- Third quarter 2023 revenue grows 8% year-over-year to $660.2 million
- Third quarter 2023 operating cash flow of $105.6 million; free cash flow of $68.0 million
- Third quarter 2023 net loss of $57.1 million, or $0.35 per share
- Third quarter 2023 adjusted EBITDA of $88.8 million, up 73% year-over-year
PURCHASE, NY, Oct. 24, 2023 (GLOBE NEWSWIRE) -- Teladoc Health, Inc. (: TDOC), the global leader in whole-person virtual care, today reported financial results for the third quarter ended September 30, 2023.
"Our third quarter financial and operating performance reinforces the fundamental strength of our business and our success in making better health available to more than 90 million members," said Jason Gorevic, CEO of Teladoc Health. "Each day, we partner and innovate with the largest healthcare payers and partners globally to offer unrivaled whole person care, offering the broadest range of integrated health services available together virtually. Our solid balance sheet enables us to invest in innovation, supported by the deepest bench of medical professionals.
"As we look into 2024, we will continue to advance virtual care in ways large and small. We've seen the positive impact of our unified app, which allows members for the first time to access complex states of care on a single device. We will accelerate our efforts to drive value through improved business performance across the enterprise, undertaking a comprehensive operational review of the business to further improve our efficiency. We are committed to building an even stronger company that continues to deliver on balanced growth, while keeping our promises to clients and caring for our members."
| Key Financial Data | |||||||||||||||||||||
| ($ in thousands, except per share data, unaudited) | |||||||||||||||||||||
| Quarter Ended | Year-over-Year | Nine Months Ended | Year-over-Year | ||||||||||||||||||
| September 30, | Change | September 30, | Change | ||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||
| Revenue | $ | 660,238 | $ | 611,402 | 8 | % | $ | 1,941,888 | $ | 1,769,131 | 10 | % | |||||||||
| Net loss | $ | (57,073 | ) | $ | (73,476 | ) | 22 | % | $ | (191,478 | ) | $ | (9,849,460 | ) | 98 | % | |||||
| Net loss per share, basic and diluted | $ | (0.35 | ) | $ | (0.45 | ) | 22 | % | $ | (1.17 | ) | $ | (61.09 | ) | 98 | % | |||||
| Adjusted EBITDA (1) | $ | 88,757 | $ | 51,211 | 73 | % | $ | 213,677 | $ | 152,419 | 40 | % | |||||||||
See note (1) in the Notes section that follows.
Third Quarter 2023
Revenue increased 8% to $660.2 million from $611.4 million in the third quarter of 2022. Access fees revenue grew 8% to $582.1 million and other revenue grew 10% to $78.2 million. U.S. revenue grew 7% to $569.3 million and International revenue grew 17% to $90.9 million.
Teladoc Health Integrated Care ("Integrated Care") segment revenue increased 9% to $374.4 million in the third quarter of 2023 and BetterHelp segment revenue increased 8% to $285.8 million.
Net loss totaled $57.1 million, or $0.35 per share, for the third quarter of 2023, compared to $73.5 million, or $0.45 per share, for the third quarter of 2022. Results for the third quarter of 2023 included stock-based compensation expense of $52.9 million, or $0.32 per share, and amortization of acquired intangibles of $69.2 million, or $0.42 per share. The amortization of acquired intangibles increased over the prior year period reflecting a change in the useful lives of certain intangibles.
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 $48.7 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 restructuring costs related to the abandonment of certain excess leased office space.
Adjusted EBITDA(1) increased 73% to $88.8 million, compared to $51.2 million for the third quarter of 2022. Integrated Care segment adjusted EBITDA increased 62% to $62.8 million in the third quarter of 2023 and BetterHelp segment adjusted EBITDA increased 133% to $26.0 million in the third quarter of 2023.
GAAP gross margin, which includes depreciation and amortization, was 68.6% for the third quarter of 2023, compared to 68.3% for the third quarter of 2022.
Adjusted gross margin(1) was 71.8% for the third quarter of 2023, compared to 69.6% for the third quarter of 2022.
Nine Months Ended September 30, 2023
Revenue increased 10% to $1,941.9 million from $1,769.1 million in the first nine months of 2022. Access fees revenue grew 10% to $1,708.6 million, and other revenue grew 7% to $233.3 million. U.S. revenue grew 8% to $1,672.8 million, and International revenue grew 21% to $269.1 million for the first nine months of 2023.
Revenue increased 7% to $1,084.4 million for the Integrated Care segment in the first nine months of 2023 and increased 15% to $857.5 million for the BetterHelp segment.
Net loss totaled $191.5 million, or $1.17 per share, for the first nine months of 2023, compared to $9,849.5 million, or $61.09 per share, for the first nine months of 2022. Results for the first nine months of 2023 included stock-based compensation expense of $154.7 million, or $0.94 per share, restructuring costs of $16.0 million, or $0.10 per share, and amortization of acquired intangibles of $172.2 million, or $1.05 per share.
Results for the first nine months of 2022 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 $148.3 million, or $0.92 per share. Net loss for the first nine months of 2022 also included $3.7 million, or $0.02 per share, of restructuring costs related to the abandonment of certain excess leased office space.
Adjusted EBITDA(1) increased 40% to $213.7 million, compared to $152.4 million for the first nine months of 2022. Integrated Care segment adjusted EBITDA increased 49% to $135.9 million in the first nine months of 2023 and BetterHelp segment adjusted EBITDA increased 27% to $77.8 million in the first nine months of 2023.
GAAP gross margin, which includes depreciation and amortization, was 68.0% for the first nine months of 2023, compared to 67.5% for the first nine months of 2022.
Adjusted gross margin(1) was 70.8% for the first nine months of 2023, compared to 68.6% for the first nine months of 2022.
Capex and Cash Flow
Cash flow from operations was $105.6 million in the third quarter of 2023, compared to $63.0 million in the third quarter of 2022, and was $219.9 million in the first nine months of 2023, compared to $123.7 million in the first nine months of 2022. Capitalized expenditures and capitalized software (together, “Capex”) was $37.6 million in the third quarter of 2023, compared to $43.2 million in the third quarter of 2022, and was $119.8 million for the first nine months of 2023, compared to $118.9 million for the first nine months of 2022. Free cash flow was $68.0 million in the third quarter of 2023, compared to $19.8 million in the third quarter of 2022, and was $100.1 million for the first nine months of 2023, compared to $4.9 million for the first nine months of 2022.
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 2023 financial performance.
For the fourth quarter of 2023, we expect:
| 4Q 2023 Outlook Range | |
| Revenue | $658 - $683 million |
| Adjusted EBITDA | $107 - $117 million |
| Net loss per share | ($0.33) - ($0.23) |
| U.S. Integrated Care Members (2) | 89 - 90 million |
For the year ending December 31, 2023, we expect:
| Full Year 2023 Outlook Range | |
| Revenue | $2,600 - $2,625 million |
| Adjusted EBITDA | $320 - $330 million |
| Net loss per share | ($1.50) - ($1.40) |
| U.S. Integrated Care Members (2) | 89 - 90 million |
See note (2) in the Notes section that follows.
Earnings Conference Call
The third quarter 2023 earnings conference call and webcast will be held Tuesday, October 24, 2023 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 # 612441. For international participants, please visit the following link for global dial-in numbers: https://www.netroadshow.com/events/global-numbers?confId=55509. 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 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; and (vii) the impact of and risk related to impairment losses with respect to goodwill or other assets. 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) | |||||||||||||||
| Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Revenue | $ | 660,238 | $ | 611,402 | $ | 1,941,888 | $ | 1,769,131 | |||||||
| Expenses: | |||||||||||||||
| Cost of revenue (exclusive of depreciation and amortization, which is shown separately below) | 185,960 | 185,619 | 566,607 | 555,114 | |||||||||||
| Operating expenses: | |||||||||||||||
| Advertising and marketing | 186,152 | 178,920 | 541,698 | 477,094 | |||||||||||
| Sales | 52,309 | 54,634 | 160,329 | 170,893 | |||||||||||
| Technology and development | 84,289 | 84,590 | 258,583 | 250,698 | |||||||||||
| General and administrative | 115,716 | 112,090 | 355,702 | 330,011 | |||||||||||
| Acquisition, integration, and transformation costs | 5,824 | 1,594 | 16,848 | 8,993 | |||||||||||
| Restructuring costs | 411 | 3,677 | 16,043 | 3,677 | |||||||||||
| Depreciation and amortization | 94,302 | 62,008 | 239,550 | 180,312 | |||||||||||
| Goodwill impairment | — | — | — | 9,630,000 | |||||||||||
| Total expenses | 724,963 | 683,132 | 2,155,360 | 11,606,792 | |||||||||||
| Loss from operations | (64,725 | ) | (71,730 | ) | (213,472 | ) | (9,837,661 | ) | |||||||
| Interest income | (12,606 | ) | (4,803 | ) | (33,075 | ) | (6,192 | ) | |||||||
| Interest expense | 5,646 | 6,149 | 16,744 | 17,355 | |||||||||||
| Other expense (income), net | 1,792 | 1,571 | (2,908 | ) | 2,607 | ||||||||||
| Loss before provision for income taxes | (59,557 | ) | (74,647 | ) | (194,233 | ) | (9,851,431 | ) | |||||||
| Provision for income taxes | (2,484 | ) | (1,171 | ) | (2,755 | ) | (1,971 | ) | |||||||
| Net loss | $ | (57,073 | ) | $ | (73,476 | ) | $ | (191,478 | ) | $ | (9,849,460 | ) | |||
| Net loss per share, basic and diluted | $ | (0.35 | ) | $ | (0.45 | ) | $ | (1.17 | ) | $ | (61.09 | ) | |||
| Weighted-average shares used to compute basic and diluted net loss per share | 165,119,379 | 161,727,962 | 164,079,194 | 161,217,033 | |||||||||||
Stock-based Compensation Summary
Compensation costs for stock-based awards were classified as follows (in thousands):
| Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Cost of revenue (exclusive of depreciation and amortization, which is shown separately) | $ | 1,464 | $ | 675 | $ | 4,060 | $ | 4,994 | |||||||
| Advertising and marketing | 4,399 | ||||||||||||||
