Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Feb. 22, 2022 | Jun. 30, 2021 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2021 | ||
Current Fiscal Year End Date | --12-31 | ||
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 | ||
ICFR Auditor Attestation Flag | true | ||
Entity Voluntary Filers | No | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Common Stock, Shares Outstanding | 160,327,041 | ||
Entity Public Float | $ 26,317,281,887 | ||
Auditor Name | Ernst & Young LLP | ||
Auditor Firm ID | 42 | ||
Auditor Location | New York, New York | ||
Entity Central Index Key | 0001477449 | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 893,480 | $ 733,324 |
Short-term investments | 2,537 | 53,245 |
Accounts receivable, net of provision of $12,384 and $6,412, respectively | 168,956 | 169,281 |
Inventories | 73,079 | 56,498 |
Prepaid expenses and other current assets | 87,387 | 47,259 |
Total current assets | 1,225,439 | 1,059,607 |
Property and equipment, net | 27,234 | 28,551 |
Goodwill | 14,504,174 | 14,581,255 |
Intangible assets, net | 1,910,278 | 2,020,864 |
Operating lease - right-of-use assets | 46,780 | 46,647 |
Other assets | 20,703 | 18,357 |
Total assets | 17,734,608 | 17,755,281 |
Current liabilities: | ||
Accounts payable | 47,257 | 46,030 |
Accrued expenses and other current liabilities | 102,933 | 83,657 |
Accrued compensation | 91,941 | 94,593 |
Deferred revenue-current | 75,569 | 52,356 |
Advances from financing companies | 13,313 | 13,453 |
Current portion of long-term debt | 0 | 42,560 |
Total current liabilities | 331,013 | 332,649 |
Other liabilities | 1,492 | 1,616 |
Operating lease liabilities, net of current portion | 41,773 | 43,142 |
Deferred revenue, net of current portion | 3,834 | 2,449 |
Advances from financing companies, net of current portion | 9,291 | 9,926 |
Deferred taxes, net | 75,777 | 102,103 |
Convertible senior notes, net | 1,225,671 | 1,379,592 |
Commitments and contingencies (Note 13) | ||
Stockholders' equity: | ||
Common stock, $0.001 par value; 300,000,000 shares authorized as of December 31, 2021 and 2020; 160,469,325 shares and 150,281,099 shares issued and outstanding as of December 31, 2021 and 2020, respectively | 160 | 150 |
Additional paid-in capital | 17,473,336 | 16,857,797 |
Accumulated deficit | (1,421,454) | (992,661) |
Accumulated other comprehensive (loss) gain | (6,285) | 18,518 |
Total stockholders' equity | 16,045,757 | 15,883,804 |
Total liabilities and stockholders' equity | $ 17,734,608 | $ 17,755,281 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Consolidated Balance Sheets | ||
Provision of Accounts receivable | $ 12,384 | $ 6,412 |
Common stock par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 160,469,325 | 150,281,099 |
Common stock, shares outstanding | 160,469,325 | 150,281,099 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Other Comprehensive (Loss) Gain, Net of Tax - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Consolidated Statements of Operations | |||
Revenue | $ 2,032,707 | $ 1,093,962 | $ 553,307 |
Expenses: | |||
Cost of revenue (exclusive of depreciation and amortization, which is shown separately below) | 650,258 | 390,829 | 184,465 |
Operating expenses: | |||
Advertising and marketing | 416,726 | 226,146 | 109,697 |
Sales | 250,581 | 154,052 | 64,915 |
Technology and development | 311,884 | 164,941 | 64,644 |
Acquisition, integration and transformation costs | 26,643 | 88,236 | 6,620 |
General and administrative | 438,007 | 506,684 | 164,456 |
Depreciation and amortization | 204,239 | 69,495 | 38,952 |
Total expenses | 2,298,338 | 1,600,383 | 633,749 |
Loss from operations | (265,631) | (506,421) | (80,442) |
Loss on extinguishment of debt | 43,748 | 9,077 | 0 |
Other (income) expense, net | (5,088) | 545 | (342) |
Interest expense, net | 80,365 | 59,950 | 29,355 |
Net loss before taxes | (384,656) | (575,993) | (109,455) |
Income tax expense (benefit) | 44,137 | (90,857) | (10,591) |
Net loss | (428,793) | (485,136) | (98,864) |
Other comprehensive (loss) gain, net of tax: | |||
Net change in unrealized gains on available-for-sale securities | 0 | 0 | 32 |
Currency translation adjustment | (24,803) | 35,757 | (4,201) |
Comprehensive loss | $ (453,596) | $ (449,379) | $ (103,033) |
Net loss per share, basic (in dollars per share) | $ (2.73) | $ (5.36) | $ (1.38) |
Net loss per share, diluted (in dollars per share) | $ (2.73) | $ (5.36) | $ (1.38) |
Weighted-average shares used to compute basic net loss per share | 156,939,349 | 90,509,229 | 71,844,535 |
Weighted-average shares used to compute diluted net loss per share | 156,939,349 | 90,509,229 | 71,844,535 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Common Stock2022 Notes | Common Stock2025 Notes | Common Stock | Additional Paid-In Capital2022 Notes | Additional Paid-In Capital2025 Notes | Additional Paid-In Capital2027 Notes | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | 2022 Notes | 2025 Notes | 2027 Notes | Total |
Balance as of beginning of the period at Dec. 31, 2018 | $ 70 | $ 1,434,780 | $ (408,661) | $ (13,070) | $ 1,013,119 | ||||||||
Balance as of beginning of the period (in shares) at Dec. 31, 2018 | 70,516,249 | ||||||||||||
Stockholders' Equity (Deficit) | |||||||||||||
Exercise of stock options | $ 2 | 33,273 | 33,275 | ||||||||||
Exercise of stock options (in shares) | 1,632,130 | ||||||||||||
Issuance of common stock for Notes | 8 | 8 | |||||||||||
Issuance of common stock for Notes (in shares) | 155 | ||||||||||||
Issuance of restricted stock units | $ 1 | (1) | |||||||||||
Issuance of restricted stock units (in shares) | 548,910 | ||||||||||||
Issuance of stock under employee stock purchase plan | 3,380 | 3,380 | |||||||||||
Issuance of stock under employee stock purchase plan (in shares) | 64,497 | ||||||||||||
Stock-based compensation | 67,276 | 67,276 | |||||||||||
Other comprehensive income (loss), net of tax | (4,169) | (4,169) | |||||||||||
Net loss | (98,864) | (98,864) | |||||||||||
Balance as of end of the period at Dec. 31, 2019 | $ 73 | 1,538,716 | (507,525) | (17,239) | 1,014,025 | ||||||||
Balance as of end of the period (in shares) at Dec. 31, 2019 | 72,761,941 | ||||||||||||
Stockholders' Equity (Deficit) | |||||||||||||
Exercise of stock options | $ 6 | 54,308 | 54,314 | ||||||||||
Exercise of stock options (in shares) | 6,104,721 | ||||||||||||
Issuance of common stock upon vesting of restricted stock units | $ 2 | (23,707) | (23,705) | ||||||||||
Issuance of common stock upon vesting of restricted stock units (in shares) | 2,150,523 | ||||||||||||
Issuance of common stock for Notes | $ 4 | $ 694,127 | $ 40,741 | $ 694,131 | $ 40,741 | ||||||||
Issuance of common stock for Notes (in shares) | 3,951,781 | 202,217 | |||||||||||
Issuance of stock under employee stock purchase plan | 4,722 | 4,722 | |||||||||||
Issuance of stock under employee stock purchase plan (in shares) | 49,781 | ||||||||||||
Sale of capped call related to the Livongo Notes | 91,659 | 91,659 | |||||||||||
Livongo Notes guaranteed by the Company | 555,448 | 555,448 | |||||||||||
Equity portion of extinguishment of Notes | (715,263) | (31,615) | (715,263) | (31,615) | |||||||||
Equity component of Notes, net of issuance costs | $ 285,601 | $ 285,601 | |||||||||||
Issuance of stock in acquisition | $ 65 | 13,884,856 | 13,884,921 | ||||||||||
Issuance of stock in acquisition (in shares) | 65,060,135 | ||||||||||||
Stock-based compensation | 478,204 | 478,204 | |||||||||||
Other comprehensive income (loss), net of tax | 35,757 | 35,757 | |||||||||||
Net loss | (485,136) | (485,136) | |||||||||||
Balance as of end of the period at Dec. 31, 2020 | $ 150 | 16,857,797 | (992,661) | 18,518 | 15,883,804 | ||||||||
Balance as of end of the period (in shares) at Dec. 31, 2020 | 150,281,099 | ||||||||||||
Stockholders' Equity (Deficit) | |||||||||||||
Exercise of stock options | $ 2 | 25,779 | 25,781 | ||||||||||
Exercise of stock options (in shares) | 2,340,025 | ||||||||||||
Issuance of common stock upon vesting of restricted stock units | $ 2 | (2) | |||||||||||
Issuance of common stock upon vesting of restricted stock units (in shares) | 1,687,557 | ||||||||||||
Issuance of common stock for Notes | $ 1 | $ 5 | 270,111 | 920,886 | 270,112 | 920,891 | |||||||
Issuance of common stock for Notes (in shares) | 1,058,373 | 5,185,491 | |||||||||||
Issuance of stock under employee stock purchase plan | 15,331 | 15,331 | |||||||||||
Issuance of stock under employee stock purchase plan (in shares) | 122,059 | ||||||||||||
Recovery of excess common stock issued for acquisition | (40,329) | (40,329) | |||||||||||
Recovery of excess common stock issued for acquisition (in shares) | (205,279) | ||||||||||||
Equity portion of extinguishment of Notes | $ (223,929) | $ (668,069) | $ (223,929) | $ (668,069) | |||||||||
Stock-based compensation | 315,761 | 315,761 | |||||||||||
Other comprehensive income (loss), net of tax | (24,803) | (24,803) | |||||||||||
Net loss | (428,793) | (428,793) | |||||||||||
Balance as of end of the period at Dec. 31, 2021 | $ 160 | $ 17,473,336 | $ (1,421,454) | $ (6,285) | $ 16,045,757 | ||||||||
Balance as of end of the period (in shares) at Dec. 31, 2021 | 160,469,325 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Operating activities: | |||
Net loss | $ (428,793) | $ (485,136) | $ (98,864) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | 204,239 | 69,495 | 38,952 |
Depreciation of rental equipment | 3,333 | 1,697 | 0 |
Amortization of right-of-use assets | 12,049 | 6,895 | 6,000 |
Provision for doubtful accounts | 16,941 | 5,284 | 2,665 |
Stock-based compensation | 302,586 | 475,531 | 66,702 |
Deferred income taxes | 41,800 | (90,158) | (10,868) |
Accretion of interest | 61,253 | 45,296 | 25,438 |
Loss on extinguishment of debt | 40,652 | 9,077 | 0 |
Gain on sale of investment | (5,901) | 0 | 0 |
Other, net | (3,845) | (1,009) | 1,248 |
Changes in operating assets and liabilities: | |||
Accounts receivable | (17,510) | (21,091) | (15,884) |
Prepaid expenses and other current assets | (31,090) | (12,565) | (2,685) |
Inventory | (19,494) | (24,732) | 0 |
Other assets | (3,547) | (8,135) | (105) |
Accounts payable | 1,188 | (87,995) | 905 |
Accrued expenses and other current liabilities | 18,175 | 20,125 | 10,026 |
Accrued compensation | (4,675) | 34,819 | 4,546 |
Deferred revenue | 20,554 | 17,751 | 4,815 |
Operating lease liabilities | (16,532) | (6,300) | (2,417) |
Other liabilities | 2,607 | (2,360) | (605) |
Net cash provided by (used in) operating activities | 193,990 | (53,511) | 29,869 |
Investing activities: | |||
Capital expenditures | (8,534) | (4,024) | (3,510) |
Purchase of software | (55,400) | (22,018) | (7,390) |
Proceeds from marketable securities | 50,000 | 2,496 | 52,100 |
Proceeds from the sale (purchase) of investment | 10,901 | 0 | (5,000) |
Acquisitions of business, net of cash acquired | (78,663) | (567,429) | (11,187) |
Other, net | 8,715 | 0 | 0 |
Net cash (used in) provided by investing activities | (72,981) | (590,975) | 25,013 |
Financing activities: | |||
Net proceeds from the exercise of stock options | 25,781 | 54,314 | 33,283 |
Proceeds from the sale of capped call related to the Livongo Notes | 0 | 91,659 | 0 |
Proceeds from advances from financing companies | 15,275 | 6,002 | 0 |
Payment against advances from financing companies | (16,050) | (8,635) | 0 |
Payment of assumed indebtedness | 0 | (10,000) | 0 |
Proceeds from employee stock purchase plan | 16,810 | 4,722 | 3,380 |
Cash received (paid) for withholding taxes on stock-based compensation, net | 3,422 | (26,703) | (1,569) |
Other, net | (4,152) | 0 | 0 |
Net cash provided by financing activities | 40,947 | 859,136 | 35,094 |
Net increase in cash and cash equivalents | 161,956 | 214,650 | 89,976 |
Foreign exchange difference | (1,800) | 4,321 | 388 |
Cash and cash equivalents at beginning of the period | 733,324 | 514,353 | 423,989 |
Cash and cash equivalents at end of the period | 893,480 | 733,324 | 514,353 |
Income taxes paid | 3,974 | 1,324 | 1,310 |
Interest paid | 16,430 | 14,890 | 12,224 |
2027 Notes | |||
Financing activities: | |||
Proceeds from issuance of Notes | 0 | 1,000,000 | 0 |
Payment of issuance costs of Notes | 0 | (24,070) | 0 |
2022 Notes | |||
Financing activities: | |||
Repurchase of 2022 Notes | $ (139) | $ (228,153) | $ 0 |
Organization and Description of
Organization and Description of Business | 12 Months Ended |
Dec. 31, 2021 | |
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 whole person virtual care focused on forging a new healthcare experience with better convenience, outcomes and value around the world. On October 30, 2020, the Company completed the merger with Livongo Health, Inc. (“Livongo”), a transformational opportunity to improve the delivery, access and experience of chronic healthcare for individuals around the world. On July 1, 2020, the Company completed the acquisition of InTouch Technologies, Inc. (“InTouch”), a leading provider of enterprise telehealth solutions for hospitals and health systems. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2021 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation These consolidated financial statements have been prepared in accordance with the United States (“U.S.”) generally accepted accounting principles (“GAAP”). The consolidated financial statements include the results of Teladoc Health, as well as three professional associations and twelve professional corporations (collectively, the “THMG Association”). Teladoc Health Medical Group, P.A., formerly Teladoc Physicians, P.A. (“THMG”) is party to several Services Agreements by and among it and the professional corporations pursuant to which each professional corporation provides services to THMG. 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 THMG Association which contracts with physicians and other health professionals in order to provide services to Teladoc Health. The THMG 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 THMG Association and funds and absorbs all losses of the VIE and appropriately consolidates the THMG Association. Total revenue and net income (loss) for the VIE were $230.2 million and $(1.6) million, $203.9 million and $2.1 million and $83.6 million and $(3.2) million for the years ended December 31, 2021, 2020 and 2019, respectively. The VIE’s total assets, all of which were current, were $58.5 million and $32.0 million at December 31, 2021 and 2020, respectively. The VIE’s total liabilities, all of which were current, were $94.7 million and $66.6 million at December 31, 2021 and 2020, respectively. The VIE’s total stockholders’ deficit was $36.1 million and $34.6 million at December 31, 2021 and 2020, respectively. All intercompany transactions and balances have been eliminated. Business Combinations The Company accounts for its business combinations using the acquisition method of accounting. The purchase price is attributed to the fair value of the assets acquired and liabilities assumed. Transaction costs directly attributable to the acquisition are expensed as incurred. Identifiable assets and liabilities acquired or assumed are measured separately at their fair values as of the acquisition date. The excess of the purchase price of acquisition over the fair value of the identifiable net assets of the acquiree is recorded as goodwill. The results of businesses acquired in a business combination are included in the Company’s consolidated financial statements from the date of acquisition. When the Company issues stock-based or cash awards to an acquired company’s stockholders, the Company evaluates whether the awards are consideration or compensation for post-acquisition services. The evaluation includes, among other things, whether the vesting of the awards is contingent on the continued employment of the acquired company’s stockholders beyond the acquisition date. If continued employment is required for vesting, the awards are treated as compensation for post-acquisition services and recognized as expense over the requisite service period. Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates, including the selection of valuation methodologies, estimates of future revenue and cash flows, discount rates and selection of comparable companies. The estimates and assumptions used to determine the fair values and useful lives of identified intangible assets could change due to numerous factors, including market conditions, technological developments, economic conditions, and competition. In connection with determination of fair values, the Company may engage a third-party valuation specialist to assist with the valuation of intangible and certain tangible assets acquired and certain assumed obligations. Acquisition-related transaction costs incurred by the Company are not included as a component of consideration transferred but are accounted for as an operating expense in the period in which the costs are incurred. 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 and economic factors, and various other assumptions that the Company believes are necessary 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. The Company believes that estimates used in the preparation of these consolidated financial statements are reasonable; however, actual results could differ materially from these estimates. Changes in estimates are made when circumstances warrant. Such changes in estimates and refinements in estimation methodologies are reflected in the Consolidated Statement of Operations, and if material, are also disclosed in the Notes to Consolidated Financial Statements. Significant estimates and assumptions by management affect areas including the allowance for doubtful accounts, the carrying value of long-lived assets (including goodwill and intangible assets), the useful life of intangible assets, the capitalization and amortization of software development costs, deferred costs, and the accounting for business combinations. Other significant areas include revenue recognition (including Client performance guarantees), the accounting for income taxes, contingencies, litigation and related legal accruals, and the accounting for stock-based compensation awards. Segment Information The Company operates an integrated virtual care system for delivering, enabling, and empowering whole person health. As a result, the Company’s chief operating decision maker, its Chief Executive Officer (“CEO”), reviews the financial information presented on a consolidated basis, reflecting this integration, for purposes of allocating resources and evaluating its financial performance. Accordingly, the Company has determined that it operates as a single reportable segment—health services. Fair Value Measurements The carrying value of our financial instruments, including cash equivalents, short-term investments, accounts receivable, accounts payable, and accrued liabilities, approximates fair value due to their short-term nature. 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. Revenue Recognition The Company follows the revenue accounting requirements of Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“Accounting Standards Codification (“ASC”) 606”). ASC 606 establishes a principle for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. The core principle of ASC 606 is to recognize revenue to depict the transfer of promised goods or services to our customers, consist of employers, health plans, hospitals and health systems, insurance, and financial services companies (collectively “Clients”) as well as individual members, in an amount that reflects the consideration the entity expects to be entitled in exchange for those goods or services. This principle is achieved through applying the following five-step approach: • • • • • 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 (“PMPM”) access fee as well as certain contracts also include additional revenue on a per-virtual healthcare visit basis for general medical, or other specialty visits or 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 (“D2C”) mental health product, U.S. paid members purchase access to the Company’s professional provider network for an access fee. Revenues are also generated from contracts with Clients for the Company’s chronic care management solutions. Substantially all of this revenue is derived from monthly access fees that are recognized as services are rendered and earned under subscription agreements with Clients that are based on a per participant per month model, using the number of active enrolled members each month for the minimum enrollment period. These solutions integrate devices, supplies, access to the Company’s web-based platform, and clinical and data services to provide an overall health management solution. The promises to transfer these goods and services are not separately identifiable and is considered a single continuous service comprised of a series of distinct services that are substantially the same and have the same pattern of transfer (i.e., distinct days of service). These services are consumed as they are received, and the Company recognizes revenue each month using the variable consideration allocation exception since the nature of the obligations and the variability of the payment being based on the number of active members are aligned. Revenue is also generated from contracts with Clients for the sale and rental of equipment consisting of virtual health devices which allow physicians to access the Company’s hosted virtual healthcare 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 devices 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 records access fees from Clients accessing its professional provider network or hosted virtual healthcare platform or chronic care management platforms, visit fee revenue for general medical, expert medical service and other specialty visits as well as other revenue primarily associated with virtual healthcare device equipment included with its hosted virtual healthcare platform. The Company’s agreements generally have a term of one The Company generally bills for the virtual healthcare services on a monthly basis, in advance or in arrears depending on the service, 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 include a variable transaction price as the number of members may vary from period to period. Based on historical experience, the Company estimates this amount. The Company’s contracts do not generally contain refund provisions for fees earned related to services performed. However, the Company’s D2C mental 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 $26.0 million, $11.2 million, and $3.6 million for the years ended December 31, 2021, 2020, and 2019, respectively. Additionally, certain of the Company’s contracts include Client performance guarantees and pricing adjustments that are based upon minimum member utilization and guarantees by the Company for specific service level performance, member satisfaction scores, cost savings guarantees, and health outcome guarantees. Performance guarantees are estimated at each reporting period based on the Company’s historical performance of the underlying criteria or the customer’s specific performance as of that reporting date. Any estimated adjustments to the contract price for achieving or not achieving the performance guarantee are recognized as an adjustment to revenue in the period. For the years ended December 31, 2021, 2020, and 2019, revenue recognized from performance obligations related to prior periods for the changes in transaction price or Client performance guarantees was $5.6 million, $1.9 million, and $0.8 million, respectively. The Company has elected the optional exemption to not disclose the remaining performance obligations of its contracts since the majority 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. For additional revenue, deferred revenue, deferred costs, and disclosures, refer to Note 3 to the consolidated financial statements. Deferred Revenue Deferred revenue represents billed, but unrecognized revenue, and is comprised of fees received in advance of the delivery or completion of the services and amounts received in instances when revenue recognition criteria have not been met. Deferred revenue associated with upfront payments for a device is amortized ratably over the expected member enrollment period. Deferred revenue that will be recognized during the succeeding twelve-month period is recorded as current deferred revenue and the remaining portion is recorded as noncurrent deferred revenue. Deferred Costs and Other Deferred costs and other consist of deferred device costs and deferred contract costs. Deferred device costs consist of cost of inventory incurred in connection with delivery of services that are deferred and amortized over the shorter of the expected member enrollment period or the expected device life and recorded as cost of revenue. Deferred contract costs represent the incremental costs of obtaining a contract with a Client if we expect to recover such costs. The primary example of our costs to obtain a contract include incremental sales commissions to obtain contracts paid to our sales organization. A portion of these incremental costs to obtain Client contracts are deferred and then amortized on a straight-line basis over the period of benefit, which has been determined to be four years. The amounts subject to the services period are amortized in sales expense in the consolidated statement of operations. Deferred costs and other that are to be amortized within twelve months are recorded to deferred costs and other, current and the remainder is recorded to deferred costs and other, noncurrent on our consolidated balance sheets. Cost of Revenue (exclusive of depreciation and amortization, which is shown separately) Cost of revenue (exclusive of depreciation and amortization, which is shown separately) primarily consists of fees paid to the physicians and other health professionals; product costs; costs incurred in connection with the Company’s provider network operations and data center activities, which include employee-related expenses (including salaries and benefits) costs related to Client support; provider network operations center activities; medical records; magnetic resonance imaging; medical lab tests; translation; postage and medical malpractice insurance, and deferred device costs. Technology and Development Technology and development expenses include personnel and related expenses for software engineering, information technology infrastructure, security and compliance, product development, and support for our efforts to add new features and ensure the reliability and scalability of our existing solutions. Technology and development expenses also include outsourced software engineering services, the costs of operating our on-demand technology infrastructure (whereas costs directly associated with changes in revenue are presented separately in cost of revenues), licensed applications, and stock-based compensation for our technology and development employees. Our technology and development expenses exclude certain allocations of occupancy expense, capitalized software development costs, and depreciation and amortization. Research and Development Costs For the years ended December 31, 2021, 2020 and 2019, research and development of $205.3 million, $110.8 million, and $23.6 million, respectively, was recognized in the Company’s consolidated statements of operations in technology and development. Cash and Cash Equivalents Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less from the date of purchase of $893.5 million at December 31, 2021. The Company’s cash and cash equivalents generally consist of investments in money market funds. Cash and cash equivalents are stated at fair value. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are recorded at the invoiced amount, net of allowances for doubtful accounts. The allowance for doubtful accounts reflects the Company’s 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. Accounts receivable deemed uncollectable are charged against the allowance for doubtful accounts when identified. Inventories Inventories consist of purchased components for assembling welcome kits, refill kits, and replacement components for the Company’s chronic care management solutions, and virtual health devices manufactured for sale or lease as part of the Company’s hosted virtual healthcare platform solution. Inventories are stated at the lower of cost and net realizable value. The cost of inventories is determined on a first-in, first-out (“FIFO”) basis or on a weighted average cost basis which approximates the 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 potentially obsolete and slow-moving inventory with write-downs being recorded when identified. Write-downs are measured as the difference between cost of the inventory and net realizable value based upon assumptions about future demand and obsolescence, and charged to cost of revenue (exclusive of depreciation and amortization shown separately) in the accompanying consolidated statement of operations. At the point of the loss recognition, a new lower cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation is recorded using the straight-line method over the estimated useful lives of the respective asset as follows: Computer equipment 3 years Furniture and equipment 5 years Leasehold improvements Shorter of the lease term or the estimated useful lives of the improvements Rental equipment 4.3 years Operating Leases The Company adopted the new leases standard set forth under ASC Topic 842, “Leases,” or ASC Topic 842, as of January 1, 2019, Leases of Hosted Virtual Healthcare Platform The Company rents its hosted virtual healthcare platform for certain Clients under arrangements that qualify primarily as operating lease arrangements. The contracts include equipment consisting of virtual health devices which allow physicians 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 whether: (1) ownership of the virtual healthcare 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 healthcare device that the lessee is reasonably certain to exercise, (3) the lease term is for the major part of the remaining useful life of the virtual healthcare device, (4) the present value of the sum of the lease payments equals or exceeds substantially all of the fair value of the virtual healthcare device, and (5) it is expected that there will be no alternative use for the virtual healthcare device at the end of the lease term. The Company generally recognizes revenue for virtual healthcare devices in sales-type leases at a point in time upon shipment 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 healthcare device is recognized over the lease term and generally on a straight-line basis. For both sales-type and operating lease arrangement, revenue associated with virtual healthcare platform access is recognized over the lease term on a straight-line basis. 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. Maintenance and repairs are charged to expense as incurred while improvements are capitalized. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in the consolidated statement of operations in the period realized. Capitalized Software Development Costs Capitalized software development costs are included in intangible assets and are amortized on a straight-line basis over 3 to 5 years. For the Company’s development costs related to its software development tools that enable its members and providers to interact, the Company capitalizes costs incurred during the application development stage. Costs related to maintenance activities are expensed as incurred. Goodwill and Other Intangible Assets Goodwill represents the excess of the total purchase consideration over the fair value of the identifiable assets acquired and liabilities assumed in a business combination. Goodwill is not amortized but is tested for impairment at the reporting unit level annually on October 1 or more frequently if events or changes in circumstances indicate that it is more likely than not to be impaired. The Company currently operates as a single reporting unit under the guidance in ASC 350, “Intangibles- Goodwill and Other.” When testing goodwill for impairment, we have the option of first performing a qualitative assessment to determine whether it is more likely than not that the fair value of our total company reporting unit is less than its carrying amount. If we elect to bypass the qualitative assessment, or if a qualitative assessment indicates it is more likely than not that carrying value exceeds its fair value, we perform a quantitative goodwill impairment test. Under the quantitative goodwill impairment test, if our reporting unit’s carrying amount exceeds its fair value, we will record an impairment charge based on that difference. To determine reporting unit fair value as part of the quantitative test, we use a weighting of fair values derived from the income approach and the market approach. Under the income approach, we project our future cash flows and discount these cash flows to reflect their relative risk. The cash flows used are consistent with those the Company uses in its internal planning, which reflects actual business trends experienced and our long-term business strategy. As such, key estimates and factors used in this method include, but are not limited to, revenue, margin and operating expense growth rates; as well as a discount rate and a terminal growth rate. Under the market approach to determining reporting unit fair value, the guideline company method develops valuation multiples by comparing our reporting unit to similar publicly traded companies. In order to further validate the reasonableness of fair value as determined by the income and market approaches described above, a reconciliation to market capitalization is then performed by estimating a reasonable control premium and other market factors. Other intangible assets include client relationships, non-compete agreements, acquired technology, patents and trademarks resulting from business acquisitions, and capitalized software development costs. We amortize these definite-lived intangible assets over their estimated useful lives and review the estimated useful lives on a quarterly basis to determine if the period of economic benefit has changed. Client relationships are amortized over a period of 2 to 20 years in relation to expected future cash flows, while non-compete agreements are amortized over a period of 1.5 to 5 years using the straight-line method. Trademarks are amortized over 3 to 15 years using the straight-line method. Technology is amortized over 5 to 7 years using the straight-line method. Patents are amortized over 3 years using the straight-line method. Capitalized software development costs are amortized over 3 to 5 years using the straight-line method. Definite-lived intangible assets are re-evaluated whenever events or changes in circumstances indicate that their estimated useful lives may require revision and/or carrying value of the related asset group may not be recoverable by its projected undiscounted cash flows. If the carrying value of the asset group is determined to be unrecoverable, an impairment charge would be recognized in an amount equal to the amount by which the carrying value of the asset group exceeds its fair value. Convertible Senior Notes Convertible Senior Notes (the “Notes”) and the Livongo Notes that we agreed to guarantee (the “Livongo Notes”) are accounted for in accordance with the financial accounting standards board (“FASB”) ASC Subtopic 470-20, Debt with Conversion and Other Options. Pursuant to ASC Subtopic 470-20, issuers of certain convertible debt instruments, such as the Notes, that have a net settlement feature and may be settled wholly or partially in cash upon conversion are required to separately account for the liability (debt) and equity (conversion option) components of the instrument. The carrying amount of the liability component of the instrument is computed by estimating the fair value of a similar liability without the conversion option using an income-based approach. For the income-based approach, the Company uses a convertible bond lattice model that includes assumptions such as volatility and the risk-free rate. The amount of the equity component is then calculated by deducting the fair value of the liability component from the principal amount of the Notes or the fair value of the total Livongo Notes assumed on consummation of the merger, as applicable. The difference between the principal amount and the liability component represents a debt discount that is amortized to interest expense over the contractual term of the Notes and the Livongo Notes using an effective interest rate method. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. In accounting for the issuance costs related to the Notes, the allocation of issuance costs, if applicable, incurred between the liability and equity components were based on their relative values. Refer to Recently Issued Accounting Pronouncements. Stock-Based Compensation Stock-based compensation for stock options and restricted stock units (“RSUs”) granted is measured based on the grant-date fair value of the awards and recognized on a straight-line basis over the period during which the employee is required to perform services in exchange for the award (generally the vesting period of the award). The Company estimates the fair value of employee stock options using the Black-Scholes option-pricing model, except as noted. Stock-based compensation for performance stock units (“PSUs”) granted is measured based on the grant- date fair value of the awards and recognized on an accelerated tranche by tranche basis over the period during which the employee is required to perform services in exchange for the award (generally the vesting period of the award). 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 targets and can range from 50% to 225% of the initial grant. For stock-based compensation assumed in the Livongo merger, the Monte Carlo valuation model was the most suitable for valuation of options for the replaced and replacement awards from the merger. The Company’s Employee Stock Purchase Plan (“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. Advances from Financing Companies The Company utilizes a third-party financing company to provide certain Clients with a rental option. Under these arrangements, the Company receives payment upfront from the financing companies and the financing companies collect the Client rental payments over the life of the rental agreement on a nonrecourse basis. The principal portion of these upfront payments are reported as advances from financing companies in the accompanying consolidated balance sheet. The Company indemnifies the financing companies for any loss or expenses resulting from its failure to provide the ongoing necessary system services and support to the Client. Income Taxes Our income tax expenses, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits reflect management's best assessment of estimated current and future taxes to be paid. The objectives for accounting for income taxes, as prescribed by the relevant accounting guidance, are to recognize the amount of taxes payable or refundable for the current year and deferred tax assets and liabilities for future tax consequences of events that have been recognized in the financial statements. Deferred income taxes refl |
Revenue, Deferred Revenue, Defe
Revenue, Deferred Revenue, Deferred Costs and Other | 12 Months Ended |
Dec. 31, 2021 | |
Revenue, Deferred Revenue, Deferred Costs and Other | |
Revenue, Deferred Revenue, Deferred Costs and Other | Note 3. Revenue, Deferred Revenue, Deferred Costs and Other The Company generates access fees from Clients accessing its professional provider network, hosted virtual healthcare platform or chronic care management platforms. Visit fee revenue is generated for general medical, expert medical service and other specialty visits. In addition, other revenue is primarily associated with virtual healthcare device equipment included with the Company’s hosted virtual healthcare platform. Access revenue accounted for approximately 85% of our total revenue for the year ended December 31, 2021, 78% of our total revenue for the year ended December 31, 2020, and 82% of our total revenue for the year ended December 31, 2019. The following table presents the Company’s revenues disaggregated by revenue source (in thousands): Year Ended December 31, 2021 2020 2019 Access Fees Revenue U.S. $ 1,488,420 $ 678,168 $ 334,675 International 243,585 168,491 119,531 Total 1,732,005 846,659 454,206 Visit Fee Revenue U.S. 241,515 211,664 88,669 International 12,719 10,388 10,432 Total 254,234 222,052 99,101 Other U.S. 44,089 23,888 - International 2,379 1,363 - Total 46,468 25,251 - Total Revenues $ 2,032,707 $ 1,093,962 $ 553,307 During the fourth quarter of 2021, the Company refined its definition of international revenues to reflect all international revenues based on location of the customer. Previously, D2C activities were primarily reflected based on the location of operations. In addition, certain activities related to the Company’s international operations are now reflected in visit revenues versus access fee revenues. Prior period amounts have been recast to conform with current presentation. Deferred Revenue For certain services, payment is required for future months before the service is delivered to the member. The Company records deferred revenue when cash payments are received in advance of the Company’s performance obligation to provide services. Deferred revenue, current and long-term, was $79.4 million at December 31, 2021 and $54.8 million at December 31, 2020. The net increase of $24.6 million and $40 million in the deferred revenue balance for the years ended December 31, 2021 and 2020, respectively, is primarily driven by the D2C mental 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 in 2021, and the impact from acquisitions in 2020. The Company anticipates that it will satisfy most of its performance obligation associated with the deferred revenue within the prospective fiscal year. Revenue recognized during the years ended December 31, 2021 and 2020 that was included in deferred revenue at the beginning of the periods was $51.0 million and $12.5 million, respectively. We expect to recognize $73.1 million and $3.1 million of revenue in 2022 and 2023 , respectively, related to future performance obligations that are unsatisfied or partially unsatisfied as of December 31, 2021. Deferred Costs and Other Deferred costs and other as of December 31, 2021 and 2020 consisted of the following (in thousands): As of December 31, 2021 2020 Deferred costs and other, current $ 22,304 $ 3,468 Deferred costs and other, noncurrent 6,249 2,179 Total deferred costs and other $ 28,553 $ 5,647 Deferred costs and other activity were as follows (in thousands): Deferred Costs and Other Beginning balance as of December 31, 2020 $ 5,647 Additions 41,579 Cost of revenue recognized (18,673) Ending balance as of December 31, 2021 $ 28,553 |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value Measurements | |
Fair Value Measurements | Note 4. Fair Value Measurements The carrying value of the Company’s cash equivalents, short-term investments, accounts receivable, accounts payable, and accrued liabilities approximates fair value due to their short-term nature. 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’s short-term investments held as of December 31, 2021 and 2020 consisted primarily of certificates of deposit held at financial institutions. The amortized cost of these investments, which are classified as Level 2, approximated their fair value. The Company’s investments in equity securities without readily determinable fair values are classified as a component of Other assets and are accounted for under the measurement alternative of the FASB ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, with any changes to fair value recognized within other (income) expense, net each reporting period. Under the measurement alternative, equity investments without readily determinable fair values are carried at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar securities of the same issuer; value is generally determined based on a market approach as of the transaction date. The Company measured its contingent consideration at fair value on a recurring basis and classifies 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): December 31, 2021 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 893,480 $ 0 $ 0 $ 893,480 Short-term investments $ 0 $ 2,537 $ 0 $ 2,537 December 31, 2020 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 733,324 $ 0 $ 0 $ 733,324 Short-term investments $ 0 $ 53,245 $ 0 $ 53,245 Equity securities without readily determinable fair values $ 0 $ 5,000 $ 0 $ 5,000 Contingent liability $ 0 $ 0 $ 4,514 $ 4,514 There were no transfers between fair value measurement levels during the years ended December 31, 2021 and 2020. The change in fair value of the Company’s equity securities without readily determinable fair values was as follows: Fair value and historical cost basis at December 31, 2020 $ 5,000 Increase due to observable price change in identical securities 5,901 Sale of investment (10,901) Fair value at December 31, 2021 $ 0 The change in fair value of the Company’s contingent liability is recorded in acquisition, integration, and transformation 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 (in thousands): Fair value at December 31, 2020 $ 4,514 Payments (4,367) Currency translation adjustment (147) Fair value at December 31, 2021 $ 0 |
Business Acquisitions
Business Acquisitions | 12 Months Ended |
Dec. 31, 2021 | |
Business Acquisitions | |
Business Acquisitions | Note 5. Business Acquisitions On October 30, 2020, the Company completed the acquisition of Livongo through a merger in which Livongo became a wholly-owned subsidiary of the Company. 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 final consideration, after certain adjustments discussed subsequently, was $13,876.9 million, consisting of $380.2 million of net cash, $555.4 million related to the conversion feature of the Livongo Notes guaranteed by the Company, and 60.2 million shares of Teladoc Health’s common stock valued at approximately $12,941.3 million on October 30, 2020. Final purchase price allocations resulted in the following intangibles: Balance at Acquisition Estimated Average Intangible Asset (in millions) Useful Lives Valuation Methodology Customer Relationships $ 1,050 15.7 years Income Approach: Multi Period Excess Earnings Method Technology $ 300 7 years Income Approach: Relief from Royalty Method Trademarks $ 250 10 years Income Approach: Relief from Royalty Method The Livongo customer relationships typically have a three-year contractual term, but the estimated useful life assumes renewals or extensions and considers historical attrition rates. The acquisition was considered a stock acquisition for tax purposes and accordingly, the goodwill resulting from this acquisition is not tax deductible. The total acquisition related costs were $59.0 million and included transaction costs for investment bankers, other professional fees, and income taxes for accelerated grants and were recognized in the Company’s consolidated statement of operations in acquisition, integration, and transformation costs. In the first quarter of 2021, the Company identified 205,279 of additional shares of Teladoc Health common stock that were included as part of the merger consideration (“Excess Shares”) and 85,481 of additional shares of Teladoc Health common stock that were not withheld from the merger consideration for withholding tax purposes (“Withholding Shares”). In addition, the Company identified $5.6 million of merger- related cash payments related to the Excess Shares (“Cash Overpayments”). The Company recovered and cancelled all 205,279 of the Excess Shares and recovered the Cash Overpayments in the form of cash. The Company withheld applicable employment taxes at the time of the merger on the Withholding Shares. These same taxes also were paid directly by the employee; the Company has since submitted an amended payroll tax filing to recover the overpaid tax, and is currently awaiting processing by the tax authorities. The Company did not incur any material charges or expenses related to the recovery of the Withholding Shares. Accordingly, the Company recorded, in the first quarter of fiscal year 2021, an increase to receivables in current other assets of $20.8 million, a decrease to consolidated stockholders’ equity of $40.3 million and a decrease to goodwill of $61.1 million. In 2021, the Company reduced goodwill by $66.5 million to record final acquisition date valuation allowance and uncertain tax positions related to stock-based compensation and research and development credits. On July 1, 2020, the Company completed the acquisition of InTouch through a merger in which InTouch became a wholly-owned subsidiary of the Company. The aggregate merger consideration paid was $1,069.8 million, which was comprised of 4.6 million shares of Teladoc Health’s common stock valued at $903.3 million on July 1, 2020, and $166.5 million of net cash. InTouch is a leading provider of enterprise telehealth solutions for hospitals and health systems. The acquisition was considered a stock acquisition for tax purposes and accordingly, the goodwill resulting from this acquisition is not tax deductible. The total acquisition-related costs were $21.4 million and included transaction costs for investment bankers and other professional fees and were recognized in the Company’s consolidated statement of operations in acquisition, integration and transformation costs. 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 respective acquisition dates. The following table summarizes the fair value estimates of the assets acquired and liabilities assumed for the Livongo and InTouch acquisitions. The Company, with the assistance of a third-party valuation expert, estimated the fair value of the acquired tangible and intangible assets with significant estimates such as revenue projections. Identifiable assets acquired and liabilities assumed (in thousands): Livongo InTouch Purchase price, net of cash acquired $ 13,876,931 $ 1,069,759 Less: Accounts receivable 80,084 16,986 Short term investment 52,500 0 Inventory 24,299 8,492 Property and equipment, net 8,952 11,366 Right of use assets 15,056 4,965 Other assets 17,337 2,541 Client relationships 1,050,000 164,580 Technology 300,000 29,190 Trademarks 250,000 32,630 Advances from financing companies 0 (26,012) Accounts payable (119,302) (5,589) Deferred revenue (997) (20,729) Convertible notes (453,417) 0 Deferred taxes (73,010) (30,102) Lease liabilities (18,834) (5,495) Other liabilities (46,606) (13,042) Goodwill $ 12,790,869 $ 899,978 The amount allocated to goodwill reflects the benefits Teladoc Health expects to realize from the growth of the respective acquisitions’ operations, cost savings, and various synergies. The Company’s pro forma revenue and net loss for the year ended December 31, 2020 below have been prepared as if Livongo and InTouch had been purchased on January 1, 2020. As such, the Company made pro-forma adjustments related to deferred revenue, deferred costs, amortization of intangible assets, interest expense, stock-based compensation, acquisition costs and transaction expenses for the purpose of this presentation. Unaudited Pro Forma Year Ended December 31, (in thousands) 2020 Revenue $ 1,441,834 Net loss $ (882,411) The unaudited pro forma financial information above is not necessarily indicative of what the Company’s consolidated results actually would have been if the acquisitions 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. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2021 | |
Inventories | |
Inventories | Note 6. Inventories Inventories consisted of the following (in thousands): As of December 31, 2021 2020 Raw materials and purchased parts $ 26,164 $ 19,591 Work in process 313 1,431 Finished goods 46,602 35,476 Total inventories $ 73,079 $ 56,498 |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2021 | |
Property and Equipment, Net | |
Property and Equipment, Net | Note 7. Property and Equipment, Net Property and equipment, net, consisted of the following (in thousands): As of December 31, 2021 2020 Computer equipment $ 28,330 $ 22,129 Furniture and equipment 7,104 6,486 Leasehold improvement 12,983 12,831 Rental Equipment 11,018 8,413 Construction in progress 1,929 657 Total 61,364 50,516 Accumulated depreciation (34,130) (21,965) Property and equipment, net $ 27,234 $ 28,551 Depreciation expense for the years ended December 31, 2021, 2020 and 2019 was $8.9 million, $4.8 million, and $3.4 million, respectively. As of December 31, 2021 and 2020, other assets included $2.4 million and zero, respectively, of capitalized cloud computing implementation costs related to the Company's enterprise resource planning and reporting software. |
Intangible Assets, Net
Intangible Assets, Net | 12 Months Ended |
Dec. 31, 2021 | |
Intangible Assets, Net | |
Intangible Assets, Net | Note 8. Intangible Assets, Net Intangible assets, net consisted of the following (in thousands): Weighted Average Remaining Useful Accumulated Net Carrying Useful Life Life Gross Value Amortization Value (Years) December 31, 2021 Client relationships 2 to 20 years $ 1,465,926 $ (199,866) $ 1,266,060 14.5 Non-compete agreements 1.5 to 5 years 4,975 (4,975) 0 Trademarks 3 to 15 years 326,392 (45,555) 280,837 9.5 Patents 3 years 200 (200) 0 Software 3 126,188 (40,767) 85,421 2.7 Technology 5 343,262 (65,302) 277,960 5.6 Intangible assets, net $ 2,266,943 $ (356,665) $ 1,910,278 12.0 December 31, 2020 Client relationships 2 $ 1,460,648 $ (100,844) $ 1,359,804 ` 15.4 Non-compete agreements 1.5 5,097 (4,872) 225 0.4 Trademarks 3 326,786 (15,576) 311,210 10.5 Patents 3 years 200 (200) 0 Software 3 to 5 years 52,518 (24,771) 27,747 2.8 Technology 5 338,150 (16,272) 321,878 6.6 Intangible assets, net $ 2,183,399 $ (162,535) $ 2,020,864 13.1 Refer to Note 9 to the consolidated financial statements for the results of impairment testing of our intangible assets including goodwill. Amortization expense for intangible assets net of foreign currency remeasurement for intangible assets was $195.3 million, $64.7 million, and $35.6 million for the years ended December 31, 2021, 2020, and 2019, respectively. Periodic amortization that will be charged to expense over the remaining life of the intangible assets as of December 31, 2021 was as follows (in thousands): Years Ending December 31, 2022 $ 206,602 2023 210,494 2024 205,595 2025 181,729 2026 and thereafter 1,105,858 $ 1,910,278 |
Goodwill
Goodwill | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill | |
Goodwill | Note 9. Goodwill Goodwill consisted of the following (in thousands): As of December 31, 2021 2020 Beginning balance as of December 31, 2020 and 2019, respectively $ 14,581,255 $ 746,079 Additions associated with acquisitions 64,269 13,812,198 Purchase consideration adjustments (see Note 5) (55,801) 0 Deferred tax adjustments (see Note 5) (66,505) 0 Currency translation adjustment (19,044) 22,978 Ending balance as of December 31, 2021 and 2020 $ 14,504,174 $ 14,581,255 There were no impairment charges recorded for our goodwill or definite-lived intangible assets for the years ended December 31, 2021, 2020 or 2019. As a result of sustained decreases to our Company share price following our annual impairment test on October 1, 2021, we concluded a triggering event had occurred and conducted impairment testing of our goodwill, definite-lived intangibles and other long-lived assets as of December 1, 2021. As a result of this review, each of the asset groups identified for the purposes of testing the recoverability of our definite-lived intangibles and other long-lived assets passed the recoverability test by a significant margin. As it related to impairment testing of goodwill, the fair value of our reporting unit exceeded its carrying value by approximately 15% on December 1, 2021. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 12 Months Ended |
Dec. 31, 2021 | |
Accrued Expenses and Other Current Liabilities | |
Accrued Expenses and Other Current Liabilities | Note 10. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following (in thousands): As of December 31, 2021 2020 Professional fees $ 5,373 $ 4,717 Consulting fees/provider fees 19,292 23,167 Client performance guarantees 7,653 7,215 Interest payable 1,480 2,049 Income tax payable 3,098 1,627 Insurance 3,884 3,139 Marketing 3,471 2,815 Operating lease liabilities - current 12,687 11,438 Earnout — 4,514 Franchise and Sales Taxes 9,965 2,099 Device Replacement Cost 6,263 0 Other 29,767 20,877 Total $ 102,933 $ 83,657 |
Convertible Senior Notes
Convertible Senior Notes | 12 Months Ended |
Dec. 31, 2021 | |
Convertible Senior Notes | |
Convertible Senior Notes | Note 11. Convertible Senior Notes Outstanding Convertible Senior Notes As of December 31, 2021, the Company had three series of convertible senior notes outstanding. The issuances of such notes originally consisted of (i) $1 billion aggregate principal amount of 1.25% convertible senior notes due 2027 (the “2027 Notes”), issued on May 19, 2020 for net proceeds to the Company of $975.9 million after deducting offering costs of approximately $24.1 million, (ii) $287.5 million aggregate principal amount of 1.375% convertible senior notes due 2025 (the “2025 Notes”), issued on May 8, 2018 for net proceeds to the Company of $279.1 million after deducting offering costs of approximately $8.4 million, and (iii) $550.0 million aggregate principal amount of 0.875% convertible senior notes due 2025 that were issued by Livongo on June 4, 2020 for which the Company has agreed to guarantee Livongo’s obligations (the “Livongo Notes” and together with the 2027 Notes, the 2025 Notes and the 2022 Notes (as defined below), the “Notes”). On June 27, 2017, the Company issued, at par value, $275 million aggregate principal amount of 3% convertible senior notes due 2022 (the “2022 Notes”), which were redeemed during the quarter ended March 31, 2021 as described below. The following table presents certain terms of the Notes that were outstanding as of December 31, 2021: 2027 Notes 2025 Notes Livongo Notes Interest Rate Per Year 1.25 % 1.375 % 0.875 % Fair Value as of December 31, 2021 (in millions) $ 940.0 $ 1.3 $ 605.0 Maturity Date June 1, 2027 May 15, 2025 June 1, 2025 Optional Redemption Date June 5, 2024 May 22, 2022 June 5, 2023 Conversion Date December 1, 2026 November 15, 2024 March 1, 2025 Share Conversion Rate Per $1,000 Principal Amount as of December 31, 2021 4.1258 18.6621 13.94 Remaining Contractual Life as of December 31, 2021 5.4 years 3.4 years 3.4 years All of the Notes are 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 such Notes; equal in right of payment to the Company’s liabilities that are 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 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 the applicable conversion date only under the following circumstances: ● during any quarter (and only during such 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 quarter is greater than or equal to 130% of the conversion price for the applicable Notes on each applicable trading day; ● during the five business day period after any ten consecutive trading day period (or five consecutive trading day period in the case of the Livongo Notes) 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 applicable Notes on each such trading day; ● upon the occurrence of specified corporate events described under the applicable indenture; or ● if the Company calls the applicable Notes for redemption, at any time until the close of business on the second business day immediately preceding the redemption date. On or after the applicable conversion date, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of such Notes, regardless of the foregoing circumstances. The 2027 Notes and the 2025 Notes are convertible into shares of the Company’s common stock at the applicable conversion rate shown in the table above. The Livongo Notes are convertible at the applicable conversion rate shown in the table above into “units of reference property,” each of which is comprised of 0.5920 of a share of the Company’s common stock and $4.24 in cash, without interest. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock (or units of reference property, in the case of the Livongo Notes) 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 or units of reference property, the amount of cash and shares of the Company’s common stock or units of reference property, 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 (or 40 days in the case of the Livongo Notes). The Company may redeem for cash all or part of the Notes, at its option, on or after the applicable optional redemption date shown in the table above (and prior to the 41st scheduled trading day immediately preceding the maturity date in the case of the Livongo Notes) 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 Notes to be redeemed, plus accrued and unpaid interest, if any. In addition, calling any 2027 Note or 2025 Note for redemption on or after the applicable optional redemption date will constitute a make-whole fundamental change with respect to that 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 applicable indenture. If Livongo undergoes a fundamental change (as defined in the applicable indenture) at any time prior to the maturity date, holders will have the right, at their option, to require Livongo to repurchase for cash all or any portion of their Livongo Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Livongo Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In accounting for the issuance of the 2027 Notes, 2025 Notes and the 2022 Notes, the Company separated the 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 applicable 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 the applicable maturity date. 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, 2025 Notes and 2022 Notes was $286 million, $91.4 million and $62.4 million, respectively, net of issuance costs which were recorded in additional paid-in capital on the accompanying consolidated balance sheet. The Company carries the liability component of the Livongo Notes at face value less unamortized debt discount on its consolidated balance sheets and provides the fair value for disclosure purposes only. The Company has reserved an aggregate of 8.7 million shares of common stock for the Notes. In accounting for the transaction costs related to the issuance of the 2027 Notes, 2025 Notes and 2022 Notes, the Company allocated the total costs incurred to the liability and equity components of the 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 Notes (or five The liability component of the Notes consisted of the following (in thousands): As of December 31, 2027 Notes 2021 2020 Principal $ 1,000,000 $ 1,000,000 Less: Debt discount, net (1) (250,846) (287,916) Net carrying amount $ 749,154 $ 712,084 2025 Notes Principal $ 730 $ 276,788 Less: Debt discount, net (1) (166) (65,923) Net carrying amount $ 564 $ 210,865 Livongo Notes Principal $ 550,000 $ 550,000 Less: Debt discount, net (1) (74,047) (93,357) Net carrying amount $ 475,953 $ 456,643 2022 Notes Principal $ 0 $ 46,762 Less: Debt discount, net (1) 0 (4,202) Net carrying amount $ 0 $ 42,560 (1) Included in the accompanying consolidated balance sheet within convertible senior notes and amortized to interest expense over the expected life of the Notes using the effective interest rate method. (See Note 2, Recently Issued Accounting Pronouncements ). The Company estimates the fair value of its Notes utilizing market quotations for debt that have quoted prices in active markets. Since the 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. . The following table sets forth total interest expense recognized related to the Notes (and in the case of the Livongo Notes, subsequent to the acquisition of Livongo) (in thousands): Year Ended December 31, 2027 Notes: 2021 2020 Contractual interest expense $ 12,500 $ 7,743 Amortization of debt discount 37,070 21,756 Total $ 49,570 $ 29,499 Effective interest rate of the liability component 3.4 % 3.4 % Year Ended December 31, 2025 Notes: 2021 2020 2019 Contractual interest expense $ 1,082 $ 3,900 $ 3,953 Amortization of debt discount 4,558 12,532 11,706 Total $ 5,640 $ 16,432 $ 15,659 Effective interest rate of the liability component 4.7 % 7.9 % 7.9 % Year Ended December 31, Livongo Notes: 2021 2020 Contractual interest expense $ 4,813 $ 829 Amortization of debt discount 19,310 3,226 Total $ 24,123 $ 4,055 Effective interest rate of the liability component 5.2 % 5.2 % Year Ended December 31, 2022 Notes: 2021 2020 2019 Contractual interest expense $ 116 $ 4,047 $ 8,250 Amortization of debt discount 316 7,553 14,026 Total $ 432 $ 11,600 $ 22,276 Effective interest rate of the liability component 9.6 % 9.6 % 9.6 % Exchanges and Conversions of Convertible Senior Notes Due 2025 Redemption and Conversions of Convertible Senior Notes Due 2022 In March 2021, the Company completed a redemption of all of the then outstanding 2022 Notes in exchange for approximately $0.1 million in cash (including accrued and unpaid interest). Prior to that redemption, certain holders of the 2022 Notes converted their 2022 Notes in exchange for 1.1 million shares of the Company’s common stock during the year ended December 31, 2021. As a result of the redemption and conversions, the Company recorded a charge associated with the loss on extinguishment of debt of $3.4 million during the year ended December 31, 2021. |
Advances from Financing Compani
Advances from Financing Companies | 12 Months Ended |
Dec. 31, 2021 | |
Advances from Financing Companies | |
Advances from Financing Companies | Note 12. Advances from Financing Companies As of December 31, 2021 2022 $ 13,313 2023 7,153 2024 2,138 $ 22,604 |
Leases
Leases | 12 Months Ended |
Dec. 31, 2021 | |
Leases. | |
Leases | Note 13. Leases Operating Leases The Company has operating leases for facilities, hosting co-location facilities, and certain equipment under non-cancelable leases in the United States and various international locations. The leases have remaining lease terms of 1 to 11 years, with options to extend the lease term from 1 to 6 years. At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the arrangement covering the right to use property, plant, or equipment for a stated period of time. For new and amended leases beginning in 2020 and after, the Company separately allocates the lease (e.g., fixed lease payments for right-to-use land, building, etc.) and non-lease components (e.g., common area maintenance) for its leases. The components of operating lease expense reflected in the consolidated statements of operations were as follows (in thousands): Year Ended December 31, 2021 Lease cost Operating lease cost $ 14,087 Short Term lease cost 1,087 Variable lease cost 3 Total lease cost $ 15,177 In determining the present value of the lease payments, the Company has elected to utilize its incremental borrowing rate based on the original lease term and not the remaining lease term. Supplemental information related to operating leases was as follows (in thousands): Year Ended Consolidated Statements of Cash Flows December 31, 2021 Cash payment for operating cash flows used for operating leases $ 14,531 Operating lease liabilities arising from obtaining right-of-use assets $ 11,598 Other Information Weighted-average remaining lease term 5.71 Weighted-average discount rate 5.88% The Company leases office space under non-cancelable operating leases in the United States and various international locations. As of December 31, 2021, the future minimum lease payments under non-cancelable operating leases were as follows (in thousands): As of Operating Leases: December 31, 2021 2022 $ 15,021 2023 14,981 2024 9,871 2025 7,232 2026 and thereafter 18,659 Sub-total $ 65,764 Less: imputed interest 11,304 Minimum lease payments $ 54,460 two |
Common Stock and Stockholders'
Common Stock and Stockholders' Equity | 12 Months Ended |
Dec. 31, 2021 | |
Common Stock and Stockholders'Equity | |
Common Stock and Stockholders' Equity | Note 14. Common Stock and Stockholders’ Equity Capitalization Effective October 30, 2020, the authorized number of shares of the Company’s common stock was increased from 150,000,000 to 300,000,000 shares. Warrants The Company had no warrants outstanding as of December 31, 2021 or 2020. Stock Plans The Company’s 2015 Incentive Award Plan, 2017 Employment Inducement Incentive Award Plan and Livongo Acquisition Incentive Award Plan (collectively, the “Plans”) provide for the issuance of incentive and non-statutory options and other equity-based awards to its employees and non-employee service providers. In connection with the closing of the Livongo merger, the Company assumed the Livongo Health, Inc. 2019 Equity Incentive Plan, the Livongo Health, Inc. Amended and Restated 2014 Stock Incentive Plan, and the Livongo Health, Inc. Amended and Restated 2008 Stock Incentive Plan (collectively, the “Assumed Plans”). At the effective time of the Livongo merger on October 30, 2020, each outstanding Livongo equity award issued under the Assumed Plans was converted into a corresponding award with respect to the Company’s common stock, with the number of shares underlying such award adjusted based on the “Equity Award Adjustment Ratio” (as defined below), and remained outstanding in accordance with the terms that were applicable to such award prior to the Livongo merger. The exercise price of each outstanding Livongo stock option was also adjusted based on the Equity Award Adjustment Ratio. The “Equity Award Adjustment Ratio” means the quotient determined by dividing (i) the volume weighted average closing price of Livongo common stock on the four four All stock-based awards to employees are measured based on the grant date fair value, or replacement grant date fair value in relation to the Livongo transaction, 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 RSU). Stock Options 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 12,855,294 shares available for grant at December 31, 2021. Activity under the Plans was 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, 2020 5,826,685 $ 17.19 5.31 $ 1,064,944 Stock option grants 49,177 $ 151.24 N/A Stock options exercised (2,339,537) $ 11.00 N/A $ (431,572) Stock options forfeited (109,347) $ 29.03 N/A Balance at December 31, 2021 3,426,978 $ 22.88 5.32 $ 242,569 Vested or expected to vest at December 31, 2021 3,426,978 $ 22.88 7.32 $ 11,645 Exercisable at December 31, 2021 3,176,543 $ 19.54 5.16 $ 230,924 The total grant-date fair value of stock options granted during the year ended December 31, 2021, 2020 and 2019 was $7.4 million, $1,298.0 million and $4.7 million, respectively. 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. The expected volatility was derived from the historical stock volatilities of the Company’s stock volatility over a period equivalent to the expected term of the stock option grants. 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. 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. 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: Year Ended December 31, 2021 2020 2019 Volatility 56.1% - 58.1% 46.1% - 56.6% 46.8% – 47.6% Expected term (in years) 4.1 4.1 5.2 Risk-free interest rate 0.31% - 1.02% 0.22%-1.64% 1.35% - 2.55% Dividend yield 0 0 0 Weighted-average fair value of underlying stock options $ $67.37 $ $48.74 $ 28.37 The Company determined that a Monte Carlo valuation model is most suitable for valuation of options for the replaced and replacement awards from the Livongo merger, for the following reasons: • • For the years ended December 31, 2021, 2020 and 2019, the Company recorded compensation expense related to stock options granted of $93.0 million, $134.9 million, and $20.4 million, respectively. As of December 31, 2021, the Company had $22.1 million in unrecognized compensation cost related to non-vested stock options, which is expected to be recognized over a weighted average period of approximately 1.0 years. Restricted Stock Units The fair value of RSUs is determined on the date of grant. The Company records 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 RSUs was as follows: Weighted-Average Grant Date RSUs Fair Value Per RSU Balance at December 31, 2020 3,550,595 $ 162.11 Granted 816,466 $ 174.64 Vested and issued (1,419,426) $ 139.32 Forfeited (814,134) $ 183.89 Balance at December 31, 2021 2,133,501 $ 168.43 Vested and unissued at December 31, 2021 16,507 $ 71.96 Non-vested at December 31, 2021 2,116,994 $ 168.43 The total grant-date fair value of RSUs granted during the years ended December 31, 2021, 2020 and 2019 was $144.2 million, $801.0 million and $56.7 million, respectively. For the years ended December 31, 2021, 2020 and 2019, the Company recorded stock-based compensation expense related to RSUs of $182.4 million, $314.1 million, and $30.5 million, respectively. As of December 31, 2021, the Company had $293.2 million in unrecognized compensation cost related to non-vested RSUs, which is expected to be recognized over a weighted-average period of approximately 1.1 years. Performance Stock Units 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 PSUs 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 PSUs are re-assessed each reporting period based upon 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 225% 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 they occur consistent with Company policy. Activity under PSUs was as follows: Weighted-Average Grant Date Shares Fair Value Per PSU Balance at December 31, 2020 429,319 $ 76.60 Granted 531,309 $ 132.66 Vested and issued (268,201) $ 74.33 Forfeited (336,178) $ 99.68 Balance at December 31, 2021 356,249 $ 140.01 Vested and unissued at December 31, 2021 0 $ 0 Non-vested at December 31, 2021 356,249 $ 140.01 The total grant-date fair value of PSUs granted during the years ended December 31, 2021, 2020 and 2019 was $70.4 million, $25.0 million, and $31.6 million, respectively. For the years ended December 31, 2021, 2020 and 2019, the Company recorded stock-based compensation expense related to PSUs of $22.0 million, $24.0 million and $14.6 million, respectively. As of December 31, 2021, the Company had $16.1 million in unrecognized compensation cost related to non-vested PSUs, which is expected to be recognized over a weighted-average period of approximately 1.9 years. Employee Stock Purchase Plan In July 2015, the Company adopted the 2015 ESPP in connection with its initial public offering. Through December 31, 2021, a total of 926,109 shares of common stock have been reserved for issuance under this plan. 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 2021 and 2020, the Company issued 122,059 shares and 49,781 shares, respectively, under the ESPP. As of December 31, 2021, 477,044 shares remained available for issuance. For the years ended December 31, 2021, 2020 and 2019, the Company recorded stock-based compensation expense related to the ESPP of $5.2 million, $2.8 million, and $1.2 million, respectively. As of December 31, 2021, the Company had $2.1 million in unrecognized compensation cost related to the ESPP, which is expected to be recognized over a weighted-average period of approximately 0.4 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 were as follows (in thousands): Year Ended December 31, 2021 2020 2019 Cost of revenue (exclusive of depreciation and amortization, which is shown separately) $ 8,280 $ 2,700 $ 0 Advertising and marketing 18,952 26,995 4,956 Sales 71,475 65,730 10,286 Technology and development 95,561 60,556 7,573 General and administrative 108,318 319,550 43,887 Total stock-based compensation expense (1) $ 302,586 $ 475,531 $ 66,702 (1) Excluding the amount capitalized related to internal software development projects. ( |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2021 | |
Income Taxes | |
Income Taxes | Note 15. Income Taxes For financial reporting purposes, income (loss) before income taxes for the years ended December 31, 2021, 2020 and 2019 included the following components (in thousands): Year Ended December 31, 2021 2020 2019 Domestic $ (365,762) $ (566,266) $ (95,476) International (18,894) (9,727) (13,979) Total $ (384,656) $ (575,993) $ (109,455) The provision (benefit) for income taxes was comprised of the following components: Year Ended December 31, 2021 2020 2019 Current federal $ 0 $ (1,954) $ 239 Current state 567 27 300 Current foreign 2,595 1,605 (262) Total current 3,162 (322) 277 Deferred federal 49,008 (60,008) (5,043) Deferred state (6,276) (26,775) (1,783) Deferred foreign (1,757) (3,752) (4,042) Total deferred 40,975 (90,535) (10,868) Total (Benefit) / Provision $ 44,137 $ (90,857) $ (10,591) A reconciliation of the statutory U.S. federal tax rate to the Company’s effective tax rate from continuing operations is as follows: Year Ended December 31, 2021 2020 2019 Tax at federal statutory rate 21.0 % 21.0 % 21.0 % State and local tax 7.7 2.3 4.6 Acquisition expenses 2.0 (2.2) (0.4) Stock compensation (1) 6.7 (1.1) 7.7 Non-deductible expenses (0.5) (0.1) (0.2) Foreign rate differential 0.2 0.3 2.2 Change in valuation allowance (46.9) (5.4) (25.3) Other (1.7) 1.0 0.1 Effective tax rate (11.5) % 15.8 % 9.7 % (1) The Company has updated the presentation of the rate reconciliation in 2021. Stock compensation has been updated to include executive compensation. Previously, stock compensation and executive compensation were shown separately. The Company’s deferred tax assets and liabilities consisted of the following (in thousands): As of December 31, 2021 2020 Deferred tax assets: Net operating loss carryforwards $ 687,679 $ 497,603 Accrued expenses and compensation 5,413 7,016 Stock-based compensation 63,641 94,029 Foreign tax credits and alternative minimum tax credits 4,814 5,727 Research and development credits 1,320 14,666 Depreciation of property and equipment 56 83 Interest expense carryforward 11,528 6,620 Operating lease assets 13,575 13,978 Deferred revenue 7,946 2,917 Other 7,032 3,290 Deferred tax assets 803,004 645,929 Valuation allowance (335,810) (107,984) Net deferred tax assets 467,194 537,945 Deferred tax liabilities: Debt related (73,378) (105,063) Operating lease liabilities (11,842) (12,117) Depreciation of property and equipment (3,427) (2,476) Intangible assets (452,049) (519,397) Other (2) (2,275) (995) Deferred tax liabilities (542,971) (640,048) Net deferred tax liabilities $ (75,777) $ (102,103) (2) The Company has updated the presentation of the deferred tax liability item of prepaid insurance and deferred commissions in 2021. As the amounts were immaterial, the Company is presenting this item in “Other”. As of December 31, 2021, the Company had approximately $2,775.2 million of federal NOL carryforwards, $1,708.1 million of state NOL carryforwards, and $57.8 million of foreign NOL carryforwards. The federal NOL carryforwards generated prior to December 31, 2017 of $555.4 million will begin to expire in 2024. The remaining NOLs generated from January 1, 2018 of $2,219.8 million will carry forward indefinitely. The state and foreign NOL carryforwards began expiring in 2021. As of December 31, 2021, the Company had approximately $4.8 million of foreign tax credits, which began expiring in 2021. As of December 31, 2021, the Company had approximately $0.5 million of federal research and development credits, which will begin to expire in 2022, and $0.8 million of state research and development credits, which can be carried forward indefinitely. As of December 31, 2021, the Company had a valuation allowance of approximately $335.8 million against a portion of the U.S. and certain foreign deferred tax assets, for which realization cannot be considered more likely than not at this time. The valuation allowance increased by $227.9 million from the beginning of the year, of which, approximately $48.5 million was primarily recorded in purchase accounting related to the pre-acquisition NOLs from Livongo. The remaining incremental amount of $179.4 million results in current year tax expense, primarily related to current period losses and a non-cash tax charge resulting from additional stock-based compensation benefits related to the acquisition of Livongo. The Company provision for income taxes includes the impact of reserves and a reconciliation of the beginning and ending amount of unrecognized tax benefits was as follows (in thousands): Balance on January 1, 2021 $ 21,362 Additions assumed in a business combination 59,110 Additions based on prior year tax positions 43,399 Additions based on current year tax positions 1,490 Release (14,513) Balance on December 31, 2021 $ 110,848 The amount of unrecognized tax benefits as of December 31, 2021 that, if recognized, would reduce tax expense was approximately $110.8 million. The Company does not anticipate any of its unrecognized tax benefits to be settled within the next 12 months. The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal and state jurisdictions in the United States and other countries, where applicable. The Company is open under the U.S. federal statute from 2017 to the present, although earlier years may be examined to the extent that loss carryforwards are used in open audit periods. The Company is currently under audit in a single foreign tax jurisdiction. There are no tax matters under discussion with taxing authorities that are expected to have a material effect on the Company's consolidated financial statements. We further believe that we have made adequate provision for all income tax uncertainties. The Company’s policy is to include interest and penalties related to unrecognized tax benefits as a component of tax expense. The Company’s consolidated financial statements provide for any related tax liability on amounts that may be repatriated, aside from undistributed earnings of $7.3 million for certain of the Company’s foreign subsidiaries that are intended to be indefinitely reinvested in operations outside the U.S. as of December 31, 2021. The amount of any unrecognized deferred tax liability on these undistributed earnings would be immaterial. |
Net Loss per Share
Net Loss per Share | 12 Months Ended |
Dec. 31, 2021 | |
Net Loss per Share | |
Net Loss per Share | Note 16. Net Loss per Share Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock of the Company outstanding during the period. Diluted net loss per share is computed by giving effect to all potential shares of common stock of the Company, including outstanding stock options and convertible notes, to the extent dilutive. Basic and diluted net loss per share was the same for each period presented as the inclusion of all potential shares of common stock of the Company outstanding would have been anti-dilutive. The Company has 3.4 million outstanding stock options, 2.1 million outstanding RSUs, 0.4 million outstanding PSUs, and 0.1 million issuable shares of common stock associated with the ESPP. The following table presents the calculation of basic and diluted net loss per share for the Company’s common stock (in thousands, except shares and per share data): Year Ended December 31, 2021 2020 2019 Net loss $ (428,793) $ (485,136) $ (98,864) Weighted-average shares used to compute basic and diluted net loss per share 156,939 90,509 71,845 Net loss per share, basic and diluted $ (2.73) $ (5.36) $ (1.38) |
401(k) Plan
401(k) Plan | 12 Months Ended |
Dec. 31, 2021 | |
401(k) Plan | |
401(k) Plan | Note 17. 401(k) Plan The Company has established a 401(k) plan that qualifies as a deferred compensation arrangement under Section 401 of the Internal Revenue Code. All U.S. employees over the age of 21 are eligible to participate in the plan. The Company contributes 100% of eligible employee’s elective deferral up to 4% of $0.3 million of eligible earnings. The Company made matching contributions to participants’ accounts totaling $11.3 million, $4.9 million, and $3.2 million during the years ended December 31, 2021, 2020 and 2019, respectively. |
Legal Matters
Legal Matters | 12 Months Ended |
Dec. 31, 2021 | |
Legal Matters | |
Legal Matters | Note 18. Legal Matters From time to time, Teladoc Health is involved in various litigation matters arising in the normal course of business, including the matters described below. The Company consults with legal counsel on those issues related to litigation and seeks 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. As of the date of these financial statements, Teladoc Health’s management does not expect any litigation matter to have a material adverse impact on its business, financial condition, results of operations or cash flows. 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 (the “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. On August 27, 2021, a purported securities class action complaint (City of Hialeah Employees’ Retirement System v. Teladoc Health, Inc., et.al.) was filed in the Circuit Court of Cook County, Illinois against the Company and certain of the Company’s current and former officers and directors. The complaint was brought on behalf of a purported class consisting of all persons who acquired shares of Teladoc Health common stock issued in the Livongo merger. The complaint asserted violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 based on allegedly false or misleading statements and omissions with respect to the registration statement and prospectus filed in connection with the Livongo merger. The complaint sought certification as a class action, unspecified compensatory damages plus interest and attorneys’ fees, rescission or a rescissory measure of damages and equitable or other relief. On January 18, 2022, the case was voluntarily dismissed without prejudice in the Circuit Court of Cook County, Illinois and on January 26, 2022, was refiled in the Supreme Court of the State of New York. The refiled case includes substantially the same allegations. The Company believes that these claims are without merit, and the Company and its named current and former officers and directors intend to defend the Company vigorously. |
Schedule II - Valuation and Qua
Schedule II - Valuation and Qualifying Accounts | 12 Months Ended |
Dec. 31, 2021 | |
Schedule II - Valuation and Qualifying Accounts | |
Schedule II - Valuation and Qualifying Accounts | Allowance for Doubtful Accounts Receivable (in thousands): Balance at Balance at Beginning End of Period Provision Write-offs Other of Period Fiscal Year Ended December 31, 2021 $ 6,412 $ 16,941 $ (11,526) $ 557 $ 12,384 Fiscal Year Ended December 31, 2020 $ 3,787 $ 5,284 $ (2,787) $ 128 $ 6,412 Fiscal Year Ended December 31, 2019 $ 3,382 $ 2,665 $ (2,264) $ 4 $ 3,787 Income Taxes Valuation Allowance (in thousands): Balance at Balance at Beginning End of Period Provision Write-offs Other of Period Fiscal Year Ended December 31, 2021 $ 107,984 $ 179,364 $ 0 $ 48,461 $ 335,809 Fiscal Year Ended December 31, 2020 $ 121,186 $ 2,146 $ 0 $ (15,348) $ 107,984 Fiscal Year Ended December 31, 2019 $ 93,572 $ 36,124 $ 0 $ (8,510) $ 121,186 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Summary of Significant Accounting Policies | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation These consolidated financial statements have been prepared in accordance with the United States (“U.S.”) generally accepted accounting principles (“GAAP”). The consolidated financial statements include the results of Teladoc Health, as well as three professional associations and twelve professional corporations (collectively, the “THMG Association”). Teladoc Health Medical Group, P.A., formerly Teladoc Physicians, P.A. (“THMG”) is party to several Services Agreements by and among it and the professional corporations pursuant to which each professional corporation provides services to THMG. 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 THMG Association which contracts with physicians and other health professionals in order to provide services to Teladoc Health. The THMG 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 THMG Association and funds and absorbs all losses of the VIE and appropriately consolidates the THMG Association. Total revenue and net income (loss) for the VIE were $230.2 million and $(1.6) million, $203.9 million and $2.1 million and $83.6 million and $(3.2) million for the years ended December 31, 2021, 2020 and 2019, respectively. The VIE’s total assets, all of which were current, were $58.5 million and $32.0 million at December 31, 2021 and 2020, respectively. The VIE’s total liabilities, all of which were current, were $94.7 million and $66.6 million at December 31, 2021 and 2020, respectively. The VIE’s total stockholders’ deficit was $36.1 million and $34.6 million at December 31, 2021 and 2020, respectively. All intercompany transactions and balances have been eliminated. |
Business Combinations | Business Combinations The Company accounts for its business combinations using the acquisition method of accounting. The purchase price is attributed to the fair value of the assets acquired and liabilities assumed. Transaction costs directly attributable to the acquisition are expensed as incurred. Identifiable assets and liabilities acquired or assumed are measured separately at their fair values as of the acquisition date. The excess of the purchase price of acquisition over the fair value of the identifiable net assets of the acquiree is recorded as goodwill. The results of businesses acquired in a business combination are included in the Company’s consolidated financial statements from the date of acquisition. When the Company issues stock-based or cash awards to an acquired company’s stockholders, the Company evaluates whether the awards are consideration or compensation for post-acquisition services. The evaluation includes, among other things, whether the vesting of the awards is contingent on the continued employment of the acquired company’s stockholders beyond the acquisition date. If continued employment is required for vesting, the awards are treated as compensation for post-acquisition services and recognized as expense over the requisite service period. Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates, including the selection of valuation methodologies, estimates of future revenue and cash flows, discount rates and selection of comparable companies. The estimates and assumptions used to determine the fair values and useful lives of identified intangible assets could change due to numerous factors, including market conditions, technological developments, economic conditions, and competition. In connection with determination of fair values, the Company may engage a third-party valuation specialist to assist with the valuation of intangible and certain tangible assets acquired and certain assumed obligations. Acquisition-related transaction costs incurred by the Company are not included as a component of consideration transferred but are accounted for as an operating expense in the period in which the costs are incurred. |
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 and economic factors, and various other assumptions that the Company believes are necessary 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. The Company believes that estimates used in the preparation of these consolidated financial statements are reasonable; however, actual results could differ materially from these estimates. Changes in estimates are made when circumstances warrant. Such changes in estimates and refinements in estimation methodologies are reflected in the Consolidated Statement of Operations, and if material, are also disclosed in the Notes to Consolidated Financial Statements. Significant estimates and assumptions by management affect areas including the allowance for doubtful accounts, the carrying value of long-lived assets (including goodwill and intangible assets), the useful life of intangible assets, the capitalization and amortization of software development costs, deferred costs, and the accounting for business combinations. Other significant areas include revenue recognition (including Client performance guarantees), the accounting for income taxes, contingencies, litigation and related legal accruals, and the accounting for stock-based compensation awards. |
Segment Information | Segment Information The Company operates an integrated virtual care system for delivering, enabling, and empowering whole person health. As a result, the Company’s chief operating decision maker, its Chief Executive Officer (“CEO”), reviews the financial information presented on a consolidated basis, reflecting this integration, for purposes of allocating resources and evaluating its financial performance. Accordingly, the Company has determined that it operates as a single reportable segment—health services. |
Fair Value Measurements | Fair Value Measurements The carrying value of our financial instruments, including cash equivalents, short-term investments, accounts receivable, accounts payable, and accrued liabilities, approximates fair value due to their short-term nature. 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. |
Revenue Recognition | Revenue Recognition The Company follows the revenue accounting requirements of Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“Accounting Standards Codification (“ASC”) 606”). ASC 606 establishes a principle for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. The core principle of ASC 606 is to recognize revenue to depict the transfer of promised goods or services to our customers, consist of employers, health plans, hospitals and health systems, insurance, and financial services companies (collectively “Clients”) as well as individual members, in an amount that reflects the consideration the entity expects to be entitled in exchange for those goods or services. This principle is achieved through applying the following five-step approach: • • • • • 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 (“PMPM”) access fee as well as certain contracts also include additional revenue on a per-virtual healthcare visit basis for general medical, or other specialty visits or 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 (“D2C”) mental health product, U.S. paid members purchase access to the Company’s professional provider network for an access fee. Revenues are also generated from contracts with Clients for the Company’s chronic care management solutions. Substantially all of this revenue is derived from monthly access fees that are recognized as services are rendered and earned under subscription agreements with Clients that are based on a per participant per month model, using the number of active enrolled members each month for the minimum enrollment period. These solutions integrate devices, supplies, access to the Company’s web-based platform, and clinical and data services to provide an overall health management solution. The promises to transfer these goods and services are not separately identifiable and is considered a single continuous service comprised of a series of distinct services that are substantially the same and have the same pattern of transfer (i.e., distinct days of service). These services are consumed as they are received, and the Company recognizes revenue each month using the variable consideration allocation exception since the nature of the obligations and the variability of the payment being based on the number of active members are aligned. Revenue is also generated from contracts with Clients for the sale and rental of equipment consisting of virtual health devices which allow physicians to access the Company’s hosted virtual healthcare 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 devices 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 records access fees from Clients accessing its professional provider network or hosted virtual healthcare platform or chronic care management platforms, visit fee revenue for general medical, expert medical service and other specialty visits as well as other revenue primarily associated with virtual healthcare device equipment included with its hosted virtual healthcare platform. The Company’s agreements generally have a term of one The Company generally bills for the virtual healthcare services on a monthly basis, in advance or in arrears depending on the service, 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 include a variable transaction price as the number of members may vary from period to period. Based on historical experience, the Company estimates this amount. The Company’s contracts do not generally contain refund provisions for fees earned related to services performed. However, the Company’s D2C mental 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 $26.0 million, $11.2 million, and $3.6 million for the years ended December 31, 2021, 2020, and 2019, respectively. Additionally, certain of the Company’s contracts include Client performance guarantees and pricing adjustments that are based upon minimum member utilization and guarantees by the Company for specific service level performance, member satisfaction scores, cost savings guarantees, and health outcome guarantees. Performance guarantees are estimated at each reporting period based on the Company’s historical performance of the underlying criteria or the customer’s specific performance as of that reporting date. Any estimated adjustments to the contract price for achieving or not achieving the performance guarantee are recognized as an adjustment to revenue in the period. For the years ended December 31, 2021, 2020, and 2019, revenue recognized from performance obligations related to prior periods for the changes in transaction price or Client performance guarantees was $5.6 million, $1.9 million, and $0.8 million, respectively. The Company has elected the optional exemption to not disclose the remaining performance obligations of its contracts since the majority 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. For additional revenue, deferred revenue, deferred costs, and disclosures, refer to Note 3 to the consolidated financial statements. Deferred Revenue Deferred revenue represents billed, but unrecognized revenue, and is comprised of fees received in advance of the delivery or completion of the services and amounts received in instances when revenue recognition criteria have not been met. Deferred revenue associated with upfront payments for a device is amortized ratably over the expected member enrollment period. Deferred revenue that will be recognized during the succeeding twelve-month period is recorded as current deferred revenue and the remaining portion is recorded as noncurrent deferred revenue. Deferred Costs and Other Deferred costs and other consist of deferred device costs and deferred contract costs. Deferred device costs consist of cost of inventory incurred in connection with delivery of services that are deferred and amortized over the shorter of the expected member enrollment period or the expected device life and recorded as cost of revenue. Deferred contract costs represent the incremental costs of obtaining a contract with a Client if we expect to recover such costs. The primary example of our costs to obtain a contract include incremental sales commissions to obtain contracts paid to our sales organization. A portion of these incremental costs to obtain Client contracts are deferred and then amortized on a straight-line basis over the period of benefit, which has been determined to be four years. The amounts subject to the services period are amortized in sales expense in the consolidated statement of operations. Deferred costs and other that are to be amortized within twelve months are recorded to deferred costs and other, current and the remainder is recorded to deferred costs and other, noncurrent on our consolidated balance sheets. |
Cost of Revenue (exclusive of depreciation and amortization, which is shown separately) | Cost of Revenue (exclusive of depreciation and amortization, which is shown separately) Cost of revenue (exclusive of depreciation and amortization, which is shown separately) primarily consists of fees paid to the physicians and other health professionals; product costs; costs incurred in connection with the Company’s provider network operations and data center activities, which include employee-related expenses (including salaries and benefits) costs related to Client support; provider network operations center activities; medical records; magnetic resonance imaging; medical lab tests; translation; postage and medical malpractice insurance, and deferred device costs. |
Technology and Development | Technology and Development Technology and development expenses include personnel and related expenses for software engineering, information technology infrastructure, security and compliance, product development, and support for our efforts to add new features and ensure the reliability and scalability of our existing solutions. Technology and development expenses also include outsourced software engineering services, the costs of operating our on-demand technology infrastructure (whereas costs directly associated with changes in revenue are presented separately in cost of revenues), licensed applications, and stock-based compensation for our technology and development employees. Our technology and development expenses exclude certain allocations of occupancy expense, capitalized software development costs, and depreciation and amortization. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less from the date of purchase of $893.5 million at December 31, 2021. The Company’s cash and cash equivalents generally consist of investments in money market funds. Cash and cash equivalents are stated at fair value. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are recorded at the invoiced amount, net of allowances for doubtful accounts. The allowance for doubtful accounts reflects the Company’s 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. Accounts receivable deemed uncollectable are charged against the allowance for doubtful accounts when identified. |
Inventories | Inventories Inventories consist of purchased components for assembling welcome kits, refill kits, and replacement components for the Company’s chronic care management solutions, and virtual health devices manufactured for sale or lease as part of the Company’s hosted virtual healthcare platform solution. Inventories are stated at the lower of cost and net realizable value. The cost of inventories is determined on a first-in, first-out (“FIFO”) basis or on a weighted average cost basis which approximates the 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 potentially obsolete and slow-moving inventory with write-downs being recorded when identified. Write-downs are measured as the difference between cost of the inventory and net realizable value based upon assumptions about future demand and obsolescence, and charged to cost of revenue (exclusive of depreciation and amortization shown separately) in the accompanying consolidated statement of operations. At the point of the loss recognition, a new lower cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation is recorded using the straight-line method over the estimated useful lives of the respective asset as follows: Computer equipment 3 years Furniture and equipment 5 years Leasehold improvements Shorter of the lease term or the estimated useful lives of the improvements Rental equipment 4.3 years |
Operating Leases | Operating Leases The Company adopted the new leases standard set forth under ASC Topic 842, “Leases,” or ASC Topic 842, as of January 1, 2019, Leases of Hosted Virtual Healthcare Platform The Company rents its hosted virtual healthcare platform for certain Clients under arrangements that qualify primarily as operating lease arrangements. The contracts include equipment consisting of virtual health devices which allow physicians 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 whether: (1) ownership of the virtual healthcare 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 healthcare device that the lessee is reasonably certain to exercise, (3) the lease term is for the major part of the remaining useful life of the virtual healthcare device, (4) the present value of the sum of the lease payments equals or exceeds substantially all of the fair value of the virtual healthcare device, and (5) it is expected that there will be no alternative use for the virtual healthcare device at the end of the lease term. The Company generally recognizes revenue for virtual healthcare devices in sales-type leases at a point in time upon shipment 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 healthcare device is recognized over the lease term and generally on a straight-line basis. For both sales-type and operating lease arrangement, revenue associated with virtual healthcare platform access is recognized over the lease term on a straight-line basis. |
Rental Equipment | 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. Maintenance and repairs are charged to expense as incurred while improvements are capitalized. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in the consolidated statement of operations in the period realized. |
Capitalized Software Development Costs | Capitalized Software Development Costs Capitalized software development costs are included in intangible assets and are amortized on a straight-line basis over 3 to 5 years. For the Company’s development costs related to its software development tools that enable its members and providers to interact, the Company capitalizes costs incurred during the application development stage. Costs related to maintenance activities are expensed as incurred. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill represents the excess of the total purchase consideration over the fair value of the identifiable assets acquired and liabilities assumed in a business combination. Goodwill is not amortized but is tested for impairment at the reporting unit level annually on October 1 or more frequently if events or changes in circumstances indicate that it is more likely than not to be impaired. The Company currently operates as a single reporting unit under the guidance in ASC 350, “Intangibles- Goodwill and Other.” When testing goodwill for impairment, we have the option of first performing a qualitative assessment to determine whether it is more likely than not that the fair value of our total company reporting unit is less than its carrying amount. If we elect to bypass the qualitative assessment, or if a qualitative assessment indicates it is more likely than not that carrying value exceeds its fair value, we perform a quantitative goodwill impairment test. Under the quantitative goodwill impairment test, if our reporting unit’s carrying amount exceeds its fair value, we will record an impairment charge based on that difference. To determine reporting unit fair value as part of the quantitative test, we use a weighting of fair values derived from the income approach and the market approach. Under the income approach, we project our future cash flows and discount these cash flows to reflect their relative risk. The cash flows used are consistent with those the Company uses in its internal planning, which reflects actual business trends experienced and our long-term business strategy. As such, key estimates and factors used in this method include, but are not limited to, revenue, margin and operating expense growth rates; as well as a discount rate and a terminal growth rate. Under the market approach to determining reporting unit fair value, the guideline company method develops valuation multiples by comparing our reporting unit to similar publicly traded companies. In order to further validate the reasonableness of fair value as determined by the income and market approaches described above, a reconciliation to market capitalization is then performed by estimating a reasonable control premium and other market factors. Other intangible assets include client relationships, non-compete agreements, acquired technology, patents and trademarks resulting from business acquisitions, and capitalized software development costs. We amortize these definite-lived intangible assets over their estimated useful lives and review the estimated useful lives on a quarterly basis to determine if the period of economic benefit has changed. Client relationships are amortized over a period of 2 to 20 years in relation to expected future cash flows, while non-compete agreements are amortized over a period of 1.5 to 5 years using the straight-line method. Trademarks are amortized over 3 to 15 years using the straight-line method. Technology is amortized over 5 to 7 years using the straight-line method. Patents are amortized over 3 years using the straight-line method. Capitalized software development costs are amortized over 3 to 5 years using the straight-line method. Definite-lived intangible assets are re-evaluated whenever events or changes in circumstances indicate that their estimated useful lives may require revision and/or carrying value of the related asset group may not be recoverable by its projected undiscounted cash flows. If the carrying value of the asset group is determined to be unrecoverable, an impairment charge would be recognized in an amount equal to the amount by which the carrying value of the asset group exceeds its fair value. |
Convertible Senior Notes | Convertible Senior Notes Convertible Senior Notes (the “Notes”) and the Livongo Notes that we agreed to guarantee (the “Livongo Notes”) are accounted for in accordance with the financial accounting standards board (“FASB”) ASC Subtopic 470-20, Debt with Conversion and Other Options. Pursuant to ASC Subtopic 470-20, issuers of certain convertible debt instruments, such as the Notes, that have a net settlement feature and may be settled wholly or partially in cash upon conversion are required to separately account for the liability (debt) and equity (conversion option) components of the instrument. The carrying amount of the liability component of the instrument is computed by estimating the fair value of a similar liability without the conversion option using an income-based approach. For the income-based approach, the Company uses a convertible bond lattice model that includes assumptions such as volatility and the risk-free rate. The amount of the equity component is then calculated by deducting the fair value of the liability component from the principal amount of the Notes or the fair value of the total Livongo Notes assumed on consummation of the merger, as applicable. The difference between the principal amount and the liability component represents a debt discount that is amortized to interest expense over the contractual term of the Notes and the Livongo Notes using an effective interest rate method. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. In accounting for the issuance costs related to the Notes, the allocation of issuance costs, if applicable, incurred between the liability and equity components were based on their relative values. Refer to Recently Issued Accounting Pronouncements. |
Stock-Based Compensation | Stock-Based Compensation Stock-based compensation for stock options and restricted stock units (“RSUs”) granted is measured based on the grant-date fair value of the awards and recognized on a straight-line basis over the period during which the employee is required to perform services in exchange for the award (generally the vesting period of the award). The Company estimates the fair value of employee stock options using the Black-Scholes option-pricing model, except as noted. Stock-based compensation for performance stock units (“PSUs”) granted is measured based on the grant- date fair value of the awards and recognized on an accelerated tranche by tranche basis over the period during which the employee is required to perform services in exchange for the award (generally the vesting period of the award). 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 targets and can range from 50% to 225% of the initial grant. For stock-based compensation assumed in the Livongo merger, the Monte Carlo valuation model was the most suitable for valuation of options for the replaced and replacement awards from the merger. The Company’s Employee Stock Purchase Plan (“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. |
Research and Development Costs | Research and Development Costs For the years ended December 31, 2021, 2020 and 2019, research and development of $205.3 million, $110.8 million, and $23.6 million, respectively, was recognized in the Company’s consolidated statements of operations in technology and development. |
Advances From Financing Companies | Advances from Financing Companies The Company utilizes a third-party financing company to provide certain Clients with a rental option. Under these arrangements, the Company receives payment upfront from the financing companies and the financing companies collect the Client rental payments over the life of the rental agreement on a nonrecourse basis. The principal portion of these upfront payments are reported as advances from financing companies in the accompanying consolidated balance sheet. The Company indemnifies the financing companies for any loss or expenses resulting from its failure to provide the ongoing necessary system services and support to the Client. |
Income Taxes | Income Taxes Our income tax expenses, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits reflect management's best assessment of estimated current and future taxes to be paid. The objectives for accounting for income taxes, as prescribed by the relevant accounting guidance, are to recognize the amount of taxes payable or refundable for the current year and deferred tax assets and liabilities for future tax consequences of events that have been recognized in the financial statements. Deferred income taxes reflect the tax effect of temporary differences between asset and liability amounts that are recognized for financial reporting purposes and the amounts that are recognized for income tax purposes. These deferred taxes are measured by applying currently enacted tax laws. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The assumptions about future tax consequences require significant judgment and variations in the actual outcome of these consequences could materially impact our results of operations. We recognize tax liabilities based on estimates of whether additional taxes and interest will be due. We adjust these liabilities when our judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the tax liabilities. Interest and penalties, if any, related to accrued liabilities for potential tax assessments are included in income tax expense. As of December 31, 2021, we had approximately $110.8 million of gross unrecognized tax benefits. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. Determination of valuation allowances recorded against deferred tax assets requires significant judgment and use of assumptions, including past operating results, estimates of future taxable income and the feasibility of tax planning strategies. To the extent that new information becomes available which causes the Company to change its judgment regarding the adequacy of existing valuation allowances, such changes to tax liabilities will impact income tax expense in the period in which such determination is made. In 2020, we released a portion of the valuation allowance against the deferred tax assets attributable to our U.S. net operating losses (“NOLs”) as the acquired intangibles from the InTouch and Livongo acquisitions serve as a source of income for which we, more likely than not, will be able to realize the benefits of the deferred tax assets. In 2021, upon filing its U.S. federal and state tax returns for the year ended December 31, 2020, the Company updated its deferred tax asset for NOLs and the related valuation allowance to reflect the amounts included on the tax returns and the current year losses. At the end of the year, the valuation allowance is $335.8 million. The Company’s policy is to include interest and penalties related to unrecognized tax benefits as a component of tax expense. |
Comprehensive Loss | Comprehensive Loss Comprehensive loss consists of net loss and unrealized gains or losses on short-term investments and currency translation gains or losses. Unrealized gains or losses on short-term investments are net of any reclassification adjustments for realized gains and losses included in the consolidated statements of operations. |
Net Loss Per Share | Net Loss Per Share Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock of the Company outstanding during the period. Diluted net loss per share is computed by giving effect to all potential shares of common stock, including outstanding stock options and convertible notes, to the extent dilutive. Basic and diluted net loss per share was the same for each period presented as the inclusion of all potential shares of common stock outstanding would have been anti-dilutive. |
Advertising and Marketing Expenses | Advertising and Marketing Expenses Advertising and marketing are primarily expensed as incurred and includes all communications and campaigns to the Company’s Clients, members and D2C digital and media advertising. For the years ended December 31, 2021, 2020, and 2019, advertising expenses were $297.0 million, $165.0 million, and $88.8 million, respectively. |
Concentrations of Risk | Concentrations of Risk The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents, short-term investments and accounts receivable. Although the Company deposits its cash with multiple financial institutions in the U.S. and in foreign countries, its deposits, at times, may exceed federally insured limits. The Company’s short-term investments are comprised of a portfolio of diverse high credit rating instruments with maturity durations of one year or less. No Client represented over 10% of revenues for the years ended December 31, 2021, 2020, or 2019. No Client represented over 10% of accounts receivable at December 31, 2021 or 2020. Revenue from Clients located in the United States for the year ended December 31, 2021, 2020, and 2019 were $1,774.0 million, $913.7 million and $423.3 million, respectively. Revenue from Clients located outside the United States for the year ended December 31, 2021, 2020 and 2019 were $258.7 million, $180.2 million, and $130.0 million, respectively. |
Seasonality | Seasonality The Company typically experiences the strongest increases in consecutive quarterly revenue during the fourth and first quarters of each year, which coincides with traditional annual benefit enrollment seasons. In particular, as a result of many Clients’ introduction of new services at the very end of the current year, or the start of each year, a high concentration of the Company’s new Client contracts has an effective date of January 1. Therefore, while membership increases, utilization is dampened until service delivery ramps up over the course of the year. Additionally, the Company’s business has become more diversified across services, channels, and geographies. The Company continues to see a diversification of Client start dates, resulting from the Company’s health plan expansions, cross sales of new services, international growth, and mid-market employer growth, all of which are not constrained by a calendar year start. As a result of national seasonal cold and flu trends, the Company typically experiences its highest level of visit fees during the first and fourth quarters of each year. Conversely, the second quarter of the year has historically been the period of lowest utilization of its provider network services relative to the other quarters of the year. However, during the COVID-19 pandemic in 2021 and 2020, the Company did not experience the typical seasonality associated with national cold and flu outbreaks. |
Reclassifications | Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In August 2020, the FASB issued ASU 2020-06—"Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.” ASU 2020-06 simplifies the accounting for convertible instruments by eliminating the conversion option separation model for convertible debt that can be settled in cash and by eliminating the measurement model for beneficial conversion features. Convertible instruments that continue to be subject to separation models are (1) those with conversion options that are required to be accounted for as bifurcated derivatives and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. This ASU also requires entities to use the if-converted method for all convertible instruments in the diluted earnings per share calculation and include the effect of share settlement for instruments that may be settled in cash or shares, except for certain liability-classified share-based payment awards. This standard becomes effective for the Company on January 1, 2022. Due to the elimination of the conversion option separation model in 2022, the adoption of this standard will result in a reduction in the non-cash component of interest expense for companies that recorded a note discount arising from the application of the separation model. The Company will adopt the new standard by the modified retrospective method, with resulting transition adjustments recorded to the January 1, 2022 balance of retained earnings to be reflected in its Form 10-Q for the first quarter of 2022. Due to the elimination of the conversion option separation model taking effect in 2022, the Company currently anticipates a reduction of approximately $58 million in non-cash interest to be recorded on its convertible notes for the year ended December 31, 2022, as compared to the year ended December 31, 2021. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Summary of Significant Accounting Policies | |
Summary of useful life of property and equipment | Computer equipment 3 years Furniture and equipment 5 years Leasehold improvements Shorter of the lease term or the estimated useful lives of the improvements Rental equipment 4.3 years |
Revenue, Deferred Revenue, De_2
Revenue, Deferred Revenue, Deferred Costs and Other (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Revenue, Deferred Revenue, Deferred Costs and Other | |
Schedule of disaggregation of revenue | The following table presents the Company’s revenues disaggregated by revenue source (in thousands): Year Ended December 31, 2021 2020 2019 Access Fees Revenue U.S. $ 1,488,420 $ 678,168 $ 334,675 International 243,585 168,491 119,531 Total 1,732,005 846,659 454,206 Visit Fee Revenue U.S. 241,515 211,664 88,669 International 12,719 10,388 10,432 Total 254,234 222,052 99,101 Other U.S. 44,089 23,888 - International 2,379 1,363 - Total 46,468 25,251 - Total Revenues $ 2,032,707 $ 1,093,962 $ 553,307 |
Schedule of deferred costs and other | Deferred costs and other as of December 31, 2021 and 2020 consisted of the following (in thousands): As of December 31, 2021 2020 Deferred costs and other, current $ 22,304 $ 3,468 Deferred costs and other, noncurrent 6,249 2,179 Total deferred costs and other $ 28,553 $ 5,647 Deferred costs and other activity were as follows (in thousands): Deferred Costs and Other Beginning balance as of December 31, 2020 $ 5,647 Additions 41,579 Cost of revenue recognized (18,673) Ending balance as of December 31, 2021 $ 28,553 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
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): December 31, 2021 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 893,480 $ 0 $ 0 $ 893,480 Short-term investments $ 0 $ 2,537 $ 0 $ 2,537 December 31, 2020 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 733,324 $ 0 $ 0 $ 733,324 Short-term investments $ 0 $ 53,245 $ 0 $ 53,245 Equity securities without readily determinable fair values $ 0 $ 5,000 $ 0 $ 5,000 Contingent liability $ 0 $ 0 $ 4,514 $ 4,514 |
Schedule of change in fair value of the Company's equity securities without readily determinable fair values: | Fair value and historical cost basis at December 31, 2020 $ 5,000 Increase due to observable price change in identical securities 5,901 Sale of investment (10,901) Fair value at December 31, 2021 $ 0 |
Schedule of reconciliation of company's Level 3 liabilities | Fair value at December 31, 2020 $ 4,514 Payments (4,367) Currency translation adjustment (147) Fair value at December 31, 2021 $ 0 |
Business Acquisitions (Tables)
Business Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Business acquisition | |
Summary of identifiable assets acquired and liabilities assumed | Identifiable assets acquired and liabilities assumed (in thousands): Livongo InTouch Purchase price, net of cash acquired $ 13,876,931 $ 1,069,759 Less: Accounts receivable 80,084 16,986 Short term investment 52,500 0 Inventory 24,299 8,492 Property and equipment, net 8,952 11,366 Right of use assets 15,056 4,965 Other assets 17,337 2,541 Client relationships 1,050,000 164,580 Technology 300,000 29,190 Trademarks 250,000 32,630 Advances from financing companies 0 (26,012) Accounts payable (119,302) (5,589) Deferred revenue (997) (20,729) Convertible notes (453,417) 0 Deferred taxes (73,010) (30,102) Lease liabilities (18,834) (5,495) Other liabilities (46,606) (13,042) Goodwill $ 12,790,869 $ 899,978 |
Schedule of unaudited pro forma revenue and net loss | Unaudited Pro Forma Year Ended December 31, (in thousands) 2020 Revenue $ 1,441,834 Net loss $ (882,411) |
Livongo Health | |
Business acquisition | |
Schedule of final purchase price allocations of intangible assets | Balance at Acquisition Estimated Average Intangible Asset (in millions) Useful Lives Valuation Methodology Customer Relationships $ 1,050 15.7 years Income Approach: Multi Period Excess Earnings Method Technology $ 300 7 years Income Approach: Relief from Royalty Method Trademarks $ 250 10 years Income Approach: Relief from Royalty Method |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Inventories | |
Schedule of inventories | Inventories consisted of the following (in thousands): As of December 31, 2021 2020 Raw materials and purchased parts $ 26,164 $ 19,591 Work in process 313 1,431 Finished goods 46,602 35,476 Total inventories $ 73,079 $ 56,498 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Property and Equipment, Net | |
Summary of property and equipment, net | Property and equipment, net, consisted of the following (in thousands): As of December 31, 2021 2020 Computer equipment $ 28,330 $ 22,129 Furniture and equipment 7,104 6,486 Leasehold improvement 12,983 12,831 Rental Equipment 11,018 8,413 Construction in progress 1,929 657 Total 61,364 50,516 Accumulated depreciation (34,130) (21,965) Property and equipment, net $ 27,234 $ 28,551 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Intangible Assets, Net | |
Schedule of finite lived intangible assets | Intangible assets, net consisted of the following (in thousands): Weighted Average Remaining Useful Accumulated Net Carrying Useful Life Life Gross Value Amortization Value (Years) December 31, 2021 Client relationships 2 to 20 years $ 1,465,926 $ (199,866) $ 1,266,060 14.5 Non-compete agreements 1.5 to 5 years 4,975 (4,975) 0 Trademarks 3 to 15 years 326,392 (45,555) 280,837 9.5 Patents 3 years 200 (200) 0 Software 3 126,188 (40,767) 85,421 2.7 Technology 5 343,262 (65,302) 277,960 5.6 Intangible assets, net $ 2,266,943 $ (356,665) $ 1,910,278 12.0 December 31, 2020 Client relationships 2 $ 1,460,648 $ (100,844) $ 1,359,804 ` 15.4 Non-compete agreements 1.5 5,097 (4,872) 225 0.4 Trademarks 3 326,786 (15,576) 311,210 10.5 Patents 3 years 200 (200) 0 Software 3 to 5 years 52,518 (24,771) 27,747 2.8 Technology 5 338,150 (16,272) 321,878 6.6 Intangible assets, net $ 2,183,399 $ (162,535) $ 2,020,864 13.1 |
Schedule of amortization to be charged to expense over the remaining life of the intangible assets | Periodic amortization that will be charged to expense over the remaining life of the intangible assets as of December 31, 2021 was as follows (in thousands): Years Ending December 31, 2022 $ 206,602 2023 210,494 2024 205,595 2025 181,729 2026 and thereafter 1,105,858 $ 1,910,278 |
Goodwill (Tables)
Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill | |
Summary of goodwill | Goodwill consisted of the following (in thousands): As of December 31, 2021 2020 Beginning balance as of December 31, 2020 and 2019, respectively $ 14,581,255 $ 746,079 Additions associated with acquisitions 64,269 13,812,198 Purchase consideration adjustments (see Note 5) (55,801) 0 Deferred tax adjustments (see Note 5) (66,505) 0 Currency translation adjustment (19,044) 22,978 Ending balance as of December 31, 2021 and 2020 $ 14,504,174 $ 14,581,255 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Accrued Expenses and Other Current Liabilities | |
Schedule of accrued expenses and other current liabilities | Accrued expenses and other current liabilities consisted of the following (in thousands): As of December 31, 2021 2020 Professional fees $ 5,373 $ 4,717 Consulting fees/provider fees 19,292 23,167 Client performance guarantees 7,653 7,215 Interest payable 1,480 2,049 Income tax payable 3,098 1,627 Insurance 3,884 3,139 Marketing 3,471 2,815 Operating lease liabilities - current 12,687 11,438 Earnout — 4,514 Franchise and Sales Taxes 9,965 2,099 Device Replacement Cost 6,263 0 Other 29,767 20,877 Total $ 102,933 $ 83,657 |
Convertible Senior Notes (Table
Convertible Senior Notes (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Convertible Senior Notes | |
Summary of the Notes | 2027 Notes 2025 Notes Livongo Notes Interest Rate Per Year 1.25 % 1.375 % 0.875 % Fair Value as of December 31, 2021 (in millions) $ 940.0 $ 1.3 $ 605.0 Maturity Date June 1, 2027 May 15, 2025 June 1, 2025 Optional Redemption Date June 5, 2024 May 22, 2022 June 5, 2023 Conversion Date December 1, 2026 November 15, 2024 March 1, 2025 Share Conversion Rate Per $1,000 Principal Amount as of December 31, 2021 4.1258 18.6621 13.94 Remaining Contractual Life as of December 31, 2021 5.4 years 3.4 years 3.4 years |
Schedule of liability components of the Notes | The liability component of the Notes consisted of the following (in thousands): As of December 31, 2027 Notes 2021 2020 Principal $ 1,000,000 $ 1,000,000 Less: Debt discount, net (1) (250,846) (287,916) Net carrying amount $ 749,154 $ 712,084 2025 Notes Principal $ 730 $ 276,788 Less: Debt discount, net (1) (166) (65,923) Net carrying amount $ 564 $ 210,865 Livongo Notes Principal $ 550,000 $ 550,000 Less: Debt discount, net (1) (74,047) (93,357) Net carrying amount $ 475,953 $ 456,643 2022 Notes Principal $ 0 $ 46,762 Less: Debt discount, net (1) 0 (4,202) Net carrying amount $ 0 $ 42,560 (1) Included in the accompanying consolidated balance sheet within convertible senior notes and amortized to interest expense over the expected life of the Notes using the effective interest rate method. (See Note 2, Recently Issued Accounting Pronouncements ). |
Schedule of total interest expense recognized related to the Notes | The following table sets forth total interest expense recognized related to the Notes (and in the case of the Livongo Notes, subsequent to the acquisition of Livongo) (in thousands): Year Ended December 31, 2027 Notes: 2021 2020 Contractual interest expense $ 12,500 $ 7,743 Amortization of debt discount 37,070 21,756 Total $ 49,570 $ 29,499 Effective interest rate of the liability component 3.4 % 3.4 % Year Ended December 31, 2025 Notes: 2021 2020 2019 Contractual interest expense $ 1,082 $ 3,900 $ 3,953 Amortization of debt discount 4,558 12,532 11,706 Total $ 5,640 $ 16,432 $ 15,659 Effective interest rate of the liability component 4.7 % 7.9 % 7.9 % Year Ended December 31, Livongo Notes: 2021 2020 Contractual interest expense $ 4,813 $ 829 Amortization of debt discount 19,310 3,226 Total $ 24,123 $ 4,055 Effective interest rate of the liability component 5.2 % 5.2 % Year Ended December 31, 2022 Notes: 2021 2020 2019 Contractual interest expense $ 116 $ 4,047 $ 8,250 Amortization of debt discount 316 7,553 14,026 Total $ 432 $ 11,600 $ 22,276 Effective interest rate of the liability component 9.6 % 9.6 % 9.6 % |
Advances from Financing Compa_2
Advances from Financing Companies (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Advances from Financing Companies | |
Schedule of client lease payments to third party financing companies | As of December 31, 2021 2022 $ 13,313 2023 7,153 2024 2,138 $ 22,604 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Leases. | |
Schedule of components of operating lease expense | The components of operating lease expense reflected in the consolidated statements of operations were as follows (in thousands): Year Ended December 31, 2021 Lease cost Operating lease cost $ 14,087 Short Term lease cost 1,087 Variable lease cost 3 Total lease cost $ 15,177 |
Schedule of supplemental information | Supplemental information related to operating leases was as follows (in thousands): Year Ended Consolidated Statements of Cash Flows December 31, 2021 Cash payment for operating cash flows used for operating leases $ 14,531 Operating lease liabilities arising from obtaining right-of-use assets $ 11,598 Other Information Weighted-average remaining lease term 5.71 Weighted-average discount rate 5.88% |
Schedule of future minimum lease payments | As of December 31, 2021, the future minimum lease payments under non-cancelable operating leases were as follows (in thousands): As of Operating Leases: December 31, 2021 2022 $ 15,021 2023 14,981 2024 9,871 2025 7,232 2026 and thereafter 18,659 Sub-total $ 65,764 Less: imputed interest 11,304 Minimum lease payments $ 54,460 |
Common Stock and Stockholders_2
Common Stock and Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Common Stock and Stockholders'Equity | |
Summary of stock option activity under the Plan | Activity under the Plans was 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, 2020 5,826,685 $ 17.19 5.31 $ 1,064,944 Stock option grants 49,177 $ 151.24 N/A Stock options exercised (2,339,537) $ 11.00 N/A $ (431,572) Stock options forfeited (109,347) $ 29.03 N/A Balance at December 31, 2021 3,426,978 $ 22.88 5.32 $ 242,569 Vested or expected to vest at December 31, 2021 3,426,978 $ 22.88 7.32 $ 11,645 Exercisable at December 31, 2021 3,176,543 $ 19.54 5.16 $ 230,924 |
Assumptions used for estimate of fair value of options | Year Ended December 31, 2021 2020 2019 Volatility 56.1% - 58.1% 46.1% - 56.6% 46.8% – 47.6% Expected term (in years) 4.1 4.1 5.2 Risk-free interest rate 0.31% - 1.02% 0.22%-1.64% 1.35% - 2.55% Dividend yield 0 0 0 Weighted-average fair value of underlying stock options $ $67.37 $ $48.74 $ 28.37 |
Schedule of activity under the RSUs | Activity under RSUs was as follows: Weighted-Average Grant Date RSUs Fair Value Per RSU Balance at December 31, 2020 3,550,595 $ 162.11 Granted 816,466 $ 174.64 Vested and issued (1,419,426) $ 139.32 Forfeited (814,134) $ 183.89 Balance at December 31, 2021 2,133,501 $ 168.43 Vested and unissued at December 31, 2021 16,507 $ 71.96 Non-vested at December 31, 2021 2,116,994 $ 168.43 |
Schedule of activity under the PSUs | Activity under PSUs was as follows: Weighted-Average Grant Date Shares Fair Value Per PSU Balance at December 31, 2020 429,319 $ 76.60 Granted 531,309 $ 132.66 Vested and issued (268,201) $ 74.33 Forfeited (336,178) $ 99.68 Balance at December 31, 2021 356,249 $ 140.01 Vested and unissued at December 31, 2021 0 $ 0 Non-vested at December 31, 2021 356,249 $ 140.01 |
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 were as follows (in thousands): Year Ended December 31, 2021 2020 2019 Cost of revenue (exclusive of depreciation and amortization, which is shown separately) $ 8,280 $ 2,700 $ 0 Advertising and marketing 18,952 26,995 4,956 Sales 71,475 65,730 10,286 Technology and development 95,561 60,556 7,573 General and administrative 108,318 319,550 43,887 Total stock-based compensation expense (1) $ 302,586 $ 475,531 $ 66,702 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Income Taxes | |
Schedule of components of income (loss) from continuing operations before income taxes | For financial reporting purposes, income (loss) before income taxes for the years ended December 31, 2021, 2020 and 2019 included the following components (in thousands): Year Ended December 31, 2021 2020 2019 Domestic $ (365,762) $ (566,266) $ (95,476) International (18,894) (9,727) (13,979) Total $ (384,656) $ (575,993) $ (109,455) |
Schedule of components of provision (benefit) for income taxes | The provision (benefit) for income taxes was comprised of the following components: Year Ended December 31, 2021 2020 2019 Current federal $ 0 $ (1,954) $ 239 Current state 567 27 300 Current foreign 2,595 1,605 (262) Total current 3,162 (322) 277 Deferred federal 49,008 (60,008) (5,043) Deferred state (6,276) (26,775) (1,783) Deferred foreign (1,757) (3,752) (4,042) Total deferred 40,975 (90,535) (10,868) Total (Benefit) / Provision $ 44,137 $ (90,857) $ (10,591) |
Schedule of reconciliation of the statutory federal income tax rate to the effective income tax rate | A reconciliation of the statutory U.S. federal tax rate to the Company’s effective tax rate from continuing operations is as follows: Year Ended December 31, 2021 2020 2019 Tax at federal statutory rate 21.0 % 21.0 % 21.0 % State and local tax 7.7 2.3 4.6 Acquisition expenses 2.0 (2.2) (0.4) Stock compensation (1) 6.7 (1.1) 7.7 Non-deductible expenses (0.5) (0.1) (0.2) Foreign rate differential 0.2 0.3 2.2 Change in valuation allowance (46.9) (5.4) (25.3) Other (1.7) 1.0 0.1 Effective tax rate (11.5) % 15.8 % 9.7 % (1) The Company has updated the presentation of the rate reconciliation in 2021. Stock compensation has been updated to include executive compensation. Previously, stock compensation and executive compensation were shown separately. |
Schedule of components of deferred tax assets and liabilities | The Company’s deferred tax assets and liabilities consisted of the following (in thousands): As of December 31, 2021 2020 Deferred tax assets: Net operating loss carryforwards $ 687,679 $ 497,603 Accrued expenses and compensation 5,413 7,016 Stock-based compensation 63,641 94,029 Foreign tax credits and alternative minimum tax credits 4,814 5,727 Research and development credits 1,320 14,666 Depreciation of property and equipment 56 83 Interest expense carryforward 11,528 6,620 Operating lease assets 13,575 13,978 Deferred revenue 7,946 2,917 Other 7,032 3,290 Deferred tax assets 803,004 645,929 Valuation allowance (335,810) (107,984) Net deferred tax assets 467,194 537,945 Deferred tax liabilities: Debt related (73,378) (105,063) Operating lease liabilities (11,842) (12,117) Depreciation of property and equipment (3,427) (2,476) Intangible assets (452,049) (519,397) Other (2) (2,275) (995) Deferred tax liabilities (542,971) (640,048) Net deferred tax liabilities $ (75,777) $ (102,103) (2) The Company has updated the presentation of the deferred tax liability item of prepaid insurance and deferred commissions in 2021. As the amounts were immaterial, the Company is presenting this item in “Other”. |
Schedule of reconciliation of beginning and ending amount of unrecognized tax benefits | The Company provision for income taxes includes the impact of reserves and a reconciliation of the beginning and ending amount of unrecognized tax benefits was as follows (in thousands): Balance on January 1, 2021 $ 21,362 Additions assumed in a business combination 59,110 Additions based on prior year tax positions 43,399 Additions based on current year tax positions 1,490 Release (14,513) Balance on December 31, 2021 $ 110,848 |
Net Loss per Share (Tables)
Net Loss per Share (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Net Loss per Share | |
Schedule of calculation of basic and diluted net loss per share | The following table presents the calculation of basic and diluted net loss per share for the Company’s common stock (in thousands, except shares and per share data): Year Ended December 31, 2021 2020 2019 Net loss $ (428,793) $ (485,136) $ (98,864) Weighted-average shares used to compute basic and diluted net loss per share 156,939 90,509 71,845 Net loss per share, basic and diluted $ (2.73) $ (5.36) $ (1.38) |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - VIE (Details) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2021USD ($)item | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Variable interest entity | ||||
Number of professional associations consolidated as VIEs | item | 3 | |||
Number of professional corporations consolidated as VIEs | item | 12 | |||
Revenue | $ 2,032,707 | $ 1,093,962 | $ 553,307 | |
Net (loss) income | (428,793) | (485,136) | (98,864) | |
Assets | 17,734,608 | 17,755,281 | ||
(Equity) deficit | (16,045,757) | (15,883,804) | (1,014,025) | $ (1,013,119) |
Primary beneficiary | ||||
Variable interest entity | ||||
Revenue | 230,200 | 203,900 | 83,600 | |
Net (loss) income | (1,600) | 2,100 | $ (3,200) | |
Assets | 58,500 | 32,000 | ||
Liabilities | 94,700 | 66,600 | ||
(Equity) deficit | $ 36,100 | $ 34,600 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenue Recognition | |||
Contract term | 1 year | ||
Payment terms | 30 days | ||
Contract with Customer Refunds Issued | $ 26 | $ 11.2 | $ 3.6 |
Revenue recognized related to prior periods | $ 5.6 | $ 1.9 | $ 0.8 |
Amortization term of deferred contract cost | 4 years | ||
Minimum | |||
Revenue Recognition | |||
Contract term | 1 year | ||
Maximum | |||
Revenue Recognition | |||
Contract term | 3 years |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Research and Development (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Summary of Significant Accounting Policies | |||
Research and development included in Technology ad Development expenses | $ 205.3 | $ 110.8 | $ 23.6 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Cash and Cash Equivalents and Short-Term Investments (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Summary of Significant Accounting Policies | ||
Cash and cash equivalents | $ 893,480 | $ 733,324 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - PPE (Details) | 12 Months Ended |
Dec. 31, 2021 | |
Computer equipment | |
Property and Equipment | |
Useful life | 3 years |
Furniture and equipment | |
Property and Equipment | |
Useful life | 5 years |
Rental Equipment | |
Property and Equipment | |
Useful life | 4 years 3 months 18 days |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Intangibles (Details) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Client relationships | Minimum | ||
Intangible assets | ||
Useful life | 2 years | 2 years |
Client relationships | Maximum | ||
Intangible assets | ||
Useful life | 20 years | 20 years |
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 |
Trademarks | Minimum | ||
Intangible assets | ||
Useful life | 3 years | 3 years |
Trademarks | Maximum | ||
Intangible assets | ||
Useful life | 15 years | 15 years |
Patents | ||
Intangible assets | ||
Useful life | 3 years | 3 years |
Technology | Minimum | ||
Intangible assets | ||
Useful life | 5 years | 5 years |
Technology | Maximum | ||
Intangible assets | ||
Useful life | 7 years | 7 years |
Capitalized software development costs | Minimum | ||
Intangible assets | ||
Useful life | 3 years | 3 years |
Capitalized software development costs | Maximum | ||
Intangible assets | ||
Useful life | 5 years | 5 years |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Stock-Based Compensation (Details) | 12 Months Ended |
Dec. 31, 2021 | |
ESPP | |
Common Stock and Stockholders' Equity | |
Maximum offering period | 27 months |
Stock purchase price as a percentage of fair value (as a percent) | 85.00% |
PSUs | Minimum | |
Common Stock and Stockholders' Equity | |
Actual performance compared to performance conditions percentage | 50.00% |
PSUs | Maximum | |
Common Stock and Stockholders' Equity | |
Actual performance compared to performance conditions percentage | 225.00% |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Income Taxes (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Summary of Significant Accounting Policies | ||
Unrecognized tax benefits | $ 110,848 | $ 21,362 |
Valuation allowance | $ 335,810 | $ 107,984 |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Advertising and Marketing Expenses (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Summary of Significant Accounting Policies | |||
Advertising expense | $ 297 | $ 165 | $ 88.8 |
Summary of Significant Accou_13
Summary of Significant Accounting Policies - Concentrations (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Concentrations of Risk and Significant Clients | |||
Revenue | $ 2,032,707 | $ 1,093,962 | $ 553,307 |
United States | |||
Concentrations of Risk and Significant Clients | |||
Revenue | 1,774,000 | 913,700 | 423,300 |
Foreign. | |||
Concentrations of Risk and Significant Clients | |||
Revenue | $ 258,700 | $ 180,200 | $ 130,000 |
Summary of Significant Accou_14
Summary of Significant Accounting Policies - Recently Issued Accounting Pronouncements (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Accounting Standards Update 2020-06 | |
Anticipated reduction in non-cash interest on convertible notes in next fiscal year with the adoption of new accounting standard | $ 58 |
Revenue, Deferred Revenue, De_3
Revenue, Deferred Revenue, Deferred Costs and Other - Other Disclosures (Details) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Product and Service Concentration Risk | Revenue from Contract with Customer | Access Fees Revenue | |||
Revenue, Deferred Revenue, Deferred Costs and Other | |||
Concentration risk (as a percent) | 85.00% | 78.00% | 82.00% |
Revenue, Deferred Revenue, De_4
Revenue, Deferred Revenue, Deferred Costs and Other - Disaggregation and Other (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenue | |||
Revenue | $ 2,032,707 | $ 1,093,962 | $ 553,307 |
Accounts receivable, net of allowance for doubtful accounts | 168,956 | 169,281 | |
Deferred revenue | 79,400 | 54,800 | |
Net increase in deferred revenue | 24,600 | 40,000 | |
Revenue recognized, included in deferred revenue balance at beginning of period | 51,000 | 12,500 | |
United States | |||
Revenue | |||
Revenue | 1,774,000 | 913,700 | 423,300 |
Foreign. | |||
Revenue | |||
Revenue | 258,700 | 180,200 | 130,000 |
Access Fees Revenue | |||
Revenue | |||
Revenue | 1,732,005 | 846,659 | 454,206 |
Access Fees Revenue | United States | |||
Revenue | |||
Revenue | 1,488,420 | 678,168 | 334,675 |
Access Fees Revenue | Foreign. | |||
Revenue | |||
Revenue | 243,585 | 168,491 | 119,531 |
Visit Fee Revenue | |||
Revenue | |||
Revenue | 254,234 | 222,052 | 99,101 |
Visit Fee Revenue | United States | |||
Revenue | |||
Revenue | 241,515 | 211,664 | 88,669 |
Visit Fee Revenue | Foreign. | |||
Revenue | |||
Revenue | 12,719 | 10,388 | $ 10,432 |
Other | |||
Revenue | |||
Revenue | 46,468 | 25,251 | |
Other | United States | |||
Revenue | |||
Revenue | 44,089 | 23,888 | |
Other | Foreign. | |||
Revenue | |||
Revenue | $ 2,379 | $ 1,363 |
Revenue, Deferred Revenue, De_5
Revenue, Deferred Revenue, Deferred Costs and Other - Revenue Remaining Performance Obligation (Details) $ in Millions | Dec. 31, 2021USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Future Performance Obligations | |
Revenue recognized, performance obligation | $ 73.1 |
Period of performance obligation | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Future Performance Obligations | |
Revenue recognized, performance obligation | $ 3.1 |
Period of performance obligation | 12 months |
Revenue, Deferred Revenue, De_6
Revenue, Deferred Revenue, Deferred Costs and Other - Deferred Cost and Other (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Deferred Device Cost And Other | ||
Deferred costs and other, current | $ 22,304 | $ 3,468 |
Deferred costs and other, noncurrent | 6,249 | 2,179 |
Total Deferred cost and other | $ 28,553 | $ 5,647 |
Revenue, Deferred Revenue, De_7
Revenue, Deferred Revenue, Deferred Costs and Other - Deferred Cost and Other Activity (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Change in Deferred Device Cost And Other | |
Beginning balance | $ 5,647 |
Additions | 41,579 |
Cost of revenue recognized | (18,673) |
Ending Balance | $ 28,553 |
Fair Value Measurements - Recur
Fair Value Measurements - Recurring (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Fair Value | ||
Short-term investments | $ 2,537 | $ 53,245 |
Equity securities without readily determinable fair values | 0 | 5,000 |
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, Liabilities, Level 2 to Level 1 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 | 893,480 | 733,324 |
Short-term investments | 2,537 | 53,245 |
Equity securities without readily determinable fair values | 5,000 | |
Contingent liability | 4,514 | |
Level 1 | Recurring | ||
Fair Value | ||
Cash and cash equivalents | 893,480 | 733,324 |
Short-term investments | 0 | 0 |
Equity securities without readily determinable fair values | 0 | |
Contingent liability | 0 | |
Level 2 | Recurring | ||
Fair Value | ||
Cash and cash equivalents | 0 | 0 |
Short-term investments | 2,537 | 53,245 |
Equity securities without readily determinable fair values | 5,000 | |
Contingent liability | 0 | |
Level 3 | Recurring | ||
Fair Value | ||
Cash and cash equivalents | 0 | 0 |
Short-term investments | $ 0 | 0 |
Equity securities without readily determinable fair values | 0 | |
Contingent liability | $ 4,514 |
Fair Value Measurements - Equit
Fair Value Measurements - Equity Securities (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Change in fair value of the Company's equity securities without readily determinable fair values: | |
Fair value and historical cost basis at December 31, 2020 | $ 5,000 |
Increase due to observable price change in identical securities | 5,901 |
Sale of investment | (10,901) |
Fair value at December 31, 2021 | $ 0 |
Fair Value Measurements - Level
Fair Value Measurements - Level 3 (Details) - Contingent Liability $ in Thousands | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Reconciliation of Level 3 liabilities | |
Fair value at beginning of period | $ 4,514 |
Payments | (4,367) |
Currency translation adjustment | (147) |
Fair value at end of period | $ 0 |
Business Acquisitions - Transac
Business Acquisitions - Transactions (Details) $ / shares in Units, $ in Thousands | Oct. 30, 2020USD ($)$ / sharesshares | Jul. 01, 2020USD ($)shares | Mar. 31, 2021USD ($)shares | Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) |
Business acquisition | ||||||
Goodwill | $ 14,504,174 | $ 14,581,255 | $ 746,079 | |||
Cash paid for acquisition, net | 78,663 | 567,429 | $ 11,187 | |||
Measurement period increase (reduction) to goodwill | $ (66,505) | $ 0 | ||||
Client relationships | Maximum | ||||||
Business acquisition | ||||||
Useful life | 20 years | 20 years | ||||
Technology | Maximum | ||||||
Business acquisition | ||||||
Useful life | 7 years | 7 years | ||||
Livongo Health | ||||||
Business acquisition | ||||||
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 | |||||
Total consideration | $ 13,876,931 | |||||
Goodwill | 12,790,869 | |||||
Cash paid for acquisition, net | 380,200 | |||||
Amount related to conversion feature of the Livongo Notes guaranteed by the Company | $ 555,400 | |||||
Equity consideration (in shares) | shares | 60,200,000 | |||||
Equity consideration | $ 12,941,300 | |||||
Acquisition related costs | 59,000 | |||||
Excess shares identified | shares | 205,279 | |||||
Excess shares not withheld | shares | 85,481 | |||||
Merger-related cash payments identified as cash overpayments | $ 5,600 | |||||
Excess shares cancelled | shares | 205,279 | |||||
Increase to receivables | $ 20,800 | |||||
Decrease to stockholders' equity | 40,300 | |||||
Decrease to goodwill | $ 61,100 | $ 66,500 | ||||
Livongo Health | Client relationships | ||||||
Business acquisition | ||||||
Finite-lived intangibles | $ 1,050,000 | |||||
Useful life | 157 months | |||||
Livongo Health | Technology | ||||||
Business acquisition | ||||||
Finite-lived intangibles | $ 300,000 | |||||
Useful life | 7 years | |||||
Livongo Health | Brand | ||||||
Business acquisition | ||||||
Finite-lived intangibles | $ 250,000 | |||||
Useful life | 10 years | |||||
InTouch | ||||||
Business acquisition | ||||||
Total consideration | $ 1,069,759 | |||||
Goodwill | 899,978 | |||||
Cash paid for acquisition, net | $ 166,500 | |||||
Equity consideration (in shares) | shares | 4,600,000 | |||||
Equity consideration | $ 903,300 | |||||
Acquisition related costs | 21,400 | |||||
InTouch | Client relationships | ||||||
Business acquisition | ||||||
Finite-lived intangibles | 164,580 | |||||
InTouch | Technology | ||||||
Business acquisition | ||||||
Finite-lived intangibles | $ 29,190 |
Business Acquisitions - Assets
Business Acquisitions - Assets Acquired, Liabilities Assumed, Pro forma (Details) - USD ($) $ in Thousands | Oct. 30, 2020 | Jul. 01, 2020 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2019 |
Less: | |||||
Goodwill | $ 14,581,255 | $ 14,504,174 | $ 746,079 | ||
Livongo Health | |||||
Identifiable assets acquired and liabilities assumed: | |||||
Purchase price, net of cash acquired | $ 13,876,931 | ||||
Less: | |||||
Accounts receivable | 80,084 | ||||
Short term investment | 52,500 | ||||
Inventory | 24,299 | ||||
Property and equipment, net | 8,952 | ||||
Right of use assets | 15,056 | ||||
Other assets | 17,337 | ||||
Advances from financing companies | 0 | ||||
Accounts payable | (119,302) | ||||
Deferred revenue | (997) | ||||
Convertible notes | (453,417) | ||||
Deferred taxes | (73,010) | ||||
Lease liabilities | (18,834) | ||||
Other liabilities | (46,606) | ||||
Goodwill | 12,790,869 | ||||
Livongo Health | Client relationships | |||||
Less: | |||||
Finite-lived intangibles | 1,050,000 | ||||
Livongo Health | Technology | |||||
Less: | |||||
Finite-lived intangibles | 300,000 | ||||
Livongo Health | Trademarks | |||||
Less: | |||||
Finite-lived intangibles | $ 250,000 | ||||
InTouch | |||||
Identifiable assets acquired and liabilities assumed: | |||||
Purchase price, net of cash acquired | $ 1,069,759 | ||||
Less: | |||||
Accounts receivable | 16,986 | ||||
Short term investment | 0 | ||||
Inventory | 8,492 | ||||
Property and equipment, net | 11,366 | ||||
Right of use assets | 4,965 | ||||
Other assets | 2,541 | ||||
Advances from financing companies | (26,012) | ||||
Accounts payable | (5,589) | ||||
Deferred revenue | (20,729) | ||||
Convertible notes | 0 | ||||
Deferred taxes | (30,102) | ||||
Lease liabilities | (5,495) | ||||
Other liabilities | (13,042) | ||||
Goodwill | 899,978 | ||||
InTouch | Client relationships | |||||
Less: | |||||
Finite-lived intangibles | 164,580 | ||||
InTouch | Technology | |||||
Less: | |||||
Finite-lived intangibles | 29,190 | ||||
InTouch | Trademarks | |||||
Less: | |||||
Finite-lived intangibles | $ 32,630 | ||||
Livongo and InTouch | |||||
Pro forma information | |||||
Revenue | 1,441,834 | ||||
Net loss | $ (882,411) |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Inventories | ||
Raw materials and purchased parts | $ 26,164 | $ 19,591 |
Work in process | 313 | 1,431 |
Finished goods | 46,602 | 35,476 |
Total inventories | $ 73,079 | $ 56,498 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Total | $ 61,364 | $ 50,516 | |
Accumulated depreciation | (34,130) | (21,965) | |
Property and equipment, net | 27,234 | 28,551 | |
Depreciation | 8,900 | 4,800 | $ 3,400 |
Capitalized cloud computing implementation costs included in other assets | 2,400 | 0 | |
Computer equipment | |||
Total | 28,330 | 22,129 | |
Furniture and equipment | |||
Total | 7,104 | 6,486 | |
Leasehold improvement | |||
Total | 12,983 | 12,831 | |
Rental Equipment | |||
Total | 11,018 | 8,413 | |
Construction in progress | |||
Total | $ 1,929 | $ 657 |
Intangible Assets, Net - Summar
Intangible Assets, Net - Summary (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Intangible assets | |||
Gross Value | $ 2,266,943 | $ 2,183,399 | |
Accumulated Amortization | (356,665) | (162,535) | |
Net Carrying Value | 1,910,278 | 2,020,864 | |
Amortization expense for intangible assets | $ 195,300 | $ 64,700 | $ 35,600 |
Weighted Average | |||
Intangible assets | |||
Weighted Average Remaining Useful Life | 12 years | 13 years 1 month 6 days | |
Client relationships | |||
Intangible assets | |||
Gross Value | $ 1,465,926 | $ 1,460,648 | |
Accumulated Amortization | (199,866) | (100,844) | |
Net Carrying Value | $ 1,266,060 | $ 1,359,804 | |
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 | 14 years 6 months | 15 years 4 months 24 days | |
Non-compete agreements | |||
Intangible assets | |||
Gross Value | $ 4,975 | $ 5,097 | |
Accumulated Amortization | (4,975) | (4,872) | |
Net Carrying Value | $ 0 | $ 225 | |
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 | 4 months 24 days | ||
Trademarks | |||
Intangible assets | |||
Gross Value | $ 326,392 | $ 326,786 | |
Accumulated Amortization | (45,555) | (15,576) | |
Net Carrying Value | $ 280,837 | $ 311,210 | |
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 | 9 years 6 months | 10 years 6 months | |
Patents | |||
Intangible assets | |||
Gross Value | $ 200 | $ 200 | |
Accumulated Amortization | (200) | (200) | |
Net Carrying Value | $ 0 | $ 0 | |
Useful life | 3 years | 3 years | |
Capitalized software development costs | |||
Intangible assets | |||
Gross Value | $ 126,188 | $ 52,518 | |
Accumulated Amortization | (40,767) | (24,771) | |
Net Carrying Value | $ 85,421 | $ 27,747 | |
Capitalized software development costs | Minimum | |||
Intangible assets | |||
Useful life | 3 years | 3 years | |
Capitalized software development costs | Maximum | |||
Intangible assets | |||
Useful life | 5 years | 5 years | |
Capitalized software development costs | Weighted Average | |||
Intangible assets | |||
Weighted Average Remaining Useful Life | 2 years 8 months 12 days | 2 years 9 months 18 days | |
Technology | |||
Intangible assets | |||
Gross Value | $ 343,262 | $ 338,150 | |
Accumulated Amortization | (65,302) | (16,272) | |
Net Carrying Value | $ 277,960 | $ 321,878 | |
Technology | Minimum | |||
Intangible assets | |||
Useful life | 5 years | 5 years | |
Technology | Maximum | |||
Intangible assets | |||
Useful life | 7 years | 7 years | |
Technology | Weighted Average | |||
Intangible assets | |||
Weighted Average Remaining Useful Life | 5 years 7 months 6 days | 6 years 7 months 6 days |
Intangible Assets, Net - Amorti
Intangible Assets, Net - Amortization (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Periodic amortization that will be charged to expense over the remaining life of the intangible assets | ||
2022 | $ 206,602 | |
2023 | 210,494 | |
2024 | 205,595 | |
2025 | 181,729 | |
2026 and thereafter | 1,105,858 | |
Net Carrying Value | $ 1,910,278 | $ 2,020,864 |
Goodwill (Details)
Goodwill (Details) - USD ($) $ in Thousands | Dec. 01, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Goodwill | ||||
Beginning balance | $ 14,581,255 | $ 746,079 | ||
Additions associated with acquisitions | 64,269 | 13,812,198 | ||
Purchase consideration adjustments | (55,801) | 0 | ||
Deferred tax adjustments | (66,505) | 0 | ||
Currency translation adjustment | (19,044) | 22,978 | ||
Ending balance | 14,504,174 | 14,581,255 | $ 746,079 | |
Impairment charges for goodwill or definite-lived intangible assets | $ 0 | $ 0 | $ 0 | |
Percentage of increase of fair value from carrying value of reporting unit | 15.00% |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Accrued Expenses and Other Current Liabilities | ||
Professional fees | $ 5,373 | $ 4,717 |
Consulting fees/provider fees | 19,292 | 23,167 |
Client performance guarantees | 7,653 | 7,215 |
Interest payable | 1,480 | 2,049 |
Income tax payable | 3,098 | 1,627 |
Insurance | 3,884 | 3,139 |
Marketing | 3,471 | 2,815 |
Operating lease liabilities - current | 12,687 | 11,438 |
Earnout | 4,514 | |
Franchise and Sales Taxes | 9,965 | 2,099 |
Device Replacement Cost | 6,263 | 0 |
Other | 29,767 | 20,877 |
Total | $ 102,933 | $ 83,657 |
Current operating lease liabilities | Accrued expenses and other current liabilities | Accrued expenses and other current liabilities |
Convertible Senior Notes - Outs
Convertible Senior Notes - Outstanding Convertible Senior Notes - Issuances (Details) - USD ($) $ in Thousands | May 19, 2020 | May 08, 2018 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Jun. 04, 2020 | Jun. 27, 2017 |
2027 Notes | |||||||
Convertible Senior Notes | |||||||
Face amount | $ 1,000,000 | $ 1,000,000 | $ 1,000,000 | ||||
Interest rate (as a percent) | 1.25% | ||||||
Net proceeds from issuance of Notes | $ 975,900 | ||||||
Offering costs | $ 24,100 | 0 | 24,070 | $ 0 | |||
2025 Notes | |||||||
Convertible Senior Notes | |||||||
Face amount | $ 287,500 | 730 | 276,788 | ||||
Interest rate (as a percent) | 1.375% | ||||||
Net proceeds from issuance of Notes | $ 279,100 | ||||||
Offering costs | $ 8,400 | ||||||
Livongo Notes | |||||||
Convertible Senior Notes | |||||||
Face amount | 550,000 | 550,000 | $ 550,000 | ||||
Interest rate (as a percent) | 0.875% | ||||||
2022 Notes | |||||||
Convertible Senior Notes | |||||||
Face amount | $ 0 | $ 46,762 | $ 275,000 | ||||
Interest rate (as a percent) | 3.00% |
Convertible Senior Notes - Cert
Convertible Senior Notes - Certain terms of the Notes (Details) | 12 Months Ended |
Dec. 31, 2021USD ($)$ / shares | |
2027 Notes | |
Convertible Senior Notes | |
Interest Rate Per Year | 1.25% |
Fair value | $ 940,000,000 |
Conversion Rate Per $1,000 Principal Amount | $ / shares | $ 4.1258 |
Remaining contractual life | 5 years 4 months 24 days |
2025 Notes | |
Convertible Senior Notes | |
Interest Rate Per Year | 1.375% |
Fair value | $ 1,300,000 |
Conversion Rate Per $1,000 Principal Amount | $ / shares | $ 18.6621 |
Remaining contractual life | 3 years 4 months 24 days |
Livongo Notes | |
Convertible Senior Notes | |
Interest Rate Per Year | 0.875% |
Fair value | $ 605,000,000 |
Conversion Rate Per $1,000 Principal Amount | $ / shares | $ 13.94 |
Remaining contractual life | 3 years 4 months 24 days |
Notes | |
Convertible Senior Notes | |
Principal multiple amount used in the conversion of the debt instrument | $ 1,000 |
Convertible Senior Notes - Term
Convertible Senior Notes - Terms (Details) $ / shares in Units, shares in Millions | 12 Months Ended |
Dec. 31, 2021USD ($)D$ / sharesshares | |
2027 Notes | |
Convertible Senior Notes | |
Convertible debt, conversion price (in dollars per share) | $ / shares | $ 4.1258 |
Convertible debt, equity component | $ | $ 286,000,000 |
2025 Notes | |
Convertible Senior Notes | |
Convertible debt, conversion price (in dollars per share) | $ / shares | $ 18.6621 |
Convertible debt, Reference property rate | 0.5920 |
Convertible debt, Reference property , conversion price (in dollars per share) | $ / shares | $ 4.24 |
Trading day observation period used to determine the amount of cash and shares, if any, that are due upon conversion | 40 |
Convertible debt, equity component | $ | $ 91,400,000 |
Livongo Notes | |
Convertible Senior Notes | |
Convertible debt, conversion price (in dollars per share) | $ / shares | $ 13.94 |
Percentage of principal for repurchase price (as percent) | 100 |
2022 Notes | |
Convertible Senior Notes | |
Convertible debt, equity component | $ | $ 62,400,000 |
Debt term | 5 years 6 months |
Notes | |
Convertible Senior Notes | |
Principal multiple amount used in the conversion of the debt instrument | $ | $ 1,000 |
Convertible debt, threshold, trading days | 20 |
Convertible debt, threshold, consecutive trading days | 30 |
Minimum percentage of common stock price as a percentage of the conversion price | 130.00% |
Convertible debt, number of business days, measurement period | 5 |
Convertible debt, number of consecutive trading days, measurement period | 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% |
Shares reserved for issuance (in shares) | shares | 8.7 |
Debt term | 7 years |
Notes | Livongo Notes | |
Convertible Senior Notes | |
Convertible debt, number of consecutive trading days, measurement period | 5 |
2027 Notes, 2025 Notes and the 2022 Notes | |
Convertible Senior Notes | |
Trading day observation period used to determine the amount of cash and shares, if any, that are due upon conversion | 25 |
Convertible Senior Notes - Ou_2
Convertible Senior Notes - Outstanding Convertible Senior Notes - Summary (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Jun. 04, 2020 | May 19, 2020 | May 08, 2018 | Jun. 27, 2017 | |
2027 Notes | |||||||
Convertible Senior Notes | |||||||
Principal | $ 1,000,000 | $ 1,000,000 | $ 1,000,000 | ||||
Less: Debt discount, net | (250,846) | (287,916) | |||||
Net carrying amount | 749,154 | 712,084 | |||||
Interest Expense | |||||||
Contractual interest expense | 12,500 | 7,743 | |||||
Amortization of debt discount | 37,070 | 21,756 | |||||
Total | $ 49,570 | $ 29,499 | |||||
Effective interest rate of the liability component (as a percent) | 3.40% | 3.40% | |||||
2025 Notes | |||||||
Convertible Senior Notes | |||||||
Principal | $ 730 | $ 276,788 | $ 287,500 | ||||
Less: Debt discount, net | (166) | (65,923) | |||||
Net carrying amount | 564 | 210,865 | |||||
Interest Expense | |||||||
Contractual interest expense | 1,082 | 3,900 | $ 3,953 | ||||
Amortization of debt discount | 4,558 | 12,532 | 11,706 | ||||
Total | $ 5,640 | $ 16,432 | $ 15,659 | ||||
Effective interest rate of the liability component (as a percent) | 4.70% | 7.90% | 7.90% | ||||
Livongo Notes | |||||||
Convertible Senior Notes | |||||||
Principal | $ 550,000 | $ 550,000 | $ 550,000 | ||||
Less: Debt discount, net | (74,047) | (93,357) | |||||
Net carrying amount | 475,953 | 456,643 | |||||
Interest Expense | |||||||
Contractual interest expense | 4,813 | 829 | |||||
Amortization of debt discount | 19,310 | 3,226 | |||||
Total | $ 24,123 | $ 4,055 | |||||
Effective interest rate of the liability component (as a percent) | 5.20% | 5.20% | |||||
2022 Notes | |||||||
Convertible Senior Notes | |||||||
Principal | $ 0 | $ 46,762 | $ 275,000 | ||||
Less: Debt discount, net | 0 | (4,202) | |||||
Net carrying amount | 0 | 42,560 | |||||
Interest Expense | |||||||
Contractual interest expense | 116 | 4,047 | $ 8,250 | ||||
Amortization of debt discount | 316 | 7,553 | 14,026 | ||||
Total | $ 432 | $ 11,600 | $ 22,276 | ||||
Effective interest rate of the liability component (as a percent) | 9.60% | 9.60% | 9.60% |
Convertible Senior Notes - Exch
Convertible Senior Notes - Exchange/Redemption of Convertible Senior Notes Due (Details) - USD ($) $ in Thousands, shares in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2021 | Aug. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Convertible Senior Notes | |||||
Loss on extinguishment of debt | $ 43,748 | $ 9,077 | $ 0 | ||
2025 Notes | |||||
Convertible Senior Notes | |||||
Shares issued for conversion/exchange of debt | 4 | 1.1 | |||
Principal amount of debt exchanged for shares of the Company's common stock in private placement transactions | $ 211,500 | ||||
Loss on extinguishment of debt | $ 40,300 | ||||
2022 Notes | |||||
Convertible Senior Notes | |||||
Shares issued for conversion/exchange of debt | 1.1 | ||||
Cash exchanged, redemption of convertible notes | $ 100 | ||||
Loss on extinguishment of debt | $ 3,400 |
Advances from Financing Compa_3
Advances from Financing Companies (Details) $ in Thousands | Dec. 31, 2021USD ($) |
2022 | $ 13,313 |
2023 | 7,153 |
2024 | 2,138 |
Total | $ 22,604 |
Minimum | |
Advances from financing companies, interest rate (as a percent) | 3.35% |
Maximum | |
Advances from financing companies, interest rate (as a percent) | 8.25% |
Leases - Other (Details)
Leases - Other (Details) | 12 Months Ended |
Dec. 31, 2021 | |
Leases and Contractual Obligations | |
Options to extend | true |
Minimum | |
Leases and Contractual Obligations | |
Remaining lease terms | 1 year |
Options to extend lease terms | 1 year |
Lessor lease term | 2 years |
Maximum | |
Leases and Contractual Obligations | |
Remaining lease terms | 11 years |
Options to extend lease terms | 6 years |
Lessor lease term | 5 years |
Leases - Lease Cost (Details)
Leases - Lease Cost (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Lease cost | |
Operating lease cost | $ 14,087 |
Short-term Lease, Cost | 1,087 |
Variable lease cost | 3 |
Total lease cost | $ 15,177 |
Leases - Supplemental Informati
Leases - Supplemental Information (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Leases | |
Cash payment for operating cash flows used for operating leases | $ 14,531 |
Operating lease liabilities arising from obtaining right-of-use assets | $ 11,598 |
Weighted-average remaining lease term | 5 years 8 months 15 days |
Weighted-average discount rate | 5.88% |
Leases - Future Minimum Lease P
Leases - Future Minimum Lease Payments (Details) $ in Thousands | Dec. 31, 2021USD ($) |
Future minimum lease payments under non cancelable operating leases: | |
2022 | $ 15,021 |
2023 | 14,981 |
2024 | 9,871 |
2025 | 7,232 |
2026 and thereafter | 18,659 |
Sub-total | 65,764 |
Less: imputed interest | 11,304 |
Minimum lease payments | $ 54,460 |
Common Stock and Stockholders_3
Common Stock and Stockholders' Equity - Capitalization (Details) - shares | Dec. 31, 2021 | Dec. 31, 2020 | Oct. 30, 2020 | Oct. 29, 2020 |
Common Stock and Stockholders'Equity | ||||
Number of common stock shares authorized | 300,000,000 | 300,000,000 | 300,000,000 | 150,000,000 |
Common Stock and Stockholders_4
Common Stock and Stockholders' Equity - Warrants (Details) - shares | Dec. 31, 2021 | Dec. 31, 2020 |
Common stock warrants | ||
Warrants | ||
Warrants outstanding (in shares) | 0 | 0 |
Common Stock and Stockholders_5
Common Stock and Stockholders' Equity - Stock Plan and Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands | Oct. 29, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Common Stock and Stockholders' Equity | ||||
Trading days | 4 days | |||
Stock options | ||||
Common Stock and Stockholders' Equity | ||||
Vesting period | 4 years | |||
Stock options | Maximum | ||||
Common Stock and Stockholders' Equity | ||||
Exercisable period (in years) | 10 years | |||
Shares available for grant | 12,855,294 | |||
RSUs | ||||
Common Stock and Stockholders' Equity | ||||
Vesting period | 3 years | |||
RSUs | Maximum | ||||
Common Stock and Stockholders' Equity | ||||
Vesting period | 4 years | |||
2015 Incentive Award Plan | ||||
Number of Shares Outstanding | ||||
Balance, beginning of period (in shares) | 5,826,685 | |||
Stock option grants and assumed awards (in shares) | 49,177 | |||
Stock option exercised (in shares) | (2,339,537) | |||
Stock options forfeited (in shares) | (109,347) | |||
Balance, end of period (in shares) | 3,426,978 | 5,826,685 | ||
Vested or expected to vest at end of period (in shares) | 3,426,978 | |||
Exercisable as of end of period (in shares) | 3,176,543 | |||
Weighted-Average Exercise Price | ||||
Balance, beginning of period (in dollars per share) | $ 17.19 | |||
Stock option grants and assumed awards (in dollars per share) | 151.24 | |||
Stock option exercised (in dollars per share) | 11 | |||
Stock options forfeited (in dollars per share) | 29.03 | |||
Balance, end of period (in dollars per share) | 22.88 | $ 17.19 | ||
Vested or expected to vest at end of period (in dollars per share) | 22.88 | |||
Exercisable as of end of period (in dollars per share) | $ 19.54 | |||
Weighted-average remaining contractual life in Years | ||||
Weighted-average remaining contractual life (in years) | 5 years 3 months 25 days | 5 years 3 months 21 days | ||
Vested or expected to vest at end of period (in years) | 7 years 3 months 25 days | |||
Exercisable as of end of period (in years) | 5 years 1 month 28 days | |||
Aggregate Intrinsic Value | ||||
Aggregate Intrinsic Value | $ 242,569 | $ 1,064,944 | ||
Stock options exercised | (431,572) | |||
Vested or expected to vest at end of period | 11,645 | |||
Exercisable as of end of period | 230,924 | |||
Grant-date fair value of stock options granted during the period | $ 7,400 | $ 1,298,000 | $ 4,700 |
Common Stock and Stockholders_6
Common Stock and Stockholders' Equity - Fair Value Assumptions (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Other disclosures | |||
Compensation expense | $ 302,586 | $ 475,531 | $ 66,702 |
Stock options | |||
Fair value assumptions | |||
Volatility, minimum (as a percent) | 56.10% | 46.10% | 46.80% |
Volatility, maximum (as a percent) | 58.10% | 56.60% | 47.60% |
Expected term (in years) | 4 years 1 month 6 days | 4 years 1 month 6 days | 5 years 2 months 12 days |
Risk-free interest rate, minimum | 0.31% | 0.22% | 1.35% |
Risk-free interest rate, maximum | 1.02% | 1.64% | 2.55% |
Dividend yield (as a percent) | 0.00% | 0.00% | 0.00% |
Weighted-average fair value of the underlying stock options | $ 67.37 | $ 48.74 | $ 28.37 |
Other disclosures | |||
Compensation expense | $ 93,000 | $ 134,900 | $ 20,400 |
Unrecognized compensation cost | $ 22,100 | ||
Period over which unrecognized compensation cost is expected to be recognized | 1 year |
Common Stock and Stockholders_7
Common Stock and Stockholders' Equity - Restricted Stock Units (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Other disclosures | |||
Stock-based compensation | $ 302,586 | $ 475,531 | $ 66,702 |
RSUs | |||
Common Stock and Stockholders' Equity | |||
Vesting period | 3 years | ||
Shares | |||
Balance at December 31, 2020 | 3,550,595 | ||
Granted | 816,466 | ||
Vested and issued (in shares) | (1,419,426) | ||
Forfeited (in shares) | (814,134) | ||
Balance at December 31, 2021 | 2,133,501 | 3,550,595 | |
Vested and unissued (in shares) | 16,507 | ||
Nonvested (in shares) | 2,116,994 | ||
Weighted-Average Grant Date Fair Value Per Share | |||
Outstanding at beginning of period (in dollars per share) | $ 162.11 | ||
Granted | 174.64 | ||
Vested and issued (in dollars per share) | 139.32 | ||
Forfeited (in dollars per share) | 183.89 | ||
Outstanding at end of period (in dollars per share) | 168.43 | $ 162.11 | |
Vested and unissued (in dollars per share) | 71.96 | ||
Non-vested (in dollars per share) | $ 168.43 | ||
Other disclosures | |||
Grant date fair value of RSUs granted | $ 144,200 | $ 801,000 | 56,700 |
Stock-based compensation | 182,400 | $ 314,100 | $ 30,500 |
Unrecognized compensation cost related to non vested awards | $ 293,200 | ||
Period over which unrecognized compensation cost is expected to be recognized | 1 year 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 |
Common Stock and Stockholders_8
Common Stock and Stockholders' Equity - Performance Stock Units (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Other disclosures | |||
Stock-based compensation | $ 302,586 | $ 475,531 | $ 66,702 |
PSUs | |||
Shares | |||
Balance at December 31, 2020 | 429,319 | ||
Granted | 531,309 | ||
Vested and issued (in shares) | (268,201) | ||
Forfeited (in shares) | (336,178) | ||
Balance at December 31, 2021 | 356,249 | 429,319 | |
Vested and unissued (in shares) | 0 | ||
Nonvested (in shares) | 356,249 | ||
Weighted-Average Grant Date Fair Value Per Share | |||
Outstanding at beginning of period (in dollars per share) | $ 76.60 | ||
Granted (in dollars per share) | 132.66 | ||
Vested and issued (in dollars per share) | 74.33 | ||
Forfeited (in dollars per share) | 99.68 | ||
Outstanding at end of period (in dollars per share) | 140.01 | $ 76.60 | |
Vested and unissued (in dollars per share) | 0 | ||
Non-vested (in dollars per share) | $ 140.01 | ||
Other disclosures | |||
Grant date fair value of PSUs granted | $ 70,400 | $ 25,000 | 31,600 |
Stock-based compensation | 22,000 | $ 24,000 | $ 14,600 |
Unrecognized compensation cost related to non vested awards | $ 16,100 | ||
Period over which unrecognized compensation cost is expected to be recognized | 1 year 10 months 24 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 | 225.00% |
Common Stock and Stockholders_9
Common Stock and Stockholders' Equity - Employee Stock Purchase Plan (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Other Disclosures | |||
Stock-based compensation | $ 302,586 | $ 475,531 | $ 66,702 |
ESPP | |||
Other Disclosures | |||
Shares reserved for issuance under the plan (in shares) | 926,109 | ||
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) | 122,059 | 49,781 | |
Remaining shares available for issuance under the plan (in shares) | 477,044 | ||
Stock-based compensation | $ 5,200 | $ 2,800 | $ 1,200 |
Unrecognized compensation cost | $ 2,100 | ||
Period over which unrecognized compensation cost is expected to be recognized | 4 months 24 days |
Common Stock and Stockholder_10
Common Stock and Stockholders' Equity - Compensation Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Compensation costs charged as an expense | |||
Stock-based compensation | $ 302,586 | $ 475,531 | $ 66,702 |
Cost of revenue (exclusive of depreciation and amortization, which is shown separately) | |||
Compensation costs charged as an expense | |||
Stock-based compensation | 8,280 | 2,700 | 0 |
Advertising and marketing | |||
Compensation costs charged as an expense | |||
Stock-based compensation | 18,952 | 26,995 | 4,956 |
Sales | |||
Compensation costs charged as an expense | |||
Stock-based compensation | 71,475 | 65,730 | 10,286 |
Technology and development | |||
Compensation costs charged as an expense | |||
Stock-based compensation | 95,561 | 60,556 | 7,573 |
General and administrative expenses | |||
Compensation costs charged as an expense | |||
Stock-based compensation | $ 108,318 | $ 319,550 | $ 43,887 |
Income Taxes - Components (Deta
Income Taxes - Components (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Components of income (loss) from continuing operations before income taxes | |||
Domestic | $ (365,762) | $ (566,266) | $ (95,476) |
International | (18,894) | (9,727) | (13,979) |
Net loss before taxes | (384,656) | (575,993) | (109,455) |
Components of provision (benefit) for income taxes | |||
Current federal | 0 | (1,954) | 239 |
Current state | 567 | 27 | 300 |
Current foreign | 2,595 | 1,605 | (262) |
Total current | 3,162 | (322) | 277 |
Deferred federal | 49,008 | (60,008) | (5,043) |
Deferred state | (6,276) | (26,775) | (1,783) |
Deferred foreign | (1,757) | (3,752) | (4,042) |
Total deferred | 40,975 | (90,535) | (10,868) |
Total (Benefit) / Provision | $ 44,137 | $ (90,857) | $ (10,591) |
Income Taxes - Statutory Income
Income Taxes - Statutory Income Tax Rate Reconciliation (Details) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Reconciliations of the statutory federal income tax rate and effective tax rate, Percent | |||
Tax at federal statutory rate (as a percent) | 21.00% | 21.00% | 21.00% |
State and local tax (as a percent) | 7.70% | 2.30% | 4.60% |
Acquisition expenses (as a percent) | 2.00% | (2.20%) | (0.40%) |
Stock compensation (as a percent) | 6.70% | (1.10%) | 7.70% |
Non-deductible expenses (as a percent) | (0.50%) | (0.10%) | (0.20%) |
Foreign rate differential (as a percent) | 0.20% | 0.30% | 2.20% |
Change in valuation allowance (as a percent) | (46.90%) | (5.40%) | (25.30%) |
Other (as percent) | (1.70%) | 1.00% | 0.10% |
Effective tax rate | (11.50%) | 15.80% | 9.70% |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets, Liabilities and Valuation Allowance (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 687,679 | $ 497,603 |
Accrued expenses and compensation | 5,413 | 7,016 |
Stock-based compensation | 63,641 | 94,029 |
Foreign tax credits and alternative minimum tax credits | 4,814 | 5,727 |
Research and development credits | 1,320 | 14,666 |
Depreciation of property and equipment | 56 | 83 |
Interest expenses carryforward | 11,528 | 6,620 |
Operating lease assets | 13,575 | 13,978 |
Deferred revenue | 7,946 | 2,917 |
Other | 7,032 | 3,290 |
Deferred tax assets | 803,004 | 645,929 |
Valuation allowance | (335,810) | (107,984) |
Net deferred tax assets | 467,194 | 537,945 |
Deferred tax liabilities: | ||
Debt related | (73,378) | (105,063) |
Operating lease liabilities | (11,842) | (12,117) |
Depreciation of property and equipment | (3,427) | (2,476) |
Intangible assets | (452,049) | (519,397) |
Other | (2,275) | (995) |
Deferred tax liabilities | (542,971) | (640,048) |
Net deferred tax liabilities | (75,777) | $ (102,103) |
Other disclosures | ||
Increase in valuation allowance | 227,900 | |
Increase in valuation allowance, purchase accounting adjustments | 48,500 | |
Increase in valuation allowance, current year tax expense | $ 179,400 |
Income Taxes - Carryforwards (D
Income Taxes - Carryforwards (Details) $ in Millions | Dec. 31, 2021USD ($) |
Income taxes | |
Operating loss carryforward, indefinitely | $ 2,219.8 |
Federal | |
Income taxes | |
Net operating loss carryforwards | 2,775.2 |
Operating loss carryforward, subject to expiration | 555.4 |
Federal | Research and Development. | |
Income taxes | |
Tax credits | 0.5 |
State | |
Income taxes | |
Net operating loss carryforwards | 1,708.1 |
State | Research and Development. | |
Income taxes | |
Tax credits | 0.8 |
Foreign | |
Income taxes | |
Net operating loss carryforwards | 57.8 |
Tax credits | $ 4.8 |
Income Taxes - Unrecognized Tax
Income Taxes - Unrecognized Tax Benefits (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Unrecognized Tax Benefits | |
Balance at beginning of period | $ 21,362 |
Additions assumed in a business combination | 59,110 |
Additions based on Prior Year Tax Positions | 43,399 |
Additions based on current year tax positions | 1,490 |
Release | (14,513) |
Balance at end of period | 110,848 |
Decrease in unrecognized tax benefits in next 12 months | 110,800 |
Undistributed earnings | $ 7,300 |
Net Loss per Share (Details)
Net Loss per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Basic and diluted net loss per share: | |||
Net loss | $ (428,793) | $ (485,136) | $ (98,864) |
Weighted-average shares used to compute basic net loss per share | 156,939,349 | 90,509,229 | 71,844,535 |
Weighted-average shares used to compute diluted net loss per share | 156,939,349 | 90,509,229 | 71,844,535 |
Net loss per share, basic (in dollars per share) | $ (2.73) | $ (5.36) | $ (1.38) |
Net loss per share, diluted (in dollars per share) | $ (2.73) | $ (5.36) | $ (1.38) |
Stock options | |||
Net Loss per Share | |||
Antidilutive securities (in shares) | 3,400,000 | ||
RSUs | |||
Net Loss per Share | |||
Antidilutive securities (in shares) | 2,100,000 | ||
PSUs | |||
Net Loss per Share | |||
Antidilutive securities (in shares) | 400,000 | ||
ESPP | |||
Net Loss per Share | |||
Antidilutive securities (in shares) | 100,000 |
401(k) Plan (Details)
401(k) Plan (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
401(k) Plan | |||
Minimum age of employee eligible to participate in the plan | 21 years | ||
Employer contributions (as a percent) | 100.00% | ||
Percentage of eligible compensation, matched by the employer | 4.00% | ||
Employee's elective deferral, maximum contribution | $ 0.3 | ||
Matching contribution made | $ 11.3 | $ 4.9 | $ 3.2 |
Schedule II - Valuation and Q_2
Schedule II - Valuation and Qualifying Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Allowance for Doubtful Accounts Receivable | |||
Valuation And Qualifying Accounts | |||
Balance at Beginning of Period | $ 6,412 | $ 3,787 | $ 3,382 |
Provisions | 16,941 | 5,284 | 2,665 |
Write-offs | (11,526) | (2,787) | (2,264) |
Other | 557 | 128 | 4 |
Balance at End of Period | 12,384 | 6,412 | 3,787 |
Income Taxes Valuation Allowance | |||
Valuation And Qualifying Accounts | |||
Balance at Beginning of Period | 107,984 | 121,186 | 93,572 |
Provisions | 179,364 | 2,146 | 36,124 |
Write-offs | 0 | 0 | 0 |
Other | 48,461 | (15,348) | (8,510) |
Balance at End of Period | $ 335,809 | $ 107,984 | $ 121,186 |