• Teladoc Health Reports Fourth Quarter and Full Year 2022 Results

    ソース: Nasdaq GlobeNewswire / 22 2 2023 15:05:01   America/Chicago

    • Fourth quarter revenue grows 15% year-over-year to $637.7 million and full year revenue grows 18% year-over-year to $2,406.8 million
    • 2022 full year cash flow from operating activities and free cash flow was $189.3 million and $16.5 million, respectively; Cash position of $918.2 million as of December 31, 2022
    • Fourth quarter net loss per share of $23.49 and full year net loss per share of $84.60, driven by non-cash goodwill impairment charges of $23.26 per share in fourth quarter and $83.01 per share for full year
    • Fourth quarter adjusted EBITDA totaled $94.1 million and full year adjusted EBITDA totaled $246.5 million
    • Disclosures expanded to include Teladoc Health Integrated Care segment and BetterHelp segment results

    PURCHASE, NY, Feb. 22, 2023 (GLOBE NEWSWIRE) -- Teladoc Health, Inc. (NYSE: TDOC), the global leader in whole-person virtual care, today reported financial results for the fourth quarter and full year ended December 31, 2022.  

    “We are pleased with the strong fourth quarter and full year operating results," said Jason Gorevic, CEO of Teladoc Health. "Despite a challenging macro environment, we were able to expand our product offerings and enhance the level of care delivered across our integrated whole-person platform.”

    Gorevic added, "As we look ahead to 2023, we see a healthy demand for solutions that promise better access and outcomes while lowering the cost of healthcare. Our key strategic priorities remain our whole-person suite of services including our virtual primary care offering - Primary360, our suite of chronic care management solutions, mental health, and continued growth in our BetterHelp consumer brand. We remain committed to a balanced approach to growth and margin which will allow us to invest in key initiatives across our product roadmap.”

                       
    Key Financial Data                  
    ($ thousands, unaudited)                  
     Quarter Ended  Year over Year Year Ended  Year over Year
     December 31,  Change December 31,  Change
      2022   2021      2022   2021    
    Revenue$637,709  $554,235   15% $2,406,840  $2,032,707   18 %
                       
    Net Loss$(3,810,071) $(10,985)  N/M  $(13,659,531) $(428,793)  N/M
    Net Loss per share, basic and diluted$(23.49) $(0.07)  N/M  $(84.60) $(2.73)  N/M
                       
    Adjusted EBITDA (1)$94,094  $77,077   22% $246,513  $267,837   (8)%

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

    Fourth Quarter 2022

    Revenue increased 15% to $637.7 million from $554.2 million in the fourth quarter of 2021. Access fees revenue grew 16% to $553.7 million and other revenue grew 10% to $84.0 million. U.S. Revenues grew 15% to $554.4 million and International revenues grew 17% to $83.3 million.

    Revenue increased 6% to $357.1 million for the Teladoc Health Integrated Care (“Integrated Care”) segment and increased 29% to $277.0 million for the BetterHelp segment in the fourth quarter of 2022. See note (9) in the Notes section that follows for further information regarding segment reporting.

    Non-cash goodwill impairment charges of $3.8 billion were recorded in the fourth quarter of 2022. The non-cash charges had no impact on the provision for income taxes.

    Net loss totaled $3,810.1 million, or ($23.49) per share, for the fourth quarter of 2022, compared to $11.0 million, or ($0.07) per share, for the fourth quarter of 2021. Results for the fourth quarter of 2022 primarily included non-cash goodwill impairment charges of $3,772.8 million, or ($23.26) per share, stock-based compensation expense of $50.8 million, or ($0.31) per share, and amortization of acquired intangibles of $49.0 million, or ($0.30) per share.

    Results for the fourth quarter of 2021 included stock-based compensation expense of $61.6 million, or ($0.39) per share, and amortization of acquired intangibles of $45.1 million, or ($0.28) per share.

    Adjusted EBITDA (1) increased 22% to $94.1 million, compared to $77.1 million for the fourth quarter of 2021. Segment adjusted EBITDA increased 31% to $43.7 million for the Integrated Care segment and increased 22% to $52.8 million for the BetterHelp segment in the fourth quarter of 2022.

    GAAP gross margin, which includes depreciation and amortization, was 68.6% for the fourth quarter of 2022, compared to 67.5% for the fourth quarter of 2021.

    Adjusted gross margin (1) was 70.4% for the fourth quarter of 2022, compared to 68.4% for the fourth quarter of 2021.

    Full Year Ended December 31, 2022

    Revenue increased 18% to $2,406.8 million from $2,032.7 million for the year ended December 31, 2022 (“Full-Year 2022”). Access fees revenue grew 21% to $2,103.8 million, and other revenue grew 4% to $303.0 million. U.S. revenues and International revenues each grew 18% to $2,101.0 million and $305.8 million, respectively.

    Revenue increased 6% to $1,373.9 million for the Integrated Care segment and increased 41% to $1,019.6 million for the BetterHelp segment for Full-Year 2022.

    Non-cash goodwill impairment charges of $13.4 billion were recorded for Full-Year 2022. The non-cash charges had no impact on the provision for income taxes.

    Net loss totaled $13,659.5 million, or ($84.60) per share, for the year ended December 31, 2022, compared to $428.8 million, or ($2.73) per share, for the year ended December 31, 2021. Results for Full-Year 2022 primarily included non-cash impairment charges of $13,402.8 million, or ($83.01) per share, as well as stock-based compensation expense of $217.9 million, or ($1.35) per share, and amortization of acquired intangibles of $196.3 million, or ($1.22) per share.

    Results for the year ended December 31,2021 included stock-based compensation expense of $302.6 million, or ($1.93) per share, amortization of acquired intangibles of $178.9 million, or ($1.14) per share, loss on extinguishment of debt of $43.7 million, or ($0.28) per share, and income taxes charges of $44.1 million, or ($0.28) per share.

    Adjusted EBITDA (1) decreased 8% to $246.5 million compared to $267.8 million for the year ended December 31, 2021. Segment adjusted EBITDA for the Integrated Care segment was $135.2 million for Full-Year 2022, versus $144.0 million in the prior year. Segment adjusted EBITDA for the BetterHelp segment was $114.1 million for Full-Year 2022, versus $121.7 million in the prior year.

    GAAP gross margin, which includes depreciation and amortization, was 67.8% for the Full-Year 2022, compared to 67.2% for the full year 2021.

    Adjusted gross margin (1) was 69.1% for the Full-Year 2022 compared to 68.0% in the prior year.

    Capex and Cash Flow

    Cash flow from operations was $65.5 million and $189.3 million in the fourth quarter and full year of 2022, respectively, as compared to $83.2 million and $194.0 million in the fourth quarter and full year of 2021, respectively. Capitalized expenditures and capitalized software (together, “Capex”) was $53.9 million in the fourth quarter of 2022 and $172.8 million for the full year 2022, as compared to $22.9 million in the fourth quarter of 2021 and $63.9 million for the full year 2021. Free cash flow was $11.7 million in the fourth quarter of 2022 and $16.5 million for the full year 2022, as compared to $60.3 million in the fourth quarter of 2021 and $130.1 million for the full year 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 2023 financial performance.

    For the first quarter of 2023, we expect:

      
     1Q 2023 Outlook Range
    Revenue$610 - $625 million
    Adjusted EBITDA$42 - $50 million
    Net loss per share($0.55) - ($0.45)
    U.S. Integrated Care Members (3)84 - 85 million


    For the full year 2023, we expect:

      
     Full Year 2023 Outlook Range
    Revenue$2,550 - $2,675 million
    Adjusted EBITDA$275 - $325 million
    Net loss per share($1.75) - ($1.25)
    U.S. Integrated Care Members (3)84 - 86 million

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

    Earnings Conference Call

    The fourth quarter and full year 2022 earnings conference call and webcast will be held Wednesday, February 22, 2023 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: 033061; 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, 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 or regulatory actions; (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 and risk related to impairment losses with respect to goodwill or other assets; and (viii) 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

                            
     Quarter Ended Year over Year Year Ended Year over Year
    ($ thousands)December 31, Change December 31, Change
      2022   2021     2022   2021   
    Revenue by Type                       
    Access fees$553,668  $478,081   16% $2,103,814  $1,740,170   21%
    Other (2) 84,041   76,154   10%  303,026   292,537   4%
    Total Revenue$637,709  $554,235   15% $2,406,840  $2,032,707   18%
                            
    Revenue by Geography                       
    U.S. Revenue$554,416  $482,895   15% $2,101,015  $1,774,024   18%
    International Revenue 83,293   71,340   17%  305,825   258,683   18%
    Total Revenue$637,709  $554,235   15% $2,406,840  $2,032,707   18%

    See note (2) in the Notes section that follows.

    Summary Operating Metrics (6)

                
     Year Ended Year over Year
    (millions, except revenue per member)December 31, Change
      2022   2021   
    U.S. Integrated Care Members (3) 83.3   77.5   7%
                
    BetterHelp Paying Users (4) 0.419   0.307   37%
                
    Chronic Care Program Enrollment (5) 1.019   0.878   16%


                        
     Quarter Ended Year over Year Year Ended Year over Year
     December 31, Change December 31, Change
     2022 2021   2022 2021  
    Total Visits 4.8   4.4   8 %  18.5   15.4   20 %
                        
    Average Revenue Per U.S. Integrated Care Member (7)$1.44  $1.46   (2)% $1.42  $1.46   (2)%

    See notes (3), (4), (5), (6), and (7) in the Notes section that follows.



    TELADOC HEALTH, INC.
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    (In thousands, except share and per share data, unaudited)

                
     Quarter Ended December 31, Year Ended December 31,
      2022   2021   2022   2021 
    Revenue$637,709  $554,235  $2,406,840  $2,032,707 
    Expenses:           
    Cost of revenue (exclusive of depreciation and amortization,
    which is shown separately below)    		 188,873   174,985   743,987   650,258 
    Operating expenses:           
    Advertising and marketing 146,443   112,988   623,536   416,726 
    Sales 56,278   59,330   227,172   250,581 
    Technology and development 82,930   72,867   333,629   311,884 
    General and administrative 119,845   118,603   449,855   438,007 
    Acquisition, integration, and transformation costs 6,627   4,559   15,620   26,643 
    Restructuring costs 3,738   0   7,416   0 
    Depreciation and amortization 75,716   52,332   256,027   204,239 
    Goodwill impairment 3,772,811   0   13,402,812   0 
    Total expenses 4,453,261   595,664   16,060,054   2,298,338 
    Loss from operations (3,815,552)  (41,429)  (13,653,214)  (265,631)
    Loss on extinguishment of debt 0   20   0   43,748 
    Other (income) expense, net (1,749)  405   859   (5,088)
    Interest (income) expense, net (1,892)  18,872   9,270   80,365 
    Net loss before provision for income taxes (3,811,911)  (60,726)  (13,663,343)  (384,656)
    Provision for income taxes (1,840)  (49,741)  (3,812)  44,137 
    Net loss$(3,810,071) $(10,985) $(13,659,531) $(428,793)
                
    Net loss per share, basic and diluted$(23.49) $(0.07) $(84.60) $(2.73)
                
    Weighted-average shares used to compute basic
    and diluted net loss per share    		 162,169,564   159,944,335   161,457,123   156,939,349 



    Stock-based Compensation Summary

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

                    
     Quarter Ended Year Ended
     December 31, December 31,
      2022   2021   2022   2021 
    Cost of revenue (exclusive of depreciation and amortization,
    which is shown separately)    		$1,474  $1,970  $6,468  $8,280 
    Advertising and marketing 3,561   3,811   14,083   18,952 
    Sales 9,337   13,837   43,183   71,475 
    Technology and development 14,461   18,226   64,577   95,561 
    General and administrative 21,921   23,771   89,541   108,318 
    Total stock-based compensation expense (8)$50,754  $61,615  $217,852  $302,586 

    See note (8) in the Notes section that follows.



    Operating Results by Segment (see note (9) in the Notes section that follows)

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

                            
     Quarter Ended Year over Year Year Ended Year over Year
    ($ thousands, unaudited)December 31, Change December 31, Change
      2022   2021     2022   2021   
    Teladoc Health Integrated Care                       
    Revenue$357,100  $337,288   6% $1,373,900  $1,300,878   6%
    Adjusted EBITDA$43,686  $33,450   31% $135,153  $144,021   (6)%
    Adjusted EBITDA Margin % 12.2%  9.9%  232bps  9.8%  11.1%  (123)bps
                            
    BetterHelp                       
    Therapy Services$274,495  $213,329   29% $1,012,574  $720,270   41%
    Other Wellness Services 2,513   675   272%  7,072   968   631%
    Total Revenue$277,008  $214,004   29% $1,019,646  $721,238   41%
    Adjusted EBITDA$52,846  $43,183   22% $114,116  $121,702   (6)%
    Adjusted EBITDA Margin % 19.1%  20.2%  (110)bps  11.2%  16.9%  (568)bps

    Operating Results by Segment by Quarter

                        
     4Q 1Q 2Q 3Q 4Q
    ($ thousands, unaudited) 2021   2022   2022   2022   2022 
    Teladoc Health Integrated Care                   
    Revenue$337,288  $332,384  $341,599  $342,817  $357,100 
    Adjusted EBITDA$33,450  $23,267  $29,320  $38,880  $43,686 
    Adjusted EBITDA Margin % 9.9%  7.0%  8.6%  11.3%  12.2%
                        
    BetterHelp                   
    Therapy Services$213,329  $229,117  $245,754  $263,208  $274,495 
    Other Wellness Services 675   1,057   1,560   1,942   2,513 
    Total Revenue$214,004  $230,174  $247,314  $265,150  $277,008 
    Adjusted EBITDA$43,183  $30,098  $20,022  $11,150  $52,846 
    Adjusted EBITDA Margin % 20.2%  13.1%  8.1%  4.2%  19.1%


                        
    Summary Operating Metrics4Q 1Q 2Q 3Q 4Q
    (millions, except revenue per member) 2021   2022   2022   2022   2022 
    U.S. Integrated Care Members (3) 77.5   79.2   80.3   81.9   83.3 
                        
    BetterHelp Paying Users (4) 0.351   0.382   0.408   0.437   0.450 
                        
    Chronic Care Program Enrollment (5) 0.878   0.913   1.005   0.993   1.019 
                        
    Average Revenue Per U.S. Integrated Care Member (7)$1.46  $1.41  $1.43  $1.40  $1.44 

    See notes (3), (4), (5), and (7) in the Notes section that follows.



    TELADOC HEALTH, INC.
    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (In thousands, unaudited)

          
     Year Ended December 31,
      2022   2021 
    Cash flows from operating activities:     
    Net loss$(13,659,531) $(428,793)
    Adjustments to reconcile net loss to net cash flows from operating activities:     
    Goodwill impairment 13,402,812   0 
    Depreciation and amortization 256,027   204,239 
    Depreciation of rental equipment 2,859   3,333 
    Amortization of right-of-use assets 11,757   12,049 
    Provision for doubtful accounts 15,398   16,941 
    Stock-based compensation 217,852   302,586 
    Deferred income taxes (7,840)  41,800 
    Accretion of interest 3,345   61,253 
    Loss on extinguishment of debt 0   40,652 
    Gain on sale of investment 0   (5,901)
    Other, net 7,584   (3,845)
    Changes in operating assets and liabilities:     
    Accounts receivable (61,641)  (17,510)
    Prepaid expenses and other current assets (41,081)  (31,090)
    Inventory 14,800   (19,494)
    Other assets (27,767)  (3,547)
    Accounts payable 1,876   1,188 
    Accrued expenses and other current liabilities 61,217   18,175 
    Accrued compensation (12,290)  (4,675)
    Deferred revenue 15,240   20,554 
    Operating lease liabilities (11,525)  (16,532)
    Other liabilities 200   2,607 
    Net cash provided by operating activities 189,292   193,990 
    Cash flows from investing activities:     
    Capital expenditures (16,480)  (8,534)
    Capitalized software (156,284)  (55,400)
    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   (78,663)
    Other, net 2,514   8,715 
    Net cash used in investing activities (167,743)  (72,981)
    Cash flows from financing activities:     
    Net proceeds from the exercise of stock options 5,884   25,781 
    Repurchase of 2022 Notes 0   (139)
    Proceeds from advances from financing companies 11,873   15,275 
    Payment against advances from financing companies (15,020)  (16,050)
    Proceeds from employee stock purchase plan 6,501   16,810 
    Cash received for withholding taxes on stock-based compensation, net 124   3,422 
    Other, net (2,865)  (4,152)
    Net cash provided by financing activities 6,497   40,947 
    Net decrease in cash and cash equivalents 28,046   161,956 
    Foreign exchange difference (3,344)  (1,800)
    Cash and cash equivalents at beginning of the period 893,480   733,324 
    Cash and cash equivalents at end of the period$918,182  $893,480 



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

          
     Quarter Ended
     December 31,
      2022      2021 
    Consolidated Statements of Cash Flows - Summary     
    Net cash provided by operating activities$65,549  $83,208 
    Net cash used in investing activities (53,891)  (20,075)
    Net cash provided by financing activities 4,381   6,624 
    Foreign exchange difference 2,512   (105)
    Net decrease in cash and cash equivalents$18,551  $69,652 



    TELADOC HEALTH, INC.
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (In thousands, except share and per share data, unaudited)

          
     December 31, December 31,
      2022   2021 
    Assets     
    Current assets:     
    Cash and cash equivalents$918,182  $893,480 
    Short-term investments 0   2,537 
    Accounts receivable, net of allowance of $14,800 and $12,384, respectively 210,554   168,956 
    Inventories 56,342   73,079 
    Prepaid expenses and other current assets 130,310   87,387 
    Total current assets 1,315,388   1,225,439 
    Property and equipment, net 29,641   27,234 
    Goodwill 1,073,190   14,504,174 
    Intangible assets, net 1,836,765   1,910,278 
    Operating lease - right-of-use assets 41,831   46,780 
    Other assets 48,540   20,703 
    Total assets$4,345,355  $17,734,608 
    Liabilities and stockholders’ equity     
    Current liabilities:     
    Accounts payable$47,690  $47,257 
    Accrued expenses and other current liabilities 168,693   102,933 
    Accrued compensation 81,554   91,941 
    Deferred revenue-current 90,457   75,569 
    Advances from financing companies 11,375   13,313 
    Total current liabilities 399,769   331,013 
    Other liabilities 1,618   1,492 
    Operating lease liabilities, net of current portion 38,042   41,773 
    Deferred revenue, net of current portion 3,872   3,834 
    Advances from financing companies, net of current portion 8,082   9,291 
    Deferred taxes, net 50,939   75,777 
    Convertible senior notes, net 1,535,288   1,225,671 
    Commitments and contingencies     
    Stockholders’ equity:     
    Common stock, $0.001 par value; 300,000,000 shares authorized; 162,840,360 shares and 160,469,325 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively 163   160 
    Additional paid-in capital 17,358,645   17,473,336 
    Accumulated deficit (15,008,287)  (1,421,454)
    Accumulated other comprehensive loss (42,776)  (6,285)
    Total stockholders’ equity 2,307,745   16,045,757 
    Total liabilities and stockholders’ equity$4,345,355  $17,734,608 


    Non-GAAP Financial Measures:

    To supplement our financial information presented in accordance with generally accepted accounting principles in the United States (“GAAP”), we use adjusted gross profit, adjusted gross margin, EBITDA, adjusted EBITDA and free cash flow, 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 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 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 (income) expense, 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 (income) expense, net; other (income) expense, net, including foreign exchange gain or loss; provision for income taxes; depreciation and amortization; goodwill impairment; loss on extinguishment of debt; stock-based compensation; restructuring costs; and acquisition, integration, and transformation costs.

    Free cash flow is net cash (used in) provided by operating activities less capital expenditures and capitalized software development costs. Free cash flow reflects an additional way of viewing our liquidity that, we believe, when viewed 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 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, adjusted EBITDA and free cash flow may vary from that of others in our industry. None of adjusted gross profit, adjusted gross margin, EBITDA, adjusted EBITDA nor free cash flow should be considered as an alternative to net loss before provision for income taxes, net loss, net loss per share, net cash provided by operating activities or any other performance measures derived in accordance with GAAP.

    Adjusted gross profit, adjusted gross margin, EBITDA, adjusted EBITDA and free cash flow 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 (income) expense, net;
    • 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 (income) expense, net;
    • adjusted EBITDA does not reflect significant 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 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, adjusted EBITDA, and free cash flow 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 adjusted gross profit, adjusted gross margin, EBITDA, adjusted EBITDA, and free cash flow 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 Year Ended
     December 31, December 31,
      2022   2021   2022   2021 
    Revenue$637,709  $554,235  $2,406,840  $2,032,707 
    Cost of revenue (exclusive of depreciation and amortization, which is shown separately below) (188,873)  (174,985)  (743,987)  (650,258)
    Depreciation and amortization of intangible assets (11,109)  (5,406)  (30,773)  (16,546)
    Gross Profit 437,727   373,844   1,632,080   1,365,903 
    Depreciation and amortization of intangible assets 11,109   5,406   30,773   16,546 
    Adjusted gross profit$448,836  $379,250  $1,662,853  $1,382,449 
                
    Gross margin 68.6 %  67.5 %  67.8 %  67.2 %
    Adjusted gross margin 70.4 %  68.4 %  69.1 %   68.0 %

    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 Year Ended Outlook in millions (10) 
      December 31, December 31, First Quarter Full Year 
       2022   2021   2022   2021  2023 2023 
    Net loss $(3,810,071) $(10,985) $(13,659,531) $(428,793) $(90) - ($73) $(288) - ($206) 
    Adjustments:                   
    Goodwill impairment  3,772,811   0   13,402,812   0        
    Loss on extinguishment of debt  0   20   0   43,748        
    Other (income) expense , net  (1,749)  405   859   (5,088)       
    Interest (income) expense, net  (1,892)  18,872   9,270   80,365        
    Provision for income taxes  (1,840)  (49,741)  (3,812)  44,137        
    Depreciation and amortization  75,716   52,332   256,027   204,239        
    Total Adjustments  3,843,046   21,888   13,665,156   367,401   53 - 80  231 - 363 
    Consolidated EBITDA  32,975   10,903   5,625   (61,392)  (20) - (10)  25 - 75 
    Adjustments:                   
    Stock-based compensation  50,754   61,615   217,852   302,586        
    Acquisition, integration, and transformation costs  6,627   4,559   15,620   26,643        
    Restructuring costs  3,738   0   7,416   0        
    Total Adjustments  61,119   66,174   240,888   329,229   52 - 70  200 - 300 
    Consolidated Adjusted EBITDA $94,094  $77,077  $246,513  $267,837  $42 - $50 $275 - $325 
                        
    Segment Adjusted EBITDA                   
    Teladoc Health Integrated Care $43,686  $33,450  $135,153  $144,021        
    BetterHelp  52,846   43,183   114,116   121,702        
    Other  (2,438)  444   (2,756)  2,114        
    Consolidated Adjusted EBITDA $94,094  $77,077  $246,513  $267,837        

    See note (10) in the Notes section that follows.



    Reconciliation of GAAP Net Loss to EBITDA and Adjusted EBITDA
    (In thousands, except for outlook data, unaudited)

             
     1Q 2Q 3Q
      2022   2022   2022 
    Net loss$(6,674,523) $(3,101,461) $(73,476)
    Add:        
    Goodwill impairment 6,600,000   3,030,000   0 
    Other (income) expense, net (724)  1,760   1,571 
    Interest expense, net 5,480   4,337   1,346 
    Provision for income taxes 388   (1,188)  (1,171)
    Depreciation and amortization 58,933   59,371   62,008 
    Consolidated EBITDA  (10,446)   (7,181)   (9,722)
    Stock-based compensation 60,436   51,000   55,662 
    Acquisition, integration, and transformation costs 4,507   2,892   1,594 
    Restructuring costs 0   0   3,677 
    Consolidated Adjusted EBITDA$ 54,497  $ 46,711  $ 51,211 
             
    Segment Adjusted EBITDA        
    Teladoc Health Integrated Care$23,267  $29,320  $38,880 
    BetterHelp 30,098   20,022   11,150 
    Other 1,132   (2,631)  1,181 
    Consolidated Adjusted EBITDA$ 54,497  $ 46,711  $ 51,211 
             

    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)

                
     Quarter Ended Year Ended
     December 31, December 31,
      2022   2021   2022   2021 
    Net cash provided by operating activities$65,549  $83,208  $189,292  $193,990 
    Capital expenditures (6,194)  (2,922)  (16,480)  (8,534)
    Capitalized software (47,697)  (19,999)  (156,284)  (55,400)
    Free Cash Flow$11,658  $60,287  $16,528  $130,056 


    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. Other revenue now combines what had been separately reported previously as visit fees and other revenue.

    3. 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.

    4. BetterHelp Paying Users represent the average number of global monthly paid users of our BetterHelp therapy services during the applicable period.

    5. Chronic Care Program Enrollment represents the total of enrollees across our suite of chronic care programs at the end of a given period.

    6. At December 31, 2022, U.S. Paid Membership was 58.4 million, U.S. Visit Fee Only Access was 24.8 million, and Unique Chronic Care Members was 0.805 million, each calculated consistent with the definitions previously provided in the third quarter 2022 earnings release.

    7. Average 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 3) during the applicable period. Approximately 20% of total Integrated Care revenues relate to international and hospital and health systems for which membership is not considered as a management metric.

    8. Excluding the amount capitalized related to software development projects.

    9. ASC Subtopic 280-10, “Segment Reporting,” establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and assess performance. The Company’s Chief Executive Officer is the CODM and is responsible for reviewing financial information presented on segment basis for purposes of making operating decisions and assessing financial performance.

      The CODM measures and evaluates segments based on segment operating revenues together with Adjusted EBITDA.

      Operating revenues and expenses directly associated with each segment are included in determining its operating results. Other expenses that are not directly attributable to a particular segment are allocated based upon methodologies, including the following: revenue, headcount, time and other relevant usage measures, and/or a combination of such. Segments do not record intersegment revenues, and, accordingly, there is none to be reported. The accounting policies for segment reporting are the same as for the Company as a whole.

      The Company has 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.

      Other includes certain revenues, expenses and charges not related to ongoing segment operations.

    10. 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 restructuring 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

     


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