charges of $9.6 billion were recorded in the first nine months of 2022. The non-cash charges had no impact on the provision for income taxes.

Net loss totaled $9,849.5 million, or ($61.09) per share, for the first nine months of 2022, compared to $417.8 million, or ($2.68) per share, for the first nine months of 2021. Results for the first nine months of 2022 primarily included non-cash goodwill impairment charges of $9,630.0 million, or ($59.73) per share, as well as stock-based compensation expense of $167.1 million, or ($1.04) per share, and amortization of acquired intangibles of $147.3 million, or ($0.91) per share. Net loss for the first nine months of 2022 also included $3.7 million, or ($0.02) per share, of lease abandonment costs related to the abandonment of certain excess leased office space.

Results for the first nine months of 2021 included stock-based compensation expense of $241.0 million, or ($1.55) per share, amortization of acquired intangibles of $133.8 million, or ($0.86) per share, loss on extinguishment of debt of $43.7 million, or ($0.28) per share, and non-cash income taxes charges of $93.9 million, or ($0.60) per share.

Adjusted EBITDA* decreased 20% to $152.4 million compared to $190.8 million for the first nine months of 2021.

GAAP gross margin, which includes depreciation and amortization, was 67.5 percent for the first nine months of 2022, compared to 67.3 percent for the first nine months of 2021.

Adjusted gross margin* was 68.6 percent for the first nine months of 2022 compared to 67.9 percent for the first nine months of 2021.

Average revenue per U.S. paid member increased to $2.58 in the first nine months of 2022, from $2.27 in the first nine months of 2021.

Financial Outlook

Teladoc Health provides an outlook based on current market conditions and expectations and what we know today. Based on what we know today, we believe our outlook ranges provide a reasonable baseline for 2022 financial performance.

For the fourth quarter of 2022, we expect:

 

 

 

4Q 2022 Outlook Range

Revenue

$625 - $640 million

EBITDA

$10 - $37 million

Adjusted EBITDA

$88 - $98 million

Net loss per share

($0.40) - ($0.10)

Total U.S. Paid Membership

57 - 58 million

Visit Fee Only Access

~24 million

Total Visits

4.7 - 4.9 million

For the full year 2022, we expect:

 

 

 

Full Year 2022 Outlook Range

Revenue

$2,395 - $2,410 million

EBITDA

($17) - $10 million

Adjusted EBITDA

$240 - $250 million

Net loss per share

($61.40) - ($61.10)

Total U.S. Paid Membership

57 - 58 million

Visit Fee Only Access

~24 million

Total Visits

18.4 - 18.6 million

Earnings Conference Call

The third quarter 2022 earnings conference call and webcast will be held Wednesday, October 26, 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: 270257; 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. Teladoc Health leverages more than two decades 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

 

Nine Months Ended

 

Year over Year

Revenue Per Member)

September 30,

 

Change

 

September 30,

 

Change

 

2022

 

2021

 

 

 

2022

 

2021

 

 

Access Fees Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

$

465,692

 

$

386,181

 

21

 

%

 

$

1,337,264

 

$

1,085,325

 

23

 

%

International

 

74,387

 

 

62,737

 

19

 

%

 

 

212,882

 

 

176,764

 

20

 

%

Total

 

540,079

 

 

448,918

 

20

 

%

 

 

1,550,146

 

 

1,262,089

 

23

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Visit Fee Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

62,766

 

 

59,863

 

5

 

%

 

 

191,479

 

 

176,187

 

9

 

%

International

 

2,800

 

 

2,690

 

4

 

%

 

 

8,748

 

 

9,131

 

(4

)

%

Total

 

65,566

 

 

62,553

 

5

 

%

 

 

200,227

 

 

185,318

 

8

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

5,555

 

 

9,583

 

(42

)

%

 

 

17,856

 

 

29,617

 

(40

)

%

International

 

202

 

 

604

 

(67

)

%

 

 

902

 

 

1,448

 

(38

)

%

Total

 

5,757

 

 

10,187

 

(43

)

%

 

 

18,758

 

 

31,065

 

(40

)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenue

$

611,402

 

$

521,658

 

17

 

%

 

$

1,769,131

 

$

1,478,472

 

20

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Revenue

$

534,013

 

$

455,627

 

17

 

%

 

$

1,546,599

 

$

1,291,129

 

20

 

%

International Revenue

 

77,389

 

 

66,031

 

17

 

%

 

 

222,532

 

 

187,343

 

19

 

%

Total Revenue

$

611,402

 

$

521,658

 

17

 

%

 

$

1,769,131

 

$

1,478,472

 

20

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average U.S. Revenue Per Member (1)

$

2.61

 

$

2.40

 

9

 

%

 

$

2.58

 

$

2.27

 

14

 

%


Visits

Quarter Ended

 

Year over Year

 

Nine Months Ended

 

Year over Year

(thousands)

September 30,

 

Change

 

September 30,

 

Change

 

2022

 

2021

 

 

 

2022

 

2021

 

 

U.S. Visits

3,445

 

 

3,007

 

 

15

%

 

10,461

 

 

8,191

 

 

28

%

International Visits

1,128

 

 

991

 

 

14

%

 

3,281

 

 

2,801

 

 

17

%

Total Visits

4,573

 

 

3,998

 

 

14

%

 

13,742

 

 

10,992

 

 

25

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Utilization (2)

22.3

%

 

21.0

%

 

128

pt

 

23.2

%

 

19.2

%

 

401

pt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Platform-Enabled Sessions (3)

974

 

 

969

 

 

1

%

 

3,189

 

 

3,078

 

 

4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Visits & Sessions Provided & Enabled

5,547

 

 

4,967

 

 

12

%

 

16,931

 

 

14,070

 

 

20

%


Membership and Visit Fee Only Access

Quarter Ended

 

Year over Year

(millions)

September 30,

 

Change

 

2022

 

2021

 

 

U.S. Paid Membership

57.8

 

52.5

 

10

%

 

 

 

 

 

 

 

U.S. Visit Fee Only Access

24.3

 

23.6

 

3

%

 

 

 

 

 

 

 

Unique Chronic Care Members (4)

0.791

 

0.725

 

9

%

(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 September 30,

 

Nine Months Ended September 30,

 

2022

 

2021

 

2022

 

2021

Revenue

$

611,402

 

 

$

521,658

 

 

$

1,769,131

 

 

$

1,478,472

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue (exclusive of depreciation and amortization, which is shown separately below)

 

185,619

 

 

 

169,041

 

 

 

555,114

 

 

 

475,273

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Advertising and marketing

 

178,920

 

 

 

111,078

 

 

 

477,094

 

 

 

303,738

 

Sales

 

54,634

 

 

 

62,602

 

 

 

170,893

 

 

 

191,251

 

Technology and development

 

87,815

 

 

 

80,250

 

 

 

256,053

 

 

 

239,017

 

General and administrative

 

112,542

 

 

 

103,016

 

 

 

328,333

 

 

 

319,404

 

Acquisition, integration, and transformation costs

 

1,594

 

 

 

4,340

 

 

 

8,993

 

 

 

22,084

 

Depreciation and amortization

 

62,008

 

 

 

51,907

 

 

 

180,312

 

 

 

151,907

 

Goodwill impairment

 

0

 

 

 

0

 

 

 

9,630,000

 

 

 

0

 

Total expenses

 

683,132

 

 

 

582,234

 

 

 

11,606,792

 

 

 

1,702,674

 

Loss from operations

 

(71,730

)

 

 

(60,576

)

 

 

(9,837,661

)

 

 

(224,202

)

Loss on extinguishment of debt

 

0

 

 

 

850

 

 

 

0

 

 

 

43,728

 

Other expense (income), net

 

1,571

 

 

 

376

 

 

 

2,607

 

 

 

(5,493

)

Interest expense, net

 

1,346

 

 

 

18,895

 

 

 

11,163

 

 

 

61,493

 

Net loss before provision for income taxes

 

(74,647

)

 

 

(80,697

)

 

 

(9,851,431

)

 

 

(323,930

)

Provision for income taxes

 

(1,171

)

 

 

3,643

 

 

 

(1,971

)

 

 

93,878

 

Net loss

$

(73,476

)

 

$

(84,340

)

 

$

(9,849,460

)

 

$

(417,808

)

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share, basic and diluted

$

(0.45

)

 

$

(0.53

)

 

$

(61.09

)

 

$

(2.68

)

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares used to compute basic and diluted net loss per share

 

161,727,962

 

 

 

159,435,165

 

 

 

161,217,033

 

 

 

155,926,680

 

Stock-based Compensation Summary

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

 

Quarter Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

2022

 

2021

 

2022

 

2021

Cost of revenue (exclusive of depreciation and amortization, which is shown separately)

$

675

 

$

2,162

 

$

4,994

 

$

6,310

Advertising and marketing

 

3,614

 

 

5,244

 

 

10,523

 

 

15,141

Sales

 

11,064

 

 

17,518

 

 

33,845

 

 

57,638

Technology and development

 

17,660

 

 

22,910

 

 

51,532

 

 

77,335

General and administrative

 

22,649

 

 

23,867

 

 

66,204

 

 

84,547

Total stock-based compensation expense (1)

$

55,662

 

$

71,701

 

$

167,098

 

$

240,971

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


TELADOC HEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)

 

Nine Months Ended September 30,

 

2022

 

2021

Operating activities:

 

    

    

 

    

Net loss

$

(9,849,460

)

 

$

(417,808

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

Goodwill impairment

 

9,630,000

 

 

 

0

 

Depreciation and amortization

 

180,312

 

 

 

151,907

 

Depreciation of rental equipment

 

2,185

 

 

 

2,500

 

Amortization of right-of-use assets

 

9,266

 

 

 

8,185

 

Provision for doubtful accounts

 

8,867

 

 

 

11,353

 

Stock-based compensation

 

167,098

 

 

 

240,971

 

Deferred income taxes

 

(5,942

)

 

 

91,414

 

Accretion of interest

 

2,496

 

 

 

46,843

 

Loss on extinguishment of debt

 

0

 

 

 

40,631

 

Gain on sale of investment

 

0

 

 

 

(5,901

)

Other, net

 

3,677

 

 

 

38

 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

(45,267

)

 

 

(19,407

)

Prepaid expenses and other current assets

 

(39,177

)

 

 

(34,566

)

Inventory

 

13,709

 

 

 

(2,661

)

Other assets

 

(22,854

)

 

 

(3,432

)

Accounts payable

 

24,067

 

 

 

(11,115

)

Accrued expenses and other current liabilities

 

70,046

 

 

 

15,880

 

Accrued compensation

 

(32,028

)

 

 

(17,352

)

Deferred revenue

 

12,311

 

 

 

20,002

 

Operating lease liabilities

 

(8,111

)

 

 

(8,202

)

Other liabilities

 

2,548

 

 

 

1,502

 

Net cash provided by operating activities

 

123,743

 

 

 

110,782

 

Investing activities:

 

 

 

 

 

Capital expenditures

 

(10,285

)

 

 

(5,611

)

Capitalized software

 

(108,588

)

 

 

(35,402

)

Proceeds from marketable securities

 

2,507

 

 

 

50,000

 

Proceeds from the sale of investment

 

0

 

 

 

10,901

 

Acquisitions of business, net of cash acquired

 

0

 

 

 

(75,944

)

Other, net

 

2,514

 

 

 

3,150

 

Net cash used in investing activities

 

(113,852

)

 

 

(52,906

)

Financing activities:

 

 

 

 

 

Net proceeds from the exercise of stock options

 

5,646

 

 

 

22,956

 

Repurchase of 2022 Notes

 

0

 

 

 

(139

)

Proceeds from advances from financing companies

 

6,807

 

 

 

10,677

 

Payment against advances from financing companies

 

(11,470

)

 

 

(12,053

)

Proceeds from employee stock purchase plan

 

3,386

 

 

 

13,996

 

Cash received for withholding taxes on stock-based compensation, net

 

594

 

 

 

3,109

 

Other, net

 

(2,847

)

 

 

(4,224

)

Net cash provided by financing activities

 

2,116

 

 

 

34,322

 

Net decrease in cash and cash equivalents

 

12,007

 

 

 

92,198

 

Foreign exchange difference

 

(5,856

)

 

 

(1,694

)

Cash and cash equivalents at beginning of the period

 

893,480

 

 

 

733,324

 

Cash and cash equivalents at end of the period

$

899,631

 

 

$

823,828

 

 

 

 

 

 

 


TELADOC HEALTH, INC.

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

 

September 30,

 

December 31,

 

2022

    

2021

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

899,631

 

 

$

893,480

 

Short-term investments

 

0

 

 

 

2,537

 

Accounts receivable, net of allowance of $15,311 and $12,384, respectively

 

201,701

 

 

 

168,956

 

Inventories

 

59,344

 

 

 

73,079

 

Prepaid expenses and other current assets

 

126,912

 

 

 

87,387

 

Total current assets

 

1,287,588

 

 

 

1,225,439

 

Property and equipment, net

 

27,270

 

 

 

27,234

 

Goodwill

 

4,846,001

 

 

 

14,504,174

 

Intangible assets, net

 

1,854,263

 

 

 

1,910,278

 

Operating lease - right-of-use assets

 

45,187

 

 

 

46,780

 

Other assets

 

43,656

 

 

 

20,703

 

Total assets

$

8,103,965

 

 

$

17,734,608

 

Liabilities and stockholders’ equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

70,783

 

 

$

47,257

 

Accrued expenses and other current liabilities

 

177,111

 

 

 

102,933

 

Accrued compensation

 

63,211

 

 

 

91,941

 

Deferred revenue-current

 

90,210

 

 

 

75,569

 

Advances from financing companies

 

10,086

 

 

 

13,313

 

Total current liabilities

 

411,401

 

 

 

331,013

 

Other liabilities

 

1,632

 

 

 

1,492

 

Operating lease liabilities, net of current portion

 

41,080

 

 

 

41,773

 

Deferred revenue, net of current portion

 

3,146

 

 

 

3,834

 

Advances from financing companies, net of current portion

 

7,855

 

 

 

9,291

 

Deferred taxes, net

 

51,742

 

 

 

75,777

 

Convertible senior notes, net

 

1,534,448

 

 

 

1,225,671

 

Commitments and contingencies

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Common stock, $0.001 par value; 300,000,000 shares authorized; 162,195,790 shares and 160,469,325 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

 

162

 

 

 

160

 

Additional paid-in capital

 

17,299,981

 

 

 

17,473,336

 

Accumulated deficit

 

(11,198,216

)

 

 

(1,421,454

)

Accumulated other comprehensive loss

 

(49,266

)

 

 

(6,285

)

Total stockholders’ equity

 

6,052,661

 

 

 

16,045,757

 

Total liabilities and stockholders’ equity

$

8,103,965

 

 

$

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; provision for income 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; provision for income taxes; depreciation and amortization; goodwill impairment; loss on extinguishment of debt; stock-based compensation; lease abandonment costs; 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 provision for income 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 the provision for 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 significant lease abandonment costs. Lease abandonment costs may include certain lease impairment costs and certain losses related to early lease terminations;

  • adjusted EBITDA does not reflect 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

 

Nine Months Ended 

 

 

September 30,

 

September 30,

 

 

2022

    

2021

    

2022

    

2021

    

Revenue

$

611,402

 

 

$

521,658

 

 

$

1,769,131

 

 

$

1,478,472

 

 

Cost of revenue (exclusive of depreciation and amortization, which is shown separately below)

 

(185,619

)

 

 

(169,041

)

 

 

(555,114

)

 

 

(475,273

)

 

Depreciation and amortization of intangible assets

 

(8,482

)

 

 

(2,545

)

 

 

(19,768

)

 

 

(8,233

)

 

Gross Profit

 

417,301

 

 

 

350,072

 

 

 

1,194,249

 

 

 

994,966

 

 

Depreciation and amortization of intangible assets

 

8,482

 

 

 

2,545

 

 

 

19,768

 

 

 

8,233

 

 

Adjusted gross profit

$

425,783

 

 

$

352,617

 

 

$

1,214,017

 

 

$

1,003,199

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin

 

68.3

 

%

 

67.1

 

%

 

67.5

 

%

 

67.3

 

%

Adjusted gross margin

 

69.6

 

%

 

67.6

 

%

 

68.6

 

%

 

67.9

 

%

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 outlook data, unaudited)

 

Quarter Ended

 

Nine Months Ended

 

Outlook in millions (1)

 

September 30,

 

September 30,

 

Fourth Quarter

 

Full Year

 

2022

 

2021

 

2022

 

2021

 

2022

 

2022

Net loss

$

(73,476

)

 

$

(84,340

)

 

$

(9,849,460

)

 

$

(417,808

)

 

$

(65) - ($16)

 

$

(9,914) - ($9,866)

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill impairment

 

0

 

 

 

0

 

 

 

9,630,000

 

 

 

0

 

 

 

 

 

 

 

Loss on extinguishment of debt

 

0

 

 

 

850

 

 

 

0

 

 

 

43,728

 

 

 

 

 

 

 

Other expense (income), net

 

1,571

 

 

 

376

 

 

 

2,607

 

 

 

(5,493

)

 

 

 

 

 

 

Interest expense, net

 

1,346

 

 

 

18,895

 

 

 

11,163

 

 

 

61,493

 

 

 

 

 

 

 

Provision for income taxes

 

(1,171

)

 

 

3,643

 

 

 

(1,971

)

 

 

93,878

 

 

 

 

 

 

 

Depreciation and amortization

 

62,008

 

 

 

51,907

 

 

 

180,312

 

 

 

151,907

 

 

 

 

 

 

 

Total Adjustments

 

63,754

 

 

 

75,671

 

 

 

9,822,111

 

 

 

345,513

 

 

 

75 - 53

 

 

9,897 - 9,876

EBITDA

 

(9,722

)

 

 

(8,669

)

 

 

(27,349

)

 

 

(72,295

)

 

 

10 - 37

 

 

(17) - 10

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

55,662

 

 

 

71,701

 

 

 

167,098

 

 

 

240,971

 

 

 

 

 

 

 

Acquisition, integration, and transformation costs

 

1,594

 

 

 

4,340

 

 

 

8,993

 

 

 

22,084

 

 

 

 

 

 

 

Lease abandonment costs

 

3,677

 

 

 

0

 

 

 

3,677

 

 

 

0

 

 

 

 

 

 

 

Total Adjustments

 

60,933

 

 

 

76,041

 

 

 

179,768

 

 

 

263,055

 

 

 

78 - 61

 

 

257 - 240

Adjusted EBITDA

$

51,211

 

 

$

67,372

 

 

$

152,419

 

 

$

190,760

 

 

$

88 - $98

 

$

240 - $250

(1) We have not provided a full line-item reconciliation for net loss to EBITDA or adjusted EBITDA outlook because we do not provide outlook 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, provision for income taxes, acquisition, integration, and transformation costs, and lease abandonment 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 outlook is not available without unreasonable effort.

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

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