Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Jul. 26, 2019 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2019 | |
Entity File Number | 001-37477 | |
Entity Registrant Name | TELADOC HEALTH, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 04-3705970 | |
Entity Address, Address Line One | 2 Manhattanville Road | |
Entity Address, Address Line Two | Suite 203 | |
Entity Address, City or Town | Purchase | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10577 | |
City Area Code | 203 | |
Local Phone Number | 635-2002 | |
Title of 12(b) Security | Common Stock, par value $0.001 per share | |
Trading Symbol | TDOC | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Central Index Key | 0001477449 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 72,040,539 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 440,443 | $ 423,989 |
Short-term investments | 32,161 | 54,545 |
Accounts receivable, net of allowance of $3,351 and $3,382, respectively | 49,778 | 43,571 |
Prepaid expenses and other current assets | 10,227 | 10,631 |
Total current assets | 532,609 | 532,736 |
Property and equipment, net | 9,722 | 10,148 |
Goodwill | 748,073 | 737,197 |
Intangible assets, net | 239,344 | 247,394 |
Operating lease - right-of-use assets | 29,220 | |
Other assets | 6,376 | 1,401 |
Total assets | 1,565,344 | 1,528,876 |
Current liabilities: | ||
Accounts payable | 6,079 | 7,769 |
Accrued expenses and other current liabilities | 46,201 | 26,801 |
Accrued compensation | 18,141 | 27,869 |
Total current liabilities | 70,421 | 62,439 |
Other liabilities | 6,990 | 6,191 |
Operating lease liabilities, net of current portion | 26,386 | |
Deferred taxes | 31,710 | 32,444 |
Convertible senior notes, net | 427,197 | 414,683 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock, $0.001 par value; 150,000,000 shares authorized as of June 30, 2019 and December 31, 2018; 71,934,381 shares and 70,516,249 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively | 72 | 70 |
Additional paid-in capital | 1,483,245 | 1,434,780 |
Accumulated deficit | (468,135) | (408,661) |
Accumulated other comprehensive (loss) income | (12,542) | (13,070) |
Total stockholders' equity | 1,002,640 | 1,013,119 |
Total liabilities and stockholders' equity | $ 1,565,344 | $ 1,528,876 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Consolidated Balance Sheets | ||
Allowance of Accounts receivable | $ 3,351 | $ 3,382 |
Common stock par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares issued | 71,934,381 | 70,516,249 |
Common stock, shares outstanding | 71,934,381 | 70,516,249 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Consolidated Statements of Operations | ||||
Revenue | $ 130,276 | $ 94,560 | $ 258,849 | $ 184,204 |
Expenses: | ||||
Cost of revenue | 41,634 | 27,684 | 86,311 | 54,540 |
Operating expenses: | ||||
Advertising and marketing | 26,616 | 19,561 | 53,020 | 39,886 |
Sales | 15,832 | 14,559 | 32,044 | 28,342 |
Technology and development | 16,665 | 14,348 | 32,652 | 27,252 |
Legal and regulatory | 2,019 | 639 | 3,605 | 1,684 |
Acquisition and integration related costs | 1,136 | 5,800 | 2,148 | 7,369 |
Gain on sale | (4,070) | (4,070) | ||
General and administrative | 38,549 | 26,140 | 74,531 | 50,141 |
Depreciation and amortization | 9,848 | 8,046 | 19,448 | 16,299 |
Total expenses | 152,299 | 112,707 | 303,759 | 221,443 |
Loss from operations | (22,023) | (18,147) | (44,910) | (37,239) |
Interest expense, net | 7,211 | 6,910 | 13,732 | 11,783 |
Net loss before taxes | (29,234) | (25,057) | (58,642) | (49,022) |
Income tax (benefit) provision | 90 | 22 | 832 | (81) |
Net loss | $ (29,324) | $ (25,079) | $ (59,474) | $ (48,941) |
Net loss per share, basic and diluted | $ (0.41) | $ (0.40) | $ (0.83) | $ (0.78) |
Weighted-average shares used to compute basic and diluted net loss per share | 71,721,246 | 62,975,535 | 71,322,586 | 62,389,902 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Consolidated Statements of Comprehensive Loss | ||||
Net loss | $ (29,324) | $ (25,079) | $ (59,474) | $ (48,941) |
Other comprehensive income (loss), net of tax | ||||
Net change in unrealized gains on available-for-sale securities | 5 | 41 | 60 | 41 |
Cumulative translation adjustment | 4,311 | (6,010) | 468 | (6,658) |
Other comprehensive income (loss), net of tax | 4,316 | (5,969) | 528 | (6,617) |
Comprehensive loss | $ (25,008) | $ (31,048) | $ (58,946) | $ (55,558) |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total |
Balance as of beginning of the period at Dec. 31, 2017 | $ 61 | $ 866,330 | $ (311,577) | $ 4,089 | $ 558,903 |
Balance as of beginning of the period (in shares) at Dec. 31, 2017 | 61,534,101 | ||||
Stockholders' Equity (Deficit) | |||||
Exercise of stock options | $ 1 | 8,642 | 8,643 | ||
Exercise of stock options (in shares) | 651,010 | ||||
Issuance of restricted stock units (in shares) | 95,094 | ||||
Stock-based compensation | 7,832 | 7,832 | |||
Other comprehensive loss, net of tax | (648) | (648) | |||
Net loss | (23,862) | (23,862) | |||
Balance as of end of the period at Mar. 31, 2018 | $ 62 | 882,804 | (335,439) | 3,441 | 550,868 |
Balance as of end of the period (in shares) at Mar. 31, 2018 | 62,280,205 | ||||
Balance as of beginning of the period at Dec. 31, 2017 | $ 61 | 866,330 | (311,577) | 4,089 | 558,903 |
Balance as of beginning of the period (in shares) at Dec. 31, 2017 | 61,534,101 | ||||
Stockholders' Equity (Deficit) | |||||
Net loss | (48,941) | ||||
Balance as of end of the period at Jun. 30, 2018 | $ 64 | 1,062,362 | (360,518) | (2,528) | 699,380 |
Balance as of end of the period (in shares) at Jun. 30, 2018 | 64,278,782 | ||||
Balance as of beginning of the period at Dec. 31, 2017 | $ 61 | 866,330 | (311,577) | 4,089 | 558,903 |
Balance as of beginning of the period (in shares) at Dec. 31, 2017 | 61,534,101 | ||||
Balance as of end of the period at Dec. 31, 2018 | $ 70 | 1,434,780 | (408,661) | (13,070) | 1,013,119 |
Balance as of end of the period (in shares) at Dec. 31, 2018 | 70,516,249 | ||||
Balance as of beginning of the period at Mar. 31, 2018 | $ 62 | 882,804 | (335,439) | 3,441 | 550,868 |
Balance as of beginning of the period (in shares) at Mar. 31, 2018 | 62,280,205 | ||||
Stockholders' Equity (Deficit) | |||||
Exercise of stock options | $ 1 | 7,122 | 7,122 | ||
Exercise of stock options (in shares) | 527,799 | ||||
Equity component of Convertible Senior Notes, net of issuance costs | 91,392 | 91,392 | |||
Issuance of restricted stock units (in shares) | 69,938 | ||||
Issuance of stock under employee stock purchase plan | 1,423 | 1,423 | |||
Issuance of stock under employee stock purchase plan (in shares) | 56,453 | ||||
Issuance of stock in acquisition | $ 2 | 68,562 | 68,564 | ||
Issuance of stock in acquisition (in shares) | 1,344,387 | ||||
Stock-based compensation | 11,059 | 11,059 | |||
Other comprehensive loss, net of tax | (5,969) | (5,969) | |||
Net loss | (25,079) | (25,079) | |||
Balance as of end of the period at Jun. 30, 2018 | $ 64 | 1,062,362 | (360,518) | (2,528) | 699,380 |
Balance as of end of the period (in shares) at Jun. 30, 2018 | 64,278,782 | ||||
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 | $ 1 | 8,853 | 8,854 | ||
Exercise of stock options (in shares) | 564,102 | ||||
Issuance of restricted stock units (in shares) | 383,060 | ||||
Stock-based compensation | 13,523 | 13,523 | |||
Other comprehensive loss, net of tax | (3,788) | (3,788) | |||
Net loss | (30,150) | (30,150) | |||
Balance as of end of the period at Mar. 31, 2019 | $ 71 | 1,457,156 | (438,811) | (16,858) | 1,001,558 |
Balance as of end of the period (in shares) at Mar. 31, 2019 | 71,463,411 | ||||
Balance as of beginning of the period at Dec. 31, 2018 | $ 70 | 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) | |||||
Net loss | (59,474) | ||||
Balance as of end of the period at Jun. 30, 2019 | $ 72 | 1,483,245 | (468,135) | (12,542) | 1,002,640 |
Balance as of end of the period (in shares) at Jun. 30, 2019 | 71,934,381 | ||||
Balance as of beginning of the period at Mar. 31, 2019 | $ 71 | 1,457,156 | (438,811) | (16,858) | 1,001,558 |
Balance as of beginning of the period (in shares) at Mar. 31, 2019 | 71,463,411 | ||||
Stockholders' Equity (Deficit) | |||||
Exercise of stock options | $ 1 | 6,846 | 6,847 | ||
Exercise of stock options (in shares) | 350,219 | ||||
Issuance of restricted stock units (in shares) | 85,035 | ||||
Issuance of stock under employee stock purchase plan | 1,875 | 1,875 | |||
Issuance of stock under employee stock purchase plan (in shares) | 35,716 | ||||
Stock-based compensation | 17,368 | 17,368 | |||
Other comprehensive loss, net of tax | 4,316 | 4,316 | |||
Net loss | (29,324) | (29,324) | |||
Balance as of end of the period at Jun. 30, 2019 | $ 72 | $ 1,483,245 | $ (468,135) | $ (12,542) | $ 1,002,640 |
Balance as of end of the period (in shares) at Jun. 30, 2019 | 71,934,381 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cash flows used in operating activities: | ||
Net loss | $ (59,474) | $ (48,941) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 22,443 | 16,299 |
Allowance for doubtful accounts | 1,014 | 1,258 |
Stock-based compensation | 30,891 | 18,891 |
Deferred income taxes | (1,472) | (1,258) |
Accretion of interest | 12,347 | 7,627 |
Gain on sale | (4,070) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (7,237) | (4,027) |
Prepaid expenses and other current assets | 1,251 | (540) |
Other assets | 74 | (73) |
Accounts payable | 374 | 1,371 |
Accrued expenses and other current liabilities | 10,358 | (287) |
Accrued compensation | (9,133) | (3,812) |
Operating lease liabilities | (794) | |
Other liabilities | (2,385) | 45 |
Net cash used in operating activities | (1,743) | (17,517) |
Cash flows provided by (used in) investing activities: | ||
Purchase of property and equipment | (1,248) | (2,015) |
Purchase of internal-use software | (2,975) | (1,388) |
Purchase of marketable securities | (12,141) | |
Proceeds from marketable securities | 22,695 | 67,970 |
Sale of assets | 7 | 5,500 |
Investment in securities | (5,000) | |
Acquisition of business, net of cash acquired | (11,207) | (273,535) |
Net cash provided by (used in) investing activities | 2,272 | (215,609) |
Cash flows provided by financing activities: | ||
Net proceeds from the exercise of stock options | 15,701 | 15,765 |
Proceeds from issuance of convertible notes | 279,126 | |
Contingent consideration fair value adjustment | 210 | |
Proceeds from employee stock purchase plan | 1,875 | 1,423 |
Cash (paid)/received for withholding taxes on stock-based compensation, net | (1,886) | 500 |
Net cash provided by financing activities | 15,900 | 296,814 |
Net increase in cash and cash equivalents | 16,429 | 63,688 |
Foreign exchange difference | 25 | (701) |
Cash and cash equivalents at beginning of the period | 423,989 | 42,817 |
Cash and cash equivalents at end of the period | 440,443 | 105,804 |
Income taxes paid | 309 | 59 |
Interest paid | $ 6,102 | $ 4,125 |
Organization and Description of
Organization and Description of Business | 6 Months Ended |
Jun. 30, 2019 | |
Organization and Description of Business | |
Organization and Description of Business | Note 1. Organization and Description of Business Teladoc, Inc. was incorporated in the State of Texas in June 2002 and changed its state of incorporation to the State of Delaware in October 2008. Effective August 10, 2018, Teladoc, Inc. changed its corporate name to Teladoc Health, Inc. Unless the context otherwise requires, Teladoc Health, Inc., together with its subsidiaries, is referred to herein as “Teladoc Health” or the “Company”. The Company’s principal executive office is located in Purchase, New York. Teladoc Health is the global leader in providing virtual healthcare services with a focus on high quality, lower costs, and improved outcomes around the world. On July 26, 2018, Teladoc Health completed a follow-on public offering (the “July Offering”) in which the Company issued and sold 5,000,000 shares of common stock, at an issuance price of $66.28 per share. The Company received net proceeds of $330.9 million after deducting offering expenses of $0.5 million. On May 31, 2018, the Company completed the acquisition of Advance Medical-Health Care Management Services, S.A. (“Advance Medical”), a leading global virtual healthcare provider. See Note 4 “Business Acquisition” for additional information. On May 8, 2018, the Company issued, at par value, $287.5 million aggregate principal amount of 1.375% convertible senior notes due 2025 (the “2025 Notes”). The 2025 Notes bear cash interest at a rate of 1.375% per year, payable semi-annually in arrears on May 15 and November 15 of each year. The 2025 Notes will mature on May 15, 2025. The net proceeds to the Company from the offering were $279.1 million after deducting offering costs of approximately $8.4 million. |
Basis of Presentation and Princ
Basis of Presentation and Principles of Consolidation | 6 Months Ended |
Jun. 30, 2019 | |
Basis Of Presentation And Principles Of Consolidation | |
Basis of Presentation and Principles of Consolidation | Note 2. Basis of Presentation and Principles of Consolidation Basis of Presentation and Principles of Consolidation The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring accruals and adjustments) necessary to present fairly the financial position, results of operations and cash flows of the Company at the dates and for the periods indicated. The interim results for the quarter and six months ended June 30, 2019 are not necessarily indicative of results for the full 2019 calendar year or any other future interim periods. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Form 10-K for the year ended December 31, 2018. The unaudited consolidated financial statements include the results of Teladoc Health, its wholly owned subsidiaries, as well as two professional associations, fourteen professional corporations and a service corporation (the “Association”). Teladoc Physicians, P.A. is party to several services agreements by and among it and the professional corporations pursuant to which each professional corporation provides services to Teladoc Physicians, P.A. Each professional corporation is established pursuant to the requirements of its respective domestic jurisdiction governing the corporate practice of medicine. The Company holds a variable interest in the Association which contracts with physicians and other health professionals in order to provide services to Teladoc Health. The Association is considered a variable interest entity (“VIE”) since it does not have sufficient equity to finance its activities without additional subordinated financial support. An enterprise having a controlling financial interest in a VIE, must consolidate the VIE if it has both power and benefits—that is, it has (1) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance (power) and (2) the obligation to absorb losses of the VIE that potentially could be significant to the VIE or the right to receive benefits from the VIE that potentially could be significant to the VIE (benefits). The Company has the power and rights to control all activities of the Association and funds and absorbs all losses of the VIE. Total revenue and net (loss) income for the VIE were $17.4 million and $(0.2) million, respectively, for the quarter ended June 30, 2019 and $12.6 million and $1.3 million, respectively, for the quarter ended June 30, 2018. Total revenue and net (loss) income for the VIE were $38.5 million and $(0.3) million, respectively, for the six months ended June 30, 2019 and $28.9 million and $2.0 million, respectively, for the six months ended June 30, 2018. The VIE’s total assets were $9.7 million and $9.8 million at June 30, 2019 and December 31, 2018, respectively. Total liabilities for the VIE were $44.5 million and $44.3 million at June 30, 2019 and December 31, 2018, respectively. The VIE’s total stockholders’ deficit was $34.8 million and $34.5 million at June 30, 2019 and December 31, 2018, respectively. The functional currency for each of the Company’s foreign subsidiaries is the local currency. All assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the exchange rate on the balance sheet date. Revenues and expenses are translated at the weighted average exchange rate during the period. Cumulative translation gains or losses are included in stockholders’ equity as a component of accumulated other comprehensive income (loss). The Company operates in a single reportable segment – health services. Revenue earned by foreign operations outside of the United States were $26.1 million and $15.0 million for the quarters ended June 30, 2019 and 2018, respectively. Revenue earned by foreign operations outside of the United States were $51.3 million and $25.9 million for the six months ended June 30, 2019 and 2018, respectively. Long-lived assets from foreign operations totaled $419.4 million and $407.5 million as of June 30, 2019 and December 31, 2018, respectively. All intercompany transactions and balances have been eliminated. Recently Issued Accounting Pronouncements In June 2018, the FASB issued ASU No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. These amendments expand the scope of Topic 718, Compensation - Stock Compensation, which currently only includes share-based payments to employees, to include share-based payments issued to nonemployees for goods or services and the accounting is substantially aligned. The ASU supersedes Subtopic 505-50, Equity - Equity-Based Payments to Non-Employees. This standard is effective for public companies for annual periods beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted as long as ASU No. 2014-09 has been adopted by the Company. The Company has elected to early adopt this standard as of July 1, 2018 and the adoption of ASU No. 2018-07 had no impact on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 outlines a comprehensive lease accounting model and supersedes the current lease guidance. The new guidance requires lessees to recognize lease liabilities and corresponding right-of-use assets for all leases with lease terms of greater than 12 months. It also changes the definition of a lease and expands the disclosure requirements of lease arrangements. The Company adopted this standard on January 1, 2019 utilizing the modified retrospective approach and reflecting a cumulative effect adjustment at that time. Under this adoption method, prior periods are presented in accordance with the previous guidance in ASC 840, Leases. In adopting the new standard, the Company elected to utilize the available package of practical expedients permitted under the transition guidance within the new standard, which does not require the reassessment of the following: i) whether existing or expired arrangements are or contain a lease, ii) the lease classification of existing or expired leases, and iii) whether previous initial direct costs would qualify for capitalization under the new lease standard. Additionally, the Company made an accounting policy election to keep leases with a term of 12 months or less off of its balance sheet. As part of its adoption, the Company underwent a process of assessing the lease population and determining the impact of the adoption of this standard which resulted in the recognition of operating lease liabilities of and right-of-use assets of approximately $34 million on the Company’s balance sheet relating to its leases on the consolidated financial statements. The Company determined the most significant impact was the recognition of right of use assets and lease liabilities for operating leases on the consolidated balance sheets and there was no impact on the consolidated statements of operations or consolidated statements of cash flows. See Note 7 “Leases”, for further information. In January 2017, the FASB issued ASU 2017-04, Goodwill Simplifications (Topic 350). ASU 2017-04 simplifies the test for goodwill impairment. The new guidance eliminates Step 2 from the goodwill impairment test as currently prescribed in the U.S. generally accepted accounting principle. This ASU is the result of the FASB project focused on simplifications to accounting for goodwill. The new guidance will be effective for the Company starting in the first quarter of fiscal 2020. Early adoption is permitted in any annual or interim period. The Company is currently in the process of evaluating the impact of the adoption of this standard on the consolidated financial statements. Summary of Significant Accounting Policies Effective January 1, 2019, the Company adopted ASC 842, using the required modified retrospective approach and utilizing the effective date as its date of initial application, for which prior periods are presented in accordance with the previous guidance in ASC 840, Leases. At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present. Most leases with a term greater than one year are recognized on the balance sheet as right-of-use assets, lease liabilities and, if applicable, long-term lease liabilities. The Company has elected not to recognize on the balance sheet leases with terms of 12 months or less. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected remaining lease term. However, certain adjustments to the right-of-use asset may be required for items such as incentives received and initial direct costs. The interest rate implicit in lease contracts is typically not readily determinable. Therefore, the Company utilizes its incremental borrowing rates, which are the rates incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. In accordance with the guidance in ASC 842, components of a lease, beginning on or after the ASC 842 effective date, should be broken into three categories: lease components, non-lease components, and operating expenses (e.g. property taxes, insurance, etc.) Then the consideration in the contract must be allocated based on the respective relative fair values to the lease components and non-lease components. The Company elected to not apply the practical expedient combining lease and non-lease components. There have been no other changes to the significant accounting policies described in the 2018 Form 10-K that have had a material impact on the consolidated financial statements and related notes. |
Revenue
Revenue | 6 Months Ended |
Jun. 30, 2019 | |
Revenue | |
Revenue | Note 3. Revenue The Company 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 subscription access fee as well as certain contracts that generate additional revenue on a per-telehealth visit basis for general medical and other specialty visits and expert medical service on a per case basis. The Company also has certain contracts that generate revenue based solely on a per telehealth visit basis for general medical and other specialty visits. For the Company’s direct-to-consumer behavioral health product, members purchase access to the Company’s professional provider network for a subscription access fee. Accordingly, the Company generates subscription access revenue from subscription access fees and visit fee revenue for general medical, expert medical service and other specialty visits. The Company’s agreements generally have a term of one year. The majority of clients renew their contracts following their first year of services. Revenues are recognized when the Company satisfies its performance obligation to stand ready to provide telehealth services which occurs when the Company’s clients and members have access to and obtain control of the telehealth service. The Company generally bills for the telehealth services on a monthly basis with payment terms generally being 30 days. There are not significant differences between the timing of revenue recognition and billing. Consequently, the Company has determined that client contracts do not include a financing component. Revenue is recognized in an amount that reflects the consideration that is expected in exchange for the service and includes a variable transaction price as the number of members may vary from period to period. Based on historical experience, the Company estimates this amount. Subscription access revenue accounted for approximately 85% and 84% of our total revenue for the quarters ended June 30, 2019 and 2018, respectively. Subscription access revenue accounted for approximately 84% and 82% of our total revenue for the six months ended June 30, 2019 and 2018, respectively. The following table presents the Company’s revenues disaggregated by revenue source (in thousands): Quarter Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Subscription Access Fees: U.S. $ 85,530 $ 65,066 $ 166,509 $ 126,086 International 25,711 14,731 50,686 25,440 Visit Fee Revenue: U.S. Paid Visits 15,083 11,795 33,331 26,004 U.S. Visit Fee Only 3,546 2,710 7,667 6,249 International Paid Visits 406 258 656 425 Total Revenues $ 130,276 $ 94,560 $ 258,849 $ 184,204 As of June 30, 2019, accounts receivable, net of allowance for doubtful accounts, were $49.8 million. The allowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance. The Company determines the allowance based on historical experience, specific account information and other currently available evidence. For certain services, payment is required for future months before the service is delivered to the client or member. The Company records deferred revenue when cash payments are received in advance of the Company’s performance obligation to provide services. The net increase of $4.6 million and $3.3 million in the deferred revenue balance for the six months ended June 30, 2019 and 2018, respectively, are primarily driven by Advance Medical and cash payments received or due in advance of satisfying the Company’s performance obligations, offset by revenue recognized that were included in the deferred revenue balance at the beginning of the period. The Company anticipates that it will satisfy most of its performance obligations associated with the deferred revenue within the prospective fiscal year. The Company’s contracts do not generally contain refund provisions for fees earned related to services performed. However, the Company’s direct-to-consumer behavioral health service provides for member refunds. Based on historical experience, the Company estimates the expected amount of refunds to be issued which are recorded as a reduction of revenue. The Company issued refunds of approximately $0.6 million and $0.4 million for the quarter ended June 30, 2019 and 2018, respectively. The Company issued refunds of approximately $1.2 million and $1.6 million for the six months ended June 30, 2019 and 2018, respectively. Additionally, certain of the Company’s contracts include client performance guarantees that are based upon minimum Member utilization and guarantees by the Company for specific service level performance of the Company’s services. If client performance guarantees are not being realized, the Company records, as a reduction to revenue, an estimate of the amount that will be due at the end of the respective client’s contractual period. For the quarter and six months ended June 30, 2019 and 2018, revenue recognized from performance obligations related to prior periods for the aforementioned changes in transaction price or client performance guarantees, were not material. The Company has elected the optional exemption to not disclose the remaining performance obligations of its contracts since substantially all of its contracts have a duration of one year or less and the variable consideration expected to be received over the duration of the contract is allocated entirely to the wholly unsatisfied performance obligations. |
Business Acquisitions
Business Acquisitions | 6 Months Ended |
Jun. 30, 2019 | |
Business Acquisitions | |
Business Acquisitions | Note 4. Business Acquisitions On April 30, 2019, the Company completed the acquisition of the Paris-based telemedicine provider MedicineDirect in which MedicineDirect became a wholly-owned subsidiary of the Company. The aggregate merger consideration paid was $11.2 million with additional potential earnout consideration. The acquisition was considered a stock acquisition for tax purposes and accordingly, the goodwill resulting from the acquisition is not tax deductible. On May 31, 2018, the Company completed the acquisition of Advance Medical through a merger in which Advance Medical became a wholly-owned subsidiary of the Company. The aggregate merger consideration paid was $351.7 million, which was comprised of 1,344,387 shares of Teladoc Health’s common stock valued at $68.6 million on May 31, 2018, and $283.1 million of net cash. Advance Medical is a leading global virtual healthcare provider offering a portfolio of virtual healthcare and expert medical service solutions. 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 $5.8 million and included transaction costs for investment bankers and other professional fees. The acquisition described above was 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 acquisition were included within the consolidated financial statements commencing on the aforementioned acquisition date. The following table summarizes the fair value estimates of the assets acquired and liabilities assumed at the acquisition date. The Company, with the assistance of a third-party valuation expert, estimated the fair value of the acquired tangible and intangible assets. Identifiable assets acquired and liabilities assumed (in thousands): Advance Medical Purchase price, net of cash acquired $ 351,694 Less: Accounts receivable 8,553 Property and equipment, net 1,326 Other assets 3,675 Client relationships 100,760 Non-compete agreements 1,540 Internal-use software 770 Trademarks 16,190 Favorable leases 203 Accounts payable (361) Deferred taxes (22,714) Other liabilities (8,368) Goodwill $ 250,120 The amount allocated to goodwill reflects the benefits Teladoc Health expects to realize from the growth of the acquisition operations. Advance Medical’s operating results has been included in the accompanying unaudited consolidated financial statements of the Company since its acquisition on May 31, 2018. |
Intangible Assets, Net
Intangible Assets, Net | 6 Months Ended |
Jun. 30, 2019 | |
Intangible Assets, Net | |
Intangible Assets, Net | Note 5. Intangible Assets, Net Intangible assets, net consist of the following (in thousands): Weighted Average Useful Accumulated Net Carrying Remaining Life Gross Value Amortization Value Useful Life June 30, 2019 Client relationships 2 to 20 years $ 237,940 $ (47,951) $ 189,989 13.4 Non-compete agreements 1.5 to 5 years 4,980 (4,024) 956 1.9 Trademarks 3 to 15 years 42,714 (5,710) 37,004 13.4 Patents 3 years 200 (172) 28 0.4 Internal-use software and other 3 to 5 years 29,579 (18,212) 11,367 2.1 Intangible assets, net $ 315,413 $ (76,069) $ 239,344 12.8 December 31, 2018 Client relationships 2 to 20 years $ 233,007 $ (35,453) $ 197,554 13.7 Non-compete agreements 1.5 to 5 years 4,992 (3,741) 1,251 2.4 Trademarks 3 to 15 years 41,815 (4,137) 37,678 13.9 Patents 3 years 200 (139) 61 0.9 Internal-use software 3 to 5 years 25,644 (14,794) 10,850 2.0 Intangible assets, net $ 305,658 $ (58,264) $ 247,394 13.2 Amortization expense for intangible assets was $9.0 million and $7.3 million for the quarters ended June 30, 2019 and 2018, respectively. Amortization expense for intangible assets was $17.7 million and $14.0 million for the six months ended June 30, 2019 and 2018, respectively. |
Goodwill
Goodwill | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill | |
Goodwill | Note 6. Goodwill Goodwill consists of the following (in thousands): As of June 30, As of December 31, 2019 2018 Beginning balance $ 737,197 $ 498,520 Additions associated with acquisitions 10,604 250,120 Cumulative translation adjustment 272 (11,443) Goodwill $ 748,073 $ 737,197 |
Leases
Leases | 6 Months Ended |
Jun. 30, 2019 | |
Leases | |
Leases | Note 7. 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 facts and circumstances present. For new and amended leases beginning in 2019 and after, the Company will separately allocate 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): Quarters Ended Six Months Ended June 30, 2019 June 30, 2019 Lease cost Operating lease cost $ 1,906 $ 3,867 Variable lease cost 242 468 Total lease cost $ 2,148 $ 4,335 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. Additionally, the Company’s policy for leases with an initial term of 12 months or less are to not record on the consolidated balance sheets and the Company did not have any such leases. Supplemental information related to operating leases was as follows (in thousands): Six Months Ended Consolidated Statements of Cash Flows June 30, 2019 Operating cash flows used for operating leases $ 4,042 Operating lease liabilities arising from obtaining right-of-use assets $ 3,389 Other Information Weighted-average remaining lease term 6.39 years Weighted-average discount rate 6.50% As of Operating Leases: June 30, 2019 2019 $ 7,430 2020 6,099 2021 5,912 2022 5,729 2023 and thereafter 15,048 Sub-total 40,218 Less: imputed interest 7,574 Minimum lease payments $ 32,644 |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 6 Months Ended |
Jun. 30, 2019 | |
Accrued Expenses and Other Current Liabilities | |
Accrued Expenses and Other Current Liabilities | Note 8. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following (in thousands): As of June 30, As of December 31, 2019 2018 Professional fees $ 1,394 $ 1,264 Consulting fees/provider fees 6,089 6,569 Client performance guarantees 3,100 2,910 Legal fees 962 1,073 Interest payable 872 883 Income tax payable 4,602 2,610 Lease abandonment obligation - current 101 53 Marketing 1,474 644 Operating lease liabilities - current 5,363 — Earnout and compensation 634 — Deferred revenue 12,285 7,650 Other 9,325 3,145 Total $ 46,201 $ 26,801 |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Measurements | |
Fair Value Measurements | Note 9. Fair Value Measurements The Company measures its financial assets and liabilities at fair value at each reporting period using a fair value hierarchy that requires it to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value: Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2—Include other inputs that are directly or indirectly observable in the marketplace. Level 3—Unobservable inputs that are supported by little or no market activity. The Company measures its cash equivalents at fair value on a recurring basis. The Company classifies its cash equivalents within Level 1 because they are valued using observable inputs that reflect quoted prices for identical assets in active markets and quoted prices directly in active markets. The Company measures its short-term investments at fair value on a recurring basis and classifies such as Level 2. They are valued using observable inputs that reflect quoted prices directly or indirectly in active markets. The short-term investments amortized cost approximates fair value. The Company measured its contingent consideration at fair value on a recurring basis and classified such as Level 3. The Company estimates the fair value of contingent consideration as the present value of the expected contingent payments, determined using the weighted probability of the possible payments. The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis using the above input categories (in thousands): June 30, 2019 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 440,443 $ — $ — $ 440,443 Short-term investments $ — $ 32,161 $ — $ 32,161 Contingent liability $ — $ — $ 3,796 $ 3,796 December 31, 2018 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 419,464 $ 4,525 $ — $ 423,989 Short-term investments $ — $ 54,545 $ — $ 54,545 There were no transfers between fair value measurement levels during the quarter and six months ended June 30, 2019 and 2018. The change in fair value of the Company’s contingent liability is recorded in general and administrative expenses in the consolidated statements of operations. The following table reconciles the beginning and ending balance of the Company’s Level 3 contingent liability: Fair value at date of acquisition $ 3,586 Payments — Change in fair value 210 Fair value at June 30, 2019 $ 3,796 |
Revolving Credit Facility
Revolving Credit Facility | 6 Months Ended |
Jun. 30, 2019 | |
Revolving Credit Facility | |
Revolving Credit Facility | Note 10. Revolving Credit Facility The Company entered into a $10.0 million Senior Secured Revolving Credit Facility (the “New Revolving Credit Facility”) in 2017. The New Revolving Credit Facility is available for working capital and other general corporate purposes. The Company has maintained the New Revolving Credit Facility and, there was no amount outstanding as of June 30, 2019 and December 31, 2018. The Company utilized $1.5 million of letters of credit for facility security deposits at June 30, 2019. The Company was in compliance with all debt covenants at June 30, 2019 and December 31, 2018. |
Convertible Senior Notes
Convertible Senior Notes | 6 Months Ended |
Jun. 30, 2019 | |
Convertible Senior Notes | |
Convertible Senior Notes | Note 11. Convertible Senior Notes Convertible Senior Notes Due 2025 On May 8, 2018, the Company issued, at par value, $287.5 million aggregate principal amount of 1.375% convertible senior notes due 2025. The 2025 Notes bear cash interest at a rate of 1.375% per year, payable semi-annually in arrears on May 15 and November 15 of each year. The 2025 Notes will mature on May 15, 2025. The net proceeds to the Company from the offering were $279.1 million after deducting offering costs of approximately $8.4 million. The 2025 Notes are senior unsecured obligations of the Company and rank senior in right of payment to the Company’s indebtedness that is expressly subordinated in right of payment to the 2025 Notes; equal in right of payment to the Company’s liabilities that is not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities incurred by the Company’s subsidiaries. Holders may convert all or any portion of their 2025 Notes in integral multiples of $1,000 principal amount, at their option, at any time prior to the close of business on the business day immediately preceding November 15, 2024 only under the following circumstances: ● during any calendar quarter (and only during such calendar quarter), if the last reported sale price of the shares of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; ● during the five business day period after any ten consecutive trading day period in which the trading price was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day; ● upon the occurrence of specified corporate events described under the 2025 Notes Indenture; or ● if the Company calls the 2025 Notes for redemption, at any time until the close of business on the second business day immediately preceding the redemption date. On or after November 15, 2024, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their 2025 Notes, regardless of the foregoing circumstances. The conversion rate for the 2025 Notes was initially, and remains, 18.6621 shares of the Company’s common stock per $1,000 principal amount of the 2025 Notes, which is equivalent to an initial conversion price of approximately $53.58 per share of the Company’s common stock. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination thereof, at the Company’s election. If the Company elects to satisfy the conversion obligation solely in cash or through payment and delivery, as the case may be, of a combination of cash and shares of the Company’s common stock, the amount of cash and shares of the Company’s common stock, if any, due upon conversion will be based on a daily conversion value calculated on a proportionate basis for each trading day in a 25 trading day observation period. The Company may redeem for cash all or any portion of the 2025 Notes, at its option, on or after May 22, 2022 if the last reported sale price of its common stock exceeds 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading days ending on, and including the trading day immediately preceding the date on which the Company provides notice of the redemption. The redemption price will be the principal amount of the 2025 Notes to be redeemed, plus accrued and unpaid interest, if any. In addition, calling any 2025 Note for redemption on or after May 22, 2022 will constitute a make-whole fundamental change with respect to that 2025 Note, in which case the conversion rate applicable to the conversion of that Note, if it is converted in connection with the redemption, will be increased in certain circumstances as described in the 2025 Notes Indenture. In accounting for the issuance of the 2025 Notes, the Company separated the 2025 Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the par value of the 2025 Notes as a whole. The excess of the principal amount of the liability component over its carrying amount, referred to as the debt discount, is amortized to interest expense from the issuance date to November 15, 2024 (the first date on which the Company may be required to repurchase the 2025 Notes at the option of the holder). The equity component is not re-measured as long as it continues to meet the conditions for equity classification. The equity component related to the 2025 Notes was $91.4 million, net of issuance costs which was recorded in additional paid-in capital on the accompanying consolidated balance sheet. In accounting for the transaction costs related to the issuance of the 2025 Notes, the Company allocated the total costs incurred to the liability and equity components of the 2025 Notes based on their relative values. Transaction costs attributable to the liability component are being amortized to interest expense over the seven-year term of the 2025 Notes, and transaction costs attributable to the equity component are netted with the equity component in stockholders’ equity. The 2025 Notes consist of the following (in thousands): As of June 30, As of December 31, Liability component 2019 2018 Principal $ 287,500 $ 287,500 Less: Debt discount, net (1) (87,185) (92,913) Net carrying amount $ 200,315 $ 194,587 (1) Included in the accompanying consolidated balance sheets within convertible senior notes and amortized to interest expense over the expected life of the 2025 Notes using the effective interest rate method. The fair value of the 2025 Notes was approximately $425.3 million as of June 30, 2019. The Company estimates the fair value of its 2025 Notes utilizing market quotations for debt that have quoted prices in active markets. Since the 2025 Notes do not trade on a daily basis in an active market, the fair value estimates are based on market observable inputs based on borrowing rates currently available for debt with similar terms and average maturities, which are classified as Level 2 measurements within the fair value hierarchy. See Note 9, “Fair Value Measurements,” for definitions of hierarchy levels. As of June 30, 2019, the remaining contractual life of the 2025 Notes is approximately 5.9 years. The following table sets forth total interest expense recognized related to the 2025 Notes (in thousands): Quarters Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Contractual interest expense $ 1,002 $ 585 $ 1,977 $ 585 Amortization of debt discount 2,892 1,493 5,728 1,493 Total $ 3,894 $ 2,078 $ 7,705 $ 2,078 Effective interest rate of the liability component 7.9 % 7.9 % 7.9 % 7.9 % Convertible Senior Notes Due 2022 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 bear cash interest at a rate of 3% per year, payable semi-annually in arrears on June 15 and December 15 of each year. The 2022 Notes will mature on December 15, 2022. The net proceeds to the Company from the offering were $263.7 million after deducting offering costs of approximately $11.3 million. The 2022 Notes are senior unsecured obligations of the Company and rank senior in right of payment to the Company’s indebtedness that is expressly subordinated in right of payment to the 2022 Notes; equal in right of payment to the Company’s liabilities that is not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities incurred by the Company’s subsidiaries. Holders may convert all or any portion of their 2022 Notes in integral multiples of $1,000 principal amount, at their option, at any time prior to the close of business on the business day immediately preceding June 15, 2022 only under the following circumstances: ● during any calendar quarter (and only during such calendar quarter), if the last reported sale price of the shares of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; ● during the five business day period after any ten consecutive trading day period in which the trading price was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day; ● upon the occurrence of specified corporate events described under the 2022 Notes Indenture; or ● if the Company calls the 2022 Notes for redemption, at any time until the close of business on the second business day immediately preceding the redemption date. The conversion rate for the 2022 Notes was initially, and remains, 22.7247 shares of the Company’s common stock per $1,000 principal amount of the 2022 Notes, which is equivalent to an initial conversion price of approximately $44.00 per share of the Company’s common stock. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination thereof, at the Company’s election. If the Company elects to satisfy the conversion obligation solely in cash or through payment and delivery, as the case may be, of a combination of cash and shares of the Company’s common stock, the amount of cash and shares of the Company’s common stock, if any, due upon conversion will be based on a daily conversion value calculated on a proportionate basis for each trading day in a 25 trading day observation period. The Company may redeem for cash all or any portion of the 2022 Notes, at its option, on or after December 22, 2020 if the last reported sale price of its common stock exceeds 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading days ending on, and including the trading day immediately preceding the date on which the Company provides notice of the redemption. The redemption price will be the principal amount of the 2022 Notes to be redeemed, plus accrued and unpaid interest, if any. In addition, calling any 2022 Note for redemption on or after December 22, 2020 will constitute a make-whole fundamental change with respect to that 2022 Note, in which case the conversion rate applicable to the conversion of that Note, if it is converted in connection with the redemption, will be increased in certain circumstances as described in the 2022 Notes Indenture. In accounting for the issuance of the 2022 Notes, the Company separated the 2022 Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the par value of the 2022 Notes as a whole. The excess of the principal amount of the liability component over its carrying amount, referred to as the debt discount, is amortized to interest expense from the issuance date to June 15, 2022 (the first date on which the Company may be required to repurchase the 2022 Notes at the option of the holder). The equity component is not re-measured as long as it continues to meet the conditions for equity classification. The equity component related to the 2022 Notes was $62.4 million, net of issuance costs which was recorded in additional paid-in capital on the accompanying condensed consolidated balance sheet. In accounting for the transaction costs related to the issuance of the 2022 Notes, the Company allocated the total costs incurred to the liability and equity components of the 2022 Notes based on their relative values. Transaction costs attributable to the liability component are being amortized to interest expense over the five and a half year term of the 2022 Notes, and transaction costs attributable to the equity component are netted with the equity components in stockholders’ equity. The 2022 Notes consist of the following (in thousands): As of June 30, As of December 31, Liability component 2019 2018 Principal $ 275,000 $ 275,000 Less: Debt discount, net (2) (48,118) (54,904) Net carrying amount $ 226,882 $ 220,096 (1) Included in the accompanying consolidated balance sheets within convertible senior notes and amortized to interest expense over the expected life of the 2022 Notes using the effective interest rate method. The fair value of the 2022 Notes was approximately $467.5 million as of June 30, 2019. The Company estimates the fair value of its 2022 Notes utilizing market quotations for debt that have quoted prices in active markets. Since the 2022 Notes do not trade on a daily basis in an active market, the fair value estimates are based on market observable inputs based on borrowing rates currently available for debt with similar terms and average maturities, which are classified as Level 2 measurements within the fair value hierarchy. See Note 9, “Fair Value Measurements,” for definitions of hierarchy levels. As of June 30, 2019, the remaining contractual life of the 2022 Notes is approximately 3.5 years. The following table sets forth total interest expense recognized related to the 2022 Notes (in thousands): Quarters Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Contractual interest expense $ 2,091 $ 2,057 $ 4,125 $ 4,091 Amortization of debt discount 3,412 3,095 6,786 6,157 Total $ 5,503 $ 5,152 $ 10,911 $ 10,248 Effective interest rate of the liability component 10.0 % 10.0 % 10.0 % 10.0 % |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2019 | |
Leases and Contractual Obligations | |
Commitments and Contingencies | Note 12. Legal Matters From time to time, Teladoc Health is involved in various litigation matters arising out of the normal course of business, including the matters described below. The Company consults with legal counsel on those issues related to litigation and seek input from other experts and advisors with respect to such matters. Estimating the probable losses or a range of probable losses resulting from litigation, government actions and other legal proceedings is inherently difficult and requires an extensive degree of judgment, particularly where the matters involve indeterminate claims for monetary damages, may involve discretionary amounts, present novel legal theories, are in the early stages of the proceedings, or are subject to appeal. Whether any losses, damages or remedies ultimately resulting from such matters could reasonably have a material effect on our business, financial condition, results of operations, or cash flows will depend on a number of variables, including, for example, the timing and amount of such losses or damages (if any) and the structure and type of any such remedies. Teladoc Health’s management does not presently expect any litigation matter to have a material adverse impact on our business, financial condition, results of operations or cash flows. On December 12, 2018, a purported securities class action complaint (Reiner v. Teladoc Health, Inc., et.al.) was filed in the United States District Court for the Southern District of New York (the “SDNY”) against the Company and certain of the Company’s officers and a former officer. The complaint is brought on behalf of a purported class consisting of all persons or entities who purchased or otherwise acquired shares of the Company’s common stock during the period March 3, 2016 through December 5, 2018. The complaint asserts violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 based on allegedly false or misleading statements and omissions with respect to, among other things, the alleged misconduct of one of the Company’s previous Executive Officers. The complaint seeks certification as a class action and unspecified compensatory damages plus interest and attorneys’ fees. The Company believes that the claims against the Company and its officers are without merit, and the Company and its named officers intend to defend the Company vigorously, including filing a motion to dismiss the complaint. In addition, on June 21, 2019, a stockholder derivative lawsuit (Kreutter v. Gorevic, et al.) was filed in the SDNY against certain current and former directors and officers of the Company. The derivative lawsuit alleges that the named directors and officers breached their fiduciary duties to the Company in connection with factual assertions substantially similar to those in the purported securities class action complaint described above. The Company believes that the claims set forth in this stockholder derivative lawsuit are without merit. On May 14, 2018, a purported class action complaint (Thomas v. Best Doctors, Inc.) was filed in the United States District Court for the District of Massachusetts against the Company’s wholly owned subsidiary, Best Doctors, Inc. The complaint alleges that on or about May 16, 2017, Best Doctors violated the U.S. Telephone Consumer Protection Act (TCPA) by sending unsolicited facsimiles to plaintiff and certain other recipients without the recipients’ prior express invitation or permission. The lawsuit seeks statutory damages for each violation, subject to trebling under the TCPA, and injunctive relief. The Company will vigorously defend the lawsuit and any potential loss is currently deemed to be immaterial. |
Common Stock and Stockholders'
Common Stock and Stockholders' Equity (Deficit) | 6 Months Ended |
Jun. 30, 2019 | |
Common Stock and Stockholders'Equity | |
Common Stock and Stockholders' Equity | Note 13. Common Stock and Stockholders’ Equity Capitalization Effective May 31, 2018, the authorized number of shares of the Company’s common stock was increased from 100,000,000 to 150,000,000 shares. Stock Plan and Stock Options The Company’s 2015 Incentive Award Plan (the “Plan”) provides for the issuance of incentive and non-statutory options and other equity-based awards to its employees and non-employees. Options issued under the Plan 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 Plan, 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 4,739,007 shares available for grant at June 30, 2019. Activity under the Plan is as follows (in thousands, except share and per share amounts and years): Weighted- Weighted- Average Number of Average Remaining Aggregate Shares Exercise Contractual Intrinsic Outstanding Price Life in Years Value Balance at December 31, 2018 6,947,797 $ 23.15 7.86 $ 186,770 Stock option grants 88,849 $ 61.54 — $ — Stock options exercised (914,321) $ 17.16 — $ — Stock options forfeited (167,842) $ 37.62 — $ — Balance at June 30, 2019 5,954,483 $ 24.24 7.50 $ 251,868 Vested or expected to vest at June 30, 2019 5,954,483 $ 24.24 7.50 $ 251,868 Exercisable at June 30, 2019 3,085,449 $ 19.05 7.06 $ 146,139 The total grant-date fair value of stock options granted during the quarters ended June 30, 2019 and 2018 was $1.2 million and $5.4 million, respectively. The total grant-date fair value of stock options granted during the six months ended June 30, 2019 and 2018 was $2.4 million and $22.3 million, respectively. Stock-Based Compensation All stock-based awards to employees are measured based on the grant-date fair value of the awards and are generally recognized on a straight line basis in the Company’s consolidated statement of operations over the period during which the employee is required to perform services in exchange for the award (generally requiring a four-year vesting period for each stock option and a three-year vesting period for each RSU). The Company estimates the fair value of stock options granted using the Black-Scholes option-pricing model. The assumptions used in the Black-Scholes option-pricing model are determined as follows: Volatility. Since the Company does not have a trading history prior to July 2015 for its common stock, the expected volatility was derived from the historical stock volatilities of several unrelated public companies within its industry that it considers to be comparable to its business combined with the Company’s stock volatility over a period equivalent to the expected term of the stock option grants. Risk-Free Interest Rate. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with terms similar to the expected term on the options. Expected Term. The expected term represents the period that the stock-based awards are expected to be outstanding. When establishing the expected term assumption, the Company utilizes historical data. Dividend Yield. The Company has never declared or paid any cash dividends and does not plan to pay cash dividends in the foreseeable future, and therefore, it used an expected dividend yield of zero. Forfeiture rate. The Company recognizes forfeitures as they occur. The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions and fair value per share: Six Months Ended June 30, 2019 2018 Volatility 46.9% – 47.6% 43.9% – 46.1% Expected life (in years) 5.2 6.0 Risk-free interest rate 1.75% - 2.55% 2.45% - 2.66% Dividend yield – – Weighted-average fair value of underlying stock options $ 27.34 $ 18.76 For the quarter ended June 30, 2019 and 2018, the Company recorded compensation expense related to stock options granted of $5.2 million and $6.0 million, respectively. For the six months ended June 30, 2019 and 2018, the Company recorded compensation expense related to stock options granted of $10.7 million and $11.4 million, respectively. As of June 30, 2019, the Company had $36.3 million in unrecognized compensation cost related to non-vested stock options, which is expected to be recognized over a weighted-average period of approximately 2.2 years. Restricted Stock Units In May 2017, the Company commenced issuing Restricted Stock Units (“RSU’s”) pursuant to the Plan to certain employees and Board members under the 2017 Employment Inducement Incentive Award Plan. The fair value of the RSU’s is determined on the date of grant. The Company will record compensation expense in the consolidated statement of operations on a straight-line basis over the vesting period for RSU’s and on an accelerated tranche by tranche basis for Performance based awards. The vesting period for employees and members of the Board of Directors ranges from one to four years. Activity under the RSU’s is as follows: Weighted-Average Grant Date Shares Fair Value Per Share Balance at December 31, 2018 1,409,448 $ 40.51 Granted 1,297,167 $ 65.53 Vested and issued (468,095) $ 39.40 Forfeited (147,502) $ 50.00 Balance at June 30, 2019 2,091,018 $ 55.27 Vested and unissued at June 30, 2019 13,755 $ 50.90 Non-vested at June 30, 2019 2,077,263 $ 55.27 The total grant-date fair value of RSU’s granted during the quarter ended June 30, 2019 and 2018 were $6.8 million and $15.0 million, respectively. The total grant-date fair value of RSU’s granted during the six months ended June 30, 2019 and 2018 were $85.0 million and 50.1 million, respectively. For the quarter ended June 30, 2019 and 2018, the Company recorded stock-based compensation expense related to the RSU’s of $12.0 million and $4.8 million, respectively. For the six months ended June 30, 2019 and 2018, the Company recorded stock-based compensation expense related to the RSU’s of $19.7 million and $7.1 million, respectively. As of June 30, 2019, the Company had $98.7 million in unrecognized compensation cost related to non-vested RSU’s, which is expected to be recognized over a weighted-average period of approximately 2.3 years. Employee Stock Purchase Plan In July 2015, the Company adopted the 2015 Employee Stock Purchase Plan, or ESPP, in connection with its initial public offering. A total of 738,875 shares of common stock were reserved for issuance under this plan as of June 30, 2019. The Company’s ESPP permits eligible employees to purchase common stock at a discount through payroll deductions during defined offering periods. Under the ESPP, the Company may specify offerings with durations of not more than 27 months and may specify shorter purchase periods within each offering. Each offering will have one or more purchase dates on which shares of its common stock will be purchased for employees participating in the offering. An offering may be terminated under certain circumstances. The price at which the stock is purchased is equal to the lower of 85% of the fair market value of the common stock at the beginning of an offering period or on the date of purchase. During the quarter ended June 30, 2019, the Company issued 35,716 shares under the ESPP. During 2018, the Company issued 85,218 shares under the ESPP. As of June 30, 2019, 490,431 shares remained available for issuance. For the quarter ended June 30, 2019 and 2018, the Company recorded stock-based compensation expense related to the ESPP of $0.2 million and $0.3 million, respectively. For the six months ended June 30, 2019 and 2018, the Company recorded stock-based compensation expense related to the ESPP of $0.5 million and $0.3 million, respectively. As of June 30, 2019, the Company had $0.3 million in unrecognized compensation cost related to the ESPP, which is expected to be recognized over a weighted-average period of approximately 0.4 years. Total compensation costs charged as an expense for stock-based awards, including stock options, RSU’s and ESPP, recognized in the components of operating expenses are as follows (in thousands): Quarter Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Administrative and marketing $ 1,317 $ 569 $ 2,138 $ 972 Sales 2,528 2,002 4,658 3,576 Technology and development 2,141 1,664 4,039 2,878 General and administrative 11,382 6,825 20,056 11,465 Total stock-based compensation expense $ 17,368 $ 11,060 $ 30,891 $ 18,891 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2019 | |
Income Taxes | |
Income Taxes | Note 14. Income Taxes As a result of the Company’s history of net operating losses, the Company has provided for a full valuation allowance against its deferred tax assets for assets that are not more-likely-than-not to be realized. For the quarter ended June 30, 2019, the Company recognized an income tax expense related to certain United States and foreign related income, as well as amortization of tax-deductible goodwill, which partially benefits the realization of its indefinite lived NOL in the United States. For the quarter ended June 30, 2018, the income tax benefit was recognized for the indefinite lived NOL that is forecasted for the 2018 calendar year which can be netted up to 80% of the deferred tax liability associated with the goodwill, offset by timing differences with respect to the treatment of the amortization of tax-deductible goodwill, as well as foreign related income. With the acquisition of Advance Medical, the Company’s income tax expense has increased for the six months ended June 30, 2019 over the six months ended June 30, 2018 as Advance Medical is made up of mainly foreign sourced income to which the Company has limited net operating losses to offset it with. A majority of the Company’s operations, and resulting deferred tax assets, were generated in the United States. Beginning with the quarter ended March 31, 2018, the Company is calculating tax expense based on the U.S. statutory rate of 21%. The US Federal tax law includes a Base Erosion Anti-Abuse Tax, commonly referred to as BEAT, which imposes a minimum tax on certain deductible payments or accruals made to foreign affiliates in tax years beginning after December 31, 2017. The Company has determined that it is currently not subject to BEAT. US Federal tax law imposes a minimum tax on global intangible low-taxed income, commonly referred to as GILTI. The Company does not expect to recognize any tax expense related to GILTI as it has net operating losses available and a full valuation allowance. In addition, US Tax law imposes an interest expense limitation which disallows a portion of the interest deduction based on EBITDA. While the disallowed interest deduction is deferred, there is no impact to tax expense due to the current year taxable loss and related valuation allowance. |
Basis of Presentation and Pri_2
Basis of Presentation and Principles of Consolidations (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Basis Of Presentation And Principles Of Consolidation | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring accruals and adjustments) necessary to present fairly the financial position, results of operations and cash flows of the Company at the dates and for the periods indicated. The interim results for the quarter and six months ended June 30, 2019 are not necessarily indicative of results for the full 2019 calendar year or any other future interim periods. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Form 10-K for the year ended December 31, 2018. The unaudited consolidated financial statements include the results of Teladoc Health, its wholly owned subsidiaries, as well as two professional associations, fourteen professional corporations and a service corporation (the “Association”). Teladoc Physicians, P.A. is party to several services agreements by and among it and the professional corporations pursuant to which each professional corporation provides services to Teladoc Physicians, P.A. Each professional corporation is established pursuant to the requirements of its respective domestic jurisdiction governing the corporate practice of medicine. The Company holds a variable interest in the Association which contracts with physicians and other health professionals in order to provide services to Teladoc Health. The Association is considered a variable interest entity (“VIE”) since it does not have sufficient equity to finance its activities without additional subordinated financial support. An enterprise having a controlling financial interest in a VIE, must consolidate the VIE if it has both power and benefits—that is, it has (1) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance (power) and (2) the obligation to absorb losses of the VIE that potentially could be significant to the VIE or the right to receive benefits from the VIE that potentially could be significant to the VIE (benefits). The Company has the power and rights to control all activities of the Association and funds and absorbs all losses of the VIE. Total revenue and net (loss) income for the VIE were $17.4 million and $(0.2) million, respectively, for the quarter ended June 30, 2019 and $12.6 million and $1.3 million, respectively, for the quarter ended June 30, 2018. Total revenue and net (loss) income for the VIE were $38.5 million and $(0.3) million, respectively, for the six months ended June 30, 2019 and $28.9 million and $2.0 million, respectively, for the six months ended June 30, 2018. The VIE’s total assets were $9.7 million and $9.8 million at June 30, 2019 and December 31, 2018, respectively. Total liabilities for the VIE were $44.5 million and $44.3 million at June 30, 2019 and December 31, 2018, respectively. The VIE’s total stockholders’ deficit was $34.8 million and $34.5 million at June 30, 2019 and December 31, 2018, respectively. The functional currency for each of the Company’s foreign subsidiaries is the local currency. All assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the exchange rate on the balance sheet date. Revenues and expenses are translated at the weighted average exchange rate during the period. Cumulative translation gains or losses are included in stockholders’ equity as a component of accumulated other comprehensive income (loss). The Company operates in a single reportable segment – health services. Revenue earned by foreign operations outside of the United States were $26.1 million and $15.0 million for the quarters ended June 30, 2019 and 2018, respectively. Revenue earned by foreign operations outside of the United States were $51.3 million and $25.9 million for the six months ended June 30, 2019 and 2018, respectively. Long-lived assets from foreign operations totaled $419.4 million and $407.5 million as of June 30, 2019 and December 31, 2018, respectively. All intercompany transactions and balances have been eliminated. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In June 2018, the FASB issued ASU No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. These amendments expand the scope of Topic 718, Compensation - Stock Compensation, which currently only includes share-based payments to employees, to include share-based payments issued to nonemployees for goods or services and the accounting is substantially aligned. The ASU supersedes Subtopic 505-50, Equity - Equity-Based Payments to Non-Employees. This standard is effective for public companies for annual periods beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted as long as ASU No. 2014-09 has been adopted by the Company. The Company has elected to early adopt this standard as of July 1, 2018 and the adoption of ASU No. 2018-07 had no impact on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 outlines a comprehensive lease accounting model and supersedes the current lease guidance. The new guidance requires lessees to recognize lease liabilities and corresponding right-of-use assets for all leases with lease terms of greater than 12 months. It also changes the definition of a lease and expands the disclosure requirements of lease arrangements. The Company adopted this standard on January 1, 2019 utilizing the modified retrospective approach and reflecting a cumulative effect adjustment at that time. Under this adoption method, prior periods are presented in accordance with the previous guidance in ASC 840, Leases. In adopting the new standard, the Company elected to utilize the available package of practical expedients permitted under the transition guidance within the new standard, which does not require the reassessment of the following: i) whether existing or expired arrangements are or contain a lease, ii) the lease classification of existing or expired leases, and iii) whether previous initial direct costs would qualify for capitalization under the new lease standard. Additionally, the Company made an accounting policy election to keep leases with a term of 12 months or less off of its balance sheet. As part of its adoption, the Company underwent a process of assessing the lease population and determining the impact of the adoption of this standard which resulted in the recognition of operating lease liabilities of and right-of-use assets of approximately $34 million on the Company’s balance sheet relating to its leases on the consolidated financial statements. The Company determined the most significant impact was the recognition of right of use assets and lease liabilities for operating leases on the consolidated balance sheets and there was no impact on the consolidated statements of operations or consolidated statements of cash flows. See Note 7 “Leases”, for further information. In January 2017, the FASB issued ASU 2017-04, Goodwill Simplifications (Topic 350). ASU 2017-04 simplifies the test for goodwill impairment. The new guidance eliminates Step 2 from the goodwill impairment test as currently prescribed in the U.S. generally accepted accounting principle. This ASU is the result of the FASB project focused on simplifications to accounting for goodwill. The new guidance will be effective for the Company starting in the first quarter of fiscal 2020. Early adoption is permitted in any annual or interim period. The Company is currently in the process of evaluating the impact of the adoption of this standard on the consolidated financial statements. Summary of Significant Accounting Policies Effective January 1, 2019, the Company adopted ASC 842, using the required modified retrospective approach and utilizing the effective date as its date of initial application, for which prior periods are presented in accordance with the previous guidance in ASC 840, Leases. At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present. Most leases with a term greater than one year are recognized on the balance sheet as right-of-use assets, lease liabilities and, if applicable, long-term lease liabilities. The Company has elected not to recognize on the balance sheet leases with terms of 12 months or less. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected remaining lease term. However, certain adjustments to the right-of-use asset may be required for items such as incentives received and initial direct costs. The interest rate implicit in lease contracts is typically not readily determinable. Therefore, the Company utilizes its incremental borrowing rates, which are the rates incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. In accordance with the guidance in ASC 842, components of a lease, beginning on or after the ASC 842 effective date, should be broken into three categories: lease components, non-lease components, and operating expenses (e.g. property taxes, insurance, etc.) Then the consideration in the contract must be allocated based on the respective relative fair values to the lease components and non-lease components. The Company elected to not apply the practical expedient combining lease and non-lease components. There have been no other changes to the significant accounting policies described in the 2018 Form 10-K that have had a material impact on the consolidated financial statements and related notes. |
Revenue (Tables)
Revenue (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Revenue | |
Schedule of disaggregation of revenue | The following table presents the Company’s revenues disaggregated by revenue source (in thousands): Quarter Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Subscription Access Fees: U.S. $ 85,530 $ 65,066 $ 166,509 $ 126,086 International 25,711 14,731 50,686 25,440 Visit Fee Revenue: U.S. Paid Visits 15,083 11,795 33,331 26,004 U.S. Visit Fee Only 3,546 2,710 7,667 6,249 International Paid Visits 406 258 656 425 Total Revenues $ 130,276 $ 94,560 $ 258,849 $ 184,204 |
Business Acquisitions (Tables)
Business Acquisitions (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Business Acquisitions | |
Summary of identifiable assets acquired and liabilities assumed | Identifiable assets acquired and liabilities assumed (in thousands): Advance Medical Purchase price, net of cash acquired $ 351,694 Less: Accounts receivable 8,553 Property and equipment, net 1,326 Other assets 3,675 Client relationships 100,760 Non-compete agreements 1,540 Internal-use software 770 Trademarks 16,190 Favorable leases 203 Accounts payable (361) Deferred taxes (22,714) Other liabilities (8,368) Goodwill $ 250,120 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Intangible Assets, Net | |
Schedule of finite lived intangible assets | Intangible assets, net consist of the following (in thousands): Weighted Average Useful Accumulated Net Carrying Remaining Life Gross Value Amortization Value Useful Life June 30, 2019 Client relationships 2 to 20 years $ 237,940 $ (47,951) $ 189,989 13.4 Non-compete agreements 1.5 to 5 years 4,980 (4,024) 956 1.9 Trademarks 3 to 15 years 42,714 (5,710) 37,004 13.4 Patents 3 years 200 (172) 28 0.4 Internal-use software and other 3 to 5 years 29,579 (18,212) 11,367 2.1 Intangible assets, net $ 315,413 $ (76,069) $ 239,344 12.8 December 31, 2018 Client relationships 2 to 20 years $ 233,007 $ (35,453) $ 197,554 13.7 Non-compete agreements 1.5 to 5 years 4,992 (3,741) 1,251 2.4 Trademarks 3 to 15 years 41,815 (4,137) 37,678 13.9 Patents 3 years 200 (139) 61 0.9 Internal-use software 3 to 5 years 25,644 (14,794) 10,850 2.0 Intangible assets, net $ 305,658 $ (58,264) $ 247,394 13.2 |
Goodwill (Tables)
Goodwill (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill | |
Summary of goodwill | Goodwill consists of the following (in thousands): As of June 30, As of December 31, 2019 2018 Beginning balance $ 737,197 $ 498,520 Additions associated with acquisitions 10,604 250,120 Cumulative translation adjustment 272 (11,443) Goodwill $ 748,073 $ 737,197 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
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): Quarters Ended Six Months Ended June 30, 2019 June 30, 2019 Lease cost Operating lease cost $ 1,906 $ 3,867 Variable lease cost 242 468 Total lease cost $ 2,148 $ 4,335 |
Schedule of supplemental information | Supplemental information related to operating leases was as follows (in thousands): Six Months Ended Consolidated Statements of Cash Flows June 30, 2019 Operating cash flows used for operating leases $ 4,042 Operating lease liabilities arising from obtaining right-of-use assets $ 3,389 Other Information Weighted-average remaining lease term 6.39 years Weighted-average discount rate 6.50% |
Schedule of future minimum lease payments | As of Operating Leases: June 30, 2019 2019 $ 7,430 2020 6,099 2021 5,912 2022 5,729 2023 and thereafter 15,048 Sub-total 40,218 Less: imputed interest 7,574 Minimum lease payments $ 32,644 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Accrued Expenses and Other Current Liabilities | |
Schedule of accrued expenses and other current liabilities | Accrued expenses and other current liabilities consist of the following (in thousands): As of June 30, As of December 31, 2019 2018 Professional fees $ 1,394 $ 1,264 Consulting fees/provider fees 6,089 6,569 Client performance guarantees 3,100 2,910 Legal fees 962 1,073 Interest payable 872 883 Income tax payable 4,602 2,610 Lease abandonment obligation - current 101 53 Marketing 1,474 644 Operating lease liabilities - current 5,363 — Earnout and compensation 634 — Deferred revenue 12,285 7,650 Other 9,325 3,145 Total $ 46,201 $ 26,801 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
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): June 30, 2019 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 440,443 $ — $ — $ 440,443 Short-term investments $ — $ 32,161 $ — $ 32,161 Contingent liability $ — $ — $ 3,796 $ 3,796 December 31, 2018 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 419,464 $ 4,525 $ — $ 423,989 Short-term investments $ — $ 54,545 $ — $ 54,545 |
Schedule of reconciliation of company's Level 3 liabilities | The following table reconciles the beginning and ending balance of the Company’s Level 3 contingent liability: Fair value at date of acquisition $ 3,586 Payments — Change in fair value 210 Fair value at June 30, 2019 $ 3,796 |
Convertible Senior Notes (Table
Convertible Senior Notes (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
2025 Notes | |
Convertible Senior Notes | |
Summary of the Notes | The 2025 Notes consist of the following (in thousands): As of June 30, As of December 31, Liability component 2019 2018 Principal $ 287,500 $ 287,500 Less: Debt discount, net (1) (87,185) (92,913) Net carrying amount $ 200,315 $ 194,587 (1) Included in the accompanying consolidated balance sheets within convertible senior notes and amortized to interest expense over the expected life of the 2025 Notes using the effective interest rate method. |
Schedule of total interest expense recognized related to the Notes | The following table sets forth total interest expense recognized related to the 2025 Notes (in thousands): Quarters Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Contractual interest expense $ 1,002 $ 585 $ 1,977 $ 585 Amortization of debt discount 2,892 1,493 5,728 1,493 Total $ 3,894 $ 2,078 $ 7,705 $ 2,078 Effective interest rate of the liability component 7.9 % 7.9 % 7.9 % 7.9 % |
2022 Notes | |
Convertible Senior Notes | |
Summary of the Notes | The 2022 Notes consist of the following (in thousands): As of June 30, As of December 31, Liability component 2019 2018 Principal $ 275,000 $ 275,000 Less: Debt discount, net (2) (48,118) (54,904) Net carrying amount $ 226,882 $ 220,096 (1) Included in the accompanying consolidated balance sheets within convertible senior notes and amortized to interest expense over the expected life of the 2022 Notes using the effective interest rate method. |
Schedule of total interest expense recognized related to the Notes | The following table sets forth total interest expense recognized related to the 2022 Notes (in thousands): Quarters Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Contractual interest expense $ 2,091 $ 2,057 $ 4,125 $ 4,091 Amortization of debt discount 3,412 3,095 6,786 6,157 Total $ 5,503 $ 5,152 $ 10,911 $ 10,248 Effective interest rate of the liability component 10.0 % 10.0 % 10.0 % 10.0 % |
Common Stock and Stockholders_2
Common Stock and Stockholders' Equity (Deficit) (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Common Stock and Stockholders'Equity | |
Summary of activity under stock options | Activity under the Plan is as follows (in thousands, except share and per share amounts and years): Weighted- Weighted- Average Number of Average Remaining Aggregate Shares Exercise Contractual Intrinsic Outstanding Price Life in Years Value Balance at December 31, 2018 6,947,797 $ 23.15 7.86 $ 186,770 Stock option grants 88,849 $ 61.54 — $ — Stock options exercised (914,321) $ 17.16 — $ — Stock options forfeited (167,842) $ 37.62 — $ — Balance at June 30, 2019 5,954,483 $ 24.24 7.50 $ 251,868 Vested or expected to vest at June 30, 2019 5,954,483 $ 24.24 7.50 $ 251,868 Exercisable at June 30, 2019 3,085,449 $ 19.05 7.06 $ 146,139 |
Assumptions used for estimate of fair value of options | Six Months Ended June 30, 2019 2018 Volatility 46.9% – 47.6% 43.9% – 46.1% Expected life (in years) 5.2 6.0 Risk-free interest rate 1.75% - 2.55% 2.45% - 2.66% Dividend yield – – Weighted-average fair value of underlying stock options $ 27.34 $ 18.76 |
Schedule of activity under the RSU's | Activity under the RSU’s is as follows: Weighted-Average Grant Date Shares Fair Value Per Share Balance at December 31, 2018 1,409,448 $ 40.51 Granted 1,297,167 $ 65.53 Vested and issued (468,095) $ 39.40 Forfeited (147,502) $ 50.00 Balance at June 30, 2019 2,091,018 $ 55.27 Vested and unissued at June 30, 2019 13,755 $ 50.90 Non-vested at June 30, 2019 2,077,263 $ 55.27 |
Components of operating expense charged for compensation cost expense | Total compensation costs charged as an expense for stock-based awards, including stock options, RSU’s and ESPP, recognized in the components of operating expenses are as follows (in thousands): Quarter Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Administrative and marketing $ 1,317 $ 569 $ 2,138 $ 972 Sales 2,528 2,002 4,658 3,576 Technology and development 2,141 1,664 4,039 2,878 General and administrative 11,382 6,825 20,056 11,465 Total stock-based compensation expense $ 17,368 $ 11,060 $ 30,891 $ 18,891 |
Organization and Description _2
Organization and Description of Business (Details) - USD ($) $ / shares in Units, $ in Thousands | Jul. 26, 2018 | May 08, 2018 | Jun. 30, 2018 | Jun. 30, 2019 | Dec. 31, 2018 |
Convertible Senior Notes | |||||
Net proceeds from offering | $ 279,126 | ||||
2025 Notes | |||||
Convertible Senior Notes | |||||
Face amount | $ 287,500 | $ 287,500 | $ 287,500 | ||
Interest rate (as a percent) | 1.375% | ||||
Net proceeds from offering | $ 279,100 | ||||
Offering costs | $ 8,400 | ||||
Follow-On Offering | |||||
Follow-On Offering | |||||
Issuance of stock (in shares) | 5,000,000 | ||||
Price of stock issued (in dollars per share) | $ 66.28 | ||||
Proceeds received, net of issuance costs | $ 330,900 | ||||
Offering expenses | $ 500 |
Basis of Presentation and Pri_3
Basis of Presentation and Principles of Consolidation - VIE (Details) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($)item | Jun. 30, 2018USD ($) | Dec. 31, 2018USD ($) | |
Variable interest entity | |||||
Number of professional associations consolidated as VIEs | item | 2 | ||||
Number of professional corporations consolidated as VIEs | item | 14 | ||||
Number of service corporations consolidated as VIEs | item | 1 | ||||
Primary beneficiary | |||||
Variable interest entity | |||||
Total revenue of VIEs | $ 17.4 | $ 12.6 | $ 38.5 | $ 28.9 | |
Net (loss) income of VIEs | (0.2) | $ 1.3 | (0.3) | $ 2 | |
Assets of VIEs | 9.7 | 9.7 | $ 9.8 | ||
Liabilities of VIEs | 44.5 | 44.5 | 44.3 | ||
Deficit of VIEs | $ 34.8 | $ 34.8 | $ 34.5 |
Basis of Presentation and Pri_4
Basis of Presentation and Principles of Consolidation - Segment and Foreign Operations (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($)segment | Jun. 30, 2018USD ($) | Dec. 31, 2018USD ($) | |
Segment Information | |||||
Number of reportable segments | segment | 1 | ||||
Revenue | $ 130,276 | $ 94,560 | $ 258,849 | $ 184,204 | |
Foreign | |||||
Segment Information | |||||
Revenue | 26,100 | $ 15,000 | 51,300 | $ 25,900 | |
Long-lived assets | $ 419,400 | $ 419,400 | $ 407,500 |
Basis of Presentation and Pri_5
Basis of Presentation and Principles of Consolidation - Accounting Pronouncements (Details) - USD ($) $ in Thousands | Jan. 01, 2019 | Jun. 30, 2019 |
Recently Issued Accounting Pronouncements | ||
Lease liabilities | $ 32,644 | |
Right of use assets | $ 29,220 | |
Accounting Standards Update 2016-02 | ||
Recently Issued Accounting Pronouncements | ||
Lease, practical expedients, package | true | |
Accounting Standards Update 2016-02 | Adjustment | ||
Recently Issued Accounting Pronouncements | ||
Lease liabilities | $ 30,000 | |
Right of use assets | $ 34,000 |
Revenue - Other Disclosures (De
Revenue - Other Disclosures (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Revenue | ||||
Contract term | 1 year | |||
Payment terms | 30 days | |||
Product and Service Concentration Risk | Revenue from Contract with Customer | Subscription Access Fees | ||||
Revenue | ||||
Concentration risk (as a percent) | 85.00% | 84.00% | 84.00% | 82.00% |
Revenue - Disaggregation and Ot
Revenue - Disaggregation and Other (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Revenue | |||||
Revenue | $ 130,276 | $ 94,560 | $ 258,849 | $ 184,204 | |
Accounts receivable, net of allowance for doubtful accounts | 49,778 | 49,778 | $ 43,571 | ||
Net increase in deferred revenue | 4,600 | 3,300 | |||
Member refunds issued relating to Company's direct-to-consumer behavioral health products | 600 | 400 | 1,200 | 1,600 | |
United States | Subscription Access Fees | |||||
Revenue | |||||
Revenue | 85,530 | 65,066 | 166,509 | 126,086 | |
United States | Paid Visits | |||||
Revenue | |||||
Revenue | 15,083 | 11,795 | 33,331 | 26,004 | |
United States | Visit Fee Only | |||||
Revenue | |||||
Revenue | 3,546 | 2,710 | 7,667 | 6,249 | |
Foreign | |||||
Revenue | |||||
Revenue | 26,100 | 15,000 | 51,300 | 25,900 | |
Foreign | Subscription Access Fees | |||||
Revenue | |||||
Revenue | 25,711 | 14,731 | 50,686 | 25,440 | |
Foreign | Paid Visits | |||||
Revenue | |||||
Revenue | $ 406 | $ 258 | $ 656 | $ 425 |
Business Acquisitions (Details)
Business Acquisitions (Details) - USD ($) $ in Thousands | Apr. 30, 2019 | May 31, 2018 | Jun. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Less: | |||||
Goodwill | $ 748,073 | $ 737,197 | $ 498,520 | ||
MedicineDirect | |||||
Business acquisition | |||||
Consideration paid | $ 11,200 | ||||
Advance Medical | |||||
Business acquisition | |||||
Consideration paid | $ 351,700 | ||||
Equity consideration (in shares) | 1,344,387 | ||||
Equity consideration | $ 68,600 | ||||
Cash paid for acquisition | 283,100 | ||||
Transaction costs associated with acquisition | 5,800 | ||||
Identifiable assets acquired and liabilities assumed: | |||||
Purchase price, net of cash acquired | 351,694 | ||||
Less: | |||||
Accounts receivable | 8,553 | ||||
Property and equipment, net | 1,326 | ||||
Other assets | 3,675 | ||||
Accounts payable | (361) | ||||
Deferred taxes | (22,714) | ||||
Other liabilities | (8,368) | ||||
Goodwill | 250,120 | ||||
Advance Medical | Client relationships | |||||
Less: | |||||
Finite-lived intangibles | 100,760 | ||||
Advance Medical | Non-compete agreements | |||||
Less: | |||||
Finite-lived intangibles | 1,540 | ||||
Advance Medical | Internal-use software | |||||
Less: | |||||
Finite-lived intangibles | 770 | ||||
Advance Medical | Trademarks | |||||
Less: | |||||
Finite-lived intangibles | 16,190 | ||||
Advance Medical | Favorable leases | |||||
Less: | |||||
Finite-lived intangibles | $ 203 |
Intangible Assets, Net - Summar
Intangible Assets, Net - Summary (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Intangible assets | |||||
Gross Value | $ 315,413 | $ 315,413 | $ 305,658 | ||
Accumulated Amortization | (76,069) | (76,069) | (58,264) | ||
Net Carrying Value | 239,344 | 239,344 | $ 247,394 | ||
Amortization expense for intangible assets | 9,000 | $ 7,300 | $ 17,700 | $ 14,000 | |
Weighted Average | |||||
Intangible assets | |||||
Weighted Average Remaining Useful Life | 12 years 9 months 18 days | 13 years 2 months 12 days | |||
Client relationships | |||||
Intangible assets | |||||
Gross Value | 237,940 | $ 237,940 | $ 233,007 | ||
Accumulated Amortization | (47,951) | (47,951) | (35,453) | ||
Net Carrying Value | 189,989 | $ 189,989 | $ 197,554 | ||
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 | 13 years 4 months 24 days | 13 years 8 months 12 days | |||
Non-compete agreements | |||||
Intangible assets | |||||
Gross Value | 4,980 | $ 4,980 | $ 4,992 | ||
Accumulated Amortization | (4,024) | (4,024) | (3,741) | ||
Net Carrying Value | 956 | $ 956 | $ 1,251 | ||
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 | 1 year 10 months 24 days | 2 years 4 months 24 days | |||
Trademarks | |||||
Intangible assets | |||||
Gross Value | 42,714 | $ 42,714 | $ 41,815 | ||
Accumulated Amortization | (5,710) | (5,710) | (4,137) | ||
Net Carrying Value | 37,004 | $ 37,004 | $ 37,678 | ||
Trademarks | Minimum | |||||
Intangible assets | |||||
Useful life | 3 years | 3 years | |||
Trademarks | Maximum | |||||
Intangible assets | |||||
Useful life | 15 years | 15 years | |||
Trademarks | Weighted Average | |||||
Intangible assets | |||||
Weighted Average Remaining Useful Life | 13 years 4 months 24 days | 13 years 10 months 24 days | |||
Patents | |||||
Intangible assets | |||||
Gross Value | 200 | $ 200 | $ 200 | ||
Accumulated Amortization | (172) | (172) | (139) | ||
Net Carrying Value | 28 | $ 28 | $ 61 | ||
Useful life | 3 years | 3 years | |||
Patents | Weighted Average | |||||
Intangible assets | |||||
Weighted Average Remaining Useful Life | 4 months 24 days | 10 months 24 days | |||
Internal-use software and others | |||||
Intangible assets | |||||
Gross Value | 29,579 | $ 29,579 | $ 25,644 | ||
Accumulated Amortization | (18,212) | (18,212) | (14,794) | ||
Net Carrying Value | $ 11,367 | $ 11,367 | $ 10,850 | ||
Internal-use software and others | Minimum | |||||
Intangible assets | |||||
Useful life | 3 years | 3 years | |||
Internal-use software and others | Maximum | |||||
Intangible assets | |||||
Useful life | 5 years | 5 years | |||
Internal-use software and others | Weighted Average | |||||
Intangible assets | |||||
Weighted Average Remaining Useful Life | 2 years 1 month 6 days | 2 years |
Goodwill (Details)
Goodwill (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019 | Dec. 31, 2018 | |
Goodwill | ||
Beginning balance | $ 737,197 | $ 498,520 |
Additions associated with acquisitions | 10,604 | 250,120 |
Cumulative translation adjustment | 272 | (11,443) |
Goodwill | $ 748,073 | $ 737,197 |
Leases - Other (Details)
Leases - Other (Details) | 6 Months Ended |
Jun. 30, 2019 | |
Leases | |
Options to extend | true |
Minimum | |
Leases | |
Remaining lease terms | 1 year |
Options to extend lease terms | 1 year |
Maximum | |
Leases | |
Remaining lease terms | 11 years |
Options to extend lease terms | 6 years |
Leases - Operating lease expens
Leases - Operating lease expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019 | Jun. 30, 2019 | |
Lease cost | ||
Operating lease cost | $ 1,906 | $ 3,867 |
Variable lease cost | 242 | 468 |
Total lease cost | $ 2,148 | $ 4,335 |
Leases - Supplemental informati
Leases - Supplemental information (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2019USD ($) | |
Leases | |
Operating cash flows used for operating leases | $ 4,042 |
Operating lease liabilities arising from obtaining right-of-use assets | $ 3,389 |
Weighted-average remaining lease term | 6 years 4 months 20 days |
Weighted-average discount rate | 6.50% |
Leases - Future minimum lease p
Leases - Future minimum lease payments (Details) $ in Thousands | Jun. 30, 2019USD ($) |
Operating Leases: | |
2019 | $ 7,430 |
2020 | 6,099 |
2021 | 5,912 |
2022 | 5,729 |
2023 and thereafter | 15,048 |
Sub-total | 40,218 |
Less: imputed interest | 7,574 |
Minimum lease payments | $ 32,644 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Accrued Expenses and Other Current Liabilities | ||
Professional fees | $ 1,394 | $ 1,264 |
Consulting fees/provider fees | 6,089 | 6,569 |
Client performance guarantees | 3,100 | 2,910 |
Legal fees | 962 | 1,073 |
Interest payable | 872 | 883 |
Income tax payable | 4,602 | 2,610 |
Lease abandonment obligation - current | 101 | 53 |
Marketing | 1,474 | 644 |
Operating lease liabilities - current | 5,363 | |
Earnout and compensation | 634 | |
Deferred revenue | 12,285 | 7,650 |
Other | 9,325 | 3,145 |
Total | $ 46,201 | $ 26,801 |
Fair Value Measurements - Recur
Fair Value Measurements - Recurring (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Fair Value | |||||
Short-term investments | $ 32,161 | $ 32,161 | $ 54,545 | ||
Fair Value, Assets, Level 1 to Level 2 Transfers, Amount | 0 | $ 0 | 0 | $ 0 | |
Fair Value, Assets, Level 2 to Level 1 Transfers, Amount | 0 | 0 | 0 | 0 | |
Fair Value, Liabilities, Level 1 to Level 2 Transfers, Amount | 0 | 0 | 0 | 0 | |
Fair Value, Liabilities, Level 2 to Level 1 Transfers, Amount | 0 | 0 | 0 | 0 | |
Fair value assets level 3 net transfers | 0 | 0 | 0 | 0 | |
Fair value liabilities level 3 net transfers | 0 | $ 0 | 0 | $ 0 | |
Recurring | |||||
Fair Value | |||||
Cash and cash equivalents | 440,443 | 440,443 | 423,989 | ||
Short-term investments | 32,161 | 32,161 | 54,545 | ||
Contingent liability | 3,796 | 3,796 | |||
Level 1 | Recurring | |||||
Fair Value | |||||
Cash and cash equivalents | 440,443 | 440,443 | 419,464 | ||
Level 2 | Recurring | |||||
Fair Value | |||||
Cash and cash equivalents | 4,525 | ||||
Short-term investments | 32,161 | 32,161 | $ 54,545 | ||
Level 3 | Recurring | |||||
Fair Value | |||||
Contingent liability | $ 3,796 | $ 3,796 |
Fair Value Measurements - Level
Fair Value Measurements - Level 3 (Details) - Contingent Liability $ in Thousands | 2 Months Ended |
Jun. 30, 2019USD ($) | |
Reconciliation of Level 3 liabilities | |
Fair value at date of acquisition | $ 3,586 |
Change in fair value | 210 |
Fair value at end of period | $ 3,796 |
Revolving Credit Facility (Deta
Revolving Credit Facility (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 | Jul. 14, 2017 |
Revolving Credit Facility | |||
Amount utilized for facility security deposits | $ 1.5 | ||
New Revolving Credit Facility | |||
Revolving Credit Facility | |||
Maximum borrowings | $ 10 | ||
Amount outstanding | $ 0 | $ 0 |
Convertible Senior Notes - Due
Convertible Senior Notes - Due 2025 - Terms (Details) | May 08, 2018USD ($)Ditem$ / shares | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($) | Dec. 31, 2018USD ($) |
Convertible Senior Notes | ||||
Net proceeds from offering | $ 279,126,000 | |||
2025 Notes | ||||
Convertible Senior Notes | ||||
Face amount | $ 287,500,000 | $ 287,500,000 | $ 287,500,000 | |
Interest rate (as a percent) | 1.375% | |||
Net proceeds from offering | $ 279,100,000 | |||
Offering costs | 8,400,000 | |||
Principal multiple amount used in the conversion of the debt instrument | $ 1,000 | |||
Convertible debt, conversion rate | 18.6621 | |||
Convertible debt, conversion price (in dollars per share) | $ / shares | $ 53.58 | |||
Trading day observation period used to determine the amount of cash and shares, if any, that are due upon conversion | item | 25 | |||
Convertible debt, equity component | $ 91,400,000 | |||
Debt term | 7 years | |||
2025 Notes | At any time prior to close of business on the business day immediately preceding November 15, 2024 | ||||
Convertible Senior Notes | ||||
Principal multiple amount used in the conversion of the debt instrument | $ 1,000 | |||
Convertible debt, threshold, trading days | D | 20 | |||
Convertible debt, threshold, consecutive trading days | D | 30 | |||
Minimum percentage of common stock price as a percentage of the conversion price | 130.00% | |||
Convertible debt, number of business days, measurement period | D | 5 | |||
Convertible debt, number of consecutive trading days, measurement period | D | 10 | |||
Trading price expressed as a percentage of the last reported sales price and conversion rate after the specified consecutive trading day period | 98.00% | |||
2025 Notes | On or after May 22, 2022 | ||||
Convertible Senior Notes | ||||
Convertible debt, threshold, trading days | D | 20 | |||
Convertible debt, threshold, consecutive trading days | D | 30 | |||
Minimum percentage of common stock price as a percentage of the conversion price | 130.00% |
Convertible Senior Notes - Du_2
Convertible Senior Notes - Due 2025 - Summary (Details) - 2025 Notes - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | May 08, 2018 | |
Convertible Senior Notes | ||||||
Principal | $ 287,500 | $ 287,500 | $ 287,500 | $ 287,500 | ||
Less: Debt discount, net | (87,185) | (87,185) | (92,913) | |||
Net carrying amount | 200,315 | $ 200,315 | $ 194,587 | |||
Remaining contractual life | 5 years 10 months 24 days | |||||
Interest Expense | ||||||
Contractual interest expense | 1,002 | $ 585 | $ 1,977 | $ 585 | ||
Amortization of debt discount | 2,892 | 1,493 | 5,728 | 1,493 | ||
Total | $ 3,894 | $ 2,078 | $ 7,705 | $ 2,078 | ||
Effective interest rate of the liability component (as a percent) | 7.90% | 7.90% | 7.90% | 7.90% | ||
Level 2 | ||||||
Convertible Senior Notes | ||||||
Fair value | $ 425,300 | $ 425,300 |
Convertible Senior Notes - Du_3
Convertible Senior Notes - Due 2022 - Terms (Details) | Jun. 27, 2017USD ($)Ditem$ / shares | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($) | Dec. 31, 2018USD ($) |
Convertible Senior Notes | ||||
Net proceeds from offering | $ 279,126,000 | |||
2022 Notes | ||||
Convertible Senior Notes | ||||
Face amount | $ 275,000,000 | $ 275,000,000 | $ 275,000,000 | |
Interest rate (as a percent) | 3.00% | |||
Net proceeds from offering | $ 263,700,000 | |||
Offering costs | 11,300,000 | |||
Principal multiple amount used in the conversion of the debt instrument | $ 1,000 | |||
Convertible debt, conversion rate | 22.7247 | |||
Convertible debt, conversion price (in dollars per share) | $ / shares | $ 44 | |||
Trading day observation period used to determine the amount of cash and shares, if any, that are due upon conversion | item | 25 | |||
Debt term | 5 years 6 months | |||
Convertible debt, equity component | $ 62,400,000 | |||
At any time prior to close of business on the business day immediately preceding June 15, 2022 | 2022 Notes | ||||
Convertible Senior Notes | ||||
Principal multiple amount used in the conversion of the debt instrument | $ 1,000 | |||
Convertible debt, threshold, trading days | D | 20 | |||
Convertible debt, threshold, consecutive trading days | D | 30 | |||
Minimum percentage of common stock price as a percentage of the conversion price | 130.00% | |||
Convertible debt, number of business days, measurement period | D | 5 | |||
Convertible debt, number of consecutive trading days, measurement period | D | 10 | |||
Trading price expressed as a percentage of the last reported sales price and conversion rate after the specified consecutive trading day period | 98.00% | |||
On or after December 22, 2020 | 2022 Notes | ||||
Convertible Senior Notes | ||||
Convertible debt, threshold, trading days | D | 20 | |||
Convertible debt, threshold, consecutive trading days | D | 30 | |||
Minimum percentage of common stock price as a percentage of the conversion price | 130.00% |
Convertible Senior Notes - Du_4
Convertible Senior Notes - Due 2022 - Summary (Details) - 2022 Notes - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | Jun. 27, 2017 | |
Convertible Senior Notes | ||||||
Principal | $ 275,000 | $ 275,000 | $ 275,000 | $ 275,000 | ||
Less: Debt discount, net | (48,118) | (48,118) | (54,904) | |||
Net carrying amount | 226,882 | $ 226,882 | $ 220,096 | |||
Remaining contractual life | 3 years 6 months | |||||
Interest Expense | ||||||
Contractual interest expense | 2,091 | $ 2,057 | $ 4,125 | $ 4,091 | ||
Amortization of debt discount | 3,412 | 3,095 | 6,786 | 6,157 | ||
Total | $ 5,503 | $ 5,152 | $ 10,911 | $ 10,248 | ||
Effective interest rate of the liability component (as a percent) | 10.00% | 10.00% | 10.00% | 10.00% | ||
Level 2 | ||||||
Convertible Senior Notes | ||||||
Fair value | $ 467,500 | $ 467,500 |
Common Stock and Stockholders_3
Common Stock and Stockholders' Equity - Capitalization (Details) - shares | Jun. 30, 2019 | Dec. 31, 2018 | May 31, 2018 | May 30, 2018 |
Common Stock and Stockholders'Equity | ||||
Number of common stock shares authorized | 150,000,000 | 150,000,000 | 150,000,000 | 100,000,000 |
Common Stock and Stockholders_4
Common Stock and Stockholders' Equity - Stock Plan and Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Stock options | |||||
Common Stock and Stockholders' Equity | |||||
Shares available for grant | 4,739,007 | 4,739,007 | |||
Aggregate Intrinsic Value | |||||
Grant-date fair value of stock options granted during the period | $ 1,200 | $ 5,400 | $ 2,400 | $ 22,300 | |
Stock options | Maximum | |||||
Common Stock and Stockholders' Equity | |||||
Exercisable period (in years) | 10 years | ||||
2015 Incentive Award Plan | |||||
Number of Shares Outstanding | |||||
Balance, beginning of period (in shares) | 6,947,797 | ||||
Stock option grants (in shares) | 88,849 | ||||
Stock option exercised (in shares) | (914,321) | ||||
Stock options forfeited (in shares) | (167,842) | ||||
Balance, end of period (in shares) | 5,954,483 | 5,954,483 | 6,947,797 | ||
Vested or expected to vest at end of period (in shares) | 5,954,483 | 5,954,483 | |||
Exercisable as of end of period (in shares) | 3,085,449 | 3,085,449 | |||
Weighted-Average Exercise Price | |||||
Balance, beginning of period (in dollars per share) | $ 23.15 | ||||
Stock option grants (in dollars per share) | 61.54 | ||||
Stock option exercised (in dollars per share) | 17.16 | ||||
Stock options forfeited (in dollars per share) | 37.62 | ||||
Balance, end of period (in dollars per share) | $ 24.24 | 24.24 | $ 23.15 | ||
Vested or expected to vest at end of period (in dollars per share) | 24.24 | 24.24 | |||
Exercisable as of end of period (in dollars per share) | $ 19.05 | $ 19.05 | |||
Weighted-average remaining contractual life in Years | |||||
Weighted-average remaining contractual life (in years) | 7 years 6 months | 7 years 10 months 9 days | |||
Vested or expected to vest at end of period (in years) | 7 years 6 months | ||||
Exercisable as of end of period (in years) | 7 years 21 days | ||||
Aggregate Intrinsic Value | |||||
Aggregate Intrinsic Value | $ 251,868 | $ 251,868 | $ 186,770 | ||
Vested or expected to vest at end of period | 251,868 | 251,868 | |||
Exercisable as of end of period | $ 146,139 | $ 146,139 |
Common Stock and Stockholders_5
Common Stock and Stockholders' Equity - Vesting (Details) - Employee | 6 Months Ended |
Jun. 30, 2019 | |
Stock options | |
Common Stock and Stockholders' Equity | |
Vesting period | 4 years |
RSU's | |
Common Stock and Stockholders' Equity | |
Vesting period | 3 years |
Common Stock and Stockholders_6
Common Stock and Stockholders' Equity - Fair Value Assumptions (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Other disclosures | ||||
Compensation expense | $ 17,368 | $ 11,060 | $ 30,891 | $ 18,891 |
Stock options | ||||
Fair value assumptions | ||||
Volatility, minimum (as a percent) | 46.90% | 43.90% | ||
Volatility, maximum (as a percent) | 47.60% | 46.10% | ||
Expected life (in years) | 5 years 2 months 12 days | 6 years | ||
Risk-free interest rate, minimum | 1.75% | 2.45% | ||
Risk-free interest rate, maximum | 2.55% | 2.66% | ||
Dividend yield (as a percent) | 0.00% | 0.00% | ||
Weighted-average fair value of the underlying stock options | $ 27.34 | $ 18.76 | ||
Other disclosures | ||||
Compensation expense | 5,200 | $ 6,000 | $ 10,700 | $ 11,400 |
Unrecognized compensation cost | $ 36,300 | $ 36,300 | ||
Period over which unrecognized compensation cost is expected to be recognized | 2 years 2 months 12 days |
Common Stock and Stockholders_7
Common Stock and Stockholders' Equity - Restricted Stock Units (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Other disclosures | ||||
Stock-based compensation | $ 17,368 | $ 11,060 | $ 30,891 | $ 18,891 |
RSU's | ||||
Shares | ||||
Outstanding at beginning of period (in shares) | 1,409,448 | |||
Granted (in shares) | 1,297,167 | |||
Vested and issued (in shares) | (468,095) | |||
Forfeited (in shares) | (147,502) | |||
Outstanding at end of period (in shares) | 2,091,018 | 2,091,018 | ||
Vested and unissued (in shares) | 13,755 | 13,755 | ||
Nonvested (in shares) | 2,077,263 | 2,077,263 | ||
Weighted-Average Grant Date Fair Value Per Share | ||||
Outstanding at beginning of period (in dollars per share) | $ 40.51 | |||
Granted (in dollars per share) | 65.53 | |||
Vested and issued (in dollars per share) | 39.40 | |||
Forfeited (in dollars per share) | 50 | |||
Outstanding at end of period (in dollars per share) | $ 55.27 | 55.27 | ||
Vested and unissued (in dollars per share) | 50.90 | 50.90 | ||
Non-vested (in dollars per share) | $ 55.27 | $ 55.27 | ||
Other disclosures | ||||
Grant date fair value of RSU's granted | $ 6,800 | 15,000 | $ 85,000 | 50,100 |
Stock-based compensation | 12,000 | $ 4,800 | 19,700 | $ 7,100 |
Unrecognized compensation cost related to non vested | $ 98,700 | $ 98,700 | ||
Period over which unrecognized compensation cost is expected to be recognized | 2 years 3 months 18 days | |||
Minimum | RSU's | ||||
Common Stock and Stockholders' Equity | ||||
Vesting period | 1 year | |||
Maximum | RSU's | ||||
Common Stock and Stockholders' Equity | ||||
Vesting period | 4 years | |||
Employee | RSU's | ||||
Common Stock and Stockholders' Equity | ||||
Vesting period | 3 years |
Common Stock and Stockholders_8
Common Stock and Stockholders' Equity - Employee Stock Purchase Plan (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jul. 31, 2015 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Employee Stock Purchase Plan | ||||||
Stock-based compensation | $ 17,368 | $ 11,060 | $ 30,891 | $ 18,891 | ||
ESPP | ||||||
Employee Stock Purchase Plan | ||||||
Shares reserved for issuance under the plan (in shares) | 738,875 | 738,875 | ||||
Maximum offering period | 27 months | |||||
Stock purchase price as a percentage of fair value (as a percent) | 85.00% | |||||
Issuance of stock under employee stock purchase plan (in shares) | 35,716 | 85,218 | ||||
Remaining shares available for issuance under the plan (in shares) | 490,431 | 490,431 | ||||
Stock-based compensation | $ 200 | $ 300 | $ 500 | $ 300 | ||
Unrecognized compensation cost | $ 300 | $ 300 | ||||
Period over which unrecognized compensation cost is expected to be recognized | 4 months 24 days |
Common Stock and Stockholders_9
Common Stock and Stockholders' Equity - Compensation Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Compensation costs charged as an expense | ||||
Stock-based compensation | $ 17,368 | $ 11,060 | $ 30,891 | $ 18,891 |
Administrative And Marketing | ||||
Compensation costs charged as an expense | ||||
Stock-based compensation | 1,317 | 569 | 2,138 | 972 |
Sales | ||||
Compensation costs charged as an expense | ||||
Stock-based compensation | 2,528 | 2,002 | 4,658 | 3,576 |
Technology And Development | ||||
Compensation costs charged as an expense | ||||
Stock-based compensation | 2,141 | 1,664 | 4,039 | 2,878 |
General and administrative expenses | ||||
Compensation costs charged as an expense | ||||
Stock-based compensation | $ 11,382 | $ 6,825 | $ 20,056 | $ 11,465 |
Income Taxes (Details)
Income Taxes (Details) | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Income Taxes | ||
Maximum percentage of the indefinite lived net operating loss which can be netted against the deferred tax liability associated with the goodwill | 80.00% | |
Corporate tax rate (as a percent) | 21.00% |