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PRESS RELEASE from provider: Globe Newswire
This content is a press release from our partner Globe Newswire. The AP newsroom and editorial departments were not involved in its creation.

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

February 27, 2019

Fourth-quarter revenue grows 59% to $122.7 million; Full-year 2018 revenue grows 79% to $417.9 million

Fourth-quarter total visits up 86% to 861,000; 2018 total visits up 80% to 2.6 million

Issues Initial 2019 Guidance

PURCHASE, N.Y., Feb. 27, 2019 (GLOBE NEWSWIRE) -- Teladoc Health, Inc. (NYSE: TDOC), the global leader in virtual care, today reported financial results for the fourth quarter and full year ending December 31, 2018.

“We had an exceptional 2018 with solid performance across all of our key financial and operational metrics, enabling us to enter 2019 with significant momentum. As virtual care becomes mainstream, we are uniquely positioned across all of our channels as the only global comprehensive virtual healthcare solution,” said Jason Gorevic, chief executive officer, Teladoc Health. “We continue to extend our leadership position by delivering the highest quality care, successfully engaging consumers, broadening our scope of services, and expanding our global geographic reach.”

Financial Highlights for the Fourth Quarter and Full Year Ended December 31, 2018

Revenue ($ million) Quarters Ended Year over Year Year Ended Year over Year December 31, Growth December 31, Growth ------------------- -------------- -------------------- -------------- 2018 2017 2018 2017 --------- -------- --------- --------- Subscription Access Fees Revenue U.S. $ 78,340 $ 55,409 41% $ 277,091 $ 179,184 55% International 24,362 9,963 145% 73,693 18,338 302% - ------- - ------ - ------- - ------- Total 102,702 65,372 57% 350,784 197,522 78% Visit Fee Revenue U.S. Paid Visits 15,752 11,558 36% 53,074 35,294 50% U.S. Visit Fee Only 3,751 — NM 12,508 — NM International Paid Visits 536 210 155% 1,541 463 233% - ------- - ------ - ------- - ------- Total 20,039 11,768 70% 67,123 35,757 88% - ------- - ------ - ------- - ------- Total Revenue* $ 122,741 $ 77,140 59% $ 417,907 $ 233,279 79% - ------- - ------ - ------- - ------- *Organic full-year and fourth-quarter 2018 revenue, excluding Advance Medical, increased by 36 percent and 33 percent, respectively, year over year. Membership & Visit Fee Only Access (millions) Quarters Ended Year over Year December 31, Growth ----------------- --------------- 2018 2017 ---- ------ Total U.S. Paid Membership* 22.8 19.6** 16% Total U.S. Visit Fee Only Access 9.5 — NM

*Organic full-year and fourth-quarter 2018 U.S. Paid Membership, excluding Advance Medical, was 21.8 million, up 11 percent year over year. **Adjusted for 3.6 million Aetna visit fee only lives.

Visits (thousands) Quarters Year over Year Years Ended Year over Year Ended December 31, Growth December 31, Growth ------------ - -------------- -------------- - -------------- 2018 2017 2018 2017 ---- - ---- - ----- - ----- - Paid Visits from U.S. Paid Membership 302 251 20% 1,020 793 29 % Percent of Paid Visits from U.S. Paid 50 % 54 % (9)% 50 % 54 % (8)% Membership Visits Included from U.S. Paid Membership 305 211 45% 1,016 667 52% Total Visits from U.S. Paid Membership 607 462 31% 2,036 1,461 39% U.S. Visit Fee Only 49 — NM 172 — NM International Visits 205 1 NM 432 3 NM ---- ---- ----- ----- Total Visits 861 464 86% 2,640 1,463 80% ---- ---- ----- -----

-- Gross margin was 67.4 percent for the fourth quarter 2018 compared to 70.6 percent for the fourth quarter 2017. Gross margin was 69.2 percent for the full year 2018 compared to 73.6 percent for the full year 2017. -- Net loss was $(24.9) million for the fourth quarter 2018 compared to $(44.4) million for the fourth quarter 2017. Net loss was $(97.1) million for the full year 2018 compared to $(106.8) million for the full year 2017. -- Net loss per basic and diluted share was $(0.35) for the fourth quarter 2018 compared to $(0.76) for the fourth quarter 2017. Net loss per basic and diluted share was $(1.47) for the full year 2018 compared to $(1.93) for the full year 2017. -- EBITDAwas $(8.3) million for the fourth quarter 2018 compared to $(17.2) million for the fourth quarter 2017. EBITDA was $(35.3) million for the full year 2018 compared to $(70.4) million for the full year 2017. -- Adjusted EBITDA was a positive $5.8 million for the fourth quarter 2018 compared to $2.4 million for the fourth quarter 2017. Adjusted EBITDA was a positive $13.4 million for the full year 2018 compared to a loss of $(12.5) million for the full year 2017.

A reconciliation of generally accepted accounting principles (“GAAP”) in the United States to non-GAAP results has been provided in this press release in the accompanying tables. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures”.

Financial OutlookTeladoc Health provides guidance based on current market conditions and expectations.

For the first-quarter 2019, we expect:

-- Total revenue to be in the range of $126 million to $129 million. -- EBITDA loss to be in the range of $(14) million to $(16) million. -- Adjusted EBITDA to be in the range of $0 million to positive $2 million. -- Total U.S. paid membership to be in the range of 26 million to 26.5 million and visit-fee-only access to be available to approximately 9.8 million individuals. -- Total visits to be between 950,000 and 1,050,000. -- Net loss per share, based on 70.8 million weighted average shares outstanding, to be between $(0.44) and $(0.46).

For the full-year 2019, we expect:

-- Total revenue to be in the range of $535 million to $545 million. -- EBITDA loss to be in the range of $(40) million to $(50) million. -- Adjusted EBITDA to be in the range of positive $25 million to $35 million. -- Total U.S. paid membership to be in the range of 27 million to 29 million members and visit-fee-only access to be available to approximately 9.8 million individuals. -- Total visits to be between 3.6 million to 3.9 million. -- Net loss per share, based on 71.9 million weighted average shares outstanding, to be between $(1.52) and $(1.66).

Quarterly Conference Call

The full-year and fourth-quarter 2018 earnings conference call and webcast will be held Wednesday, February 27, 2019, at 4:30 p.m. EST. The conference call can be accessed by dialing 1-833-241-4255 for U.S. participants, or 1-647-689-4206 for international participants, and including the following Conference ID Number: 3386008 to expedite caller registration; or via a live audio webcast available online at http://ir.teladoc.com/news-and-events/events-and-presentations/. A webcast replay will be available for on-demand listening shortly after the completion of the call at the same web link.

About Teladoc Health

A mission-driven organization, Teladoc Health, Inc. is successfully transforming how people access and experience healthcare, with a focus on high quality, lower costs, and improved outcomes around the world. The company’s award-winning, integrated clinical solutions are inclusive of telehealth, expert medical services, AI and analytics, and licensable platform services. With more than 2,000 employees, the organization delivers care in 125 countries and in more than 20 languages, partnering with employers, hospitals and health systems, and insurers to transform care delivery. For more information, please visit www.teladochealth.com or follow @TeladocHealth on Twitter.

Cautionary Note Regarding Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “believe,” “project,” “estimate,” “expect,” “may,” “should,” “will” and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding future revenues, future earnings, future numbers of members or clients, litigation outcomes, regulatory developments, market developments, new products and growth strategies, and the effects of any of the foregoing on our future results of operations or financial conditions. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: (i) changes in laws and regulations applicable to our business model; (ii) changes in market conditions and receptivity to our services and offerings; (iii) results of litigation; (iv) the loss of one or more key clients; and (v) changes to our abilities to recruit and retain qualified providers into our network. For a detailed discussion of the risk factors that could affect our actual results, please refer to the risk factors identified in our SEC reports, including, but not limited to our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, as filed with the SEC.

Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

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

December 31, December 31, 2018 2017 ------------- ------------ Assets Current assets: Cash and cash equivalents $ 423,989 $ 42,817 Short-term investments 54,545 79,489 Accounts receivable, net of allowance of $3,382 and $2,422, respectively 43,571 27,094 Prepaid expenses and other current assets 10,631 6,839 - --------- - - -------- - Total current assets 532,736 156,239 Property and equipment, net 10,148 8,963 Goodwill 737,197 498,520 Intangible assets, net 247,394 159,811 Other assets 1,401 858 - --------- - - -------- - Total assets $ 1,528,876 $ 824,391 - --------- - - -------- - Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 7,769 $ 3,884 Accrued expenses and other current liabilities 26,801 19,357 Accrued compensation 27,869 17,089 - --------- - - -------- - Total current liabilities 62,439 40,330 Other liabilities 6,191 4,882 Deferred taxes 32,444 12,906 Convertible senior notes, net 414,683 207,370 Commitments and contingencies Stockholders’ equity: Common stock, $0.001 par value; 150,000,000 and 100,000,000 shares authorized as of December 31, 2018 and December 31, 2017, respectively; 70,516,249 shares and 70 61 61,534,101 shares issued and outstanding as of December 31, 2018 and December 31, 2017, respectively Additional paid-in capital 1,434,780 866,330 Accumulated deficit (408,661 ) (311,577 ) Accumulated other comprehensive (loss) income (13,070 ) 4,089 - --------- - - -------- - Total stockholders’ equity 1,013,119 558,903 - --------- - - -------- - Total liabilities and stockholders’ equity $ 1,528,876 $ 824,391 - --------- - - -------- -

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

Quarters Ended December 31, Year Ended December 31, ------------------------------ ------------------------------ 2018 2017 2018 2017 ------------ - ------------ - ------------ - ------------ - Revenue $ 122,741 $ 77,140 $ 417,907 $ 233,279 Cost of revenue 40,028 22,716 128,735 61,623 - ---------- - - ---------- - - ---------- - - ---------- - Gross profit 82,713 54,424 289,172 171,656 Operating expenses: Advertising and marketing 23,555 18,441 85,109 57,663 Sales 14,509 11,279 59,154 37,984 Technology and development 13,544 10,446 54,373 34,459 Legal 1,023 760 1,866 1,485 Regulatory 467 616 2,115 3,387 Acquisition and integration related costs 1,434 2,557 10,391 13,196 Gain on sale — — (5,500 ) — General and administrative 36,461 27,482 116,916 79,781 Depreciation and amortization 9,557 7,402 35,602 19,095 - ---------- - - ---------- - - ---------- - - ---------- - Loss from operations (17,837 ) (24,559 ) (70,854 ) (75,394 ) Amortization of warrants and loss on — 12,665 — 14,122 extinguishment of debt Interest expense, net 6,663 7,813 26,112 17,491 - ---------- - - ---------- - - ---------- - - ---------- - Net loss before taxes (24,500 ) (45,037 ) (96,966 ) (107,007 ) Income tax (benefit) provision 379 (654 ) 118 (225 ) - ---------- - - ---------- - - ---------- - - ---------- - Net loss $ (24,879 ) $ (44,383 ) $ (97,084 ) $ (106,782 ) - ---------- - - ---------- - - ---------- - - ---------- - Net loss per share, basic and diluted $ (0.35 ) $ (0.76 ) $ (1.47 ) $ (1.93 ) - ---------- - - ---------- - - ---------- - - ---------- - Weighted-average shares used to compute basic 70,239,511 58,371,458 65,844,908 55,427,460 and diluted net loss per share - ---------- - - ---------- - - ---------- - - ---------- -

CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands, unaudited)

- ---------- - ---------- 2018 2017 ---------- - ---------- - Cash flows used in operating activities: Net loss $ (97,084 ) $ (106,782 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 35,602 19,095 Allowance for doubtful accounts 2,243 1,731 Stock-based compensation 43,769 30,597 Deferred income taxes (2,247 ) (306 ) Accretion of interest 19,487 6,382 Amortization of warrants and loss on extinguishment of debt — 14,122 Gain on sale (5,500 ) — Changes in operating assets and liabilities: Accounts receivable (10,931 ) (3,659 ) Prepaid expenses and other current assets (2,612 ) (2,003 ) Other assets (414 ) 98 Accounts payable (391 ) 1,534 Accrued expenses and other current liabilities 3,993 4,292 Accrued compensation 8,480 3,768 Other liabilities 745 (3,310 ) - -------- - - -------- - Net cash used in operating activities (4,860 ) (34,441 ) Cash flows used in investing activities: Purchase of property and equipment (4,011 ) (2,633 ) Purchase of internal-use software (4,396 ) (2,882 ) Purchase of marketable securities (56,347 ) (149,261 ) Proceeds from marketable securities 84,170 85,753 Sale of assets 5,530 — Acquisition of business, net of cash acquired (282,442 ) (379,356 ) - -------- - - -------- - Net cash used in investing activities (257,496 ) (448,379 ) Cash flows provided by financing activities: Net proceeds from the exercise of stock options 31,322 10,837 Proceeds from issuance of convertible notes 279,152 263,722 Proceeds from borrowing under bank and other debt 10 166,679 Repayment of debt — (226,440 ) Proceeds from issuance of common stock 330,843 258,554 Proceeds from employee stock purchase plan 2,564 2,153 Proceeds from cash received for withholding taxes on stock-based compensation, 1,721 (74 ) net - -------- - - -------- - Net cash provided by financing activities 645,612 475,431 - -------- - - -------- - Net increase (decrease) in cash and cash equivalents 383,258 (7,389 ) Foreign exchange difference (2,084 ) 191 Cash and cash equivalents at beginning of the period 42,817 50,015 - -------- - - -------- - Cash and cash equivalents at end of the period $ 423,989 $ 42,817 - -------- - - -------- - Income taxes paid $ 441 $ 137 - -------- - - -------- - Interest paid $ 10,303 $ 9,450 - -------- - - -------- -

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

Quarters Ended Year Ended December 31, December 31, ------------------- -------------------- 2018 2017 2018 2017 --------- -------- --------- --------- Subscription Access Fees: U.S. $ 78,340 $ 55,409 $ 277,091 $ 179,184 International 24,362 9,963 73,693 18,338 Visit Fee Revenue: U.S. Paid Visits 15,752 11,558 53,074 35,294 U.S. Visit Fee Only 3,751 — 12,508 — International Paid Visits 536 210 1,541 463 - ------- - ------ - ------- - ------- Total Revenues $ 122,741 $ 77,140 $ 417,907 $ 233,279 - ------- - ------ - ------- - -------

Non-GAAP Financial Measures:

To supplement our financial information presented in accordance with generally accepted accounting principles in the United States, or U.S. GAAP, we use EBITDA and Adjusted EBITDA, which are non-U.S. GAAP financial measures to clarify and enhance an understanding of past performance. We believe that the presentation of these financial measures enhances an investor’s understanding of our financial performance. We further believe that these financial measures are useful financial metrics to assess our operating performance from period-to-period by excluding certain items that we believe are not representative of our core business. We use certain financial measures for business planning purposes and in measuring our performance relative to that of our competitors. We utilize Adjusted EBITDA as the primary measure of our performance.

EBITDA consists of net loss before interest, taxes, depreciation and amortization. We believe that making such adjustment provides investors meaningful information to understand our results of operations and the ability to analyze financial and business trends on a period-to-period basis.

Adjusted EBITDA consists of net loss before interest, taxes, depreciation, amortization, gain on sale of certain contracts, amortization of warrants and loss on extinguishment of debt, stock-based compensation and acquisition and integration related costs. We believe that making such adjustment provides investors meaningful information to understand our results of operations and the ability to analyze financial and business trends on a period-to-period basis.

We believe both financial measures are commonly used by investors to evaluate our performance and that of our competitors. However, our use of the term EBITDA and Adjusted EBITDA may vary from that of others in our industry. Neither EBITDA nor Adjusted EBITDA should be considered as an alternative to net loss before taxes, net loss, loss per share or any other performance measures derived in accordance with U.S. GAAP as measures of performance.

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

-- EBTIDA and Adjusted EBITDA do not reflect the significant interest expense on our debt; -- EBTIDA and Adjusted EBITDA eliminate the impact of income taxes on our results of operations; -- Adjusted EBITDA does not reflect the significant acquisition and integration related costs related to mergers and acquisitions; -- Adjusted EBITDA does not reflect the significant gain on sale of certain non-core business contracts; -- Adjusted EBITDA does not reflect the significant amortization of warrants and loss on extinguishment of debt; -- Adjusted EBITDA does not reflect the significant non-cash stock compensation expense which should be viewed as a component of recurring operating costs; and -- other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than we do, limiting the usefulness of EBITDA and Adjusted EBITDA as comparative measures.

In addition, although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any expenditures for such replacements.

We compensate for these limitations by using EBITDA and Adjusted EBITDA along with other comparative tools, together with U.S. GAAP measurements, to assist in the evaluation of operating performance. Such U.S. GAAP measurements include gross profit, net loss, net loss per share and other performance measures.

In evaluating these financial measures, you should be aware that in the future we may incur expenses similar to those eliminated in this presentation. Our presentation of EBITDA and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items.

Reconciliation of EBITDA and Adjusted EBITDA to Net Loss(In thousands, unaudited)

Three Months Ended Year Ended December 31, December 31, ------------------------ ------------------------- 2018 2017 2018 2017 ----------- ----------- ----------- ------------ Net loss $ (24,879 ) $ (44,383 ) $ (97,084 ) $ (106,782 ) Add: Interest expense, net 6,663 7,813 26,112 17,491 Income tax (benefit) provision 379 (654 ) 118 (225 ) Depreciation expense 939 1,305 4,057 3,771 Amortization expense 8,618 6,097 31,545 15,324 - ------- - - ------- - - ------- - - -------- - EBITDA(1) (8,280 ) (29,822 ) (35,252 ) (70,421 ) Stock-based compensation 12,683 16,969 43,769 30,597 Amortization of warrants and loss on extinguishment of — 12,665 — 14,122 debt Gain on sale — — (5,500 ) — Acquisition and integration related costs 1,434 2,557 10,391 13,196 - ------- - - ------- - - ------- - - -------- - Adjusted EBITDA(1) $ 5,837 $ 2,369 $ 13,408 $ (12,506 ) - ------- - - ------- - - ------- - - -------- -

Media:Courtney McLeod914-265-6789 cmcleod@teladochealth.com

Investors: Valerie Haertel914-265-6706 vhaertel@teladochealth.com