Teladoc Health Reports Second Quarter 2024 Results

PURCHASE, NY, July 31, 2024 (GLOBE NEWSWIRE) — Teladoc Health, Inc. (NYSE: TDOC), the global leader in whole-person virtual care, today reported financial results for the three months ended June 30, 2024 (“Second Quarter 2024”). Unless otherwise noted, percentage and other changes are relative to the three months ended June 30, 2023 (“Second Quarter 2023”).

Financial and Operational Highlights for Second Quarter 2024

  • Second Quarter 2024 revenue of $642.4 million, down 2% year-over-year
  • Second Quarter 2024 net loss of $837.7 million, or $4.92 per share, including a goodwill impairment charge of $790.0 million, or $4.64 per share
  • Second Quarter 2024 adjusted EBITDA of $89.5 million, up 24% year-over-year
  • Integrated Care segment revenue of $377.4 million, up 5% year-over-year and adjusted EBITDA margin of 17.0%
  • BetterHelp segment revenue of $265.0 million, down 9% year-over-year and adjusted EBITDA margin of 9.6%

“I am excited to have joined Teladoc Health and for the opportunity to lead the company going forward, building on our strengths while driving higher levels of performance. Our scaled position, core capabilities, and talented employees position us well in this regard,” said Chuck Divita, Chief Executive Officer of Teladoc Health.

“I also see opportunities to strengthen execution and to streamline the organization to ensure we are delivering for our customers and stakeholders. While we achieved solid performance in the Integrated Care segment, continued headwinds in the BetterHelp segment impacted overall results. We are focused on addressing the work ahead of us with urgency to unlock greater value across the company over time,” Divita added.

Key Financial Data                      
($ in thousands, except per share data, unaudited)                  
  Three Months Ended       Six Months Ended    
  June 30,       June 30,    
    2024       2023     Change     2024       2023     Change
Revenue $ 642,444     $ 652,406       (2 )%   $ 1,288,575     $ 1,281,650       1 %
                       
Net loss $ (837,671 )   $ (65,177 )   N/M   $ (919,560 )   $ (134,405 )   N/M
Net loss per share, basic and diluted $ (4.92 )   $ (0.40 )   N/M   $ (5.44 )   $ (0.82 )   N/M
                       
Adjusted EBITDA (1) $ 89,481     $ 72,155       24 %   $ 152,621     $ 124,920       22 %

See note (1) in the Notes section that follows.
N/M not meaningful

Second Quarter 2024

Revenue decreased 2% to $642.4 million from $652.4 million in Second Quarter 2023. Access fees revenue decreased 3% to $559.6 million and other revenue grew 8% to $82.8 million. U.S. revenue decreased 4% to $540.8 million and International revenue grew 12% to $101.6 million.

Teladoc Health Integrated Care (“Integrated Care”) segment revenue increased 5% to $377.4 million in Second Quarter 2024 and BetterHelp segment revenue decreased 9% to $265.0 million.

Non-cash goodwill impairment charge of $790.0 million was recorded in Second Quarter 2024 and was attributable to changes in estimates of future cash flows related to the company’s BetterHelp segment. The non-cash charge had no impact on the provision for income taxes.

Net loss totaled $837.7 million, or $4.92 per share, for Second Quarter 2024, compared to $65.2 million, or $0.40 per share, for Second Quarter 2023. Results for Second Quarter 2024 included a non-cash goodwill impairment charge of $790.0 million, or $4.64 per share, stock-based compensation expense of $42.1 million, or $0.25 per share, and amortization of acquired intangibles of $64.1 million, or $0.38 per share. The amortization of acquired intangibles increased over the prior year period reflecting a change in the useful lives of certain intangibles in the third quarter of 2023. Net loss for Second Quarter 2024 also included
$1.5 million, or $0.01 per share, of restructuring costs, primarily related to severance payments.

Results for Second Quarter 2023 primarily included stock-based compensation expense of $55.7 million, or $0.34 per share, and amortization of acquired intangibles of $52.8 million, or $0.32 per share. Net loss for Second Quarter 2023 also included $7.5 million, or $0.05 per share, of restructuring costs related to the abandonment of certain excess leased office space.

Adjusted EBITDA(1) increased 24% to $89.5 million, compared to $72.2 million for Second Quarter 2023. Integrated Care segment adjusted EBITDA increased 69% to $64.0 million in Second Quarter 2024 and BetterHelp segment adjusted EBITDA decreased 26% to $25.5 million in Second Quarter 2024.

GAAP gross margin, which includes amortization of intangible assets and depreciation of property and equipment, was 66.7% for Second Quarter 2024, compared to 67.5% for Second Quarter 2023.

Adjusted gross margin(1) was 70.7% for Second Quarter 2024, compared to 70.8% for Second Quarter 2023.

Six Months Ended June 30, 2024

Revenue increased 1% to $1,288.6 million from $1,281.7 million in the first six months of 2023. Access fees revenue decreased 1% to $1,116.8 million, and other revenue grew 11% to $171.8 million. U.S. revenue decreased 1% to $1,088.4 million, and International revenue grew 12% to $200.2 million for the first six months of 2024.

Revenue increased 6% to $754.5 million for the Integrated Care segment in the first six months of 2024 and decreased 7% to $534.0 million for the BetterHelp segment.

Non-cash goodwill impairment charge of $790.0 million was recorded in the first six months of 2024 and was attributable to changes in estimates of future cash flows related to the company’s BetterHelp segment. The non-cash charge had no impact on the provision for income taxes.

Net loss totaled $919.6 million, or $5.44 per share, for the first six months of 2024, compared to $134.4 million, or $0.82 per share, for the first six months of 2023. Results for the first six months of 2024 included a non-cash goodwill impairment charge of $790.0 million, or $4.68 per share, stock-based compensation expense of $84.4 million, or $0.50 per share, restructuring costs of $11.2 million, or $0.07 per share, and amortization of acquired intangibles of $128.3 million, or $0.76 per share.

Results for the first six months of 2023 primarily included stock-based compensation expense of $101.8 million, or $0.62 per share, and amortization of acquired intangibles of $103.0 million, or $0.63 per share. Net loss for the first six months of 2023 also included $15.6 million, or $0.10 per share, of restructuring costs related to the abandonment of certain excess leased office space.

Adjusted EBITDA(1) increased 22% to $152.6 million, compared to $124.9 million for the first six months of 2023. Integrated Care segment adjusted EBITDA increased 53% to $111.7 million in the first six months of 2024 and BetterHelp segment adjusted EBITDA decreased 21% to $40.9 million in the first six months of 2024.

GAAP gross margin, which includes depreciation and amortization, was 66.2% for the first six months of 2024, compared to 67.6% for the first six months of 2023.

Adjusted gross margin(1) was 70.3% for the first six months of 2024, compared to 70.3% for the first six months of 2023.

Capex and Cash Flow

Cash flow from operations was $88.7 million in Second Quarter 2024, compared to $101.2 million in Second Quarter 2023, and was $97.6 million in the first six months of 2024, compared to $114.3 million in the first six months of 2023. Capitalized expenditures and capitalized software development costs (together, “Capex”) were $27.7 million in Second Quarter 2024, compared to $36.6 million in Second Quarter 2023, and were $63.3 million for the first six months of 2024, compared to $82.2 million for the first six months of 2023. Free cash flow was $60.9 million in Second Quarter 2024, compared to $64.6 million in Second Quarter 2023, and was $34.3 million for the first six months of 2024, compared to $32.1 million for the first six months of 2023.

Financial Outlook

Teladoc Health is withdrawing the financial outlook for the Full Year of 2024 for its Consolidated operations and its BetterHelp segment that was last provided on April 25, 2024. It is also withdrawing its three year outlook on its Consolidated operations and its operating segments that had last been reaffirmed on April 25, 2024.

The outlook provided for the Integrated Care segment is based on current market conditions and expectations and what we know today. Accordingly, we believe our outlook ranges provide a reasonable baseline for future financial performance.

Integrated Care

For the third quarter of 2024, we expect  
Revenue growth percentage (year-over-year) (1)% – 2%
Adjusted EBITDA margin 14.5% – 16.0%
U.S. Integrated Care Members (2) 92.5 – 93.5 million
   
For the full year of 2024, we expect  
Revenue growth percentage (year-over-year) Low single digits to mid-single digits
Adjusted EBITDA margin expansion (year-over-year) +150bps to +200bps
U.S. Integrated Care Members (2) 92.5 – 94.0 million

Earnings Conference Call

The Second Quarter 2024 earnings conference call and webcast will be held Wednesday, July 31, 2024 at 4:30 p.m. E.T. The conference call can be accessed by dialing 1-833-470-1428 for U.S. participants and using the access code #453227. For international participants, please visit the following link for global dial-in numbers: https://www.netroadshow.com/conferencing/global-numbers?confId=68682. A live audio webcast will also be available online at http://ir.teladoc.com/news-and-events/events-and-presentations/. A replay of the call will be available via webcast 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.

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, BetterHelp paying users 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 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, including our ability to effectively compete; (iii) results of litigation or regulatory actions; (iv) the loss of one or more key clients or the loss of a significant number of members or BetterHelp paying users; (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 and risk related to impairment losses with respect to goodwill or other assets; and (viii) the success of our operational review of the company to achieve a more balanced approach to growth and margin. 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.

TELADOC HEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data, unaudited)
 
  Three Months Ended
June 30,
  Six Months Ended
June 30,
    2024       2023       2024       2023  
Revenue $ 642,444     $ 652,406     $ 1,288,575     $ 1,281,650  
Costs and expenses:              
Cost of revenue (exclusive of depreciation and amortization, which are shown separately below)   188,059       190,540       382,597       380,647  
Advertising and marketing   170,270       178,756       353,599       355,546  
Sales   50,438       53,530       104,802       108,020  
Technology and development   76,751       87,309       158,139       174,294  
General and administrative   109,552       125,841       221,249       239,986  
Goodwill impairment   790,000             790,000        
Acquisition, integration, and transformation costs   457       5,080       830       11,024  
Restructuring costs   1,500       7,530       11,173       15,632  
Amortization of intangible assets   94,862       72,511       189,919       139,371  
Depreciation of property and equipment   1,703       2,954       4,537       5,877  
Total costs and expenses   1,483,592       724,051       2,216,845       1,430,397  
Loss from operations   (841,148 )     (71,645 )     (928,270 )     (148,747 )
Interest income   (13,572 )     (11,558 )     (27,514 )     (20,469 )
Interest expense   5,648       5,835       11,297       11,098  
Other expense (income), net   563       207       933       (4,700 )
Loss before provision for income taxes   (833,787 )     (66,129 )     (912,986 )     (134,676 )
Provision for income taxes   3,884       (952 )     6,574       (271 )
Net loss $ (837,671 )   $ (65,177 )   $ (919,560 )   $ (134,405 )
               
Net loss per share, basic and diluted $ (4.92 )   $ (0.40 )   $ (5.44 )   $ (0.82 )
               
Weighted-average shares used to compute basic and diluted net loss per share   170,229,583       164,171,372       168,980,165       163,550,481  

Stock-based Compensation Summary

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

  Three Months Ended
June 30,
  Six Months Ended
June 30,
    2024       2023       2024       2023  
Cost of revenue (exclusive of depreciation and amortization, which are shown separately) $ 1,313     $ 1,243     $ 2,707     $ 2,596  
Advertising and marketing   3,378       4,002       7,167       7,128  
Sales   6,953       9,870       14,920       17,947  
Technology and development   9,683       15,689       18,982       28,416  
General and administrative   20,780       24,921       40,656       45,676  
Total stock-based compensation expense (3) $ 42,107     $ 55,725     $ 84,432     $ 101,763  

See note (3) in the Notes section that follows.

Revenues

  Three Months Ended       Six Months Ended    
  June 30,       June 30,    
($ in thousands, unaudited)   2024       2023     Change     2024       2023     Change
Revenue by Type                          
Access fees $ 559,648     $ 575,661       (3 )%   $ 1,116,822     $ 1,126,531       (1 )%
Other   82,796       76,745       8 %     171,753       155,119       11 %
Total Revenue $ 642,444     $ 652,406       (2 )%   $ 1,288,575     $ 1,281,650       1 %
                               
Revenue by Geography                              
U.S. Revenue $ 540,802     $ 561,787       (4 )%   $ 1,088,402     $ 1,103,448       (1 )%
International Revenue   101,642       90,619       12 %     200,173       178,202       12 %
Total Revenue $ 642,444     $ 652,406       (2 )%   $ 1,288,575     $ 1,281,650       1 %

Summary Operating Metrics

Consolidated

  Three Months Ended           Six Months Ended        
  June 30,           June 30,        
(In millions)   2024       2023       Change       2024       2023       Change  
Total Visits   4.2       4.7       (11 )%     8.8       9.5       (7 )%

Integrated Care

  As of June 30,    
(In millions)   2024       2023     Change
U.S. Integrated Care Members (2)   92.4       85.9       8 %
Chronic Care Program Enrollment (4)   1.173       1.073       9 %
  Three Months Ended           Six Months Ended        
  June 30,           June 30,        
    2024       2023       Change       2024       2023       Change  
Average Monthly Revenue
Per U.S. Integrated Care Member (5)
$ 1.36     $ 1.41       (4 )%   $ 1.37     $ 1.40       (2 )%

BetterHelp

  Average for           Average for        
  Three Months Ended           Six Months Ended        
  June 30,           June 30,        
(In millions)   2024       2023       Change       2024       2023       Change  
BetterHelp Paying Users (6)   0.407       0.476       (14 )%     0.411       0.471       (13 )%

See notes (2), (4), (5), and (6) in the Notes section that follows.

Operating Results by Segment (see note (7) in the Notes section that follows)

The following table presents operating results by reportable segment for the periods indicated:

  Three Months Ended       Six Months Ended    
  June 30,       June 30,    
($ in thousands, unaudited)   2024       2023     Change     2024       2023     Change
Teladoc Health Integrated Care                      
Revenue $ 377,421     $ 360,050       5 %   $ 754,532     $ 710,022       6 %
Adjusted EBITDA $ 64,028     $ 37,968       69 %   $ 111,702     $ 73,095       53 %
Adjusted EBITDA Margin %   17.0 %     10.5 %   642 bps     14.8 %     10.3 %   451 bps
                       
BetterHelp                      
Therapy Services $ 259,073     $ 288,288       (10 )%   $ 522,785     $ 564,216       (7 )%
Other Wellness Services   5,950       4,068       46 %     11,258       7,412       52 %
Total Revenue $ 265,023     $ 292,356       (9 )%   $ 534,043     $ 571,628       (7 )%
Adjusted EBITDA $ 25,453     $ 34,187       (26 )%   $ 40,919     $ 51,825       (21 )%
Adjusted EBITDA Margin %   9.6 %     11.7 %   (209) bps     7.7 %     9.1 %   (140) bps
TELADOC HEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
 
  Six Months Ended
June 30,
    2024       2023  
Cash flows from operating activities:      
Net loss $ (919,560 )   $ (134,405 )
Adjustments to reconcile net loss to net cash flows from operating activities:      
Goodwill impairment   790,000        
Amortization of intangible assets   189,919       139,371  
Depreciation of property and equipment   4,537       5,877  
Amortization of right-of-use assets   4,902       5,778  
Provision for allowances for doubtful accounts   810       3,048  
Stock-based compensation   84,432       101,763  
Deferred income taxes   1,368       (3,557 )
Other, net   2,695       7,587  
Changes in operating assets and liabilities:      
Accounts receivable   (2,971 )     (7,032 )
Prepaid expenses and other current assets   (13,017 )     16,625  
Inventory   (6,032 )     20,613  
Other assets   676       (17,463 )
Accounts payable   12,614       (31,788 )
Accrued expenses and other current liabilities   154       20,742  
Accrued compensation   (45,802 )     (15,532 )
Deferred revenue   (1,638 )     7,546  
Operating lease liabilities   (5,424 )     (4,946 )
Other liabilities   (60 )     111  
Net cash provided by operating activities   97,603       114,338  
Cash flows from investing activities:      
Capital expenditures   (3,061 )     (4,267 )
Capitalized software development costs   (60,199 )     (77,927 )
Net cash used in investing activities   (63,260 )     (82,194 )
Cash flows from financing activities:      
Net proceeds from the exercise of stock options   2,677       677  
Proceeds from employee stock purchase plan   2,798       5,435  
Cash received for withholding taxes on stock-based compensation, net   83       1,450  
Other, net   (2 )     (1 )
Net cash provided by financing activities   5,556       7,561  
Net increase in cash and cash equivalents   39,899       39,705  
Effect of foreign currency exchange rate changes   (1,191 )     808  
Cash and cash equivalents at beginning of the period   1,123,675       918,182  
Cash and cash equivalents at end of the period $ 1,162,383     $ 958,695  

The following table presents the selected cash flow information for the following quarters (in thousands, unaudited):

  Three Months Ended
June 30,
  2024       2023  
Net cash provided by operating activities $ 88,683     $ 101,182  
Net cash used in investing activities   (27,748 )     (36,570 )
Net cash provided by financing activities   3,805       4,208  
Effect of foreign currency exchange rate changes   (292 )     1,296  
Net increase in cash and cash equivalents $ 64,448     $ 70,116  
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data, unaudited)
 
  June 30,
2024
  December 31,
2023
ASSETS      
Current assets:      
Cash and cash equivalents $ 1,162,383     $ 1,123,675  
Accounts receivable, net of allowance for doubtful accounts of $3,881 and $4,240 at June 30, 2024 and December 31, 2023, respectively   218,420       217,423  
Inventories   34,896       29,513  
Prepaid expenses and other current assets   130,956       118,437  
Total current assets   1,546,655       1,489,048  
Property and equipment, net   29,330       32,032  
Goodwill   283,190       1,073,190  
Intangible assets, net   1,547,498       1,677,781  
Operating lease—right-of-use assets   35,538       40,060  
Other assets   81,427       80,258  
Total assets $ 3,523,638     $ 4,392,369  
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities:      
Accounts payable $ 56,111     $ 43,637  
Accrued expenses and other current liabilities   173,804       178,634  
Accrued compensation   54,656       102,686  
Deferred revenue—current   95,434       95,659  
Convertible senior notes, net—current   550,722        
Total current liabilities   930,727       420,616  
Other liabilities   1,007       1,080  
Operating lease liabilities, net of current portion   37,716       42,837  
Deferred revenue, net of current portion   11,743       13,623  
Deferred taxes, net   50,673       49,452  
Convertible senior notes, net—non-current   989,686       1,538,688  
Total liabilities   2,021,552       2,066,296  
Commitments and contingencies      
Stockholders’ equity:      
Common stock, $0.001 par value; 300,000,000 shares authorized; 171,124,883 shares and 166,658,253 shares issued and outstanding as of June 30, 2024 and December 31, 2023 respectively   171       167  
Additional paid-in capital   17,689,096       17,591,551  
Accumulated deficit   (16,148,215 )     (15,228,655 )
Accumulated other comprehensive loss   (38,966 )     (36,990 )
Total stockholders’ equity   1,502,086       2,326,073  
Total liabilities and stockholders’ equity $ 3,523,638     $ 4,392,369  

Non-GAAP Financial Measures:

To supplement our financial information presented in accordance with generally accepted accounting principles in the United States (“GAAP”), we use certain non-GAAP financial measures to clarify and enhance an understanding of past performance, which include adjusted gross profit, adjusted gross margin, adjusted EBITDA, and free cash flow. We believe that the presentation of these financial measures enhances an investor’s understanding of our financial performance, and are commonly used by investors to evaluate our performance and that of our competitors. 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, and that free cash flow reflects an additional way of viewing our liquidity that, when viewed together with GAAP results, provides management, investors, and other users of our financial information with a more complete understanding of factors and trends affecting our cash flows. We use these non-GAAP financial measures for business planning purposes and in measuring our performance relative to that of our competitors. We utilize adjusted EBITDA as a key measure of our performance.

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

Adjusted EBITDA consists of net loss before provision for income taxes; other expense (income), net; interest income; interest expense; depreciation of property and equipment; amortization of intangible assets; restructuring costs; acquisition, integration, and transformation cost; goodwill impairment; and stock-based compensation.

Free cash flow is net cash provided by operating activities less capital expenditures and capitalized software development costs.

Our use of these non-GAAP terms may vary from that of others in our industry, and other companies may calculate such measures differently than we do, limiting their usefulness as comparative measures.

Non-GAAP measures have important limitations as analytical tools and you should not consider them in isolation, and they should not be considered as an alternative to net loss before provision for income taxes, net loss, net loss per share, net cash from operating activities or any other measures derived in accordance with 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;
  • adjusted EBITDA eliminates the impact of the provision for income taxes on our results of operations, and it does not reflect other expense (income), net, interest income, or interest expense;
  • adjusted EBITDA does not reflect restructuring costs. Restructuring costs may include certain lease impairment costs, certain losses related to early lease terminations, and severance;
  • 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 goodwill impairment; and
  • adjusted EBITDA does not reflect the significant non-cash stock-based compensation expense which should be viewed as a component of recurring operating costs.

In addition, although amortization of intangible assets and depreciation of property and equipment 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, and adjusted EBITDA do not reflect any expenditures for such replacements.

We compensate for these limitations by using these non-GAAP measures 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, net cash provided by operating activities, 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 these non-GAAP measures 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, the most directly comparable GAAP financial measures, to adjusted gross profit:

Reconciliation of GAAP Gross Profit to Adjusted Gross Profit
(In thousands, unaudited)
 
  Three Months Ended
June 30,
  Six Months Ended
June 30,
    2024       2023       2024       2023  
Revenue $ 642,444     $ 652,406     $ 1,288,575     $ 1,281,650  
Cost of revenue (exclusive of depreciation and amortization, which are shown separately below)   (188,059 )     (190,540 )     (382,597 )     (380,647 )
Amortization of intangible assets and depreciation of property and equipment   (26,146 )     (21,474 )     (52,458 )     (34,005 )
Gross Profit   428,239       440,392       853,520       866,998  
Amortization of intangible assets and depreciation of property and equipment   26,146       21,474       52,458       34,005  
Adjusted gross profit $ 454,385     $ 461,866     $ 905,978     $ 901,003  
               
Gross margin   66.7 %     67.5 %     66.2 %     67.6 %
Adjusted gross margin   70.7 %     70.8 %     70.3 %     70.3 %

The following is a reconciliation of net loss, the most directly comparable GAAP financial measure, to adjusted EBITDA:

Reconciliation of GAAP Net Loss to Adjusted EBITDA
(In thousands, except for outlook data, unaudited)
 
  Three Months Ended
June 30,
  Six Months Ended
June 30,
    2024       2023       2024       2023  
Net loss $ (837,671 )   $ (65,177 )   $ (919,560 )   $ (134,405 )
Add:              
Provision for income taxes   3,884       (952 )     6,574       (271 )
Other expense (income), net   563       207       933       (4,700 )
Interest expense   5,648       5,835       11,297       11,098  
Interest income   (13,572 )     (11,558 )     (27,514 )     (20,469 )
Depreciation of property and equipment   1,703       2,954       4,537       5,877  
Amortization of intangible assets   94,862       72,511       189,919       139,371  
Restructuring costs   1,500       7,530       11,173       15,632  
Acquisition, integration, and transformation costs   457       5,080       830       11,024  
Goodwill impairment   790,000             790,000        
Stock-based compensation   42,107       55,725       84,432       101,763  
Total Adjustments   834,064       68,335       886,435       128,419  
Consolidated Adjusted EBITDA $ 89,481     $ 72,155     $ 152,621     $ 124,920  
               
Segment Adjusted EBITDA              
Teladoc Health Integrated Care $ 64,028     $ 37,968     $ 111,702     $ 73,095  
BetterHelp   25,453       34,187       40,919       51,825  
Consolidated Adjusted EBITDA $ 89,481     $ 72,155     $ 152,621     $ 124,920  

The following is a reconciliation of net cash provided by operating activities, the most directly comparable GAAP financial measure, to free cash flow:

Reconciliation of GAAP Net Cash Provided by Operating Activities to Free Cash Flow
(In thousands, unaudited)
 
  Three Months Ended   Six Months Ended
  June 30,   June 30,
    2024       2023       2024       2023  
Net cash provided by operating activities $ 88,683     $ 101,182     $ 97,603     $ 114,338  
Capital expenditures   (1,912 )     (1,904 )     (3,061 )     (4,267 )
Capitalized software development costs   (25,836 )     (34,666 )     (60,199 )     (77,927 )
Capex   (27,748 )     (36,570 )     (63,260 )     (82,194 )
Free Cash Flow $ 60,935     $ 64,612     $ 34,343     $ 32,144  

Notes:

  1. 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 under the heading “Non-GAAP Financial Measures.”
  2. U.S. Integrated Care Members represent the number of unique individuals who have paid access and visit fee only access to our suite of integrated care services in the U.S. at the end of the applicable period.
  3. Excluding the amount capitalized related to software development projects.
  4. Chronic Care Program Enrollment represents the total number of enrollees across our suite of chronic care programs at the end of a given period.
  5. Average monthly revenue per U.S. Integrated Care member is calculated by dividing the total revenue generated from the Integrated Care segment by the average number of U.S. Integrated Care Members (see note 2) during the applicable period.
  6. BetterHelp Paying Users represent the average number of global monthly paying users of our BetterHelp therapy services during the applicable period.
  7. We have two segments: Teladoc Health Integrated Care (“Integrated Care”) and BetterHelp. The Integrated Care segment includes a suite of global virtual medical services including general medical, expert medical services, specialty medical, chronic condition management, mental health, and enabling technologies and enterprise telehealth solutions for hospitals and health systems. The BetterHelp segment includes virtual therapy and other wellness services provided on a global basis which are predominantly marketed and sold on a direct-to-consumer basis.

Investors:
Michael Minchak
617-444-9612
[email protected]

Media:
Chris Stenrud
860-491-8821
[email protected]


Bay Street News