Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 03, 2020 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2020 | |
Entity File Number | 001-37477 | |
Entity Registrant Name | TELADOC HEALTH, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 04-3705970 | |
Entity Address, Address Line One | 2 Manhattanville Road | |
Entity Address, Address Line Two | Suite 203 | |
Entity Address, City or Town | Purchase | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10577 | |
City Area Code | 203 | |
Local Phone Number | 635-2002 | |
Title of 12(b) Security | Common Stock, par value $0.001 per share | |
Trading Symbol | TDOC | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Central Index Key | 0001477449 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 144,960,748 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 1,187,299 | $ 514,353 |
Short-term investments | 3,070 | 2,711 |
Accounts receivable, net of allowance of $4,661 and $3,787, respectively | 85,803 | 56,948 |
Inventories | 11,578 | 0 |
Prepaid expenses and other current assets | 22,293 | 13,990 |
Total current assets | 1,310,043 | 588,002 |
Property and equipment, net | 20,364 | 10,296 |
Goodwill | 1,691,355 | 746,079 |
Intangible assets, net | 386,573 | 225,453 |
Operating lease - right-of-use assets | 33,933 | 26,452 |
Other assets | 7,117 | 6,545 |
Total assets | 3,449,385 | 1,602,827 |
Current liabilities: | ||
Accounts payable | 21,408 | 9,075 |
Accrued expenses and other current liabilities | 65,130 | 34,439 |
Accrued compensation | 53,957 | 34,201 |
Deferred revenue-current | 46,721 | 12,466 |
Advances from financing companies | 13,609 | 0 |
Total current liabilities | 200,825 | 90,181 |
Other liabilities | 1,033 | 9,239 |
Operating lease liabilities, net of current portion | 30,326 | 24,994 |
Deferred Revenue, net of current portion | 4,884 | 2,300 |
Advances from financing companies, net of current portion | 9,901 | 0 |
Deferred taxes | 17,896 | 21,678 |
Convertible senior notes, net | 953,484 | 440,410 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock, $0.001 par value; 150,000,000 shares authorized as of September 30, 2020 and December 31, 2019; 84,358,345 shares and 72,761,941 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively | 84 | 73 |
Additional paid-in capital | 2,835,274 | 1,538,716 |
Accumulated deficit | (598,694) | (507,525) |
Accumulated other comprehensive loss | (5,628) | (17,239) |
Total stockholders' equity | 2,231,036 | 1,014,025 |
Total liabilities and stockholders' equity | $ 3,449,385 | $ 1,602,827 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Consolidated Balance Sheets | ||
Allowance of Accounts receivable | $ 4,661 | $ 3,787 |
Common stock par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares issued | 84,358,345 | 72,761,941 |
Common stock, shares outstanding | 84,358,345 | 72,761,941 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Consolidated Statements of Operations | ||||
Revenue | $ 288,812 | $ 137,969 | $ 710,641 | $ 396,818 |
Expenses: | ||||
Cost of revenue (exclusive of depreciation and amortization shown separately below) | 104,725 | 42,799 | 267,887 | 129,110 |
Operating expenses: | ||||
Advertising and marketing | 52,302 | 31,321 | 132,395 | 84,341 |
Sales | 23,483 | 16,120 | 60,110 | 48,164 |
Technology and development | 29,958 | 15,746 | 72,244 | 48,398 |
Legal and regulatory | 2,812 | 1,634 | 6,266 | 5,239 |
Acquisition and integration related costs | 25,395 | 1,995 | 30,686 | 4,143 |
General and administrative | 56,930 | 38,681 | 156,433 | 113,212 |
Depreciation and amortization | 12,932 | 9,617 | 32,535 | 29,065 |
Total expenses | 308,537 | 157,913 | 758,556 | 461,672 |
Loss from operations | (19,725) | (19,944) | (47,915) | (64,854) |
Loss on extinguishment of debt | 1,227 | 0 | 8,978 | 0 |
Interest expense, net | 17,222 | 7,700 | 39,676 | 21,432 |
Net loss before taxes | (38,174) | (27,644) | (96,569) | (86,286) |
Income tax (benefit) expense | (2,290) | (7,298) | (5,400) | (6,466) |
Net loss | $ (35,884) | $ (20,346) | $ (91,169) | $ (79,820) |
Net loss per share, basic and diluted | $ (0.43) | $ (0.28) | $ (1.17) | $ (1.11) |
Weighted-average shares used to compute basic and diluted net loss per share | 83,607,902 | 72,151,094 | 77,821,073 | 71,601,790 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Consolidated Statements of Comprehensive Loss | ||||
Net loss | $ (35,884) | $ (20,346) | $ (91,169) | $ (79,820) |
Other comprehensive loss, net of tax: | ||||
Net change in unrealized gains on available-for-sale securities | 0 | (23) | 0 | 37 |
Cumulative translation adjustment | 16,285 | (15,493) | 11,610 | (15,025) |
Other comprehensive loss, net of tax | 16,285 | (15,516) | 11,610 | (14,988) |
Comprehensive loss | $ (19,599) | $ (35,862) | $ (79,559) | $ (94,808) |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) | Common Stock2027 Notes | Common Stock2025 Notes | Common Stock2022 Notes | Common Stock | Additional Paid-In Capital2027 Notes | Additional Paid-In Capital2025 Notes | Additional Paid-In Capital2022 Notes | Additional Paid-In Capital | Accumulated Deficit2027 Notes | Accumulated Deficit2025 Notes | Accumulated Deficit2022 Notes | Accumulated Deficit | Accumulated Other Comprehensive Income2027 Notes | Accumulated Other Comprehensive Income2025 Notes | Accumulated Other Comprehensive Income2022 Notes | Accumulated Other Comprehensive Income | 2027 Notes | 2025 Notes | 2022 Notes | Total |
Balance as of beginning of the period at Dec. 31, 2018 | $ 70,000 | $ 1,434,780,000 | $ (408,661,000) | $ (13,070,000) | $ 1,013,119,000 | |||||||||||||||
Balance as of beginning of the period (in shares) at Dec. 31, 2018 | 70,516,249 | |||||||||||||||||||
Stockholders' Equity (Deficit) | ||||||||||||||||||||
Exercise of stock options | $ 1,000 | 8,853,000 | 0 | 0 | 8,854,000 | |||||||||||||||
Exercise of stock options (in shares) | 564,102 | |||||||||||||||||||
Issuance of restricted stock units | $ 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Issuance of restricted stock units (in shares) | 383,060 | |||||||||||||||||||
Stock-based compensation | $ 0 | 13,523,000 | 0 | 0 | 13,523,000 | |||||||||||||||
Other comprehensive income (loss), net of tax | 0 | 0 | 0 | (3,788,000) | (3,788,000) | |||||||||||||||
Net loss | 0 | 0 | (30,150,000) | 0 | (30,150,000) | |||||||||||||||
Balance as of end of the period at Mar. 31, 2019 | $ 71,000 | 1,457,156,000 | (438,811,000) | (16,858,000) | 1,001,558,000 | |||||||||||||||
Balance as of end of the period (in shares) at Mar. 31, 2019 | 71,463,411 | |||||||||||||||||||
Balance as of beginning of the period at Dec. 31, 2018 | $ 70,000 | 1,434,780,000 | (408,661,000) | (13,070,000) | 1,013,119,000 | |||||||||||||||
Balance as of beginning of the period (in shares) at Dec. 31, 2018 | 70,516,249 | |||||||||||||||||||
Stockholders' Equity (Deficit) | ||||||||||||||||||||
Net loss | (79,820,000) | |||||||||||||||||||
Balance as of end of the period at Sep. 30, 2019 | $ 72,000 | 1,510,205,000 | (488,481,000) | (28,058,000) | 993,738,000 | |||||||||||||||
Balance as of end of the period (in shares) at Sep. 30, 2019 | 72,356,849 | |||||||||||||||||||
Balance as of beginning of the period at Mar. 31, 2019 | $ 71,000 | 1,457,156,000 | (438,811,000) | (16,858,000) | 1,001,558,000 | |||||||||||||||
Balance as of beginning of the period (in shares) at Mar. 31, 2019 | 71,463,411 | |||||||||||||||||||
Stockholders' Equity (Deficit) | ||||||||||||||||||||
Exercise of stock options | $ 1,000 | 6,846,000 | 0 | 0 | 6,847,000 | |||||||||||||||
Exercise of stock options (in shares) | 350,219 | |||||||||||||||||||
Issuance of restricted stock units | $ 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Issuance of restricted stock units (in shares) | 85,035 | |||||||||||||||||||
Issuance of stock under employee stock purchase plan | $ 0 | 1,875,000 | 0 | 0 | 1,875,000 | |||||||||||||||
Issuance of stock under employee stock purchase plan (in shares) | 35,716 | |||||||||||||||||||
Stock-based compensation | $ 0 | 17,368,000 | 0 | 0 | 17,368,000 | |||||||||||||||
Other comprehensive income (loss), net of tax | 0 | 0 | 0 | 4,316,000 | 4,316,000 | |||||||||||||||
Net loss | 0 | 0 | (29,324,000) | 0 | (29,324,000) | |||||||||||||||
Balance as of end of the period at Jun. 30, 2019 | $ 72,000 | 1,483,245,000 | (468,135,000) | (12,542,000) | 1,002,640,000 | |||||||||||||||
Balance as of end of the period (in shares) at Jun. 30, 2019 | 71,934,381 | |||||||||||||||||||
Stockholders' Equity (Deficit) | ||||||||||||||||||||
Exercise of stock options | $ 0 | 9,119,000 | 0 | 0 | 9,119,000 | |||||||||||||||
Exercise of stock options (in shares) | 356,691 | |||||||||||||||||||
Issuance of restricted stock units | $ 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Issuance of restricted stock units (in shares) | 65,622 | |||||||||||||||||||
Issuance of common stock for Convertible Notes | $ 0 | 8,000 | 0 | 0 | 8,000 | |||||||||||||||
Issuance of common stock for Convertible Notes (in shares) | 155 | |||||||||||||||||||
Stock-based compensation | $ 0 | 17,833,000 | 0 | 0 | 17,833,000 | |||||||||||||||
Other comprehensive income (loss), net of tax | 0 | 0 | 0 | (15,516,000) | (15,516,000) | |||||||||||||||
Net loss | 0 | 0 | (20,346,000) | 0 | (20,346,000) | |||||||||||||||
Balance as of end of the period at Sep. 30, 2019 | $ 72,000 | 1,510,205,000 | (488,481,000) | (28,058,000) | 993,738,000 | |||||||||||||||
Balance as of end of the period (in shares) at Sep. 30, 2019 | 72,356,849 | |||||||||||||||||||
Balance as of beginning of the period at Dec. 31, 2019 | $ 73,000 | 1,538,716,000 | (507,525,000) | (17,239,000) | 1,014,025,000 | |||||||||||||||
Balance as of beginning of the period (in shares) at Dec. 31, 2019 | 72,761,941 | |||||||||||||||||||
Stockholders' Equity (Deficit) | ||||||||||||||||||||
Exercise of stock options | $ 0 | 14,830,000 | 0 | 0 | 14,830,000 | |||||||||||||||
Exercise of stock options (in shares) | 671,279 | |||||||||||||||||||
Issuance of restricted stock units | $ 1,000 | (1,000) | 0 | 0 | 0 | |||||||||||||||
Issuance of restricted stock units (in shares) | 642,411 | |||||||||||||||||||
Issuance of common stock for Convertible Notes | $ 0 | 58,000 | 0 | 0 | 58,000 | |||||||||||||||
Issuance of common stock for Convertible Notes (in shares) | 655 | |||||||||||||||||||
Stock-based compensation | $ 0 | 18,421,000 | 0 | 0 | 18,421,000 | |||||||||||||||
Other comprehensive income (loss), net of tax | 0 | 0 | 0 | (17,554,000) | (17,554,000) | |||||||||||||||
Net loss | 0 | 0 | (29,603,000) | 0 | (29,603,000) | |||||||||||||||
Balance as of end of the period at Mar. 31, 2020 | $ 74,000 | 1,572,024,000 | (537,128,000) | (34,793,000) | 1,000,177,000 | |||||||||||||||
Balance as of end of the period (in shares) at Mar. 31, 2020 | 74,076,286 | |||||||||||||||||||
Balance as of beginning of the period at Dec. 31, 2019 | $ 73,000 | 1,538,716,000 | (507,525,000) | (17,239,000) | 1,014,025,000 | |||||||||||||||
Balance as of beginning of the period (in shares) at Dec. 31, 2019 | 72,761,941 | |||||||||||||||||||
Stockholders' Equity (Deficit) | ||||||||||||||||||||
Net loss | (91,169,000) | |||||||||||||||||||
Balance as of end of the period at Sep. 30, 2020 | $ 84,000 | 2,835,274,000 | (598,694,000) | (5,628,000) | 2,231,036,000 | |||||||||||||||
Balance as of end of the period (in shares) at Sep. 30, 2020 | 84,358,345 | |||||||||||||||||||
Balance as of beginning of the period at Mar. 31, 2020 | $ 74,000 | 1,572,024,000 | (537,128,000) | (34,793,000) | 1,000,177,000 | |||||||||||||||
Balance as of beginning of the period (in shares) at Mar. 31, 2020 | 74,076,286 | |||||||||||||||||||
Stockholders' Equity (Deficit) | ||||||||||||||||||||
Exercise of stock options | $ 1,000 | 18,682,000 | 0 | 0 | 18,683,000 | |||||||||||||||
Exercise of stock options (in shares) | 927,684 | |||||||||||||||||||
Issuance of restricted stock units | $ 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Issuance of restricted stock units (in shares) | 109,768 | |||||||||||||||||||
Issuance of stock under employee stock purchase plan | $ 0 | 2,473,000 | 0 | 0 | 2,473,000 | |||||||||||||||
Issuance of stock under employee stock purchase plan (in shares) | 35,901 | |||||||||||||||||||
Issuance of common stock for Convertible Notes | $ 4,000 | $ 693,802,000 | $ 0 | $ 0 | $ 693,806,000 | |||||||||||||||
Issuance of common stock for Convertible Notes (in shares) | 3,949,794 | |||||||||||||||||||
Equity portion of extinguishment of Convertible Notes | $ 0 | (715,151,000) | 0 | 0 | (715,151,000) | |||||||||||||||
Equity component of 2027 Notes, net of issuance costs | $ 0 | $ 285,601,000 | $ 0 | $ 0 | $ 285,601,000 | |||||||||||||||
Stock-based compensation | $ 0 | 22,142,000 | 0 | 0 | 22,142,000 | |||||||||||||||
Other comprehensive income (loss), net of tax | 0 | 0 | 0 | 12,880,000 | 12,880,000 | |||||||||||||||
Net loss | 0 | 0 | (25,682,000) | 0 | (25,682,000) | |||||||||||||||
Balance as of end of the period at Jun. 30, 2020 | $ 79,000 | 1,879,573,000 | (562,810,000) | (21,913,000) | 1,294,929,000 | |||||||||||||||
Balance as of end of the period (in shares) at Jun. 30, 2020 | 79,099,433 | |||||||||||||||||||
Stockholders' Equity (Deficit) | ||||||||||||||||||||
Exercise of stock options | $ 0 | 7,113,000 | 0 | 0 | 7,113,000 | |||||||||||||||
Exercise of stock options (in shares) | 400,555 | |||||||||||||||||||
Issuance of restricted stock units | $ 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Issuance of restricted stock units (in shares) | 49,396 | |||||||||||||||||||
Issuance of stock in acquisition | $ 5,000 | 918,813,000 | 0 | 0 | 918,818,000 | |||||||||||||||
Issuance of stock in acquisition (in shares) | 4,620,665 | |||||||||||||||||||
Issuance of common stock for Convertible Notes | $ 0 | $ 0 | $ 37,780,000 | 187,000 | $ 0 | 0 | $ 0 | 0 | $ 37,780,000 | 187,000 | ||||||||||
Issuance of common stock for Convertible Notes (in shares) | 187,346 | 950 | ||||||||||||||||||
Equity portion of extinguishment of Convertible Notes | $ 0 | $ 0 | $ (29,326,000) | $ (44,000) | $ 0 | $ 0 | $ 0 | $ 0 | $ (29,326,000) | $ (44,000) | ||||||||||
Stock-based compensation | $ 0 | 21,178,000 | 0 | 0 | 21,178,000 | |||||||||||||||
Other comprehensive income (loss), net of tax | 0 | 0 | 0 | 16,285,000 | 16,285,000 | |||||||||||||||
Net loss | 0 | 0 | (35,884,000) | 0 | (35,884,000) | |||||||||||||||
Balance as of end of the period at Sep. 30, 2020 | $ 84,000 | $ 2,835,274,000 | $ (598,694,000) | $ (5,628,000) | $ 2,231,036,000 | |||||||||||||||
Balance as of end of the period (in shares) at Sep. 30, 2020 | 84,358,345 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows used in operating activities: | ||
Net loss | $ (91,169) | $ (79,820) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 38,029 | 33,860 |
Allowance for doubtful accounts | 2,320 | 1,717 |
Stock-based compensation | 61,151 | 48,245 |
Deferred income taxes | (4,096) | (10,288) |
Accretion of interest | 29,459 | 19,422 |
Loss on extinguishment of debt | 8,978 | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (16,450) | (12,386) |
Prepaid expenses and other current assets | (5,906) | (2,219) |
Inventory | (2,392) | 0 |
Other assets | 140 | 73 |
Accounts payable | 6,584 | (1,976) |
Accrued expenses and other current liabilities | 17,269 | 14,304 |
Accrued compensation | 9,329 | (1,813) |
Deferred revenue | 15,348 | 6,708 |
Operating lease liabilities | (4,360) | (1,481) |
Other liabilities | (2,809) | (2,599) |
Net cash provided by in operating activities | 61,425 | 11,747 |
Cash flows (used in) provided by investing activities: | ||
Purchase of property and equipment | (2,872) | (2,847) |
Purchase of internal-use software | (14,515) | (4,658) |
Proceeds from marketable securities | 0 | 39,165 |
Sale of assets | 0 | 10 |
Investment in securities | 0 | (5,000) |
Pre-funding associated with the pending acquisition | (159,663) | (11,204) |
Net cash (used in) provided by investing activities | (177,050) | 15,466 |
Cash flows provided by financing activities: | ||
Net proceeds from the exercise of stock options | 40,627 | 24,820 |
Proceeds from issuance of 2027 Notes | 1,000,000 | 0 |
Issuance costs of 2027 Notes | (24,070) | 0 |
Repurchase of 2022 Notes | (228,153) | 0 |
Proceeds from advances from financing companies | 1,924 | 0 |
Payment from customers against advances from financing companies | (4,427) | 0 |
Proceeds from employee stock purchase plan | 2,473 | 1,875 |
Cash received (paid) for withholding taxes on stock-based compensation, net | 326 | (1,642) |
Net cash provided by financing activities | 788,700 | 25,053 |
Net increase in cash and cash equivalents | 673,075 | 52,266 |
Foreign exchange difference | (129) | (1,013) |
Cash and cash equivalents at beginning of the period | 514,353 | 423,989 |
Cash and cash equivalents at end of the period | 1,187,299 | 475,242 |
Income taxes paid | 786 | 846 |
Interest paid | $ 5,612 | $ 6,112 |
Organization and Description of
Organization and Description of Business | 9 Months Ended |
Sep. 30, 2020 | |
Organization and Description of Business | |
Organization and Description of Business | Note 1. Organization and Description of Business Teladoc, Inc. was incorporated in the State of Texas in June 2002 and changed its state of incorporation to the State of Delaware in October 2008. Effective August 10, 2018, Teladoc, Inc. changed its corporate name to Teladoc Health, Inc. Unless the context otherwise requires, Teladoc Health, Inc., together with its subsidiaries, is referred to herein as “Teladoc Health” or the “Company”. The Company’s principal executive office is located in Purchase, New York. Teladoc Health is the global leader in providing virtual healthcare services with a focus on high quality, lower costs, and improved outcomes around the world. On July 1, 2020, the Company completed the acquisition of InTouch Technologies, Inc. (“InTouch”), the leading provider of enterprise telehealth solutions for hospitals and health systems. See Note 4 “Business Acquisition”. On August 5, 2020, Teladoc Health announced that it had entered into a definitive merger agreement with Livongo Health, Inc. (“Livongo”), which represents a transformational opportunity to improve the delivery, access and experience of healthcare for consumers around the world. The merger closed on October 30, 2020. See Note 16 “Subsequent Event”. |
Basis of Presentation and Princ
Basis of Presentation and Principles of Consolidation | 9 Months Ended |
Sep. 30, 2020 | |
Basis Of Presentation And Principles Of Consolidation | |
Basis of Presentation and Principles of Consolidation | Note 2. Basis of Presentation and Principles of Consolidation Basis of Presentation and Principles of Consolidation The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring accruals and adjustments) necessary to present fairly the financial position, results of operations and cash flows of the Company at the dates and for the periods indicated. The interim results for the quarter and nine months ended September 30, 2020 are not necessarily indicative of results for the full 2020 calendar year or any other future interim periods. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Form 10-K for the year ended December 31, 2019 (the “2019 Form 10-K”). The unaudited consolidated financial statements include the results of Teladoc Health, its wholly owned subsidiaries, as well as two professional associations, eleven professional corporations and a service corporation (the “Association”). Teladoc Physicians, P.A. became Teladoc Health Medical Group, P.A. on January 1, 2020. Teladoc Health Medical Group, P.A. is party to several services agreements by and among it and the professional corporations pursuant to which each professional corporation provides services to Teladoc Health Medical Group, P.A. Each professional corporation is established pursuant to the requirements of its respective domestic jurisdiction governing the corporate practice of medicine. The Company holds a variable interest in the Association which contracts with physicians and other health professionals in order to provide services to Teladoc Health. The Association is considered a variable interest entity (“VIE”) since it does not have sufficient equity to finance its activities without additional subordinated financial support. An enterprise having a controlling financial interest in a VIE, must consolidate the VIE if it has both power and benefits—that is, it has (1) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance (power) and (2) the obligation to absorb losses of the VIE that potentially could be significant to the VIE or the right to receive benefits from the VIE that potentially could be significant to the VIE (benefits). The Company has the power and rights to control all activities of the Association and funds and absorbs all losses of the VIE. Total revenue and net (loss) income for the VIE were $48.9 million and $(0.7) million, respectively, for the quarter ended September 30, 2020 and $17.2 million and $0.2 million, respectively, for the quarter ended September 30, 2019. Total revenue and net (loss) income for the VIE were $149.1 million and $0.1 million, respectively, for the nine months ended September 30, 2020 and $55.7 million and $(0.1) million, respectively, for the nine months ended September 30, 2019. The VIE’s total assets were $28.1 million and $13.6 million at September 30, 2020 and December 31, 2019, respectively. Total liabilities for the VIE were $65.7 million and $51.3 million at September 30, 2020 and December 31, 2019, respectively. The VIE’s total stockholders’ deficit was $37.6 million and $37.7 million at September 30, 2020 and December 31, 2019, respectively. The functional currency for each of the Company’s foreign subsidiaries is the local currency. All assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the exchange rate on the balance sheet date. Revenues and expenses are translated at the weighted average exchange rate during the period. Cumulative translation gains or losses are included in stockholders’ equity as a component of accumulated other comprehensive income (loss). The Company operates in a single All intercompany transactions and balances have been eliminated. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company bases its estimates on historical experience, current business factors, and various other assumptions that the Company believes are necessary to consider to form a basis for making judgments about the carrying values of assets and liabilities, the recorded amounts of revenue and expenses, and the disclosure of contingent assets and liabilities. The Company is subject to uncertainties such as the impact of future events, economic and political factors, and changes in the Company’s business environment; therefore, actual results could differ from these estimates. Accordingly, the accounting estimates used in the preparation of the Company’s consolidated financial statements will change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment evolves. Changes in estimates are made when circumstances warrant. Such changes in estimates and refinements in estimation methodologies are reflected in reported results of operations; if material, the effects of changes in estimates are disclosed in the notes to the consolidated financial statements. On an ongoing basis, management evaluates its estimates compared to historical experience and trends, which form the basis for making judgments about the carrying values of assets and liabilities, the recorded amounts of revenue and expenses, and the disclosure of contingent assets and liabilities. Key estimates are used for revenue recognition criteria, purchase accounting, net realizable value for inventories, useful lives of property and equipment as well as rental equipment, carrying value of all long-lived assets, recognition, accounting for convertible notes transactions, disclosure of contingent liabilities, and assumptions used in determining appropriate accounting treatment of leasing transactions, among other material accounting policies as described in the Summary of Significant Accounting policies in this Quarterly Report on Form 10-Q and in the 2019 Form 10-K. Presentation Certain prior year amounts have been reclassified to conform to the current year presentation. Cost of revenue includes product depreciation but excludes all other forms of depreciation and amortization. Recently Issued Accounting Pronouncements In December 2019, FASB issued ASU 2019-12 Simplification of Income Taxes (Topic 740). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. ASU 2019-12 is effective for public companies for annual periods beginning after December 15, 2020, including interim periods within those fiscal years. We have early adopted ASU 2019-12 on our consolidated financial statements and disclosures effective January 1, 2020, with no material impact to the financial statements. In January 2017, the FASB issued ASU 2017-04, Goodwill Simplifications (Topic 350). ASU 2017-04 simplifies the test for goodwill impairment. The new guidance eliminates Step 2 from the goodwill impairment test as currently prescribed in the U.S. generally accepted accounting principle. This ASU is the result of the FASB project focused on simplifications to accounting for goodwill. The new guidance was effective for the first quarter of 2020 and was adopted in the quarter-ended December 31, 2019. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires an entity to utilize a new impairment model known as the current expected credit loss ("CECL") model to estimate its lifetime "expected credit loss" and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. The CECL model is expected to result in more timely recognition of credit losses. ASU 2016-13 requires new disclosures for financial assets measured at amortized cost, loans and available-for-sale debt securities. ASU 2016- 13 is effective for public companies for annual periods beginning after December 13, 2019, including interim periods within those fiscal years. The standard applies as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. The guidance was effective and adopted in the quarter ended March 31, 2020, with no material impact to the financial statements. Summary of Significant Accounting Policies In conjunction with the recent acquisiton of In Touch, the Company’s significant accounting policies were expanded to include the following policies. Inventories Inventories are stated at the lower of cost and net realizable value on a first-in, first-out (FIFO) basis. Inventory costs include direct materials,direct labor and contracting costs, certain indirect labor and manufacturing overhead and inbound shipping charges. Inventories are assessed on a periodic basis for potential obsolete and slow-moving inventory with write-downsbeing recorded when identified. Rental Equipment Equipment is assigned to the rental pool upon the execution of a sales leasing arrangement. Rental equipment assets are generally stated at cost, less accumulated depreciation and reflected in property and equipment, net. Depreciation of rental equipment is provided on a straight-line basis, over the estimated useful lives of the respective assets, which is generally 4.3 years and is charged to cost of revenues. Leases Thc Company rents its hosted virtual health platform for certain clients under arrangements that qualify as either sales-type lease or operating lease arrangements. The contracts include equipment consisting of virtual health devices which allow phyisicians access to the platform and there are multiple performance obligations where the Company determines the standalone selling prices based on overall selling prices and pricing objectives. In determining whether a transaction should be classified as a sales-type or operating lease, the Company considers the following terms: (1) ownership of the virtual health device transfers to the lessee by the end of the term of the lease, (2) the lease grants the lessee an option to purchase the virtual health device that the lessee is reasonably certain to exercise, (3) the lease term is for themajor part of the remaining useful life of the virtual health device, (4) the present value of the sum of the lease payments equals or exceeds substantially all of the fair value of the virtual health device, and (5) it is expected that there will be no alternative use for the virtual health device at the end of the lease term. The Company generally recognizes revenue for virtual health devices in sales-type leases at the time of acceptance by the client provided all other revenue recognition criteria have been met and these leases are not material. For operating lease arrangements, revenue for the virtual health device is recognized over the lease term and generally on a straight-line basis. For both sales-type and operating lease arrangnement, revenue associated with virtual health platform access is recognized over the lease term on a straight line basis. Advances from Financing Companies There have been no other material changes to the significant accounting policies described in the 2019 Form 10-K that have had a material impact on the consolidated financial statements and related notes other than those as discussed above. The Company has not experienced any significant impact to it’s estimates and assumptions as a result of the COVID-19 pandemic. On an ongoing basis, the Company will continue to closely monitor for any changes to the related impacts, especially on the allowance for doubtful accounts. |
Revenue
Revenue | 9 Months Ended |
Sep. 30, 2020 | |
Revenue | |
Revenue | Note 3. Revenue The Company primarily generates virtual healthcare service revenue from contracts with clients who purchase access to the Company’s professional provider network or medical experts for their employees, dependents and other beneficiaries. The Company’s client contracts include a per-member-per-month access fee as well as certain contracts that generate additional revenue on a per-virtual healthcare visit basis for general medical, other specialty visits and expert medical service on a per case basis. The Company also has certain contracts that generate revenue based solely on a per healthcare visit basis for general medical and other specialty visits. For the Company’s direct-to-consumer behavioral health product, members purchase access to the Company’s professional provider network for a access fee. Revenue is also generated from contracts with clients for the sale and rental of access to the Company’s hosted virtual healthcare platform. These contracts include equipment consisting of virtual health devices which allow physicians access to the platform. These contracts also include multiple performance obligations and the Company determines the standalone selling prices based on overall pricing objectives. In some arrangements, the Company’s hosted virtual health platform are rented to certain qualified clients that qualify as either sales-type lease or operating lease arrangements and are subject to lease accounting guidance. The Company’s agreements generally have a term of one year. The majority of clients renew their contracts following their first year of services. Revenues are recognized when the Company satisfies its performance obligation to stand ready to provide virtual healthcare services which occurs when the Company’s clients and members have access to and obtain control of the virtual healthcare service or platform. Additionally, contracts where revenue is generated on a per healthcare visit basis, revenues are recognized when the visits are completed as the Company has delivered on its stand ready obligation to provide access. For other revenue which primarily includes virtual healthcare devices, the Company’s performance obligation is satisfied when the equipment is provided to the client and revenue is recognized at a point in time upon shipment. The Company generally bills for the virtual healthcare services on a monthly basis with payment terms generally being 30 days. There are not significant differences between the timing of revenue recognition and billing. Consequently, the Company has determined that client contracts do not include a financing component. Revenue is recognized in an amount that reflects the consideration that is expected in exchange for the service and for certain contracts includes a variable transaction price as the number of members may vary from period to period. Based on historical experience, the Company estimates this amount. Access revenue accounted for approximately 78% and 86% of our total revenue for the quarters ended September 30, 2020 and 2019, respectively. Access revenue accounted for approximately 77% and 85% of our total revenue for the nine months ended September 30, 2020 and 2019, respectively. The following table presents the Company’s revenues disaggregated by revenue source (in thousands): Quarter Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Access Fees: U.S. $ 194,622 $ 92,095 $ 454,582 $ 258,604 International 31,997 27,030 91,261 77,716 Visit Fee Revenue: U.S. Paid Visits 35,074 14,142 105,013 47,473 U.S. Visit Fee Only 15,874 4,307 47,931 11,974 International Paid Visits 96 395 705 1,051 Other: U.S. 10,299 0 10,299 0 International 850 0 850 0 Total Revenues $ 288,812 $ 137,969 $ 710,641 $ 396,818 As of September 30, 2020, accounts receivable, net of allowance for doubtful accounts, were $85.8 million. The allowance for doubtful accounts reflects our best estimate of expected losses inherent in the accounts receivable balance. The Company determines the allowance based on historical experience, specific account information and other currently available evidence. For certain services, payment is required for future months before the service is delivered to the client or member. The Company records deferred revenue when cash payments are received in advance of the Company’s performance obligation to provide services. The net increase of $36.8 million and $6.7 million in the deferred revenue balance for the nine months ended September 30, 2020 and 2019, respectively, are primarily driven by the recent acquisition of In Touch in 2020 as well as the direct-to-consumer behavioral health product and cash payments received or due in advance of satisfying the Company’s performance obligations, offset by revenue recognized that were included in the deferred revenue balance at the beginning of the period. The Company anticipates that it will satisfy most of its performance obligations associated with the deferred revenue within the prospective fiscal year. The Company’s contracts do not generally contain refund provisions for fees earned related to services performed. However, the Company’s direct-to-consumer behavioral health service provides for member refunds. Based on historical experience, the Company estimates the expected amount of refunds to be issued which are recorded as a reduction of revenue. The Company issued refunds of approximately $3.3 million and $0.9 million for the quarter ended September 30, 2020 and 2019, respectively. The Company issued refunds of approximately $7.0 million and $2.1 million for the nine months ended September 30, 2020 and 2019, respectively. Additionally, certain of the Company’s contracts include client performance guarantees that are based upon minimum Member utilization and guarantees by the Company for specific service level performance of the Company’s services. If client performance guarantees are not being realized, the Company records, as a reduction to revenue, an estimate of the amount that will be due at the end of the respective client’s contractual period. For the quarter and nine months ended September 30, 2020 and 2019, revenue recognized from performance obligations related to prior periods for the aforementioned changes in transaction price or client performance guarantees, were not material. The Company has elected the optional exemption to not disclose the remaining performance obligations of its contracts since substantially all of its contracts have a duration of one year or less and the variable consideration expected to be received over the duration of the contract is allocated entirely to the wholly unsatisfied performance obligations. |
Business Acquisitions
Business Acquisitions | 9 Months Ended |
Sep. 30, 2020 | |
Business Acquisitions | |
Business Acquisitions | Note 4. Business Acquisitions On April 30, 2019, the Company completed the acquisition of the Paris-based telemedicine provider MedecinDirect in which MedecinDirect became a wholly-owned subsidiary of the Company. The aggregate merger consideration paid was $11.2 million with additional potential earnout consideration. The acquisition was considered a stock acquisition for tax purposes and accordingly, the goodwill resulting from the acquisition is not tax deductible. The acquisitions described above were accounted for using the acquisition method of accounting, which requires, among other things, the assets acquired and the liabilities assumed be recognized at their fair values as of the acquisition date. The results of the acquisitions were included within the consolidated financial statements commencing on the aforementioned acquisition dates. The following table summarizes the preliminary fair value estimates of the assets acquired and liabilities assumed for the July 2020 InTouch Health acquisition at the acquisition date. The Company, with the assistance of a third-party valuation expert, estimated the preliminary fair value of the acquired tangible and intangible assets with significant estimates such as revenue projections. The allocation of the consideration transferred to the assets acquired and the liabilities assumed is preliminary. This can be revised as a result of additional information obtained due to the finalization of the valuation inputs and assumptions as well as completing the assessment of the tax attributes of the business combination. Additional adjustments that could have a material impact on the Company’s results of operations and financial position may be recorded within the measurement period, which will not exceed one year from the acquisition date. Identifiable assets acquired and liabilities assumed (in thousands): InTouch Health Purchase price, net of cash acquired $ 1,078,480 Less: Accounts receivable 16,517 Inventory 9,444 Property and equipment, net 11,366 Others assets 7,506 Client relationships 110,240 Technology 29,190 Trademarks 32,630 Advances from financing companies (26,012) Accounts payable (5,589) Deferred revenue (21,271) Other liabilities (23,004) Goodwill $ 937,463 The amount allocated to goodwill reflects the benefits Teladoc expects to realize from the growth of the acquisition’s operations. The Company’s unaudited pro forma revenue and net loss for the quarters ended September 30, 2020 and 2019 and for the nine months ended September 30, 2020 and 2019 below have been prepared as if InTouch had been purchased on January 1, 2019. The Company made some pro-forma adjustments related to amortization of intangible assets, interest expense, stock based compensation. The Company’s pro-forma net loss excluded acquisition costs and transaction expenses of $9.2 million and $0.5 million for the quarter ended September 30,2020 and 2019, respectively, and $31.8 million and $0.9 million for the nine months ended September 30, 2020 and 2019, respectively. Unaudited Pro Forma Unaudited Pro Forma Quarters Ended Nine Months Ended September 30, September 30, (in thousands) 2020 2019 2020 2019 Revenue $ 288,812 $ 159,965 $ 762,995 $ 457,093 Net loss $ (27,772) $ (27,734) $ (100,990) $ (100,287) The unaudited pro forma financial information above is not necessarily indicative of what the Company’s consolidated results actually would have been if the acquisition had been completed at the beginning of the respective periods. In addition, the unaudited pro forma information above does not attempt to project the Company’s future results. The Company recorded approximately |
Intangible Assets, Net
Intangible Assets, Net | 9 Months Ended |
Sep. 30, 2020 | |
Intangible Assets, Net | |
Intangible Assets, Net | Note 5. Intangible Assets, Net Intangible assets, net consist of the following (in thousands): Weighted Average Useful Accumulated Net Carrying Remaining Life Gross Value Amortization Value Useful Life September 30, 2020 Client relationships 2 to 20 years $ 350,600 $ (80,528) $ 270,072 15.1 Non-compete agreements 1.5 to 5 years 5,025 (4,682) 343 0.7 Trademarks 3 to 15 years 75,738 (9,919) 65,819 13.4 Patents 3 years 200 (200) 0 0 Internal-use software and other 3 to 5 years 80,301 (29,962) 50,339 3.9 Intangible assets, net $ 511,864 $ (125,291) $ 386,573 12.6 December 31, 2019 Client relationships 2 to 20 years $ 237,182 $ (60,647) $ 176,535 13.1 Non-compete agreements 1.5 to 5 years 4,958 (4,260) 698 1.4 Trademarks 3 to 15 years 42,606 (7,143) 35,463 12.9 Patents 3 years 200 (200) 0 0 Internal-use software and other 3 to 5 years 34,850 (22,093) 12,757 2.3 Intangible assets, net $ 319,796 $ (94,343) $ 225,453 12.4 Amortization expense for intangible assets was $11.7 million and $8.7 million for the quarters ended September 30, 2020 and 2019, respectively. Amortization expense for intangible assets was $29.6 million and $26.4 million for the nine months ended September 30, 2020 and 2019, respectively. |
Goodwill
Goodwill | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill | |
Goodwill | Note 6. Goodwill Goodwill consists of the following (in thousands): As of September 30, As of December 31, 2020 2019 Beginning balance $ 746,079 $ 737,197 Additions associated with acquisitions 937,463 10,604 Cumulative translation adjustment 7,813 (1,722) Goodwill $ 1,691,355 $ 746,079 |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 9 Months Ended |
Sep. 30, 2020 | |
Accrued Expenses and Other Current Liabilities | |
Accrued Expenses and Other Current Liabilities | Note 7. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following (in thousands): 2020 2019 Professional fees $ 3,011 $ 1,535 Consulting fees/provider fees 19,255 10,618 Client performance guarantees 3,575 3,298 Legal fees 2,364 1,077 Interest payable 6,492 838 Income tax payable 2,704 2,859 Insurance 3,205 1,263 Marketing 5,983 2,810 Operating lease liabilities - current 7,276 5,088 Earnout 4,552 0 Other 6,713 5,053 Total $ 65,130 $ 34,439 |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Measurements | |
Fair Value Measurements | Note 8. Fair Value Measurements The Company measures its financial assets and liabilities at fair value at each reporting period using a fair value hierarchy that requires it to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value: Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2—Include other inputs that are directly or indirectly observable in the marketplace. Level 3—Unobservable inputs that are supported by little or no market activity. The Company measures its cash equivalents at fair value on a recurring basis. The Company classifies its cash equivalents within Level 1 because they are valued using observable inputs that reflect quoted prices for identical assets in active markets and quoted prices directly in active markets. The Company measures its short-term investments at fair value on a recurring basis and classifies such as Level 2. They are valued using observable inputs that reflect quoted prices directly or indirectly in active markets. The short-term investments amortized cost approximates fair value. The Company measured its contingent consideration at fair value on a recurring basis and classified such as Level 3. The Company estimates the fair value of contingent consideration as the present value of the expected contingent payments, determined using the weighted probability of the possible payments. The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis using the above input categories (in thousands): September 30, 2020 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 1,187,299 $ 0 $ 0 $ 1,187,299 Short-term investments $ 0 $ 3,070 $ 0 $ 3,070 Contingent liability $ 0 $ 0 $ 4,552 $ 4,552 December 31, 2019 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 514,353 $ 0 $ 0 $ 514,353 Short-term investments $ 0 $ 2,711 $ 0 $ 2,711 Contingent liability $ 0 $ 0 $ 4,769 $ 4,769 There were no transfers between fair value measurement levels during the quarter and nine months ended September 30, 2020 and 2019. The change in fair value of the Company’s contingent liability is recorded in acquisition and integration related costs in the consolidated statements of operations. The contingent liability is based on future revenue and profitability expectations. The following table reconciles the beginning and ending balance of the Company’s Level 3 contingent liability: Fair value at December 31, 2019 $ 4,769 Payments 0 Change in fair value (432) Currency translation adjustment 215 Fair value at September 30, 2020 $ 4,552 |
Revolving Credit Facility
Revolving Credit Facility | 9 Months Ended |
Sep. 30, 2020 | |
Revolving Credit Facility | |
Revolving Credit Facility | Note 9. Revolving Credit Facility The Company entered into a $10.0 million Senior Secured Revolving Credit Facility (the “Revolving Credit Facility”) in 2017. The Revolving Credit Facility was terminated pursuant to its terms effective July 14, 2020. There was no amount outstanding as of December 31, 2019. The Company was in compliance with all debt covenants at December 31, 2019. |
Leasing Operations
Leasing Operations | 9 Months Ended |
Sep. 30, 2020 | |
Leasing Operations | |
Leasing Operations | Note 10. Leasing Operations The Company commenced a new 5 year lease on March 1, 2020 for office space in Santa Clara, CA. As a result the Company recorded a right-of-use asset sales-type lease or operating lease arrangements. Leases have terms that generally range from two to five years. Operating Leases Minimum future lease receipts on noncancelable leases as of September 30, 2020 are as follows: As of Operating Leases: September 30, 2020 2020 $ 4,712 2021 13,161 2022 6,533 2023 962 Total receipts on noncancelable operating leases $ 25,368 |
Convertible Senior Notes
Convertible Senior Notes | 9 Months Ended |
Sep. 30, 2020 | |
Convertible Senior Notes | |
Convertible Senior Notes | Note 11. Convertible Senior Notes Convertible Senior Notes Due 2027 On May 19, 2020, the Company issued, at par value, $1 billion aggregate principal amount of 1.25% convertible senior notes due 2027 (the “2027 Notes”). The 2027 Notes bear cash interest at a rate of 1.25% per year, payable semi-annually in arrears on June 1 and December 1 of each year, beginning on December 15, 2020. The 2027 Notes will mature on June 1, 2027. The net proceeds to the Company from the offering were $975.9 million after deducting offering costs of approximately $24.1 million. The 2027 Notes are senior unsecured obligations of the Company and rank senior in right of payment to the Company’s indebtedness that is expressly subordinated in right of payment to the 2027 Notes; equal in right of payment to the Company’s liabilities that is not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities incurred by the Company’s subsidiaries. Holders may convert all or any portion of their 2027 Notes in integral multiples of $1,000 principal amount, at their option, at any time prior to the close of business on the business day immediately preceding December 1, 2026 only under the following circumstances: ● during any calendar quarter commencing after the calendar quarter ending on September 30, 2020 (and only during such calendar quarter), if the last reported sale price of the shares of Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price for the 2027 Notes on each applicable trading day; ● during the five business day period after any ten consecutive trading day period in which the trading price was less than 98% of the product of the last reported sale price of Company’s common stock and the conversion rate for the 2027 Notes on each such trading day; ● upon the occurrence of specified corporate events described under the 2027 Notes Indenture; or ● if the Company calls the 2027 Notes for redemption, at any time until the close of business on the second business day immediately preceding the redemption date. On or after December 1, 2026, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their 2027 Notes, regardless of the foregoing circumstances. The conversion rate for the 2027 Notes was initially, and remains, 4.1258 shares of the Company’s common stock per $1,000 principal amount of the 2027 Notes, which is equal to an initial conversion price of approximately $242.38 per share of the Company’s common stock. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination thereof, at the Company’s election. If the Company elects to satisfy the conversion obligation solely in cash or through payment and delivery, as the case may be, of a combination of cash and shares of the Company’s common stock, the amount of cash and shares of the Company’s common stock, if any, due upon conversion will be based on a daily conversion value calculated on a proportionate basis for each trading day in a 25 consecutive trading days observation period. The Company may redeem for cash all or part of the 2027 Notes, at its option, on or after June 5, 2024 if the last reported sale price of its common stock exceeds 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading days ending on, and including the trading day immediately preceding the date on which the Company provides notice of the redemption. The redemption price will be the principal amount of the 2027 Notes to be redeemed, plus accrued and unpaid interest, if any. In addition, calling any 2027 Note for redemption on or after June 5, 2024 will constitute a make-whole fundamental change with respect to that 2027 Note, in which case the conversion rate applicable to the conversion of that 2027 Note, if it is converted in connection with the redemption, will be increased in certain circumstances as described in the indenture governing the 2027 Notes. In accounting for the issuance of the 2027 Notes, the Company separated the 2027 Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the par value of the 2027 Notes as a whole. The excess of the principal amount of the liability component over its carrying amount, referred to as the debt discount, is amortized to interest expense from the issuance date to June 1, 2027. The equity component is not re-measured as long as it continues to meet the conditions for equity classification. The equity component related to the 2027 Notes was $286 million, net of issuance costs which was recorded in additional paid-in capital on the accompanying condensed consolidated balance sheet. The Company has reserved 5.4 million shares of common stock for the 2027 Notes. In accounting for the transaction costs related to the issuance of the 2027 Notes, the Company allocated the total costs incurred to the liability and equity components of the 2027 Notes based on their relative values. Transaction costs attributable to the liability component are being amortized to interest expense over the seven year term of the 2027 Notes, and transaction costs attributable to the equity component are netted with the equity components in stockholders’ equity. The 2027 Notes consist of the following (in thousands): As of September 30, Liability component 2020 Principal $ 1,000,000 Less: Debt discount, net (1) (296,760) Net carrying amount $ 703,240 (1) Included in the accompanying consolidated balance sheet within convertiable senior notes and amortized to interest expense over the expected life of the 2027 Notes using the effective interest rate method. The fair value of the 2027 Notes was approximately $1,246.3 million as of September 30, 2020. The Company estimates the fair value of its 2027 Notes utilizing market quotations for debt that have quoted prices in active markets. Since the 2027 Notes do not trade on a daily basis in an active market, the fair value estimates are based on market observable inputs based on borrowing rates currently available for debt with similar terms and average maturities, which are classified as Level 2 measurements within the fair value hierarchy. See Note 8, “Fair Value Measurements,” for definitions of hierarchy levels. As of September 30, 2020, the remaining contractual life of the 2027 Notes is approximately 6.7 years. The following table sets forth total interest expense recognized related to the 2027 Notes (in thousands): Quarters Ended Nine Months Ended September 30, September 30, 2020 2020 Contractual interest expense $ 3,125 $ 4,618 Amortization of debt discount 8,989 12,911 Total $ 12,114 $ 17,529 Effective interest rate of the liability component 7.0 % 7.0 % Convertible Senior Notes Due 2025 On May 8, 2018, the Company issued, at par value, $287.5 million aggregate principal amount of 1.375% convertible senior notes due 2025 (the “2025 Notes”). The 2025 Notes bear cash interest at a rate of 1.375% per year, payable semi-annually in arrears on May 15 and November 15 of each year. The 2025 Notes will mature on May 15, 2025. The net proceeds to the Company from the offering were $279.1 million after deducting offering costs of approximately $8.4 million. The 2025 Notes are senior unsecured obligations of the Company and rank senior in right of payment to the Company’s indebtedness that is expressly subordinated in right of payment to the 2025 Notes; equal in right of payment to the Company’s liabilities that is not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities incurred by the Company’s subsidiaries. Holders may convert all or any portion of their 2025 Notes in integral multiples of $1,000 principal amount, at their option, at any time prior to the close of business on the business day immediately preceding November 15, 2024 only under the following circumstances: ● during any calendar quarter (and only during such calendar quarter), if the last reported sale price of the shares of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price for the 2025 Notes on each applicable trading day; ● during the five business day period after any ten consecutive trading day period in which the trading price was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate for the 2025 Notes on each such trading day; ● upon the occurrence of specified corporate events described under the indenture governing the 2025 Notes; or ● if the Company calls the 2025 Notes for redemption, at any time until the close of business on the second business day immediately preceding the redemption date. On or after November 15, 2024, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their 2025 Notes, regardless of the foregoing circumstances. The conversion rate for the 2025 Notes was initially, and remains, 18.6621 shares of the Company’s common stock per $1,000 principal amount of the 2025 Notes, which is equivalent to an initial conversion price of approximately $53.58 per share of the Company’s common stock. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination thereof, at the Company’s election. If the Company elects to satisfy the conversion obligation solely in cash or through payment and delivery, as the case may be, of a combination of cash and shares of the Company’s common stock, the amount of cash and shares of the Company’s common stock, if any, due upon conversion will be based on a daily conversion value calculated on a proportionate basis for each trading day in a 25 trading day observation period. The Company may redeem for cash all or any portion of the 2025 Notes, at its option, on or after May 22, 2022 if the last reported sale price of its common stock exceeds 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading days ending on, and including the trading day immediately preceding the date on which the Company provides notice of the redemption. The redemption price will be the principal amount of the 2025 Notes to be redeemed, plus accrued and unpaid interest, if any. In addition, calling any 2025 Note for redemption on or after May 22, 2022 will constitute a make-whole fundamental change with respect to that 2025 Note, in which case the conversion rate applicable to the conversion of that Note, if it is converted in connection with the redemption, will be increased in certain circumstances as described in the indenture governing the 2025 Notes. In accounting for the issuance of the 2025 Notes, the Company separated the 2025 Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the par value of the 2025 Notes as a whole. The excess of the principal amount of the liability component over its carrying amount, referred to as the debt discount, is amortized to interest expense from the issuance date to May 15, 2025. The equity component is not re-measured as long as it continues to meet the conditions for equity classification. The equity component related to the 2025 Notes was $91.4 million, net of issuance costs which was recorded in additional paid-in capital on the accompanying consolidated balance sheet. In accounting for the transaction costs related to the issuance of the 2025 Notes, the Company allocated the total costs incurred to the liability and equity components of the 2025 Notes based on their relative values. Transaction costs attributable to the liability component are being amortized to interest expense over the seven-year term of the 2025 Notes, and transaction costs attributable to the equity component are netted with the equity component in stockholders’ equity. The 2025 Notes consist of the following (in thousands): As of September 30, As of December 31, Liability component 2020 2019 Principal $ 277,557 $ 287,500 Less: Debt discount, net (2) (69,262) (81,207) Net carrying amount $ 208,295 $ 206,293 (2) Included in the accompanying consolidated balance sheets within convertible senior notes and amortized to interest expense over the expected life of the 2025 Notes using the effective interest rate method. The fair value of the 2025 Notes was approximately $1,135.9 million as of September 30, 2020. The Company estimates the fair value of its 2025 Notes utilizing market quotations for debt that have quoted prices in active markets. Since the 2025 Notes do not trade on a daily basis in an active market, the fair value estimates are based on market observable inputs based on borrowing rates currently available for debt with similar terms and average maturities, which are classified as Level 2 measurements within the fair value hierarchy. See Note 8, “Fair Value Measurements,” for definitions of hierarchy levels. As of September 30, 2020, the remaining contractual life of the 2025 Notes is approximately 4.6 years. The following table sets forth total interest expense recognized related to the 2025 Notes (in thousands): Quarters Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Contractual interest expense $ 971 $ 988 $ 2,947 $ 2,965 Amortization of debt discount 3,170 2,949 9,379 8,677 Total $ 4,141 $ 3,937 $ 12,326 $ 11,642 Effective interest rate of the liability component 7.9 % 7.9 % 7.9 % 7.9 % A few 2025 Noteholders converted their 2025 Notes into common stock, as a result the Company recorded a charge associated with the loss on extinguishment of debt of $1.0 million during the nine months ended September 30, 2020 . Convertible Senior Notes Due 2022 The Company had issued, at par value, $275 million aggregate principal amount of 3% convertible senior notes due 2022 (the “2022 Notes”) on June 27, 2017. The 2022 Notes bear cash interest at a rate of 3% per year, payable semi-annually in arrears on June 15 and December 15 of each year. The remaining 2022 Notes will mature on December 15, 2022. The net proceeds to the Company from the offering were $263.7 million after deducting offering costs of approximately $11.3 million. The 2022 Notes are senior unsecured obligations of the Company and rank senior in right of payment to the Company’s indebtedness that is expressly subordinated in right of payment to the 2022 Notes; equal in right of payment to the Company’s liabilities that is not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities incurred by the Company’s subsidiaries. Holders may convert all or any portion of their 2022 Notes in integral multiples of $1,000 principal amount, at their option, at any time prior to the close of business on the business day immediately preceding June 15, 2022 only under the following circumstances: ● during any calendar quarter (and only during such calendar quarter), if the last reported sale price of the shares of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price for the 2022 Notes on each applicable trading day; ● during the five business day period after any ten consecutive trading day period in which the trading price was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate for the 2022 Notes on each such trading day; ● upon the occurrence of specified corporate events described under the indenture governing the 2022 Notes; or ● if the Company calls the 2022 Notes for redemption, at any time until the close of business on the second business day immediately preceding the redemption date. On or after June 15, 2022, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their 2022 Notes, regardless of the foregoing circumstances. The conversion rate for the 2022 Notes was initially, and remains, 22.7247 shares of the Company’s common stock per $1,000 principal amount of the 2022 Notes, which is equivalent to an initial conversion price of approximately $44.00 per share of the Company’s common stock. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination thereof, at the Company’s election. If the Company elects to satisfy the conversion obligation solely in cash or through payment and delivery, as the case may be, of a combination of cash and shares of the Company’s common stock, the amount of cash and shares of the Company’s common stock, if any, due upon conversion will be based on a daily conversion value calculated on a proportionate basis for each trading day in a 25 trading day observation period. The Company may redeem for cash all or any portion of the 2022 Notes, at its option, on or after December 22, 2020 if the last reported sale price of its common stock exceeds 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading days ending on, and including the trading day immediately preceding the date on which the Company provides notice of the redemption. The redemption price will be the principal amount of the 2022 Notes to be redeemed, plus accrued and unpaid interest, if any. In addition, calling any 2022 Note for redemption on or after December 22, 2020 will constitute a make-whole fundamental change with respect to that 2022 Note, in which case the conversion rate applicable to the conversion of that Note, if it is converted in connection with the redemption, will be increased in certain circumstances as described in the indenture governing the 2022 Notes. In accounting for the issuance of the 2022 Notes, the Company separated the 2022 Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the par value of the 2022 Notes as a whole. The excess of the principal amount of the liability component over its carrying amount, referred to as the debt discount, is amortized to interest expense from the issuance date to June 15, 2022 (the first date on which the Company may be required to repurchase the 2022 Notes at the option of the holder). The equity component is not re-measured as long as it continues to meet the conditions for equity classification. The equity component related to the 2022 Notes was $62.4 million, net of issuance costs which was recorded in additional paid-in capital on the accompanying condensed consolidated balance sheet. In accounting for the transaction costs related to the issuance of the 2022 Notes, the Company allocated the total costs incurred to the liability and equity components of the 2022 Notes based on their relative values. Transaction costs attributable to the liability component are being amortized to interest expense over the five The 2022 Notes consist of the following (in thousands): As of September 30, As of December 31, Liability component 2020 2019 Principal $ 46,765 $ 274,995 Less: Debt discount, net (3) (4,815) (40,878) Net carrying amount $ 41,950 $ 234,117 (3) Included in the accompanying consolidated balance sheets within convertible senior notes and amortized to interest expense over the expected life of the 2022 Notes using the effective interest rate method. The fair value of the 2022 Notes was approximately $233.3 million as of September 30, 2020. The Company estimates the fair value of its 2022 Notes utilizing market quotations for debt that have quoted prices in active markets. Since the 2022 Notes do not trade on a daily basis in an active market, the fair value estimates are based on market observable inputs based on borrowing rates currently available for debt with similar terms and average maturities, which are classified as Level 2 measurements within the fair value hierarchy. See Note 8, “Fair Value Measurements,” for definitions of hierarchy levels. As of September 30, 2020, the remaining contractual life of the 2022 Notes is approximately 2.2 years. The following table sets forth total interest expense recognized related to the 2022 Notes (in thousands): Quarters Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Contractual interest expense $ 351 $ 2,062 $ 3,696 $ 6,187 Amortization of debt discount 650 3,620 6,940 10,406 Total $ 1,001 $ 5,682 $ 10,636 $ 16,593 Effective interest rate of the liability component 10.0 % 10.0 % 10.0 % 10.0 % On May 14, 2020, the Company entered into privately negotiated agreements with certain holders of 2022 Notes to exchange 2022 Notes for shares of the Company’s common stock, together with cash, in private placement transactions pursuant to Section 4(a)(2) of the Securities Act (the “Exchange Transactions”). The closing occurred on May 19, 2020. In exchange for approximately $228.2 million aggregate principal amount of 2022 Notes, the Company paid approximately $231.1 million in cash (including accrued and unpaid interest and cash paid in lieu of fractional shares), together with an aggregate of approximately 3.9 million shares of its common stock. As a result of the Exchange Transactions, the company recorded a charge associated with the loss on extinguishment of debt of $9.0 million during the nine months ended September 30, 2020 . Approximately $46.8 million aggregate principal amount of the 2022 Notes remains outstanding as of September 30, 2020. |
Advances from Financing Compani
Advances from Financing Companies | 9 Months Ended |
Sep. 30, 2020 | |
Advances from Financing Companies | |
Advances from Financing Companies | Note 12. Advances from Financing Companies Client lease payments to third party financing companies will reduce the advances from financing companies as of September 30, 2020 by year as follows: As of September 30, 2020 2021 $ 4,037 2022 12,058 2023 6,437 2024 978 $ 23,510 |
Legal Matters
Legal Matters | 9 Months Ended |
Sep. 30, 2020 | |
Legal Matters | |
Legal Matters | Note 13. Legal Matters From time to time, Teladoc Health is involved in various litigation matters arising out of the normal course of business, including the matters described below. The Company consults with legal counsel on those issues related to litigation and seek input from other experts and advisors with respect to such matters. Estimating the probable losses or a range of probable losses resulting from litigation, government actions and other legal proceedings is inherently difficult and requires an extensive degree of judgment, particularly where the matters involve indeterminate claims for monetary damages, may involve discretionary amounts, present novel legal theories, are in the early stages of the proceedings, or are subject to appeal. Whether any losses, damages or remedies ultimately resulting from such matters could reasonably have a material effect on our business, financial condition, results of operations, or cash flows will depend on a number of variables, including, for example, the timing and amount of such losses or damages (if any) and the structure and type of any such remedies. Teladoc Health’s management does not presently expect any litigation matter to have a material adverse impact on our business, financial condition, results of operations or cash flows. On December 12, 2018, a purported securities class action complaint (Reiner v. Teladoc Health, Inc., et.al.) was filed in the United States District Court for the Southern District of New York (the “SDNY”) against the Company and certain of the Company’s officers and a former officer. The complaint is brought on behalf of a purported class consisting of all persons or entities who purchased or otherwise acquired shares of the Company’s common stock during the period March 3, 2016 through December 5, 2019. The complaint asserts violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 based on allegedly false or misleading statements and omissions with respect to, among other things, the alleged misconduct of one of the Company’s previous Executive Officers. The complaint seeks certification as a class action and unspecified compensatory damages plus interest and attorneys’ fees. The Company believes that the claims against the Company and its officers are without merit, and the Company and its named officers intend to defend the Company vigorously, including filing a motion to dismiss the complaint. In addition, on June 21, 2019, a stockholder derivative lawsuit (Kreutter v. Gorevic, et al.) was filed in the SDNY against certain current and former directors and officers of the Company. The derivative lawsuit alleges that the named directors and officers breached their fiduciary duties to the Company in connection with factual assertions substantially similar to those in the purported securities class action complaint described above. The Company believes that the claims set forth in this stockholder derivative lawsuit are without merit. On May 14, 2018, a purported class action complaint (Thomas v. Best Doctors, Inc.) was filed in the United States District Court for the District of Massachusetts against the Company’s wholly owned subsidiary, Best Doctors, Inc. The complaint alleges that on or about May 16, 2017, Best Doctors violated the U.S. Telephone Consumer Protection Act (TCPA) by sending unsolicited facsimiles to plaintiff and certain other recipients without the recipients’ prior express invitation or permission. The lawsuit seeks statutory damages for each violation, subject to trebling under the TCPA, and injunctive relief. The Company will vigorously defend the lawsuit and any potential loss is currently deemed to be immaterial. Several complaints have been filed to date in connection with the merger between Livongo and the Company. Three purported class action complaints were filed under the captions: Kent v. Livongo Health, Inc., et al. Raheja v. Livongo Health, Inc., et al. Hart v. Livongo Health, Inc., et al. stockholders of Livongo under the captions: Kubus v. Livongo Health, Inc., et al. Jones v. Livongo Health, Inc., et al. Anthony v. Livongo Health, Inc., et al. Banner v. Livongo Health, Inc., et al. Vea v. Livongo Health, Inc., et al. Ormesher v. Livongo Health Inc., et al. O’Connor v. Livongo Health Inc., et al. The Merger Litigations generally name as defendants Livongo and the members of its board of directors. The Kent complaint, Raheja complaint, and Hart complaint also assert claims against the Company and Tempranillo Merger Sub, Inc., a wholly owned subsidiary of the Company. The Merger Litigations generally allege that the registration statement and/or the joint proxy statement/prospectus filed in connection with the merger between Livongo and the Company omitted material information in violation of Sections 14(a) and 20(a) of the Securities Exchange Act of 1934, rendering the statements false and misleading. The Raheja complaint and the Kubus complaint also alleged that certain defendants breached their fiduciary duties in connection with the merger. The Merger Litigations seek, among other things, an order enjoining the merger; rescinding the merger, to the extent it closes, and recovering damages; and awarding costs, including attorneys’ fees and expenses. The Company believes that the claims asserted are wholly without merit. |
Common Stock and Stockholders'
Common Stock and Stockholders' Equity | 9 Months Ended |
Sep. 30, 2020 | |
Common Stock and Stockholders'Equity | |
Common Stock and Stockholders' Equity | Note 14. Common Stock and Stockholders’ Equity Capitalization Effective May 31, 2018, the authorized number of shares of the Company’s common stock was increased from 100,000,000 to 150,000,000 shares. Stock Plans and Stock Options The Company’s 2015 Incentive Award Plan and 2017 Employment Inducement Incentive Award Plan (together, the “Plans”) provide for the issuance of incentive and non-statutory options and other equity-based awards to its employees and non-employees. Options issued under the Plans are exercisable for periods not to exceed ten years, and vest and contain such other terms and conditions as specified in the applicable award document. Options to buy common stock are issued under the Plans, with exercise prices equal to the closing price of shares of the Company’s common stock on the New York Stock Exchange on the date of award. The Company had 7,824,286 shares available for grant at September 30, 2020. Activity under the Plans is as follows (in thousands, except share and per share amounts and years): Weighted- Weighted- Average Number of Average Remaining Aggregate Shares Exercise Contractual Intrinsic Outstanding Price Life in Years Value Balance at December 31, 2019 5,206,980 $ 24.47 7.03 $ 308,538 Stock option grants 344,413 $ 32.60 N/A Stock options exercised (1,999,518) $ 20.49 N/A $ (288,909) Stock options forfeited (162,161) $ 33.14 N/A Balance at September 30, 2020 3,389,714 $ 27.58 6.34 $ 649,682 Vested or expected to vest at September 30, 2020 3,389,714 $ 27.58 6.34 $ 649,682 Exercisable at September 30, 2020 2,610,779 $ 22.18 6.19 $ 514,480 The total grant-date fair value of stock options granted during the quarters ended September 30, 2020 and 2019 was $10.7 million and $2.1 million, respectively. The total grant-date fair value of stock options granted during the nine months ended September 30, 2020 and 2019 was $11.2 million and $4.7 million, respectively. Stock-Based Compensation All stock-based awards to employees are measured based on the grant-date fair value of the awards and are generally recognized on a straight line basis in the Company’s consolidated statement of operations over the period during which the employee is required to perform services in exchange for the award (generally requiring a four-year vesting period for each stock option and a three-year vesting period for each restricted stock unit (“RSU”)). The Company estimates the fair value of stock options granted using the Black-Scholes option-pricing model. The assumptions used in the Black-Scholes option-pricing model are determined as follows: Volatility. Since the Company does not have a reliable trading history for the expected term for its common stock, the expected volatility was derived from the historical stock volatilities of several unrelated public companies within its industry that it considers to be comparable to its business combined with the Company’s stock volatility over a period equivalent to the expected term of the stock option grants. Risk-Free Interest Rate. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with terms similar to the expected term on the options. Expected Term. The expected term represents the period that the stock-based awards are expected to be outstanding. When establishing the expected term assumption, the Company utilizes historical data. Dividend Yield. The Company has never declared or paid any cash dividends and does not plan to pay cash dividends in the foreseeable future, and therefore, it used an expected dividend yield of zero. Forfeiture rate. The Company recognizes forfeitures as they occur. The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions and fair value per share: Nine Months Ended September 30, 2020 2019 Volatility 46.1% - 56.0% 46.8% – 47.6% Expected life (in years) 4.1 5.3 Risk-free interest rate 0.27%-1.64% 1.35% - 2.55% Dividend yield 0 0 Weighted-average fair value of underlying stock options $ 49.21 $ 29.21 For the quarter ended September 30, 2020 and 2019, the Company recorded compensation expense related to stock options granted of $3.4 million and $4.6 million, respectively. For the nine months ended September 30, 2020 and 2019, the Company recorded compensation expense related to stock options granted of $11.5 million and $15.3 million, respectively. As of September 30, 2020, the Company had $15.1 million in unrecognized compensation cost related to non-vested stock options, which is expected to be recognized over a weighted-average period of approximately 1.9 years. Restricted Stock Units In May 2017, the Company commenced issuing RSUs to certain employees and Board members under the 2017 Employment Inducement Incentive Award Plan. The fair value of the RSUs is determined on the date of grant. The Company will record compensation expense in the consolidated statement of operations on a straight-line basis over the vesting period for RSUs. The vesting period for employees and members of the Board of Directors ranges from one Activity under the RSUs is as follows: Weighted-Average Grant Date RSUs Fair Value Per RSU Balance at December 31, 2019 1,483,558 $ 54.13 Granted 400,894 $ 137.01 Vested and issued (615,123) $ 52.33 Forfeited (97,771) $ 58.48 Balance at September 30, 2020 1,171,558 $ 58.82 Vested and unissued at September 30, 2020 13,755 $ 50.90 Non-vested at September 30, 2020 1,157,803 $ 58.91 The total grant-date fair value of RSU’s granted during the quarter ended September 30, 2020 and 2019 were $11.9 million and $3.3 million, respectively. The total grant-date fair value of RSUs granted during the nine months ended September 30, 2020 and 2019 were $54.9 million and $86.7 million, respectively. For the quarter ended September 30, 2020 and 2019, the Company recorded stock-based compensation expense related to the RSU’s of $11.3 million and $12.5 million, respectively. For the nine months ended September 30, 2020 and 2019, the Company recorded stock-based compensation expense related to the RSUs of $32.0 million and $32.2 million, respectively. As of September 30, 2020, the Company had $72.9 million in unrecognized compensation cost related to non-vested RSUs, which is expected to be recognized over a weighted-average period of approximately 2.1 years. Performance Stock Units The Company began issuing grants Performance Stock Units (“PSUs”) to employees under the Plan in 2018. Stock-based compensation costs associated with our PSUs are initially determined using the fair market value of the Company's common stock on the date the awards are approved by the Compensation Committee of the Board of Directors (service inception date). The vesting of these PSU is subject to certain performance conditions and a service requirement ranging from 1 - 3 years . Until the performance conditions are met, stock compensation costs associated with these PSU reflect the estimated performance attainment on the reporting date. The ultimate number of PSUs that are issued to an employee is the result of the actual performance of the Company at the end of the performance period compared to the performance conditions and can range from 50% to 200% of the initial grant. Stock compensation expense for PSUs is recognized on an accelerated tranche by tranche basis for performance-based awards . Forfeitures are accounted for at the time the occur consistent with Company policy. Activity under the PSU is as follows: Weighted-Average Grant Date Shares Fair Value Per Share Balance at December 31, 2019 512,482 $ 62.51 Granted 111,199 $ 117.81 Vested and issued (186,455) $ 62.02 Balance at September 30, 2020 437,226 $ 76.78 Vested and unissued at September 30, 2020 0 $ 0 Non-vested at September 30, 2020 437,226 $ 76.78 No PSUs were granted during the quarter ended September 30, 2020 and 2019. The total grant-date fair value of PSU’s granted during the nine months ended September 30, 2020 and 2019 were $13.1 million and $28.5 million, respectively For the quarter ended September 30, 2020 and 2019, the Company recorded stock-based compensation expense related to the PSU of $5.9 million and $4.2 million, respectively. For the nine months ended September 30, 2020 and 2019, the Company recorded stock-based compensation expense related to the PSUs of $16.8 million and $11.0 million, respectively. As of September 30, 2020, the Company had $20.9 million in unrecognized compensation cost related to non-vested PSU, which is expected to be recognized over a weighted-average period of approximately 1.7 years. Employee Stock Purchase Plan In July 2015, the Company adopted the 2015 Employee Stock Purchase Plan, or ESPP, in connection with its initial public offering. A total of 832,492 shares of common stock were reserved for issuance under this plan as of September 30, 2020. The Company’s ESPP permits eligible employees to purchase common stock at a discount through payroll deductions during defined offering periods. Under the ESPP, the Company may specify offerings with durations of not more than 27 months and may specify shorter purchase periods within each offering. Each offering will have one or more purchase dates on which shares of its common stock will be purchased for employees participating in the offering. An offering may be terminated under certain circumstances. The price at which the stock is purchased is equal to the lower of 85% of the fair market value of the common stock at the beginning of an offering period or on the date of purchase. During the quarter September 30, 2020, the Company had not issued any shares under the ESPP. During the nine months ended September 30, 2020 and 2019, the Company issued 35,901 shares and 35,716 shares, respectively, under the ESPP. As of September 30, 2020, 519,366 shares remained available for issuance. For the quarter ended September 30, 2020 and 2019, the Company recorded stock-based compensation expense related to the ESPP of $0.6 million and $0.2 million, respectively. For the nine months ended September 30, 2020 and 2019, the Company recorded stock-based compensation expense related to the ESPP of $1.4 million and $0.7 million, respectively. As of September 30, 2020, the Company had $0.3 million in unrecognized compensation cost related to the ESPP, which is expected to be recognized over a weighted-average period of approximately 0.1 years. Total compensation costs charged as an expense for stock-based awards, including stock options, RSUs, PSUs and ESPP, recognized in the components of operating expenses are as follows (in thousands): Quarter Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Cost of revenue (exclusive of depreciation and amortization shown separately) $ 128 $ 0 $ 128 $ 0 Advertising and marketing 1,644 1,384 4,447 3,522 Sales 3,275 2,732 9,465 7,390 Technology and development 2,622 1,594 7,285 5,633 General and administrative 13,239 11,644 39,826 31,700 Total stock-based compensation expense $ 20,908 $ 17,354 $ 61,151 $ 48,245 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Taxes | |
Income Taxes | Note 15. Income Taxes As a result of the Company’s history of net operating losses (“NOL”), the Company has provided for a full valuation allowance against its deferred tax assets for assets that are not more-likely-than-not to be realized. For the quarter and nine months ended September 30, 2020, the Company recognized an income tax benefit of $(2.3) million and $(5.4) million, respectively, primarily due to the reduction of an uncertain tax benefit reserve, as well as the amortization of acquired intangibles and stock compensation deductions. The expiration of the statute of limitations for an uncertain tax position occurred in this quarter, resulting in a $(2.0) million tax benefit. For the quarter and nine months ended September 30, 2019, the Company recognized an income tax benefit of $(7.3) million and $(6.5) million, respectively, primarily related to the partial valuation allowance release due to the anticipated intercompany transfer of a U.S. subsidiary from a foreign owned subsidiary to the U.S. parent which was executed the following quarter. Beginning with the quarter ended March 31, 2018, the Company is calculating tax expense based on the U.S. statutory rate of 21%. The US Federal tax law includes a Base Erosion Anti-Abuse Tax, commonly referred to as BEAT, which imposes a minimum tax on certain deductible payments or accruals made to foreign affiliates in tax years beginning after December 31, 2017. The Company has determined that it is currently not subject to BEAT. US Federal tax law imposes a minimum tax on global intangible low-taxed income, commonly referred to as GILTI. The Company does not expect to recognize any tax expense related to GILTI as it has net operating losses available and a full valuation allowance. In addition, US Tax law imposes an interest expense limitation which disallows a portion of the interest deduction based on EBITDA. While the disallowed interest deduction is deferred, there is no impact to tax expense due to the current year taxable loss and related valuation allowance. |
Subsequent Event
Subsequent Event | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Event | |
Subsequent Event | Note 16. Subsequent Event The closing of the merger with Livongo occurred on October 30, 2020. Upon completion of the merger, each share of Livongo’s common stock converted into the right to receive 0.5920 shares of Teladoc Health’s common stock and $4.24 in cash, without interest. In addition, in connection with the closing of the merger, Livongo paid a special cash dividend equal to $7.09 per share of Livongo’s common stock to shareholders of Livongo as of a record date of October 29, 2020. The total consideration received by Livongo shareholders from the Company was $12,846.3 million consisting of $432.9 million of cash and 60.4 million shares of Teladoc Health’s common stock valued at approximately $12,413.4 million on October 30, 2020. The guarantee is an unsecured obligation of Teladoc Health, ranks equally with all of its other unsecured and unsubordinated indebtedness and is full and unconditional. See Livongo’s Current Report on Form 8-K filed on October 28, 2020 for financial information regarding Livongo as of September 30, 2020 and for the three and nine months ended September 30, 2020 and Livongo’s Quarterly Report on Form 10-Q for the quarter and six months ended June 30, 2020 for information regarding the terms of the Livongo Notes. |
Basis of Presentation and Pri_2
Basis of Presentation and Principles of Consolidations (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Basis Of Presentation And Principles Of Consolidation | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring accruals and adjustments) necessary to present fairly the financial position, results of operations and cash flows of the Company at the dates and for the periods indicated. The interim results for the quarter and nine months ended September 30, 2020 are not necessarily indicative of results for the full 2020 calendar year or any other future interim periods. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Form 10-K for the year ended December 31, 2019 (the “2019 Form 10-K”). The unaudited consolidated financial statements include the results of Teladoc Health, its wholly owned subsidiaries, as well as two professional associations, eleven professional corporations and a service corporation (the “Association”). Teladoc Physicians, P.A. became Teladoc Health Medical Group, P.A. on January 1, 2020. Teladoc Health Medical Group, P.A. is party to several services agreements by and among it and the professional corporations pursuant to which each professional corporation provides services to Teladoc Health Medical Group, P.A. Each professional corporation is established pursuant to the requirements of its respective domestic jurisdiction governing the corporate practice of medicine. The Company holds a variable interest in the Association which contracts with physicians and other health professionals in order to provide services to Teladoc Health. The Association is considered a variable interest entity (“VIE”) since it does not have sufficient equity to finance its activities without additional subordinated financial support. An enterprise having a controlling financial interest in a VIE, must consolidate the VIE if it has both power and benefits—that is, it has (1) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance (power) and (2) the obligation to absorb losses of the VIE that potentially could be significant to the VIE or the right to receive benefits from the VIE that potentially could be significant to the VIE (benefits). The Company has the power and rights to control all activities of the Association and funds and absorbs all losses of the VIE. Total revenue and net (loss) income for the VIE were $48.9 million and $(0.7) million, respectively, for the quarter ended September 30, 2020 and $17.2 million and $0.2 million, respectively, for the quarter ended September 30, 2019. Total revenue and net (loss) income for the VIE were $149.1 million and $0.1 million, respectively, for the nine months ended September 30, 2020 and $55.7 million and $(0.1) million, respectively, for the nine months ended September 30, 2019. The VIE’s total assets were $28.1 million and $13.6 million at September 30, 2020 and December 31, 2019, respectively. Total liabilities for the VIE were $65.7 million and $51.3 million at September 30, 2020 and December 31, 2019, respectively. The VIE’s total stockholders’ deficit was $37.6 million and $37.7 million at September 30, 2020 and December 31, 2019, respectively. The functional currency for each of the Company’s foreign subsidiaries is the local currency. All assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the exchange rate on the balance sheet date. Revenues and expenses are translated at the weighted average exchange rate during the period. Cumulative translation gains or losses are included in stockholders’ equity as a component of accumulated other comprehensive income (loss). The Company operates in a single All intercompany transactions and balances have been eliminated. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company bases its estimates on historical experience, current business factors, and various other assumptions that the Company believes are necessary to consider to form a basis for making judgments about the carrying values of assets and liabilities, the recorded amounts of revenue and expenses, and the disclosure of contingent assets and liabilities. The Company is subject to uncertainties such as the impact of future events, economic and political factors, and changes in the Company’s business environment; therefore, actual results could differ from these estimates. Accordingly, the accounting estimates used in the preparation of the Company’s consolidated financial statements will change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment evolves. Changes in estimates are made when circumstances warrant. Such changes in estimates and refinements in estimation methodologies are reflected in reported results of operations; if material, the effects of changes in estimates are disclosed in the notes to the consolidated financial statements. On an ongoing basis, management evaluates its estimates compared to historical experience and trends, which form the basis for making judgments about the carrying values of assets and liabilities, the recorded amounts of revenue and expenses, and the disclosure of contingent assets and liabilities. Key estimates are used for revenue recognition criteria, purchase accounting, net realizable value for inventories, useful lives of property and equipment as well as rental equipment, carrying value of all long-lived assets, recognition, accounting for convertible notes transactions, disclosure of contingent liabilities, and assumptions used in determining appropriate accounting treatment of leasing transactions, among other material accounting policies as described in the Summary of Significant Accounting policies in this Quarterly Report on Form 10-Q and in the 2019 Form 10-K. |
Reclassifications | Presentation Certain prior year amounts have been reclassified to conform to the current year presentation. Cost of revenue includes product depreciation but excludes all other forms of depreciation and amortization. |
Recently Issued and Adopted Accounting Pronouncements | Recently Issued Accounting Pronouncements In December 2019, FASB issued ASU 2019-12 Simplification of Income Taxes (Topic 740). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. ASU 2019-12 is effective for public companies for annual periods beginning after December 15, 2020, including interim periods within those fiscal years. We have early adopted ASU 2019-12 on our consolidated financial statements and disclosures effective January 1, 2020, with no material impact to the financial statements. In January 2017, the FASB issued ASU 2017-04, Goodwill Simplifications (Topic 350). ASU 2017-04 simplifies the test for goodwill impairment. The new guidance eliminates Step 2 from the goodwill impairment test as currently prescribed in the U.S. generally accepted accounting principle. This ASU is the result of the FASB project focused on simplifications to accounting for goodwill. The new guidance was effective for the first quarter of 2020 and was adopted in the quarter-ended December 31, 2019. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires an entity to utilize a new impairment model known as the current expected credit loss ("CECL") model to estimate its lifetime "expected credit loss" and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. The CECL model is expected to result in more timely recognition of credit losses. ASU 2016-13 requires new disclosures for financial assets measured at amortized cost, loans and available-for-sale debt securities. ASU 2016- 13 is effective for public companies for annual periods beginning after December 13, 2019, including interim periods within those fiscal years. The standard applies as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. The guidance was effective and adopted in the quarter ended March 31, 2020, with no material impact to the financial statements. |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Revenue | |
Schedule of disaggregation of revenue | The following table presents the Company’s revenues disaggregated by revenue source (in thousands): Quarter Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Access Fees: U.S. $ 194,622 $ 92,095 $ 454,582 $ 258,604 International 31,997 27,030 91,261 77,716 Visit Fee Revenue: U.S. Paid Visits 35,074 14,142 105,013 47,473 U.S. Visit Fee Only 15,874 4,307 47,931 11,974 International Paid Visits 96 395 705 1,051 Other: U.S. 10,299 0 10,299 0 International 850 0 850 0 Total Revenues $ 288,812 $ 137,969 $ 710,641 $ 396,818 |
Business Acquisitions (Tables)
Business Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
InTouch | |
Business Acquisition [Line Items] | |
Summary of identifiable assets acquired and liabilities assumed | Identifiable assets acquired and liabilities assumed (in thousands): InTouch Health Purchase price, net of cash acquired $ 1,078,480 Less: Accounts receivable 16,517 Inventory 9,444 Property and equipment, net 11,366 Others assets 7,506 Client relationships 110,240 Technology 29,190 Trademarks 32,630 Advances from financing companies (26,012) Accounts payable (5,589) Deferred revenue (21,271) Other liabilities (23,004) Goodwill $ 937,463 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Intangible Assets, Net | |
Schedule of finite lived intangible assets | Intangible assets, net consist of the following (in thousands): Weighted Average Useful Accumulated Net Carrying Remaining Life Gross Value Amortization Value Useful Life September 30, 2020 Client relationships 2 to 20 years $ 350,600 $ (80,528) $ 270,072 15.1 Non-compete agreements 1.5 to 5 years 5,025 (4,682) 343 0.7 Trademarks 3 to 15 years 75,738 (9,919) 65,819 13.4 Patents 3 years 200 (200) 0 0 Internal-use software and other 3 to 5 years 80,301 (29,962) 50,339 3.9 Intangible assets, net $ 511,864 $ (125,291) $ 386,573 12.6 December 31, 2019 Client relationships 2 to 20 years $ 237,182 $ (60,647) $ 176,535 13.1 Non-compete agreements 1.5 to 5 years 4,958 (4,260) 698 1.4 Trademarks 3 to 15 years 42,606 (7,143) 35,463 12.9 Patents 3 years 200 (200) 0 0 Internal-use software and other 3 to 5 years 34,850 (22,093) 12,757 2.3 Intangible assets, net $ 319,796 $ (94,343) $ 225,453 12.4 |
Goodwill (Tables)
Goodwill (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill | |
Summary of goodwill | Goodwill consists of the following (in thousands): As of September 30, As of December 31, 2020 2019 Beginning balance $ 746,079 $ 737,197 Additions associated with acquisitions 937,463 10,604 Cumulative translation adjustment 7,813 (1,722) Goodwill $ 1,691,355 $ 746,079 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Accrued Expenses and Other Current Liabilities | |
Schedule of accrued expenses and other current liabilities | Accrued expenses and other current liabilities consist of the following (in thousands): 2020 2019 Professional fees $ 3,011 $ 1,535 Consulting fees/provider fees 19,255 10,618 Client performance guarantees 3,575 3,298 Legal fees 2,364 1,077 Interest payable 6,492 838 Income tax payable 2,704 2,859 Insurance 3,205 1,263 Marketing 5,983 2,810 Operating lease liabilities - current 7,276 5,088 Earnout 4,552 0 Other 6,713 5,053 Total $ 65,130 $ 34,439 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Measurements | |
Schedule assets and liabilities measured at fair value on a recurring basis | The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis using the above input categories (in thousands): September 30, 2020 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 1,187,299 $ 0 $ 0 $ 1,187,299 Short-term investments $ 0 $ 3,070 $ 0 $ 3,070 Contingent liability $ 0 $ 0 $ 4,552 $ 4,552 December 31, 2019 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 514,353 $ 0 $ 0 $ 514,353 Short-term investments $ 0 $ 2,711 $ 0 $ 2,711 Contingent liability $ 0 $ 0 $ 4,769 $ 4,769 |
Schedule of reconciliation of company's Level 3 liabilities | The contingent liability is based on future revenue and profitability expectations. The following table reconciles the beginning and ending balance of the Company’s Level 3 contingent liability: Fair value at December 31, 2019 $ 4,769 Payments 0 Change in fair value (432) Currency translation adjustment 215 Fair value at September 30, 2020 $ 4,552 |
Convertible Senior Notes (Table
Convertible Senior Notes (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
2027 Notes | |
Convertible Senior Notes | |
Summary of the Notes | The 2027 Notes consist of the following (in thousands): As of September 30, Liability component 2020 Principal $ 1,000,000 Less: Debt discount, net (1) (296,760) Net carrying amount $ 703,240 (1) Included in the accompanying consolidated balance sheet within convertiable senior notes and amortized to interest expense over the expected life of the 2027 Notes using the effective interest rate method. |
Schedule of total interest expense recognized related to the Notes | The following table sets forth total interest expense recognized related to the 2027 Notes (in thousands): Quarters Ended Nine Months Ended September 30, September 30, 2020 2020 Contractual interest expense $ 3,125 $ 4,618 Amortization of debt discount 8,989 12,911 Total $ 12,114 $ 17,529 Effective interest rate of the liability component 7.0 % 7.0 % |
2025 Notes | |
Convertible Senior Notes | |
Summary of the Notes | The 2025 Notes consist of the following (in thousands): As of September 30, As of December 31, Liability component 2020 2019 Principal $ 277,557 $ 287,500 Less: Debt discount, net (2) (69,262) (81,207) Net carrying amount $ 208,295 $ 206,293 (2) Included in the accompanying consolidated balance sheets within convertible senior notes and amortized to interest expense over the expected life of the 2025 Notes using the effective interest rate method. |
Schedule of total interest expense recognized related to the Notes | The following table sets forth total interest expense recognized related to the 2025 Notes (in thousands): Quarters Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Contractual interest expense $ 971 $ 988 $ 2,947 $ 2,965 Amortization of debt discount 3,170 2,949 9,379 8,677 Total $ 4,141 $ 3,937 $ 12,326 $ 11,642 Effective interest rate of the liability component 7.9 % 7.9 % 7.9 % 7.9 % |
2022 Notes | |
Convertible Senior Notes | |
Summary of the Notes | The 2022 Notes consist of the following (in thousands): As of September 30, As of December 31, Liability component 2020 2019 Principal $ 46,765 $ 274,995 Less: Debt discount, net (3) (4,815) (40,878) Net carrying amount $ 41,950 $ 234,117 (3) Included in the accompanying consolidated balance sheets within convertible senior notes and amortized to interest expense over the expected life of the 2022 Notes using the effective interest rate method. |
Schedule of total interest expense recognized related to the Notes | The following table sets forth total interest expense recognized related to the 2022 Notes (in thousands): Quarters Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Contractual interest expense $ 351 $ 2,062 $ 3,696 $ 6,187 Amortization of debt discount 650 3,620 6,940 10,406 Total $ 1,001 $ 5,682 $ 10,636 $ 16,593 Effective interest rate of the liability component 10.0 % 10.0 % 10.0 % 10.0 % |
Advances from Financing Compa_2
Advances from Financing Companies (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Advances from Financing Companies | |
Schedule of client lease payments to third party financing companies | Client lease payments to third party financing companies will reduce the advances from financing companies as of September 30, 2020 by year as follows: As of September 30, 2020 2021 $ 4,037 2022 12,058 2023 6,437 2024 978 $ 23,510 |
Common Stock and Stockholders_2
Common Stock and Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Common Stock and Stockholders'Equity | |
Summary of stock option activity under the Plan | Activity under the Plans is as follows (in thousands, except share and per share amounts and years): Weighted- Weighted- Average Number of Average Remaining Aggregate Shares Exercise Contractual Intrinsic Outstanding Price Life in Years Value Balance at December 31, 2019 5,206,980 $ 24.47 7.03 $ 308,538 Stock option grants 344,413 $ 32.60 N/A Stock options exercised (1,999,518) $ 20.49 N/A $ (288,909) Stock options forfeited (162,161) $ 33.14 N/A Balance at September 30, 2020 3,389,714 $ 27.58 6.34 $ 649,682 Vested or expected to vest at September 30, 2020 3,389,714 $ 27.58 6.34 $ 649,682 Exercisable at September 30, 2020 2,610,779 $ 22.18 6.19 $ 514,480 |
Assumptions used for estimate of fair value of options | Nine Months Ended September 30, 2020 2019 Volatility 46.1% - 56.0% 46.8% – 47.6% Expected life (in years) 4.1 5.3 Risk-free interest rate 0.27%-1.64% 1.35% - 2.55% Dividend yield 0 0 Weighted-average fair value of underlying stock options $ 49.21 $ 29.21 |
Schedule of activity under the RSUs | Activity under the RSUs is as follows: Weighted-Average Grant Date RSUs Fair Value Per RSU Balance at December 31, 2019 1,483,558 $ 54.13 Granted 400,894 $ 137.01 Vested and issued (615,123) $ 52.33 Forfeited (97,771) $ 58.48 Balance at September 30, 2020 1,171,558 $ 58.82 Vested and unissued at September 30, 2020 13,755 $ 50.90 Non-vested at September 30, 2020 1,157,803 $ 58.91 |
Schedule of activity under the PSUs | Activity under the PSU is as follows: Weighted-Average Grant Date Shares Fair Value Per Share Balance at December 31, 2019 512,482 $ 62.51 Granted 111,199 $ 117.81 Vested and issued (186,455) $ 62.02 Balance at September 30, 2020 437,226 $ 76.78 Vested and unissued at September 30, 2020 0 $ 0 Non-vested at September 30, 2020 437,226 $ 76.78 |
Components of operating expense charged for compensation cost expense | Total compensation costs charged as an expense for stock-based awards, including stock options, RSUs, PSUs and ESPP, recognized in the components of operating expenses are as follows (in thousands): Quarter Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Cost of revenue (exclusive of depreciation and amortization shown separately) $ 128 $ 0 $ 128 $ 0 Advertising and marketing 1,644 1,384 4,447 3,522 Sales 3,275 2,732 9,465 7,390 Technology and development 2,622 1,594 7,285 5,633 General and administrative 13,239 11,644 39,826 31,700 Total stock-based compensation expense $ 20,908 $ 17,354 $ 61,151 $ 48,245 |
Basis of Presentation and Pri_3
Basis of Presentation and Principles of Consolidation - VIE (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||||
Sep. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Sep. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Sep. 30, 2020USD ($)item | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Variable interest entity | ||||||||||
Number of professional associations consolidated as VIEs | item | 2 | |||||||||
Number of professional corporations consolidated as VIEs | item | 11 | |||||||||
Number of service corporations consolidated as VIEs | item | 1 | |||||||||
Revenue | $ 288,812 | $ 137,969 | $ 710,641 | $ 396,818 | ||||||
Net (loss) income | (35,884) | $ (25,682) | $ (29,603) | (20,346) | $ (29,324) | $ (30,150) | (91,169) | (79,820) | ||
Assets | 3,449,385 | 3,449,385 | $ 1,602,827 | |||||||
Deficit | (2,231,036) | $ (1,294,929) | $ (1,000,177) | (993,738) | $ (1,002,640) | $ (1,001,558) | (2,231,036) | (993,738) | (1,014,025) | $ (1,013,119) |
Primary beneficiary | ||||||||||
Variable interest entity | ||||||||||
Revenue | 48,900 | 17,200 | 149,100 | 55,700 | ||||||
Net (loss) income | (700) | $ 200 | 100 | $ (100) | ||||||
Assets | 28,100 | 28,100 | 13,600 | |||||||
Liabilities | 65,700 | 65,700 | 51,300 | |||||||
Deficit | $ 37,600 | $ 37,600 | $ 37,700 |
Basis of Presentation and Pri_4
Basis of Presentation and Principles of Consolidation - Segment and Foreign Operations (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)segment | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | |
Segment Information | |||||
Number of reportable segments | segment | 1 | ||||
Revenue | $ 288,812 | $ 137,969 | $ 710,641 | $ 396,818 | |
Foreign. | |||||
Segment Information | |||||
Revenue | 32,900 | $ 27,400 | 92,800 | $ 78,700 | |
Long-lived assets | $ 1,600 | $ 1,600 | $ 2,200 |
Revenue - Other Disclosures (De
Revenue - Other Disclosures (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenue | ||||
Contract term | 1 year | |||
Payment terms | 30 days | |||
Product and Service Concentration Risk | Revenue from Contract with Customer | Access Fees | ||||
Revenue | ||||
Concentration risk (as a percent) | 78.00% | 86.00% | 77.00% | 85.00% |
Revenue - Disaggregation and Ot
Revenue - Disaggregation and Other (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Revenue | |||||
Revenue | $ 288,812 | $ 137,969 | $ 710,641 | $ 396,818 | |
Accounts receivable, net of allowance for doubtful accounts | 85,803 | 85,803 | $ 56,948 | ||
Net increase in deferred revenue | 36,800 | 6,700 | |||
Member refunds issued relating to Company's direct-to-consumer behavioral health products | 3,300 | 900 | 7,000 | 2,100 | |
United States | Access Fees | |||||
Revenue | |||||
Revenue | 194,622 | 92,095 | 454,582 | 258,604 | |
United States | Paid Visits | |||||
Revenue | |||||
Revenue | 35,074 | 14,142 | 105,013 | 47,473 | |
United States | Visit Fee Only | |||||
Revenue | |||||
Revenue | 15,874 | 4,307 | 47,931 | 11,974 | |
United States | Other | |||||
Revenue | |||||
Revenue | 10,299 | 0 | 10,299 | 0 | |
Foreign. | |||||
Revenue | |||||
Revenue | 32,900 | 27,400 | 92,800 | 78,700 | |
Foreign. | Access Fees | |||||
Revenue | |||||
Revenue | 31,997 | 27,030 | 91,261 | 77,716 | |
Foreign. | Paid Visits | |||||
Revenue | |||||
Revenue | 96 | 395 | 705 | 1,051 | |
Foreign. | Other | |||||
Revenue | |||||
Revenue | $ 850 | $ 0 | $ 850 | $ 0 |
Business Acquisitions - Transac
Business Acquisitions - Transactions (Details) - USD ($) $ in Thousands, shares in Millions | Jul. 01, 2020 | Apr. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 |
InTouch | ||||||
Business acquisition | ||||||
Consideration paid | $ 1,078,500 | |||||
Cash acquired | $ 1,100 | |||||
Equity consideration (in shares) | 4.6 | |||||
Equity consideration | $ 918,800 | |||||
Cash paid for acquisition | 160,700 | |||||
Acquisition related costs | 12,500 | |||||
Identifiable assets acquired and liabilities assumed: | ||||||
Purchase price, net of cash acquired | 1,078,480 | |||||
Less: | ||||||
Accounts receivable | 16,517 | |||||
Property and equipment, net | 11,366 | |||||
Other assets | 7,506 | |||||
Accounts payable | (5,589) | |||||
Other liabilities | (23,004) | |||||
Pro forma information | ||||||
Revenue | $ 288,812 | $ 159,965 | $ 762,995 | $ 457,093 | ||
Net loss | (27,772) | $ (27,734) | (100,990) | $ (100,287) | ||
Revenue of acquiree | 25,000 | 25,000 | ||||
Net loss of acquiree | $ (6,000) | $ (6,000) | ||||
InTouch | Client relationships | ||||||
Less: | ||||||
Finite-lived intangibles | 110,240 | |||||
InTouch | Trademarks | ||||||
Less: | ||||||
Finite-lived intangibles | $ 32,630 | |||||
MedecinDirect | ||||||
Business acquisition | ||||||
Consideration paid | $ 11,200 |
Business Acquisitions - Assets
Business Acquisitions - Assets Acquired, Liabilities Assumed, Pro forma (Details) - USD ($) $ in Thousands | Jul. 01, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 |
Less: | |||||||
Goodwill | $ 1,691,355 | $ 1,691,355 | $ 746,079 | $ 737,197 | |||
InTouch | |||||||
Identifiable assets acquired and liabilities assumed: | |||||||
Purchase price, net of cash acquired | $ 1,078,480 | ||||||
Less: | |||||||
Accounts receivable | 16,517 | ||||||
Inventory | 9,444 | ||||||
Property and equipment, net | 11,366 | ||||||
Other assets | 7,506 | ||||||
Advances from financing companies | (26,012) | ||||||
Accounts payable | (5,589) | ||||||
Deferred revenue | (21,271) | ||||||
Other liabilities | (23,004) | ||||||
Goodwill | 937,463 | ||||||
Pro forma information | |||||||
Acquisition costs and transaction expenses | 9,200 | $ 500 | 31,800 | $ 900 | |||
Revenue | 288,812 | 159,965 | 762,995 | 457,093 | |||
Net loss | (27,772) | $ (27,734) | (100,990) | $ (100,287) | |||
Revenue of acquiree | 25,000 | 25,000 | |||||
Net loss of acquiree | $ (6,000) | $ (6,000) | |||||
InTouch | Client relationships | |||||||
Less: | |||||||
Finite-lived intangibles | 110,240 | ||||||
InTouch | Technology | |||||||
Less: | |||||||
Finite-lived intangibles | 29,190 | ||||||
InTouch | Trademarks | |||||||
Less: | |||||||
Finite-lived intangibles | $ 32,630 |
Intangible Assets, Net - Summar
Intangible Assets, Net - Summary (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Intangible assets | |||||
Gross Value | $ 511,864 | $ 511,864 | $ 319,796 | ||
Accumulated Amortization | (125,291) | (125,291) | (94,343) | ||
Net Carrying Value | 386,573 | 386,573 | $ 225,453 | ||
Amortization expense for intangible assets | 11,700 | $ 8,700 | $ 29,600 | $ 26,400 | |
Weighted Average | |||||
Intangible assets | |||||
Weighted Average Remaining Useful Life | 12 years 7 months 6 days | 12 years 4 months 24 days | |||
Client relationships | |||||
Intangible assets | |||||
Gross Value | 350,600 | $ 350,600 | $ 237,182 | ||
Accumulated Amortization | (80,528) | (80,528) | (60,647) | ||
Net Carrying Value | 270,072 | $ 270,072 | $ 176,535 | ||
Client relationships | Minimum | |||||
Intangible assets | |||||
Useful life | 2 years | 2 years | |||
Client relationships | Maximum | |||||
Intangible assets | |||||
Useful life | 20 years | 20 years | |||
Client relationships | Weighted Average | |||||
Intangible assets | |||||
Weighted Average Remaining Useful Life | 15 years 1 month 6 days | 13 years 1 month 6 days | |||
Non-compete agreements | |||||
Intangible assets | |||||
Gross Value | 5,025 | $ 5,025 | $ 4,958 | ||
Accumulated Amortization | (4,682) | (4,682) | (4,260) | ||
Net Carrying Value | 343 | $ 343 | $ 698 | ||
Non-compete agreements | Minimum | |||||
Intangible assets | |||||
Useful life | 1 year 6 months | 1 year 6 months | |||
Non-compete agreements | Maximum | |||||
Intangible assets | |||||
Useful life | 5 years | 5 years | |||
Non-compete agreements | Weighted Average | |||||
Intangible assets | |||||
Weighted Average Remaining Useful Life | 8 months 12 days | 1 year 4 months 24 days | |||
Trademarks | |||||
Intangible assets | |||||
Gross Value | 75,738 | $ 75,738 | $ 42,606 | ||
Accumulated Amortization | (9,919) | (9,919) | (7,143) | ||
Net Carrying Value | 65,819 | $ 65,819 | $ 35,463 | ||
Trademarks | Minimum | |||||
Intangible assets | |||||
Useful life | 3 years | 3 years | |||
Trademarks | Maximum | |||||
Intangible assets | |||||
Useful life | 15 years | 15 years | |||
Trademarks | Weighted Average | |||||
Intangible assets | |||||
Weighted Average Remaining Useful Life | 13 years 4 months 24 days | 12 years 10 months 24 days | |||
Patents | |||||
Intangible assets | |||||
Gross Value | 200 | $ 200 | $ 200 | ||
Accumulated Amortization | (200) | $ (200) | (200) | ||
Net Carrying Value | $ 0 | ||||
Useful life | 3 years | 3 years | |||
Patents | Weighted Average | |||||
Intangible assets | |||||
Weighted Average Remaining Useful Life | 0 years | 0 years | |||
Internal-use software and other | |||||
Intangible assets | |||||
Gross Value | 80,301 | $ 80,301 | $ 34,850 | ||
Accumulated Amortization | (29,962) | (29,962) | (22,093) | ||
Net Carrying Value | $ 50,339 | $ 50,339 | $ 12,757 | ||
Internal-use software and other | Minimum | |||||
Intangible assets | |||||
Useful life | 3 years | 3 years | |||
Internal-use software and other | Maximum | |||||
Intangible assets | |||||
Useful life | 5 years | 5 years | |||
Internal-use software and other | Weighted Average | |||||
Intangible assets | |||||
Weighted Average Remaining Useful Life | 3 years 10 months 24 days | 2 years 3 months 18 days |
Goodwill (Details)
Goodwill (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Goodwill | ||
Beginning balance | $ 746,079 | $ 737,197 |
Additions associated with acquisitions | 937,463 | 10,604 |
Cumulative translation adjustment | 7,813 | (1,722) |
Goodwill | $ 1,691,355 | $ 746,079 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Accrued Expenses and Other Current Liabilities | ||
Professional fees | $ 3,011 | $ 1,535 |
Consulting fees/provider fees | 19,255 | 10,618 |
Client performance guarantees | 3,575 | 3,298 |
Legal fees | 2,364 | 1,077 |
Interest payable | 6,492 | 838 |
Income tax payable | 2,704 | 2,859 |
Insurance | 3,205 | 1,263 |
Marketing | 5,983 | 2,810 |
Operating lease liabilities - current | 7,276 | 5,088 |
Earnout | 4,552 | 0 |
Other | 6,713 | 5,053 |
Total | $ 65,130 | $ 34,439 |
Fair Value Measurements - Recur
Fair Value Measurements - Recurring (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Fair Value | |||
Short-term investments | $ 3,070 | $ 2,711 | |
Fair Value, Assets, Level 1 to Level 2 Transfers, Amount | 0 | $ 0 | |
Fair Value, Assets, Level 2 to Level 1 Transfers, Amount | 0 | 0 | |
Fair Value, Liabilities, Level 1 to Level 2 Transfers, Amount | 0 | 0 | |
Fair value assets level 3 net transfers | 0 | 0 | |
Fair value liabilities level 3 net transfers | 0 | $ 0 | |
Recurring | |||
Fair Value | |||
Cash and cash equivalents | 1,187,299 | 514,353 | |
Short-term investments | 3,070 | 2,711 | |
Contingent liability | 4,552 | 4,769 | |
Level 1 | Recurring | |||
Fair Value | |||
Cash and cash equivalents | 1,187,299 | 514,353 | |
Short-term investments | 0 | 0 | |
Contingent liability | 0 | 0 | |
Level 2 | Recurring | |||
Fair Value | |||
Cash and cash equivalents | 0 | 0 | |
Short-term investments | 3,070 | 2,711 | |
Contingent liability | 0 | 0 | |
Level 3 | Recurring | |||
Fair Value | |||
Cash and cash equivalents | 0 | 0 | |
Short-term investments | 0 | 0 | |
Contingent liability | $ 4,552 | $ 4,769 |
Fair Value Measurements - Level
Fair Value Measurements - Level 3 (Details) - Contingent Liability $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Reconciliation of Level 3 liabilities | |
Fair value at beginning of period | $ 4,769 |
Payments | 0 |
Change in fair value | (432) |
Currency translation adjustment | 215 |
Fair value at end of period | $ 4,552 |
Revolving Credit Facility (Deta
Revolving Credit Facility (Details) $ in Millions | Jul. 14, 2017USD ($) |
New Revolving Credit Facility | |
Revolving Credit Facility | |
Maximum borrowings | $ 10 |
Leasing Operations - Other (Det
Leasing Operations - Other (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Mar. 01, 2020 | Dec. 31, 2019 |
Leasing Operations | |||
Operating lease - right-of-use assets | $ 33,933 | $ 26,452 | |
Office Lease, Santa Clara, CA | |||
Leasing Operations | |||
Lease term | 5 years | ||
Operating lease - right-of-use assets | $ 6,800 | ||
Operating lease liability | $ 6,800 |
Leasing Operations - Operating
Leasing Operations - Operating Leases (Details) $ in Thousands | Sep. 30, 2020USD ($) |
Minimum future lease receipts on noncancelable leases | |
2020 | $ 4,712 |
2021 | 13,161 |
2022 | 6,533 |
2023 | 962 |
Total receipts on noncancelable operating leases | $ 25,368 |
Convertible Senior Notes - Due
Convertible Senior Notes - Due 2027 - Terms (Details) $ / shares in Units, shares in Millions | May 19, 2020USD ($)D$ / sharesshares | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) |
Convertible Senior Notes | |||
Net proceeds from offering | $ | $ 1,000,000,000 | $ 0 | |
Offering costs | $ | 24,070,000 | $ 0 | |
2027 Notes | |||
Convertible Senior Notes | |||
Face amount | $ | $ 1,000,000,000 | $ 1,000,000,000 | |
Interest rate (as a percent) | 1.25% | ||
Net proceeds from offering | $ | $ 975,900,000 | ||
Offering costs | $ | 24,100,000 | ||
Principal multiple amount used in the conversion of the debt instrument | $ | $ 1,000 | ||
Minimum percentage of common stock price as a percentage of the conversion price | 130.00% | ||
Convertible debt, threshold, trading days | D | 20 | ||
Convertible debt, threshold, consecutive trading days | D | 30 | ||
Convertible debt, number of business days, measurement period | D | 5 | ||
Convertible debt, number of consecutive trading days, measurement period | D | 10 | ||
Trading price expressed as a percentage of the last reported sales price and conversion rate after the specified consecutive trading day period | 98.00% | ||
Convertible debt, conversion rate | 4.1258 | ||
Convertible debt, conversion price (in dollars per share) | $ / shares | $ 242.38 | ||
Trading day observation period used to determine the amount of cash and shares, if any, that are due upon conversion | D | 25 | ||
Debt term | 7 years | ||
Convertible debt, equity component | $ | $ 286,000,000 | ||
Shares reserved for issuance (in shares) | shares | 5.4 | ||
2027 Notes | On or after June 5, 2024 | |||
Convertible Senior Notes | |||
Minimum percentage of common stock price as a percentage of the conversion price | 130.00% | ||
Convertible debt, threshold, trading days | D | 20 | ||
Convertible debt, threshold, consecutive trading days | D | 30 |
Convertible Senior Notes - Du_2
Convertible Senior Notes - Due 2027 - Summary (Details) - 2027 Notes - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2020 | May 19, 2020 | |
Convertible Senior Notes | |||
Principal | $ 1,000,000 | $ 1,000,000 | $ 1,000,000 |
Less: Debt discount, net | (296,760) | (296,760) | |
Net carrying amount | 703,240 | $ 703,240 | |
Remaining contractual life | 6 years 8 months 12 days | ||
Interest Expense | |||
Contractual interest expense | 3,125 | $ 4,618 | |
Amortization of debt discount | 8,989 | 12,911 | |
Total | $ 12,114 | $ 17,529 | |
Effective interest rate of the liability component (as a percent) | 7.00% | 7.00% | |
Level 2 | |||
Convertible Senior Notes | |||
Fair value | $ 1,246,300 | $ 1,246,300 |
Convertible Senior Notes - Du_3
Convertible Senior Notes - Due 2025 - Terms (Details) | May 08, 2018USD ($)Ditem$ / shares | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) |
Convertible Senior Notes | ||||
Net proceeds from offering | $ 1,000,000,000 | $ 0 | ||
Offering costs | 24,070,000 | $ 0 | ||
2025 Notes | ||||
Convertible Senior Notes | ||||
Face amount | $ 287,500,000 | $ 277,557,000 | $ 287,500,000 | |
Interest rate (as a percent) | 1.375% | |||
Net proceeds from offering | $ 279,100,000 | |||
Offering costs | 8,400,000 | |||
Principal multiple amount used in the conversion of the debt instrument | $ 1,000 | |||
Convertible debt, conversion rate | 18.6621 | |||
Convertible debt, conversion price (in dollars per share) | $ / shares | $ 53.58 | |||
Trading day observation period used to determine the amount of cash and shares, if any, that are due upon conversion | item | 25 | |||
Convertible debt, equity component | $ 91,400,000 | |||
Debt term | 7 years | |||
2025 Notes | At any time prior to close of business on the business day immediately preceding November 15, 2024 | ||||
Convertible Senior Notes | ||||
Principal multiple amount used in the conversion of the debt instrument | $ 1,000 | |||
Convertible debt, threshold, trading days | D | 20 | |||
Convertible debt, threshold, consecutive trading days | D | 30 | |||
Minimum percentage of common stock price as a percentage of the conversion price | 130.00% | |||
Convertible debt, number of business days, measurement period | D | 5 | |||
Convertible debt, number of consecutive trading days, measurement period | D | 10 | |||
Trading price expressed as a percentage of the last reported sales price and conversion rate after the specified consecutive trading day period | 98.00% | |||
2025 Notes | On or after May 22, 2022 | ||||
Convertible Senior Notes | ||||
Convertible debt, threshold, trading days | D | 20 | |||
Convertible debt, threshold, consecutive trading days | D | 30 | |||
Minimum percentage of common stock price as a percentage of the conversion price | 130.00% |
Convertible Senior Notes - Du_4
Convertible Senior Notes - Due 2025 - Summary (Details) - 2025 Notes - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | May 08, 2018 | |
Convertible Senior Notes | ||||||
Principal | $ 277,557 | $ 277,557 | $ 287,500 | $ 287,500 | ||
Less: Debt discount, net | (69,262) | (69,262) | (81,207) | |||
Net carrying amount | 208,295 | $ 208,295 | $ 206,293 | |||
Remaining contractual life | 4 years 7 months 6 days | |||||
Interest Expense | ||||||
Contractual interest expense | 971 | $ 988 | $ 2,947 | $ 2,965 | ||
Amortization of debt discount | 3,170 | 2,949 | 9,379 | 8,677 | ||
Total | $ 4,141 | $ 3,937 | $ 12,326 | $ 11,642 | ||
Effective interest rate of the liability component (as a percent) | 7.90% | 7.90% | 7.90% | 7.90% | ||
Level 2 | ||||||
Convertible Senior Notes | ||||||
Fair value | $ 1,135,900 | $ 1,135,900 |
Convertible Senior Notes - Du_5
Convertible Senior Notes - Due 2022 - Terms (Details) $ / shares in Units, shares in Millions | May 19, 2020USD ($)shares | Jun. 27, 2017USD ($)Ditem$ / shares | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) |
Convertible Senior Notes | |||||||
Loss on extinguishment of debt | $ (1,227,000) | $ 0 | $ (8,978,000) | $ 0 | |||
Net proceeds from offering | 1,000,000,000 | 0 | |||||
Offering costs | 24,070,000 | $ 0 | |||||
2022 Notes | |||||||
Convertible Senior Notes | |||||||
Principal amount of debt exchanged for shares of the Company's common stock in private placement transactions | $ 228,200,000 | ||||||
Face amount | $ 275,000,000 | $ 46,765,000 | $ 46,765,000 | $ 274,995,000 | |||
Shares issued for exchange of debt | shares | 3.9 | ||||||
Loss on extinguishment of debt | $ 9,000,000 | ||||||
Interest rate (as a percent) | 3.00% | ||||||
Net proceeds from offering | $ 263,700,000 | ||||||
Offering costs | 11,300,000 | ||||||
Principal multiple amount used in the conversion of the debt instrument | $ 1,000 | ||||||
Convertible debt, conversion rate | 22.7247 | ||||||
Convertible debt, conversion price (in dollars per share) | $ / shares | $ 44 | ||||||
Trading day observation period used to determine the amount of cash and shares, if any, that are due upon conversion | item | 25 | ||||||
Debt term | 5 years 6 months | ||||||
Convertible debt, equity component | $ 62,400,000 | ||||||
At any time prior to close of business on the business day immediately preceding June 15, 2022 | 2022 Notes | |||||||
Convertible Senior Notes | |||||||
Principal multiple amount used in the conversion of the debt instrument | $ 1,000 | ||||||
Convertible debt, threshold, trading days | D | 20 | ||||||
Convertible debt, threshold, consecutive trading days | D | 30 | ||||||
Minimum percentage of common stock price as a percentage of the conversion price | 130.00% | ||||||
Convertible debt, number of business days, measurement period | D | 5 | ||||||
Convertible debt, number of consecutive trading days, measurement period | D | 10 | ||||||
Trading price expressed as a percentage of the last reported sales price and conversion rate after the specified consecutive trading day period | 98.00% | ||||||
On or after December 22, 2020 | 2022 Notes | |||||||
Convertible Senior Notes | |||||||
Convertible debt, threshold, trading days | D | 20 | ||||||
Convertible debt, threshold, consecutive trading days | D | 30 | ||||||
Minimum percentage of common stock price as a percentage of the conversion price | 130.00% |
Convertible Senior Notes - Du_6
Convertible Senior Notes - Due 2022 - Summary (Details) - 2022 Notes - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Jun. 27, 2017 | |
Convertible Senior Notes | ||||||
Principal | $ 46,765 | $ 46,765 | $ 274,995 | $ 275,000 | ||
Less: Debt discount, net | (4,815) | (4,815) | (40,878) | |||
Net carrying amount | 41,950 | $ 41,950 | $ 234,117 | |||
Remaining contractual life | 2 years 2 months 12 days | |||||
Interest Expense | ||||||
Contractual interest expense | 351 | $ 2,062 | $ 3,696 | $ 6,187 | ||
Amortization of debt discount | 650 | 3,620 | 6,940 | 10,406 | ||
Total | $ 1,001 | $ 5,682 | $ 10,636 | $ 16,593 | ||
Effective interest rate of the liability component (as a percent) | 10.00% | 10.00% | 10.00% | 10.00% | ||
Level 2 | ||||||
Convertible Senior Notes | ||||||
Fair value | $ 233,300 | $ 233,300 |
Convertible Senior Notes - Du_7
Convertible Senior Notes - Due 2022 - Other (Details) $ / shares in Units, shares in Millions | May 19, 2020USD ($)shares | Jun. 27, 2017USD ($)Ditem$ / shares | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) |
Convertible Senior Notes | |||||||
Loss on extinguishment of debt | $ (1,227,000) | $ 0 | $ (8,978,000) | $ 0 | |||
Net proceeds from offering | 1,000,000,000 | 0 | |||||
Offering costs | 24,070,000 | $ 0 | |||||
2022 Notes | |||||||
Convertible Senior Notes | |||||||
Principal amount of debt exchanged for shares of the Company's common stock in private placement transactions | $ 228,200,000 | ||||||
Payment of cash for repurchase of convertible debt | $ 231,100,000 | ||||||
Shares issued for exchange of debt | shares | 3.9 | ||||||
Loss on extinguishment of debt | $ 9,000,000 | ||||||
Face amount | $ 275,000,000 | $ 46,765,000 | $ 46,765,000 | $ 274,995,000 | |||
Interest rate (as a percent) | 3.00% | ||||||
Net proceeds from offering | $ 263,700,000 | ||||||
Offering costs | 11,300,000 | ||||||
Principal multiple amount used in the conversion of the debt instrument | $ 1,000 | ||||||
Convertible debt, conversion rate | 22.7247 | ||||||
Convertible debt, conversion price (in dollars per share) | $ / shares | $ 44 | ||||||
Trading day observation period used to determine the amount of cash and shares, if any, that are due upon conversion | item | 25 | ||||||
Debt term | 5 years 6 months | ||||||
Convertible debt, equity component | $ 62,400,000 | ||||||
2022 Notes | At any time prior to close of business on the business day immediately preceding June 15, 2022 | |||||||
Convertible Senior Notes | |||||||
Principal multiple amount used in the conversion of the debt instrument | $ 1,000 | ||||||
Convertible debt, threshold, trading days | D | 20 | ||||||
Convertible debt, threshold, consecutive trading days | D | 30 | ||||||
Minimum percentage of common stock price as a percentage of the conversion price | 130.00% | ||||||
Convertible debt, number of business days, measurement period | D | 5 | ||||||
Convertible debt, number of consecutive trading days, measurement period | D | 10 | ||||||
Trading price expressed as a percentage of the last reported sales price and conversion rate after the specified consecutive trading day period | 98.00% | ||||||
2022 Notes | On or after December 22, 2020 | |||||||
Convertible Senior Notes | |||||||
Convertible debt, threshold, trading days | D | 20 | ||||||
Convertible debt, threshold, consecutive trading days | D | 30 | ||||||
Minimum percentage of common stock price as a percentage of the conversion price | 130.00% |
Advances from Financing Compa_3
Advances from Financing Companies (Details) $ in Thousands | Sep. 30, 2020USD ($) |
2021 | $ 4,037 |
2022 | 12,058 |
2023 | 6,437 |
2024 | 978 |
Total | $ 23,510 |
Minimum | |
Advances from financing companies, interest rate (as a percent) | 2.47% |
Maximum | |
Advances from financing companies, interest rate (as a percent) | 8.75% |
Common Stock and Stockholders_3
Common Stock and Stockholders' Equity - Capitalization (Details) - shares | Sep. 30, 2020 | Dec. 31, 2019 | May 31, 2018 | May 30, 2018 |
Common Stock and Stockholders'Equity | ||||
Number of common stock shares authorized | 150,000,000 | 150,000,000 | 150,000,000 | 100,000,000 |
Common Stock and Stockholders_4
Common Stock and Stockholders' Equity - Stock Plan and Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||
Sep. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | |
Common Stock and Stockholders' Equity | ||||||||||
Deficit | $ (2,231,036) | $ (1,000,177) | $ (993,738) | $ (2,231,036) | $ (993,738) | $ (1,014,025) | $ (1,294,929) | $ (1,002,640) | $ (1,001,558) | $ (1,013,119) |
Stock options | ||||||||||
Common Stock and Stockholders' Equity | ||||||||||
Shares available for grant | 7,824,286 | 7,824,286 | ||||||||
Stock options | Maximum | ||||||||||
Common Stock and Stockholders' Equity | ||||||||||
Exercisable period (in years) | 10 years | |||||||||
2015 Incentive Award Plan | ||||||||||
Number of Shares Outstanding | ||||||||||
Balance, beginning of period (in shares) | 5,206,980 | 5,206,980 | ||||||||
Stock option grants (in shares) | 344,413 | |||||||||
Stock option exercised (in shares) | (1,999,518) | |||||||||
Stock options forfeited (in shares) | (162,161) | |||||||||
Balance, end of period (in shares) | 3,389,714 | 3,389,714 | 5,206,980 | |||||||
Vested or expected to vest at end of period (in shares) | 3,389,714 | 3,389,714 | ||||||||
Exercisable as of end of period (in shares) | 2,610,779 | 2,610,779 | ||||||||
Weighted-Average Exercise Price | ||||||||||
Balance, beginning of period (in dollars per share) | $ 24.47 | $ 24.47 | ||||||||
Stock option grants (in dollars per share) | 32.60 | |||||||||
Stock option exercised (in dollars per share) | 20.49 | |||||||||
Stock options forfeited (in dollars per share) | 33.14 | |||||||||
Balance, end of period (in dollars per share) | $ 27.58 | 27.58 | $ 24.47 | |||||||
Vested or expected to vest at end of period (in dollars per share) | 27.58 | 27.58 | ||||||||
Exercisable as of end of period (in dollars per share) | $ 22.18 | $ 22.18 | ||||||||
Weighted-average remaining contractual life in Years | ||||||||||
Weighted-average remaining contractual life (in years) | 6 years 4 months 2 days | 7 years 10 days | ||||||||
Vested or expected to vest at end of period (in years) | 6 years 4 months 2 days | |||||||||
Exercisable as of end of period (in years) | 6 years 2 months 8 days | |||||||||
Aggregate Intrinsic Value | ||||||||||
Aggregate Intrinsic Value | $ 649,682 | $ 649,682 | $ 308,538 | |||||||
Stock options exercised | (288,909) | |||||||||
Vested or expected to vest at end of period | 649,682 | 649,682 | ||||||||
Exercisable as of end of period | 514,480 | 514,480 | ||||||||
Grant-date fair value of stock options granted during the period | $ 10,700 | $ 2,100 | $ 11,200 | $ 4,700 |
Common Stock and Stockholders_5
Common Stock and Stockholders' Equity - Vesting (Details) - Employee | 9 Months Ended |
Sep. 30, 2020 | |
Stock options | |
Common Stock and Stockholders' Equity | |
Vesting period | 4 years |
RSUs | |
Common Stock and Stockholders' Equity | |
Vesting period | 3 years |
Common Stock and Stockholders_6
Common Stock and Stockholders' Equity - Fair Value Assumptions (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Other disclosures | ||||
Compensation expense | $ 20,908 | $ 17,354 | $ 61,151 | $ 48,245 |
Stock options | ||||
Fair value assumptions | ||||
Volatility, minimum (as a percent) | 46.10% | 46.80% | ||
Volatility, maximum (as a percent) | 56.00% | 47.60% | ||
Expected life (in years) | 4 years 1 month 6 days | 5 years 3 months 18 days | ||
Risk-free interest rate, minimum | 0.27% | 1.35% | ||
Risk-free interest rate, maximum | 1.64% | 2.55% | ||
Dividend yield (as a percent) | 0.00% | 0.00% | ||
Weighted-average fair value of the underlying stock options | $ 49.21 | $ 29.21 | ||
Other disclosures | ||||
Compensation expense | 3,400 | $ 4,600 | $ 11,500 | $ 15,300 |
Unrecognized compensation cost | $ 15,100 | $ 15,100 | ||
Period over which unrecognized compensation cost is expected to be recognized | 1 year 10 months 24 days |
Common Stock and Stockholders_7
Common Stock and Stockholders' Equity - Restricted Stock Units (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Other disclosures | ||||
Stock-based compensation | $ 20,908 | $ 17,354 | $ 61,151 | $ 48,245 |
RSUs | ||||
Shares | ||||
Outstanding at beginning of period (in shares) | 1,483,558 | |||
Granted (in shares) | 400,894 | |||
Vested and issued (in shares) | (615,123) | |||
Forfeited (in shares) | (97,771) | |||
Outstanding at end of period (in shares) | 1,171,558 | 1,171,558 | ||
Vested and unissued (in shares) | 13,755 | 13,755 | ||
Nonvested (in shares) | 1,157,803 | 1,157,803 | ||
Weighted-Average Grant Date Fair Value Per Share | ||||
Outstanding at beginning of period (in dollars per share) | $ 54.13 | |||
Granted (in dollars per share) | 137.01 | |||
Vested and issued (in dollars per share) | 52.33 | |||
Forfeited (in dollars per share) | 58.48 | |||
Outstanding at end of period (in dollars per share) | $ 58.82 | 58.82 | ||
Vested and unissued (in dollars per share) | 50.90 | 50.90 | ||
Non-vested (in dollars per share) | $ 58.91 | $ 58.91 | ||
Other disclosures | ||||
Grant date fair value of RSUs granted | $ 11,900 | 3,300 | $ 54,900 | 86,700 |
Stock-based compensation | 11,300 | $ 12,500 | 32,000 | $ 32,200 |
Unrecognized compensation cost related to non vested | $ 72,900 | $ 72,900 | ||
Period over which unrecognized compensation cost is expected to be recognized | 2 years 1 month 6 days | |||
Minimum | RSUs | ||||
Common Stock and Stockholders' Equity | ||||
Vesting period | 1 year | |||
Maximum | RSUs | ||||
Common Stock and Stockholders' Equity | ||||
Vesting period | 4 years | |||
Employee | RSUs | ||||
Common Stock and Stockholders' Equity | ||||
Vesting period | 3 years |
Common Stock and Stockholders_8
Common Stock and Stockholders' Equity - Performance Stock Units (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Other disclosures | ||||
Stock-based compensation | $ 20,908 | $ 17,354 | $ 61,151 | $ 48,245 |
PSUs | ||||
Shares | ||||
Outstanding at beginning of period (in shares) | 512,482 | |||
Granted (in shares) | 0 | 0 | 111,199 | |
Vested and issued (in shares) | (186,455) | |||
Outstanding at end of period (in shares) | 437,226 | 437,226 | ||
Vested and unissued (in shares) | 0 | 0 | ||
Nonvested (in shares) | 437,226 | 437,226 | ||
Weighted-Average Grant Date Fair Value Per Share | ||||
Outstanding at beginning of period (in dollars per share) | $ 62.51 | |||
Granted (in dollars per share) | 117.81 | |||
Vested and issued (in dollars per share) | 62.02 | |||
Outstanding at end of period (in dollars per share) | $ 76.78 | 76.78 | ||
Vested and unissued (in dollars per share) | 0 | 0 | ||
Non-vested (in dollars per share) | $ 76.78 | $ 76.78 | ||
Other disclosures | ||||
Grant date fair value of PSUs granted | $ 13,100 | 28,500 | ||
Stock-based compensation | $ 5,900 | $ 4,200 | 16,800 | $ 11,000 |
Unrecognized compensation cost related to non vested | $ 20,900 | $ 20,900 | ||
Period over which unrecognized compensation cost is expected to be recognized | 1 year 8 months 12 days | |||
PSUs | Minimum | ||||
Common Stock and Stockholders' Equity | ||||
Vesting period | 1 year | |||
Actual performance compared to performance conditions percentage | 50.00% | |||
PSUs | Maximum | ||||
Common Stock and Stockholders' Equity | ||||
Vesting period | 3 years | |||
Actual performance compared to performance conditions percentage | 200.00% |
Common Stock and Stockholders_9
Common Stock and Stockholders' Equity - Employee Stock Purchase Plan (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2015 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Employee Stock Purchase Plan | |||||
Stock-based compensation | $ 20,908 | $ 17,354 | $ 61,151 | $ 48,245 | |
ESPP | |||||
Employee Stock Purchase Plan | |||||
Shares reserved for issuance under the plan (in shares) | 832,492 | 832,492 | |||
Maximum offering period | 27 months | ||||
Stock purchase price as a percentage of fair value (as a percent) | 85.00% | ||||
Issuance of stock under employee stock purchase plan (in shares) | 35,901 | 35,716 | |||
Remaining shares available for issuance under the plan (in shares) | 519,366 | 519,366 | |||
Stock-based compensation | $ 600 | $ 200 | $ 1,400 | $ 700 | |
Unrecognized compensation cost | $ 300 | $ 300 | |||
Period over which unrecognized compensation cost is expected to be recognized | 1 month 6 days |
Common Stock and Stockholder_10
Common Stock and Stockholders' Equity - Compensation Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Compensation costs charged as an expense | ||||
Stock-based compensation | $ 20,908 | $ 17,354 | $ 61,151 | $ 48,245 |
Cost of revenue | ||||
Compensation costs charged as an expense | ||||
Stock-based compensation | 128 | 0 | 128 | 0 |
Advertising and marketing | ||||
Compensation costs charged as an expense | ||||
Stock-based compensation | 1,644 | 1,384 | 4,447 | 3,522 |
Sales | ||||
Compensation costs charged as an expense | ||||
Stock-based compensation | 3,275 | 2,732 | 9,465 | 7,390 |
Technology and development | ||||
Compensation costs charged as an expense | ||||
Stock-based compensation | 2,622 | 1,594 | 7,285 | 5,633 |
General and administrative expenses | ||||
Compensation costs charged as an expense | ||||
Stock-based compensation | $ 13,239 | $ 11,644 | $ 39,826 | $ 31,700 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Taxes | ||||
Income tax (benefit) expense | $ (2,290) | $ (7,298) | $ (5,400) | $ (6,466) |
Income tax benefit related to the expiration of the statute of limitations for an uncertain position | $ (2,000) | |||
Corporate tax rate (as a percent) | 21.00% |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event $ / shares in Units, shares in Millions, $ in Millions | Oct. 30, 2020USD ($)$ / sharesshares |
Livongo Notes | |
Subsequent events | |
Principal amount of the subsidiary issued debt, guaranteed by the Company | $ 550 |
Interest rate (as a percent) | 0.875% |
Livongo Health, Inc. | |
Subsequent events | |
Merger, conversion of common shares ratio | 0.5920 |
Merger, conversion price (in dollars per share) | $ / shares | $ 4.24 |
Merger, special cash dividend | $ / shares | $ 7.09 |
Purchase price | $ 12,846.3 |
Cash consideration | $ 432.9 |
Equity consideration (in shares) | shares | 60.4 |
Equity consideration | $ 12,413.4 |