Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Feb. 25, 2021 | Jun. 30, 2020 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2020 | ||
Entity File Number | 001-37477 | ||
Entity Registrant Name | TELADOC HEALTH, INC. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 04-3705970 | ||
Entity Address, Address Line One | 2 Manhattanville Road | ||
Entity Address, Address Line Two | Suite 203 | ||
Entity Address, City or Town | Purchase | ||
Entity Address, State or Province | NY | ||
Entity Address, Postal Zip Code | 10577 | ||
City Area Code | 203 | ||
Local Phone Number | 635-2002 | ||
Title of 12(b) Security | Common Stock, par value $0.001 per share | ||
Trading Symbol | TDOC | ||
Security Exchange Name | NYSE | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
ICFR Auditor Attestation Flag | true | ||
Entity Central Index Key | 0001477449 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Voluntary Filers | No | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Common Stock, Shares Outstanding | 152,699,999 | ||
Entity Public Float | $ 14,936,555,578 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 733,324 | $ 514,353 |
Short-term investments | 53,245 | 2,711 |
Accounts receivable, net of allowance of $6,412 and $3,787, respectively | 169,281 | 56,948 |
Inventories | 56,498 | 0 |
Prepaid expenses and other current assets | 47,259 | 13,990 |
Total current assets | 1,059,607 | 588,002 |
Property and equipment, net | 28,551 | 10,296 |
Goodwill | 14,581,255 | 746,079 |
Intangible assets, net | 2,020,864 | 225,453 |
Operating lease - right-of-use assets | 46,647 | 26,452 |
Other assets | 18,357 | 6,545 |
Total assets | 17,755,281 | 1,602,827 |
Current liabilities: | ||
Accounts payable | 46,030 | 9,075 |
Accrued expenses and other current liabilities | 83,657 | 34,440 |
Accrued compensation | 94,593 | 34,201 |
Deferred revenue-current | 52,356 | 12,465 |
Advances from financing companies | 13,453 | 0 |
Current portion of long-term debt | 42,560 | 0 |
Total current liabilities | 332,649 | 90,181 |
Other liabilities | 1,616 | 9,239 |
Operating lease liabilities, net of current portion | 43,142 | 24,994 |
Deferred revenue, net of current portion | 2,449 | 2,300 |
Advances from financing companies, net of current portion | 9,926 | 0 |
Deferred taxes | 102,103 | 21,678 |
Convertible senior notes, net | 1,379,592 | 440,410 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock, $0.001 par value; 300,000,000 shares and 150,000,000 shares authorized as of December 31, 2020 and December 31, 2019, respectively; 150,281,099 shares and 72,761,941 shares issued and outstanding as of December 31, 2020 and December 31, 2019, respectively | 150 | 73 |
Additional paid-in capital | 16,857,797 | 1,538,716 |
Accumulated deficit | (992,661) | (507,525) |
Accumulated other comprehensive loss | 18,518 | (17,239) |
Total stockholders' equity | 15,883,804 | 1,014,025 |
Total liabilities and stockholders' equity | $ 17,755,281 | $ 1,602,827 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Consolidated Balance Sheets | ||
Allowance of Accounts receivable | $ 6,412 | $ 3,787 |
Common stock par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 300,000,000 | 150,000,000 |
Common stock, shares issued | 150,281,099 | 72,761,941 |
Common stock, shares outstanding | 150,281,099 | 72,761,941 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Consolidated Statements of Operations | |||
Revenue | $ 1,093,962 | $ 553,307 | $ 417,907 |
Expenses: | |||
Cost of revenue (exclusive of depreciation and amortization, which is shown separately below) | 390,829 | 184,465 | 128,735 |
Operating expenses: | |||
Advertising and marketing | 226,146 | 109,697 | 85,109 |
Sales | 154,052 | 64,915 | 59,154 |
Technology and development | 164,941 | 64,644 | 54,373 |
Legal and regulatory | 8,876 | 6,762 | 3,981 |
Acquisition and integration related costs | 88,236 | 6,620 | 10,391 |
Gain on sale | 0 | 0 | (5,500) |
General and administrative | 497,808 | 157,694 | 116,916 |
Depreciation and amortization | 69,495 | 38,952 | 35,602 |
Total expenses | 1,600,383 | 633,749 | 488,761 |
Loss from operations | (506,421) | (80,442) | (70,854) |
Loss on extinguishment of debt | 9,077 | 0 | 0 |
Interest expense, net | 60,495 | 29,013 | 26,112 |
Net loss before taxes | (575,993) | (109,455) | (96,966) |
Income tax (benefit) expense | (90,857) | (10,591) | 118 |
Net loss | $ (485,136) | $ (98,864) | $ (97,084) |
Net loss per share, basic and diluted | $ (5.36) | $ (1.38) | $ (1.47) |
Weighted-average shares used to compute basic and diluted net loss per share | 90,509,229 | 71,844,535 | 65,844,908 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Consolidated Statements of Comprehensive Loss | |||
Net loss | $ (485,136) | $ (98,864) | $ (97,084) |
Other comprehensive income (loss), net of tax: | |||
Net change in unrealized gains on available-for-sale securities | 0 | 32 | 20 |
Cumulative translation adjustment | 35,757 | (4,201) | (17,179) |
Other comprehensive income (loss), net of tax | 35,757 | (4,169) | (17,159) |
Comprehensive loss | $ (449,379) | $ (103,033) | $ (114,243) |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock2022 Notes | Common Stock2025 Notes | Common Stock | Additional Paid-In Capital2022 Notes | Additional Paid-In Capital2025 Notes | Additional Paid-In Capital2027 Notes | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | 2022 Notes | 2025 Notes | 2027 Notes | Total |
Balance as of beginning of the period at Dec. 31, 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 | $ 2 | 31,320 | 31,322 | ||||||||||
Exercise of stock options (in shares) | 2,247,635 | ||||||||||||
Equity component of Convertible Senior Notes, net of issuance costs | 91,397 | 91,397 | |||||||||||
Follow-on Offerings | $ 5 | 330,838 | 330,843 | ||||||||||
Follow-on Offerings (in shares) | 5,000,000 | ||||||||||||
Issuance of restricted stock units (in shares) | 304,908 | ||||||||||||
Issuance of stock under employee stock purchase plan | 2,564 | 2,564 | |||||||||||
Issuance of stock under employee stock purchase plan (in shares) | 85,218 | ||||||||||||
Issuance of stock in acquisition | $ 2 | 68,562 | 68,564 | ||||||||||
Issuance of stock in acquisition (in shares) | 1,344,387 | ||||||||||||
Stock-based compensation | 43,769 | 43,769 | |||||||||||
Other comprehensive loss, net of tax | (17,159) | (17,159) | |||||||||||
Net loss | (97,084) | (97,084) | |||||||||||
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 | ||||||||||||
Stockholders' Equity (Deficit) | |||||||||||||
Exercise of stock options | $ 2 | 33,273 | 33,275 | ||||||||||
Exercise of stock options (in shares) | 1,632,130 | ||||||||||||
Issuance of restricted stock units | $ 1 | (1) | |||||||||||
Issuance of restricted stock units (in shares) | 548,910 | ||||||||||||
Issuance of stock under employee stock purchase plan | 3,380 | 3,380 | |||||||||||
Issuance of stock under employee stock purchase plan (in shares) | 64,497 | ||||||||||||
Issuance of common stock for Notes | 8 | 8 | |||||||||||
Issuance of common stock for Notes (in shares) | 155 | ||||||||||||
Stock-based compensation | 67,276 | 67,276 | |||||||||||
Other comprehensive loss, net of tax | (4,169) | (4,169) | |||||||||||
Net loss | (98,864) | (98,864) | |||||||||||
Balance as of end of the period at Dec. 31, 2019 | $ 73 | 1,538,716 | (507,525) | (17,239) | 1,014,025 | ||||||||
Balance as of end of the period (in shares) at Dec. 31, 2019 | 72,761,941 | ||||||||||||
Stockholders' Equity (Deficit) | |||||||||||||
Exercise of stock options | $ 6 | 54,308 | 54,314 | ||||||||||
Exercise of stock options (in shares) | 6,104,721 | ||||||||||||
Issuance of common stock upon vesting of restricted stock units | $ 2 | (23,707) | (23,705) | ||||||||||
Issuance of common stock upon vesting of restricted stock units (in shares) | 2,150,523 | ||||||||||||
Equity component of Convertible Senior Notes, net of issuance costs | $ 285,601 | $ 285,601 | |||||||||||
Issuance of stock under employee stock purchase plan | 4,722 | 4,722 | |||||||||||
Issuance of stock under employee stock purchase plan (in shares) | 49,781 | ||||||||||||
Issuance of stock in acquisition | $ 65 | 13,884,856 | 13,884,921 | ||||||||||
Issuance of stock in acquisition (in shares) | 65,060,135 | ||||||||||||
Sale of capped call related to the Livongo Notes | 91,659 | 91,659 | |||||||||||
Livongo Notes guaranteed by the Company | 555,448 | 555,448 | |||||||||||
Issuance of common stock for Notes | $ 4 | $ 694,127 | $ 40,741 | $ 694,131 | $ 40,741 | ||||||||
Issuance of common stock for Notes (in shares) | 3,951,781 | 202,217 | |||||||||||
Equity portion of extinguishment of Notes | $ (715,263) | $ (31,615) | $ (715,263) | $ (31,615) | |||||||||
Stock-based compensation | 478,204 | 478,204 | |||||||||||
Other comprehensive loss, net of tax | 35,757 | 35,757 | |||||||||||
Net loss | (485,136) | (485,136) | |||||||||||
Balance as of end of the period at Dec. 31, 2020 | $ 150 | $ 16,857,797 | $ (992,661) | $ 18,518 | $ 15,883,804 | ||||||||
Balance as of end of the period (in shares) at Dec. 31, 2020 | 150,281,099 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Cash flows (used in) provided by operating activities: | |||
Net loss | $ (485,136) | $ (98,864) | $ (97,084) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | |||
Depreciation and amortization | 69,495 | 38,952 | 35,602 |
Depreciation of rental equipment | 1,697 | 0 | 0 |
Amortization of right-of-use assets | 6,895 | 6,000 | 0 |
Allowance for doubtful accounts | 5,284 | 2,665 | 2,243 |
Stock-based compensation | 475,531 | 66,702 | 43,769 |
Deferred income taxes | (90,158) | (10,868) | (2,247) |
Accretion of interest | 45,296 | 25,438 | 19,487 |
Loss on extinguishment of debt | 9,077 | 0 | 0 |
Change in fair value of contingent consideration | (1,009) | 1,248 | 0 |
Gain on sale | 0 | 0 | (5,500) |
Changes in operating assets and liabilities: | |||
Accounts receivable | (21,091) | (15,884) | (10,931) |
Prepaid expenses and other current assets | (12,565) | (2,685) | (2,612) |
Inventory | (24,732) | 0 | 0 |
Other assets | (8,135) | (105) | (414) |
Accounts payable | (87,995) | 905 | (391) |
Accrued expenses and other current liabilities | 20,125 | 10,026 | 454 |
Accrued compensation | 34,819 | 4,546 | 8,480 |
Deferred revenue | 17,751 | 4,815 | 3,539 |
Operating lease liabilities | (6,300) | (2,417) | 0 |
Other liabilities | (2,360) | (605) | 745 |
Net cash (used in) provided by operating activities | (53,511) | 29,869 | (4,860) |
Cash flows (used in) provided by investing activities: | |||
Capital expenditures | (4,024) | (3,510) | (4,011) |
Capitalized software development costs | (22,018) | (7,390) | (4,396) |
Purchase of marketable securities | 0 | 0 | (56,347) |
Proceeds from marketable securities | 2,496 | 52,100 | 84,170 |
Sale of assets | 0 | 0 | 5,530 |
Investment in securities | 0 | (5,000) | 0 |
Acquisitions of business, net of cash acquired | (567,429) | (11,187) | (282,442) |
Net cash (used in) provided by investing activities | (590,975) | 25,013 | (257,496) |
Cash flows provided by financing activities: | |||
Net proceeds from the exercise of stock options | 54,314 | 33,283 | 31,322 |
Proceeds from the sale of capped call related to the Livongo Notes | 91,659 | 0 | 0 |
Proceeds from advances from financing companies | 6,002 | 0 | 0 |
Payment from customers against advances from financing companies | (8,635) | 0 | 0 |
Payment of assumed indebtedness | (10,000) | 0 | 0 |
Proceeds from borrowing under bank and other debt | 0 | 0 | 10 |
Proceeds from issuance of common stock | 0 | 0 | 330,843 |
Proceeds from employee stock purchase plan | 4,722 | 3,380 | 2,564 |
Cash (paid) received for withholding taxes on stock-based compensation, net | (26,703) | (1,569) | 1,721 |
Net cash provided by financing activities | 859,136 | 35,094 | 645,612 |
Net increase in cash and cash equivalents | 214,650 | 89,976 | 383,256 |
Foreign exchange difference | 4,321 | 388 | (2,084) |
Cash and cash equivalents at beginning of the period | 514,353 | 423,989 | 42,817 |
Cash and cash equivalents at end of the period | 733,324 | 514,353 | 423,989 |
Income taxes paid | 1,324 | 1,310 | 441 |
Interest paid | 14,890 | 12,224 | 10,303 |
2025 Notes | |||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | |||
Loss on extinguishment of debt | 1,300 | ||
Cash flows provided by financing activities: | |||
Proceeds from issuance of Notes | 0 | 0 | 279,152 |
2027 Notes | |||
Cash flows provided by financing activities: | |||
Proceeds from issuance of Notes | 1,000,000 | 0 | 0 |
Payment of issuance costs of Notes | (24,070) | 0 | 0 |
2022 Notes | |||
Cash flows provided by financing activities: | |||
Repurchase of Notes | $ (228,153) | $ 0 | $ 0 |
Organization and Description of
Organization and Description of Business | 12 Months Ended |
Dec. 31, 2020 | |
Organization and Description of Business | |
Organization and Description of Business | TELADOC HEALTH, INC. Notes to Audited Consolidated Financial Statements 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 October 30, 2020, the Company completed the merger with Livongo Health, Inc. (“Livongo”), a transformational opportunity to improve the delivery, access and experience of healthcare for consumers around the world. Livongo is pioneering a new category in healthcare, called Applied Health Signals, which is transforming the management of chronic conditions. On July 1, 2020, the Company completed the acquisition of InTouch Technologies, Inc. (“InTouch”), the leading provider of enterprise telehealth solutions for hospitals and health systems. On April 30, 2019, the Company completed the acquisition of MedecinDirect, a Paris-based telemedicine provider. On May 31, 2018, the Company completed the acquisition of Advance Medical-Health Care Management Services, S.A. (“Advance Medical”), a leading virtual healthcare provider outside the United States. On July 14, 2017, the Company completed the acquisition of Best Doctors Holdings, Inc. (“Best Doctors”), an expert medical consultation company focused on improving health outcomes for the most complex, critical and costly medical issues. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2020 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation These consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The consolidated financial statements include the results of Teladoc Health, three professional associations, twelve professional corporations and a service corporation (collectively, the “Association”). Teladoc Health Medical Group, P.A., formerly 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 Health Medical Group, P.A. Each professional corporation is established pursuant to the requirements of its respective domestic jurisdiction governing the corporate practice of medicine. The Company holds a variable interest in the Association which contracts with physicians and other health professionals in order to provide services to Teladoc Health. The Association is considered a variable interest entity (“VIE”) since it does not have sufficient equity to finance its activities without additional subordinated financial support. An enterprise having a controlling financial interest in a VIE, must consolidate the VIE if it has both power and benefits—that is, it has (1) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance (power) and (2) the obligation to absorb losses of the VIE that potentially could be significant to the VIE or the right to receive benefits from the VIE that potentially could be significant to the VIE (benefits). The Company has the power and rights to control all activities of the Association and funds and absorbs all losses of the VIE and appropriately consolidates the Association. Total revenue and net income (loss) for the VIE were $199.3 million and $0.6 million, $83.6 million and $(3.2) million and $58.1 million and $(2.5) million for the years ended December 31, 2020, 2019 and 2018, respectively. The VIE’s total assets, all of which were current were $28.7 million and $13.6 million at December 31, 2020 and 2019, respectively. Total liabilities, all of which were current for the VIE were $65.8 million and $51.3 million at December 31, 2020 and 2019, respectively. The VIE’s total stockholders’ deficit was $37.1 million and $37.7 million at December 31, 2020 and 2019, respectively. All intercompany transactions and balances have been eliminated. Business Combinations The Company accounts for its business combinations using the acquisition method of accounting. The purchase price is attributed to the fair value of the assets acquired and liabilities assumed. Transaction costs directly attributable to the acquisition are expensed as incurred. Identifiable assets and liabilities acquired or assumed are measured separately at their fair values as of the acquisition date. The excess of the purchase price of acquisition over the fair value of the identifiable net assets of the acquiree is recorded as goodwill. The results of businesses acquired in a business combination are included in the Company’s consolidated financial statements from the date of acquisition. When the Company issues stock-based or cash awards to an acquired company’s shareholders, the Company evaluates whether the awards are consideration or compensation for post-acquisition services. The evaluation includes, among other things, whether the vesting of the awards is contingent on the continued employment of the acquired company’s stockholders beyond the acquisition date. If continued employment is required for vesting, the awards are treated as compensation for post-acquisition services and recognized as expense over the requisite service period. Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates, including the selection of valuation methodologies, estimates of future revenue and cash flows, discount rates and selection of comparable companies. The estimates and assumptions used to determine the fair values and useful lives of identified intangible assets could change due to numerous factors, including market conditions, technological developments, economic conditions and competition. In connection with determination of fair values, the Company may engage a third-party valuation specialist to assist with the valuation of intangible and certain tangible assets acquired and certain assumed obligations. Acquisition-related transaction costs incurred by the Company are not included as a component of consideration transferred but are accounted for as an operating expense in the period in which the costs are incurred. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company bases its estimates on historical experience, current business factors, and various other assumptions that the Company believes are necessary to form a basis for making judgments about the carrying values of assets and liabilities, the recorded amounts of revenue and expenses, and the disclosure of contingent assets and liabilities. The Company is subject to uncertainties such as the impact of future events, economic and political factors, and changes in the Company’s business environment; therefore, actual results could differ from these estimates. Accordingly, the accounting estimates used in the preparation of the Company’s consolidated financial statements will change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment evolves. The Company believes that estimates used in the preparation of these consolidated financial statements are reasonable; however, actual results could differ materially from these estimates. Changes in estimates are made when circumstances warrant. Such changes in estimates and refinements in estimation methodologies are reflected in reported results of operations; if material, the effects of changes in estimates are disclosed in the notes to the consolidated financial statements. Significant estimates and assumptions by management affect the allowance for doubtful accounts, the carrying value of long-lived assets (including goodwill and intangible assets), capitalization and amortization of software development costs, the finalization of purchase accounting adjustments, Client performance guarantees, the calculation of a contingent liability in connection with an acquisition earn-out, the provision for income taxes and related deferred tax accounts, certain accrued liabilities, revenue recognition, contingencies, litigation and related legal accruals and the value attributed to employee stock options and other stock-based awards and the periods of benefit for deferred costs. Segment Information The Company operates an integrated virtual care system for delivering, enabling, and empowering whole-person health. As a result, the Company’s chief operating decision maker, its Chief Executive Officer (“CEO”), reviews the financial information presented on a consolidated basis, reflecting this integration, for purposes of allocating resources and evaluating its financial performance. Accordingly, the Company has determined that it operates as a single reportable segment—health services. Fair Value Measurements The carrying value of our financial instruments, including cash equivalents, short-term investments, accounts receivable, accounts payable, and accrued liabilities approximates fair value due to their short-term nature. The Company measures its financial assets and liabilities at fair value at each reporting period using a fair value hierarchy that requires it to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Revenue Recognition The Company follows the revenue accounting requirements of Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASC 606”). ASC 606 establishes a principle for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. The core principle of ASC 606 is to recognize revenue to depict the transfer of promised goods or services to Clients in an amount that reflects the consideration the entity expects to be entitled in exchange for those goods or services. This principle is achieved through applying the following five-step approach: • • • • • The Company primarily generates virtual healthcare service revenue from contracts with Clients who purchase access to the Company’s professional provider network or medical experts for their employees, dependents and other beneficiaries. The Company’s Client contracts include a per-Member-per-month access fee as well as certain contracts that generate additional revenue on a per-virtual healthcare visit basis for general medical, other specialty visits and expert medical service on a per case basis. The Company also has certain contracts that generate revenue based solely on a per healthcare visit basis for general medical and other specialty visits. For the Company’s direct-to-consumer behavioral health product, Members purchase access to the Company’s professional provider network for an access fee. Revenues are also generated from contracts with Clients for the Company’s chronic care management solutions. Substantially all of this revenue is derived from monthly subscription fees that are recognized as services are rendered and earned under the subscription agreements with Clients that are based on a per participant per month model, from the number of active enrolled Members each month for the minimum enrollment period. These solutions integrate devices, supplies, access to the Company’s web-based platform, and clinical and data services to provide an overall health management solution. The promises to transfer these goods and services are not separately identifiable and is considered a single continuous service comprised of a series of distinct services that are substantially the same and have the same pattern of transfer (i.e., distinct days of service). These services are consumed as they are received, and the Company recognizes revenue each month using the variable consideration allocation exception since the nature of the obligations and the variability of the payment being based on the number of active Members are aligned . Revenue is also generated from contracts with Clients for the sale and rental of access to the Company’s hosted virtual healthcare platform. These contracts include equipment consisting of virtual health devices which allow physicians access to the platform. These contracts also include multiple performance obligations, and the Company determines the standalone selling prices based on overall pricing objectives. In some arrangements, the Company’s hosted virtual health platform are rented to certain qualified Clients that qualify as either sales-type lease or operating lease arrangements and are subject to lease accounting guidance. The Company generates access fees from Clients accessing its professional provider network or hosted virtual healthcare platform or chronic care management platforms, visit fee revenue for general medical, expert medical service and other specialty visits as well as other revenue primarily associated with virtual healthcare device equipment included with its hosted virtual healthcare platform. The Company’s agreements have a term of one The Company generally bills for the virtual healthcare services on a monthly basis with payment terms generally being 30 days . There are not significant differences between the timing of revenue recognition and billing. Consequently, the Company has determined that Client contracts do not include a financing component. Revenue is recognized in an amount that reflects the consideration that is expected in exchange for the service and for certain contracts includes a variable transaction price as the number of Members may vary from period to period. Based on historical experience, the Company estimates this amount. 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 $11.2 million, $3.6 million and $3.0 million for the year ended December 31, 2020, 2019 and 2018, respectively. Additionally, certain of the Company’s contracts include Client performance guarantees and pricing adjustments that are based upon minimum Member utilization and guarantees by the Company for specific service level performance, Member satisfaction scores, cost savings guarantees, and health outcome guarantees. If Client performance guarantees are not met, 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 years ended December 31, 2020, 2019 and 2018, revenue recognized from performance obligations related to prior periods for the changes in transaction price or Client performance guarantees was $1.9 million, $0.8 million, and $0.8 million, respectively. 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. For additional revenue, deferred revenue, deferred costs and disclosures, refer to Note 3 Revenue, Deferred Revenue, Deferred Costs and Other Deferred Revenue Deferred revenue represents billed, but unrecognized revenue, and is comprised of fees received in advance of the delivery or completion of the services and amounts received in instances when revenue recognition criteria have not been met. Deferred revenue associated with upfront payments for a device is amortized ratably over the expected Member enrollment period. Deferred revenue that will be recognized during the succeeding twelve-month period is recorded as current deferred revenue and the remaining portion is recorded as noncurrent deferred revenue. Deferred Costs and Other Deferred costs and other consist of deferred device costs and deferred contract costs. Deferred device costs consist of cost of inventory incurred in connection with delivery of services that are deferred and amortized over the shorter of the expected Member enrollment period or the expected device life and recorded as cost of revenue. Deferred contract costs represent the incremental costs of obtaining a contract with a Client if we expect to recover such costs. The primary example of our costs to obtain a contract include incremental sales commissions to obtain contracts paid to our sales organization. These incremental costs to obtain Client contracts are deferred and then amortized on a straight-line basis over the period of benefit which has been determined to be four years. Amortization expense is included in sales and marketing expenses in the consolidated statement of operations. Deferred costs and other that are to be amortized within twelve months are recorded to deferred costs and other, current and the remainder is recorded to deferred costs and other, noncurrent on our consolidated balance sheets. Cost of Revenue (exclusive of depreciation and amortization, which is shown separately) Cost of revenue (exclusive of depreciation and amortization shown separately) primarily consists of fees paid to the physicians and other health professionals; product costs; costs incurred in connection with the Company’s provider network operations and data center activities, which include employee-related expenses (including salaries and benefits) costs related to Client support; provider network operations center activities; medical records; magnetic resonance imaging; medical lab tests; translation; postage and medical malpractice insurance, and deferred device costs. Cash and Cash Equivalents Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less from the date of purchase and restricted cash of $62.6 million at December 31, 2020. The Company’s cash and cash equivalents generally consist of investments in money market funds. Cash and cash equivalents are stated at fair value. Short-Term Investments The Company holds short-term investments primarily consisting of corporate bonds, commercial paper, U.S. treasuries and asset backed securities with maturities of less than one year. These short-term investments are classified as available-for-sale and are carried at fair value with unrealized gains or losses recorded as a separate component of stockholders’ equity in accumulated other comprehensive income (loss). Realized gains or losses are recognized in the consolidated statements of operations upon disposition of the securities. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Realized gains and losses for the years ended December 31, 2020, 2019 and 2018 were less than $0.1 million in each year and were recognized in the Company’s consolidated statements of operations. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are recorded at the invoiced amount, net of allowances for doubtful accounts. The allowance for doubtful accounts reflects the Company’s best estimate of expected losses inherent in the accounts receivable balance. The Company determines the allowance based on historical experience, specific account information and other currently available evidence. Accounts receivable deemed uncollectable are charged against the allowance for doubtful accounts when identified. Inventories Inventories consist of purchased components for assembling welcome kits, refill kits, and replacement components for the Company’s chronic care management solutions, and virtual health devices manufactured for sale or lease as part of the Company’s hosted virtual healthcare platform solution. Inventories are stated at the lower of cost and net realizable value. The cost of inventories is determined on a first-in, first out (FIFO) basis or on a weighted average cost basis which approximates the FIFO basis. Inventory costs include direct materials, direct labor and contracting costs, certain indirect labor and manufacturing overhead and inbound shipping charges. Inventories are assessed on a periodic basis for potential obsolete and slow-moving inventory with write-downs being recorded when identified. Write-downs are measured as the difference between cost of the inventory and net realizable value based upon assumptions about future demand and charged to cost of revenue (exclusive of depreciation and amortization shown separately) in the accompanying consolidated statement of operations. At the point of the loss recognition, a new lower cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation is recorded using the straight-line method over the estimated useful lives of the respective asset as follows: Computer equipment 3 years Furniture and equipment 5 years Leasehold improvements Shorter of the lease term or the estimated useful lives of the improvements Product tooling 2 years Rental equipment 4.3 Operating Leases The Company adopted the new leases standard set forth under Accounting Standards Codification Topic 842, “Leases,” or ASC Topic 842, as of January 1, 2019 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 Leases of Hosted Virtual Health Platform The Company rents its hosted virtual health platform for certain Clients under arrangements that qualify as either sales-type leases or operating lease arrangements. The contracts include equipment consisting of virtual health devices which allow physicians access to the platform and there are multiple performance obligations where the Company determines the standalone selling prices based on overall selling prices and pricing objectives. In determining whether a transaction should be classified as a sales-type or operating lease, the Company considers the following terms: (1) ownership of the virtual health device transfers to the lessee by the end of the term of the lease, (2) the lease grants the lessee an option to purchase the virtual health device that the lessee is reasonably certain to exercise, (3) the lease term is for the major part of the remaining useful life of the virtual health device, (4) the present value of the sum of the lease payments equals or exceeds substantially all of the fair value of the virtual health device, and (5) it is expected that there will be no alternative use for the virtual health device at the end of the lease term. The Company generally recognizes revenue for virtual health devices in sales-type leases at the time of acceptance by the Client provided all other revenue recognition criteria have been met and these leases are not material. For operating lease arrangements, revenue for the virtual health device is recognized over the lease term and generally on a straight-line basis. For both sales-type and operating lease arrangement, revenue associated with virtual health platform access is recognized over the lease term on a straight-line basis. Rental Equipment Equipment is assigned to the rental pool upon the execution of a sales leasing arrangement. Rental equipment assets are generally stated at cost, less accumulated depreciation and reflected in property and equipment, net. Depreciation of rental equipment is provided on a straight-line basis, over the estimated useful lives of the respective assets, which is generally 4.3 Maintenance and repairs are charged to expense as incurred while improvements are capitalized. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in the consolidated statement of operations in the period realized. Capitalized Software Development Costs Capitalized software development costs are included in intangible assets and are amortized on a straight-line basis over 3 to 5 years. For the Company’s development costs related to its software development tools that enable its Members and providers to interact, the Company capitalizes costs incurred during the application development stage. Costs related to minor upgrades, minor enhancements and maintenance activities are expensed as incurred. Goodwill and Intangible Assets Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired in a business combination. Goodwill is not amortized but is tested for impairment annually on October 1 or more frequently if events or changes in circumstances indicate that the asset may be impaired. The Company operates as one reporting unit and the fair value of the reporting unit is estimated using quoted market prices in active markets of the Company’s stock. An impairment charge is recognized for the excess of the carrying value of goodwill over its implied fair value. The Company’s annual goodwill impairment test resulted in no impairment charges in any of the periods presented in the consolidated financial statements. Other intangible assets include Client relationships, non-compete agreements, acquired technology, patents, trademarks resulting from business acquisitions, and capitalized software development costs. The Company amortizes such definite-lived intangible assets over their estimated useful lives. The Company reviews the useful lives on a quarterly basis to determine if the period of economic benefit has changed. Client relationships are amortized over a period of 2 1.5 3 5 3 Definite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. If the carrying value of an intangible asset exceeds its fair value, an impairment charge would be recognized in an amount equal to the amount by which the carrying value of the intangible asset exceeds its fair value. There were no events or changes in circumstances that would indicate that the carrying value of the definite-lived intangible assets may not be recoverable during the years ended December 31, 2020, 2019 or 2018. Investments in Equity Securities Investments in equity securities, other than those of our consolidated subsidiaries, are accounted for at fair value or under the measurement alternative of the Financial Accounting Standards Board's ("FASB") ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, following its adoption on January 1, 2018, with any changes to fair value recognized within other income (expense), net each reporting period. Under the measurement alternative, equity investments without readily determinable fair values are carried at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar securities of the same issuer; value is generally determined based on a market approach as of the transaction date. The Company reviews its investments in equity securities without readily determinable fair values for impairment each reporting period when there are qualitative factors or events that indicate possible impairment. If our assessment indicates that the fair value of the investment is below its carrying value, the Company will write down the investment to its fair value and record the corresponding charge within other income (expense), net. Convertible Senior Notes Convertible Senior Notes (the Notes) are accounted for in accordance with FASB ASC Subtopic 470-20, Debt with Conversion and Other Options. Pursuant to ASC Subtopic 470-20, issuers of certain convertible debt instruments, such as the Notes, that have a net settlement feature and may be settled wholly or partially in cash upon conversion are required to separately account for the liability (debt) and equity (conversion option) components of the instrument. The carrying amount of the liability component of the instrument is computed by estimating the fair value of a similar liability without the conversion option using an income-based approach. For the income-based approach, the Company uses a convertible bond lattice model that includes assumptions such as volatility and the risk-free rate. The amount of the equity component is then calculated by deducting the fair value of the liability component from the principal amount of the Notes or the fair value of the total Livongo Notes assumed on consummation of the merger, as applicable. The difference between the principal amount and the liability component represents a debt discount that is amortized to interest expense over the contractual term of the Notes and the Livongo Notes using an effective interest rate method. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. In accounting for the issuance costs related to the Notes, the allocation of issuance costs, if applicable, incurred between the liability and equity components were based on their relative values. Stock-Based Compensation Stock-based compensation for stock options and restricted stock units granted is measured based on the grant-date fair value of the awards and recognized on a straight-line basis over the period during which the employee is required to perform services in exchange for the award (generally the vesting period of the award). The Company estimates the fair value of employee stock options using the Black-Scholes option-pricing model, except as noted. Stock-based compensation for performance stock units (PSU) granted is measured based on the grant- date fair value of the awards and recognized on an accelerated tranche by tranche basis over the period during which the employee is required to perform services in exchange for the award (generally the vesting period of the award). The ultimate number of PSUs that are issued to an employee is the result of the actual performance of the Company at the end of the performance period compared to the performance targets and can range from 50% to 225% of the initial grant. For stock-based compensation assumed in the Livongo merger, the Monte Carlo valuation model was the most suitable for valuation of options for the replaced and replacement awards from the merger. The Company’s Employee Stock Purchase Plan (“ESPP”) permits eligible employees to purchase common stock at a discount through payroll deductions during defined offering periods. Under the ESPP, the Company may specify offerings with durations of not more than 27 months and may specify shorter purchase periods within each offering. Each offering will have one or more purchase dates on which shares of its common stock will be purchased for employees participating in the offering. An offering may be terminated under certain circumstances. The price at which the stock is purchased is equal to the lower of 85% of the fair market value of the common stock at the beginning of an offering period or on the date of purchase. Foreign Currency The functional currency for each of our 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) . For the year ended December 31, 2020, 2019 and 2018, realized foreign exchange (loss) gain of $(0.6) million, $0.2 million and $(0.1) million, respectively, that was recognized in the Company’s consolidated statement of operations in interest expense, net. Advances from Financing Companies The Company utilizes a third-party financing company to provide certain Clients with a rental option. Under these arrangements, the Company receives payment up front from the financing companies and the financing companies collect the Client rental payments over the life of the rental agreement on a nonrecourse basis. The principal portion of these up-front payments are reported as advances from financing companies in the accompanying consolidated balance sheet. The Company indemnifies the financing companies for any loss or expenses resulting from its failure to provide the ongoing necessary system services and support to the Client. Income Taxes The Company accounts for income taxes using the liability method, under which deferred tax assets and liabilities are determined based on the future tax consequences attributable to differences |
Revenue, Deferred Revenue, Defe
Revenue, Deferred Revenue, Deferred Costs and Other | 12 Months Ended |
Dec. 31, 2020 | |
Revenue, Deferred Revenue, Deferred Costs and Other | |
Revenue, Deferred Revenue, Deferred Costs and Other | Note 3. Revenue, Deferred Revenue, Deferred Costs and Other The Company generates access fees from Clients accessing its professional provider network or hosted virtual healthcare platform or chronic care management platforms, visit fee revenue for general medical, expert medical service and other specialty visits as well as other revenue primarily associated with virtual healthcare device equipment included with its hosted virtual healthcare platform. Access revenue accounted for approximately 79% of our total revenue for the year ended December 31, 2020, and 84% of our total revenue for both of the years ended December 31, 2019 and 2018. The following table presents the Company’s revenues disaggregated by revenue source (in thousands): Year Ended December 31, 2020 2019 2018 Access Fees Revenue U.S. $ 737,408 $ 356,656 $ 277,091 International 124,392 106,640 73,693 Total 861,800 463,296 350,784 Visit Fee Revenue U.S. 206,093 88,669 65,582 International 818 1,342 1,541 Total 206,911 90,011 67,123 Other U.S. 23,888 0 0 International 1,363 0 0 Total 25,251 0 0 Total Revenues $ 1,093,962 $ 553,307 $ 417,907 Deferred Revenue For certain services, payment is required for future months before the service is delivered to the Member. The Company records deferred revenue when cash payments are received in advance of the Company’s performance obligation to provide services. The net increase of $40 million and $7.1 million in the deferred revenue balance for the year ended December 31, 2020 and 2019, respectively, is primarily driven by the recent acquisition of InTouch and Livongo in 2020 as well as the direct-to-consumer behavioral health product and cash payments received or due in advance of satisfying the Company’s performance obligations, offset by revenue recognized that were included in the deferred revenue balance at the beginning of the period. For the year ended December 31, 2020, $21.7 million of the increase to deferred revenue relates to amount assumed from business combinations, see Note 5, Business Acquisitions We expect to recognize $52.4 million and $2.0 million of revenue in 2021 and 2022 , respectively, related to future performance obligations that are unsatisfied or partially unsatisfied as of December 31, 2020. Deferred Costs and Other Deferred costs and other as of December 31, 2020 consist of the following (in thousands): Year Ended December 31, 2020 Deferred device cost, current $ 3,384 Deferred device cost, noncurrent 2,179 Total Deferred cost and other $ 5,563 Deferred costs and other activity are as follows (in thousands): Year Ended December 31, 2020 Deferred Device Beginning balance as of January 1, 2020 $ 0 Additions 6,007 Cost of revenue recognized (444) Ending balance as of December 31, 2020 $ 5,563 |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2020 | |
Fair Value Measurements | |
Fair Value Measurements | Note 4. Fair Value Measurements 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 measures its contingent consideration at fair value on a recurring basis and classifies such as Level 3. The Company estimates the fair value of contingent consideration as the present value of the expected contingent payments, determined using the weighted probability of the possible payments. The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis using the above input categories (in thousands): December 31, 2020 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 733,324 $ 0 $ 0 $ 733,324 Short-term investments $ 0 $ 53,245 $ 0 $ 53,245 Contingent liability $ 0 $ 0 $ 4,514 $ 4,514 December 31, 2019 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 514,353 $ 0 $ 0 $ 514,353 Short-term investments $ 0 $ 2,711 $ 0 $ 2,711 Contingent liability $ 0 $ 0 $ 4,769 $ 4,769 There were no transfers between fair value measurement levels during the years ended December 31, 2020 and 2019. The change in fair value of the Company’s contingent liability is recorded in acquisition and integration related costs in the consolidated statements of operations. The contingent liability is based on future revenue and profitability expectations. The following table reconciles the beginning and ending balance of the Company’s Level 3 contingent liability (in thousands): Fair value at December 31, 2019 $ 4,769 Assumed from business combinations 357 Payments 0 Change in fair value (1,058) Currency translation adjustment 446 Fair value at December 31, 2020 $ 4,514 |
Business Acquisitions
Business Acquisitions | 12 Months Ended |
Dec. 31, 2020 | |
Business Acquisitions | |
Business Acquisitions | Note 5. Business Acquisitions On October 30, 2020, the Company completed the acquisition of Livongo through a merger in which Livongo became a wholly-owned subsidiary of the Company. Upon completion of the merger, each share of Livongo’s common stock converted into the right to receive 0.5920 shares of Teladoc Health’s common stock and $4.24 in cash, without interest. In addition, in connection with the closing of the merger, Livongo paid a special cash dividend equal to $7.09 per share of Livongo’s common stock to shareholders of Livongo as of a record date of October 29, 2020. The total consideration was $13,938.0 million consisting of $401.0 million of net cash, $555.4 million related to the conversion feature of the Livongo Notes guaranteed by the Company and 60.4 million shares of Teladoc Health’s common stock valued at approximately $12,981.6 million on October 30, 2020. The acquisition was considered a stock acquisition for tax purposes and accordingly, the goodwill resulting from this acquisition is not tax deductible. The total acquisition related costs were $59.0 million and included transaction costs for investment bankers, other professional fees and income taxes for accelerated grants and were recognized in the Company’s consolidated statement of operations in acquisition and integration related costs. On July 1, 2020, the Company completed the acquisition of InTouch through a merger in which InTouch became a wholly-owned subsidiary of the Company. The preliminary aggregate merger consideration paid was $1,069.8 million, which was comprised of 4.6 million shares of Teladoc Health’s common stock valued at $903.3 million on July 1, 2020, and $166.5 million of net cash. InTouch is a leading provider of enterprise telehealth solutions for hospitals and health systems. The acquisition was considered a stock acquisition for tax purposes and accordingly, the goodwill resulting from this acquisition is not tax deductible. The total acquisition related costs were $21.4 million and included transaction costs for investment bankers and other professional fees. On April 30, 2019, the Company completed the acquisition of the Paris-based telemedicine provider MedecinDirect in which MedecinDirect became a wholly-owned subsidiary of the Company. The aggregate merger consideration paid was $11.2 million with additional potential earnout consideration. The acquisition was considered a stock acquisition for tax purposes and accordingly, the goodwill resulting from the acquisition is not tax deductible. 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 was a leading global provider 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 acquisitions described above were accounted for using the acquisition method of accounting, which requires, among other things, the assets acquired and the liabilities assumed be recognized at their fair values as of the acquisition date. The results of the acquisitions were integrated within the Company’s existing business on the respective aforementioned acquisition dates. The following table summarizes the preliminary fair value estimates of the assets acquired and liabilities assumed for the Livongo and InTouch acquisitions at acquisition date. The Company, with the assistance of a third-party valuation expert, estimated the preliminary fair value of the acquired tangible and intangible assets with significant estimates such as revenue projections. The allocation of the consideration transferred to the assets acquired and the liabilities assumed is preliminary. This can be revised as a result of additional information obtained due to the finalization of the valuation inputs and assumptions as well as completing the assessment of the tax attributes of the business combination. Additional adjustments that could have a material impact on the Company’s results of operations and financial position may be recorded within the measurement period, which will not exceed one year from the acquisition date. Identifiable assets acquired and liabilities assumed (in thousands): Livongo InTouch Purchase price, net of cash acquired $ 13,938,039 $ 1,069,759 Less: Accounts receivable 80,084 16,986 Short term investment 52,500 0 Inventory 24,299 8,492 Property and equipment, net 8,952 11,366 Right of use assets 15,056 4,965 Other assets 17,337 2,541 Client relationships 1,050,000 164,580 Technology 300,000 29,190 Trademarks 250,000 32,630 Advances from financing companies 0 (26,012) Accounts payable (119,302) (5,589) Deferred revenue (997) (20,729) Convertible notes (453,417) 0 Deferred taxes (139,516) (30,102) Lease liabilities (18,834) (5,495) Other liabilities (40,343) (13,042) Goodwill $ 12,912,220 $ 899,978 The amount allocated to goodwill reflects the benefits Teladoc Health expects to realize from the growth of the respective acquisitions’ operations, cost savings, and various synergies. The Company’s pro forma revenue and net loss for the years ended December 31, 2020 and 2019 below have been prepared as if Livongo and InTouch had been purchased on January 1, 2019. The Company made some pro-forma adjustments related to deferred revenue, deferred costs, amortization of intangible assets, interest expense, stock-based compensation, acquisition costs and transaction expenses. Unaudited Pro Forma Year Ended December 31, (in thousands) 2020 2019 Revenue $ 1,445,766 $ 798,384 Net loss $ (396,791) $ (787,185) The unaudited pro forma financial information above is not necessarily indicative of what the Company’s consolidated results actually would have been if the acquisitions had been completed at the beginning of the respective periods. In addition, the unaudited pro forma information above does not attempt to project the Company’s future results. The Company recorded approximately $128.3 million of revenue, net of deferred revenue acquisition related fair value adjustments and $(409.9) million of net loss in total from Livongo and InTouch for the year ended December 31, 2020. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2020 | |
Inventories | |
Inventories | Note 6. Inventories Inventories consisted of the following as of December 31, 2020: As of December 31, 2020 Raw materials and purchased parts $ 19,591 Work in process 1,431 Finished goods 35,476 Total inventories $ 56,498 |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2020 | |
Property and Equipment, Net | |
Property and Equipment, Net | Note 7. Property and Equipment, Net Property and equipment, net, consist of the following (in thousands): As of December 31, 2020 2019 Computer equipment $ 22,129 $ 15,219 Furniture and equipment 6,486 3,458 Leasehold improvement 12,831 7,022 Rental Equipment 8,413 0 Construction in progress 657 359 Total 50,516 26,058 Accumulated depreciation (21,965) (15,762) Property and equipment, net $ 28,551 $ 10,296 Depreciation expense for the years ended December 31, 2020, 2019 and 2018 was $4.8 million, $3.4 million, and $4.1 million, respectively. |
Intangible Assets, Net
Intangible Assets, Net | 12 Months Ended |
Dec. 31, 2020 | |
Intangible Assets, Net | |
Intangible Assets, Net | Note 8. Intangible Assets, Net Intangible assets consist of the following (in thousands): Weighted Average Useful Accumulated Net Carrying Remaining Life Gross Value Amortization Value Useful Life December 31, 2020 Client relationships 2 to 20 years $ 1,460,648 $ (100,844) $ 1,359,804 15.4 Non-compete agreements 1.5 to 5 years 5,097 (4,872) 225 0.4 Trademarks 3 to 15 years 326,786 (15,576) 311,210 10.5 Patents 3 years 200 (200) 0 0 Capitalized software development costs 3 52,518 (24,771) 27,747 2.8 Technology 5 338,150 (16,272) 321,878 6.6 Intangible assets, net $ 2,183,399 $ (162,535) $ 2,020,864 9.2 December 31, 2019 Client relationships 2 $ 237,182 $ (60,647) $ 176,535 13.1 Non-compete agreements 1.5 4,958 (4,260) 698 1.4 Trademarks 3 42,606 (7,143) 35,463 12.9 Patents 3 years 200 (200) 0 0 Capitalized software development costs 3 28,890 (16,415) 12,475 2.3 Technology 5 5,960 (5,678) 282 0.5 Intangible assets, net $ 319,796 $ (94,343) $ 225,453 12.4 Amortization expense for intangible assets was $64.7 million, $35.6 million and $31.5 million for the years ended December 31, 2020, 2019 and 2018, respectively. Periodic amortization that will be charged to expense over the remaining life of the intangible assets as of December 31, 2020 is as follows (in thousands): Years Ending December 31, 2021 $ 196,019 2022 186,860 2023 188,386 2024 183,409 2025 and thereafter 1,266,190 $ 2,020,864 |
Goodwill
Goodwill | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill | |
Goodwill | Note 9. Goodwill Goodwill consists of the following (in thousands): As of December 31, As of December 31, 2020 2019 Beginning balance $ 746,079 $ 737,197 Additions associated with acquisitions 13,812,198 10,604 Cumulative translation adjustment 22,978 (1,722) Goodwill $ 14,581,255 $ 746,079 |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 12 Months Ended |
Dec. 31, 2020 | |
Accrued Expenses and Other Current Liabilities | |
Accrued Expenses and Other Current Liabilities | Note 10. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following (in thousands): 2020 2019 Professional fees $ 4,717 $ 1,535 Consulting fees/provider fees 23,167 10,618 Client performance guarantees 7,215 3,298 Legal fees 2,419 1,077 Interest payable 2,049 838 Income tax payable 1,627 2,859 Insurance 3,139 1,263 Marketing 2,815 2,810 Operating lease liabilities - current 11,438 5,088 Earnout 4,514 0 Other 20,557 5,054 Total $ 83,657 $ 34,440 |
Revolving Credit Facility
Revolving Credit Facility | 12 Months Ended |
Dec. 31, 2020 | |
Revolving Credit Facility | |
Revolving Credit Facility | Note 11. Revolving Credit Facility The Company entered into a $10.0 million Senior Secured Revolving Credit Facility (the “Revolving Credit Facility”) in 2017. The Revolving Credit Facility was terminated pursuant to its terms effective July 14, 2020. As of December 31, 2019, there was no amount outstanding other than $2.2 million of letters of credit issued for facility security deposits at December 31, 2019. In addition, the acquired fair value of the assumed indebtedness of $10.0 million in connection with Livongo merger was paid in full and there was no amount outstanding as of December 31, 2020. |
Convertible Senior Notes
Convertible Senior Notes | 12 Months Ended |
Dec. 31, 2020 | |
Convertible Senior Notes | |
Convertible Senior Notes | Note 12. Convertible Senior Notes Convertible Senior Notes Due 2027 On May 19, 2020, the Company issued, at par value, $1 billion aggregate principal amount of 1.25% convertible senior notes due 2027 (the “2027 Notes”). The 2027 Notes bear cash interest at a rate of 1.25% per year, payable semi-annually in arrears on June 1 and December 1 of each year, beginning on December 15, 2020. The 2027 Notes will mature on June 1, 2027. The net proceeds to the Company from the offering were $975.9 million after deducting offering costs of approximately $24.1 million. The 2027 Notes are senior unsecured obligations of the Company and rank senior in right of payment to the Company’s indebtedness that is expressly subordinated in right of payment to the 2027 Notes; equal in right of payment to the Company’s liabilities that are not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities incurred by the Company’s subsidiaries. Holders may convert all or any portion of their 2027 Notes in integral multiples of $1,000 principal amount, at their option, at any time prior to the close of business on the business day immediately preceding December 1, 2026 only under the following circumstances: • during any calendar quarter commencing after the calendar quarter ending on September 30, 2020 (and only during such calendar quarter), if the last reported sale price of the shares of Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price for the 2027 Notes on each applicable trading day; • during the five business day period after any ten consecutive trading day period in which the trading price was less than 98% of the product of the last reported sale price of Company’s common stock and the conversion rate for the 2027 Notes on each such trading day; • upon the occurrence of specified corporate events described under the 2027 Notes Indenture; or • if the Company calls the 2027 Notes for redemption, at any time until the close of business on the second business day immediately preceding the redemption date. On or after December 1, 2026, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their 2027 Notes, regardless of the foregoing circumstances. The conversion rate for the 2027 Notes was initially, and remains, 4.1258 shares of the Company’s common stock per $1,000 principal amount of the 2027 Notes, which is equal to an initial conversion price of approximately $242.38 per share of the Company’s common stock. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination thereof, at the Company’s election. If the Company elects to satisfy the conversion obligation solely in cash or through payment and delivery, as the case may be, of a combination of cash and shares of the Company’s common stock, the amount of cash and shares of the Company’s common stock, if any, due upon conversion will be based on a daily conversion value calculated on a proportionate basis for each trading day in a 25 consecutive trading days observation period. The Company may redeem for cash all or part of the 2027 Notes, at its option, on or after June 5, 2024 if the last reported sale price of its common stock exceeds 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading days ending on, and including the trading day immediately preceding the date on which the Company provides notice of the redemption. The redemption price will be the principal amount of the 2027 Notes to be redeemed, plus accrued and unpaid interest, if any. In addition, calling any 2027 Note for redemption on or after June 5, 2024 will constitute a make-whole fundamental change with respect to that 2027 Note, in which case the conversion rate applicable to the conversion of that 2027 Note, if it is converted in connection with the redemption, will be increased in certain circumstances as described in the indenture governing the 2027 Notes. In accounting for the issuance of the 2027 Notes, the Company separated the 2027 Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the par value of the 2027 Notes as a whole. The excess of the principal amount of the liability component over its carrying amount, referred to as the debt discount, is amortized to interest expense from the issuance date to June 1, 2027. The equity component is not re-measured as long as it continues to meet the conditions for equity classification. The equity component related to the 2027 Notes was $286 million, net of issuance costs which was recorded in additional paid-in capital on the accompanying condensed consolidated balance sheet. The Company has reserved 5.4 million shares of common stock for the 2027 Notes. In accounting for the transaction costs related to the issuance of the 2027 Notes, the Company allocated the total costs incurred to the liability and equity components of the 2027 Notes based on their relative values. Transaction costs attributable to the liability component are being amortized to interest expense over the seven year term of the 2027 Notes, and transaction costs attributable to the equity component are netted with the equity components in stockholders’ equity. The 2027 Notes consist of the following (in thousands): As of December 31, Liability component 2020 Principal $ 1,000,000 Less: Debt discount, net (1) (287,916) Net carrying amount $ 712,084 (1) Included in the accompanying consolidated balance sheet within convertible senior notes and amortized to interest expense over the expected life of the 2027 Notes using the effective interest rate method. The fair value of the 2027 Notes was $1,188.9 million as of December 31, 2020. The Company estimates the fair value of its 2027 Notes utilizing market quotations for debt that have quoted prices in active markets. Since the 2027 Notes do not trade on a daily basis in an active market, the fair value estimates are based on market observable inputs based on borrowing rates currently available for debt with similar terms and average maturities, which are classified as Level 2 measurements within the fair value hierarchy. See Note 4, “Fair Value Measurements,” for definitions of hierarchy levels. As of December 31, 2020, the remaining contractual life of the 2027 Notes is approximately 6.4 years. The following table sets forth total interest expense recognized related to the 2027 Notes (in thousands): Year Ended December 31, 2020 Contractual interest expense $ 7,743 Amortization of debt discount 21,756 Total $ 29,499 Effective interest rate of the liability component 3.4% Livongo Convertible Senior Notes Due 2025 As part of the Livongo acquisition in October 2020, the Company agreed to guarantee Livongo’s obligations under its $550.0 million aggregate principal amount of convertible senior notes due 2025 (the “Livongo Notes”), which had been issued by Livongo on June 4, 2020, prior to the Company’s acquisition of Livongo. The Livongo Notes bear cash interest at a rate of 0.875% per year, payable semi-annually in arrears on June 1 and December 1 of each year. The Livongo Notes will mature on June 1, 2025. The Livongo Notes are general 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 Livongo Notes; equal in right of payment to the Company’s unsecured indebtedness 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 Livongo 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 March 1, 2025 only under the following circumstances: • during any fiscal quarter commencing after the fiscal quarter ending on September 30, 2020 (and only during such fiscal quarter), if the last reported sale price of the shares of Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price for the Livongo Notes on each applicable trading day; • during the five business day period after any five consecutive trading day period in which the trading price was less than 98% of the product of the last reported sale price of Company’s common stock and the conversion rate for the Livongo Notes on each such trading day; • upon the occurrence of specified corporate events described under the 2027 Notes Indenture; or • if the Company calls the Livongo Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date. On or after March 1, 2025, 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 Livongo Notes, regardless of the foregoing circumstances. The conversion rate for the Livongo Notes was initially 13.2329 shares of Livongo’s common stock. Following our acquisition of Livongo and the issuance of the special dividend to Livongo stockholders in connection with the merger, the conversion rate for the Livongo Notes is 13.94 units of reference property per $1,000 principal amount of the Livongo Notes. Each “unit of reference property” is comprised of 0.5920 of a share of our common stock and $4.24 in cash, without interest. Upon conversion, the Company will pay or deliver, as the case may be, cash, units of reference property 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 units of reference property, the amount of cash and units of reference property, if any, due upon conversion will be based on a daily conversion value calculated on a proportionate basis for each trading day in a 40 trading days observation period. The Company may redeem for cash all or part of the Livongo Notes, at its option, on or after June 5, 2023 and prior to the 41st scheduled trading day immediately preceding the maturity date, 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 (including the last trading day of such period) 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 Livongo Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. If Livongo undergoes a fundamental change (as defined in the applicable indenture) at any time prior to the maturity date, holders will have the right, at their option, to require Livongo to repurchase for cash all or any portion of their Livongo Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Livongo Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. As of December 31, Liability component 2020 Principal $ 550,000 Less: Debt discount, net (1) (93,357) Net carrying amount $ 456,643 (1) Included in the accompanying consolidated balance sheet within convertible senior notes and amortized to interest expense over the expected life of the Livongo Notes using the effective interest rate method. The fair value of the Livongo Notes was $988.5 million as of December 31, 2020. The Company estimates the fair value of the Livongo Notes utilizing market quotations for debt that have quoted prices in active markets. Since the Livongo 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 4, “Fair Value Measurements,” for definitions of hierarchy levels. As of December 31, 2020, the remaining contractual life of the Livongo Notes is approximately 4.4 years. We carry the liability component of the Livongo Notes at face value less unamortized debt discount on our condensed consolidated balance sheets and provide the fair value for disclosure purposes only. The following table sets forth total interest expense recognized related to the Livongo Notes subsequent to the acquisition of Livongo (in thousands): Year Ended December 31, 2020 Contractual interest expense $ 829 Amortization of debt discount 3,226 Total $ 4,055 Effective interest rate of the liability component 5.2% Convertible Senior Notes Due 2025 On May 8, 2018, the Company issued, at par value, $287.5 million aggregate principal amount of 1.375% convertible senior notes due 2025 (the “2025 Notes”). The 2025 Notes bear cash interest at a rate of 1.375% per year, payable semi-annually in arrears on May 15 and November 15 of each year. The 2025 Notes will mature on May 15, 2025. The net proceeds to the Company from the offering were $279.1 million after deducting offering costs of approximately $8.4 million. The 2025 Notes are senior unsecured obligations of the Company and rank senior in right of payment to the Company’s indebtedness that is expressly subordinated in right of payment to the 2025 Notes; equal in right of payment to the Company’s liabilities that are not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities incurred by the Company’s subsidiaries. Holders may convert all or any portion of their 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 December 31, As of December 31, Liability component 2020 2019 Principal $ 276,788 $ 287,500 Less: Debt discount, net (2) (65,923) (81,207) Net carrying amount $ 210,865 $ 206,293 (2) Included in the accompanying consolidated balance sheets within convertible senior notes and amortized to interest expense over the expected life of the 2025 Notes using the effective interest rate method. The fair value of the 2025 Notes was $1,032.9 million as of December 31, 2020. The Company estimates the fair value of its 2025 Notes utilizing market quotations for debt that have quoted prices in active markets. Since the 2025 Notes do not trade on a daily basis in an active market, the fair value estimates are based on market observable inputs based on borrowing rates currently available for debt with similar terms and average maturities, which are classified as Level 2 measurements within the fair value hierarchy. See Note 4, “Fair Value Measurements,” for definitions of hierarchy levels. As of December 31, 2020, the remaining contractual life of the 2025 Notes is approximately 4.4 years. The following table sets forth total interest expense recognized related to the 2025 Notes (in thousands): Year Ended December 31, 2020 2019 2018 Contractual interest expense $ 3,900 $ 3,953 $ 2,578 Amortization of debt discount 12,532 11,706 6,831 Total $ 16,432 $ 15,659 $ 9,409 Effective interest rate of the liability component 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”). 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 are not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities incurred by the Company’s subsidiaries. Holders may convert all or any portion of their 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 consolidated balance sheet. In accounting for the transaction costs related to the issuance of the 2022 Notes, the Company allocated the total costs incurred to the liability and equity components of the 2022 Notes based on their relative values. Transaction costs attributable to the liability component are being amortized to interest expense over the five The 2022 Notes consist of the following (in thousands): As of December 31, As of December 31, Liability component 2020 2019 Principal $ 46,762 $ 274,995 Less: Debt discount, net (3) (4,202) (40,878) Net carrying amount $ 42,560 $ 234,117 (3) Included in the accompanying consolidated balance sheets within convertible senior notes and amortized to interest expense over the expected life of the 2022 Notes using the effective interest rate method. The fair value of the 2022 Notes was $212.5 million as of December 31, 2020. The Company estimates the fair value of its 2022 Notes utilizing market quotations for debt that have quoted prices in active markets. Since the 2022 Notes do not trade on a daily basis in an active market, the fair value estimates are based on market observable inputs based on borrowing rates currently available for debt with similar terms and average maturities, which are classified as Level 2 measurements within the fair value hierarchy. See Note 4, “Fair Value Measurements,” for definitions of hierarchy levels. As of December 31, 2020, the remaining contractual life of the 2022 Notes is approximately 2.0 years. The following table sets forth total interest expense recognized related to the 2022 Notes (in thousands): Year Ended December 31, 2020 2019 2018 Contractual interest expense $ 4,047 $ 8,250 $ 8,250 Amortization of debt discount 7,553 14,026 12,726 Total $ 11,600 $ 22,276 $ 20,976 Effective interest rate of the liability component 9.6% 10.0% 10.0% On May 14, 2020, the Company entered into privately negotiated agreements with certain holders of 2022 Notes to exchange 2022 Notes for shares of the Company’s common stock, together with cash, in private placement transactions pursuant to Section 4(a)(2) of the Securities Act (the “Exchange Transactions”). The closing occurred on May 19, 2020. In exchange for approximately $228.2 million aggregate principal amount of 2022 Notes, the Company paid approximately $231.1 million in cash (including accrued and unpaid interest and cash paid in lieu of fractional shares), together with an aggregate of approximately 3.9 million shares of its common stock. As a result of the Exchange Transactions, the company recorded a charge associated with the loss on extinguishment of debt of $7.8 million for the year ended December 31, 2020. The remaining loss on extinguishment of debt of $1.3 million was related to conversion of the 2025 Notes in 2020. Approximately $46.8 million aggregate principal amount of the 2022 Notes remained outstanding as of December 31, 2020. In February 2021, the Company issued notice to holders that it had called for redemption all of the outstanding 2022 Notes. |
Advances from Financing Compani
Advances from Financing Companies | 12 Months Ended |
Dec. 31, 2020 | |
Advances from Financing Companies | |
Advances from Financing Companies | Note 13. Advances from Financing Companies As of December 31, 2020 2021 $ 13,453 2022 7,909 2023 2,017 $ 23,379 |
Leases and Contractual Obligati
Leases and Contractual Obligations | 12 Months Ended |
Dec. 31, 2020 | |
Leases and Contractual Obligations | |
Leases and Contractual Obligations | Note 14. Leases and Contractual Obligations Operating Leases The Company has operating leases for facilities, hosting co-location facilities and certain equipment under non-cancelable leases in the United States and various international locations. The leases have remaining lease terms of 1 to 11 years, with options to extend the lease term from 1 to 6 years. At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the arrangement covering the right to use property, plant or equipment for a started period of time. For new and amended leases beginning in 2020 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): Year Ended December 31, 2020 Lease cost Operating lease cost $ 10,823 Short Term lease cost 1,107 Variable lease cost 3 Total lease cost $ 11,933 In determining the present value of the lease payments, the Company has elected to utilize its incremental borrowing rate based on the original lease term and not the remaining lease term. Supplemental information related to operating leases was as follows (in thousands): Year Ended Consolidated Statements of Cash Flows December 31, 2020 Cash payment for operating cash flows used for operating leases $ 10,654 Operating lease liabilities arising from obtaining right-of-use assets $ 8,134 Other Information Weighted-average remaining lease term 4.69 Weighted-average discount rate 5.64% The Company leases office space under non-cancelable operating leases in the United States and various international locations. As of December 31, 2020, the future minimum lease payments under non-cancelable operating leases are as follows (in thousands): Operating Leases 2021 $ 14,193 2022 14,159 2023 13,946 2024 8,918 2025 and thereafter 12,049 Sub-total 63,265 Less: imputed interest 8,685 Minimum lease payments $ 54,580 The Company commenced a new 5 year lease on March 1, 2020 for office space in Santa Clara, CA. As a result, the Company recorded a right-of-use sales-type lease or operating lease arrangements. Leases have terms that generally range from two |
Common Stock and Stockholders'
Common Stock and Stockholders' Equity | 12 Months Ended |
Dec. 31, 2020 | |
Common Stock and Stockholders'Equity | |
Common Stock and Stockholders' Equity | Note 15. Common Stock and Stockholders’ Equity Capitalization Effective October 30, 2020, the authorized number of shares of the Company’s common stock was increased from 150,000,000 to 300,000,000 shares. On July 26, 2018, Teladoc Health closed on its 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. Warrants The Company has no warrants outstanding as of December 31, 2020 and 2019. Stock Plans The Company’s 2015 Incentive Award Plan, 2017 Employment Inducement Incentive Award Plan and Livongo Acquisition Incentive Award Plan (collectively, the “Plans”) provide for the issuance of incentive and non-statutory options and other equity-based awards to its employees and non-employee service providers. In connection with the closing of the Livongo merger, the Company assumed the Livongo Health, Inc. 2019 Equity Incentive Plan, the Livongo Health, Inc. Amended and Restated 2014 Stock Incentive Plan and the Livongo Health, Inc. Amended and Restated 2008 Stock Incentive Plan (collectively, the “Assumed Plan”). At the effective time of the Livongo merger on October 30, 2020, each outstanding Livongo equity award issued under the Assumed Plans was converted into a corresponding award with respect to the Company’s common stock, with the number of shares underlying such award adjusted based on the “Equity Award Adjustment Ratio” (as defined below), and remained outstanding in accordance with the terms that were applicable to such award prior to the Livongo merger. The exercise price of each outstanding Livongo stock option was also adjusted based on the Equity Award Adjustment Ratio. The “Equity Award Adjustment Ratio” means the quotient determined by dividing (i) the volume weighted average closing price of Livongo common stock on the four four All stock-based awards to employees are measured based on the grant date fair value, or replacement grant date fair value in relation to Livongo transaction, and are generally recognized on a straight-line basis in the Company’s consolidated statement of operations over the period during which the employee is required to perform services in exchange for the award (generally requiring a four-year vesting period for each stock option and a three-year vesting period for each RSU). Stock Options Options issued under the Plans are exercisable for periods not to exceed ten years, and vest and contain such other terms and conditions as specified in the applicable award document. Options to buy common stock are issued under the Plans, with exercise prices equal to the closing price of shares of the Company’s common stock on the New York Stock Exchange on the date of award. The Company had 13,012,602 shares available for grant at December 31, 2020. Activity under the Plans is as follows (in thousands, except share and per share amounts and years): Weighted- Weighted- Average Number of Average Remaining Aggregate Shares Exercise Contractual Intrinsic Outstanding Price Life in Years Value Balance at December 31, 2019 5,206,980 $ 24.47 7.03 $ 308,538 Stock option grants and assumed awards 6,892,990 $ 188.31 N/A $ Stock options exercised (6,104,718) $ 9.00 N/A $ (1,165,746) Stock options forfeited (168,567) $ 36.12 N/A $ Balance at December 31, 2020 5,826,685 $ 17.19 5.31 $ 1,064,944 Vested or expected to vest at December 31, 2020 5,826,685 $ 17.19 5.31 $ 1,064,944 Exercisable at December 31, 2020 3,903,612 $ 16.36 5.55 $ 716,706 The total grant-date fair value of stock options granted during the year ended December 31, 2020, 2019 and 2018 was $1,298.0 million, $4.7 million and $27.0 million, respectively. Included in the December 31, 2020 stock options grant date fair value is $1,266.3 million of replacement awards related to mergers and acquisitions. The Company estimates the fair value of stock options granted using the Black-Scholes option-pricing model. The assumptions used in the Black-Scholes option-pricing model are determined as follows: Volatility. The expected volatility was derived from the historical stock volatilities of the Company’s stock volatility over a period equivalent to the expected term of the stock option grants. 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: Year Ended December 31, 2020 2019 2018 Volatility 46.1% - 56.6% 46.8% – 47.6% 43.4% – 46.1% Expected life (in years) 4.1 5.2 6.0 Risk-free interest rate 0.22%-1.64% 1.35% - 2.55% 2.45% - 3.03% Dividend yield 0 0 0 Weighted-average fair value of underlying stock options $ $48.74 $ 28.37 $ 20.26 The Company determined that a Monte Carlo valuation model is most suitable for valuation of options for the replaced and replacement awards from the Livongo merger, for the following reasons: • • For the years ended December 31, 2020, 2019 and 2018, the Company recorded compensation expense related to stock options granted of $134.9 million, $20.4 million, and $24.6 million, respectively. Included in the $134.9 million for December 31, 2020 was expense of $91.5 million related to the acceleration of replacement awards connected to the acquisitions of InTouch and Livongo. As of December 31, 2020, the Company had $138.0 million in unrecognized compensation cost related to non-vested stock options, which is expected to be recognized over a weighted average period of approximately 1.8 years. Restricted Stock Units In May 2017, the Company commenced issuing Restricted Stock Units (“RSUs”), pursuant to the Plan to certain employees and Board Members under the 2017 Employment Inducement Incentive Award Plan. The fair value of the RSUs is determined on the date of grant. The Company records compensation expense in the consolidated statement of operations on a straight-line basis over the vesting period for RSUs 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 Activity under the RSUs is as follows: Weighted-Average Grant Date RSUs Fair Value Per RSU Balance at December 31, 2019 1,483,558 $ 54.13 Granted including replacement awards for merger 4,205,573 $ 190.46 Vested and issued (1,819,566) $ 142.84 Forfeited (318,970) $ 148.43 Balance at December 31, 2020 3,550,595 $ 161.68 Vested and unissued at December 31, 2020 13,755 $ 50.90 Non-vested at December 31, 2020 3,536,840 $ 162.11 The total grant-date fair value of RSUs granted for the years ended December 31, 2020, 2019 and 2018 were $801.0 million, $56.7 million and $49.3 million, respectively. Included in the December 31, 2020 RSUs grant date fair value is $712.4 million of replacement awards related to mergers and acquisitions. For the years ended December 31, 2020, 2019 and 2018, the Company recorded stock-based compensation expense related to the RSUs of $314.1 million, $30.5 million, and $16.7 million, respectively. Included in the $314.1 million for December 31, 2020 was expense of $240.4 million related to the acceleration of replacement awards connected to mergers and acquisitions. As of December 31, 2020, the Company had $460.9 million in unrecognized compensation cost related to non-vested RSUs, which is expected to be recognized over a weighted-average period of approximately 2.0 years. Performance Stock Units The Company began issuing grants Performance Stock Units (“PSUs”) to employees under the 2015 Plan in 2018. Stock-based compensation costs associated with our PSUs are initially determined using the fair market value of the Company's common stock on the date the awards are approved by the Compensation Committee of the Board of Directors (service inception date). The vesting of these PSUs is subject to certain performance conditions and a service requirement ranging from 1 - 3 years . Until the performance conditions are met, stock compensation costs associated with these PSUs are re-measured each reporting period based upon the fair market value of the Company's common stock and the estimated performance attainment on the reporting date. The ultimate number of PSUs that are issued to an employee is the result of the actual performance of the Company at the end of the performance period compared to the performance conditions and can range from 50% to 225% of the initial grant. Stock compensation expense for PSUs is recognized on an accelerated tranche by tranche basis for performance-based awards . Forfeitures are accounted for at the time the occur consistent with Company policy. Activity under the PSUs is as follows: Weighted-Average Grant Date Shares Fair Value Per Share Balance at December 31, 2019 512,482 $ 62.51 Granted 114,613 $ 118.01 Vested and issued (197,776) $ 64.31 Balance at December 31, 2020 429,319 $ 76.60 Vested and unissued at December 31, 2020 0 $ 0 Non-vested at December 31, 2020 429,319 $ 76.60 The total grant-date fair value of PSUs granted for the years ended December 31, 2020, 2019 and 2018 were $25.0 million, $31.6 million, and $3.5 million, respectively. For the years ended December 31, 2020, 2019 and 2018, the Company recorded stock-based compensation expense related to the PSUs of $24.0 million, 14.6 million and $1.5 million, respectively. As of December 31, 2020, the Company had $20.4 million in unrecognized compensation cost related to non-vested PSUs, which is expected to be recognized over a weighted-average period of approximately 1.5 years. Employee Stock Purchase Plan In July 2015, the Company adopted the 2015 Employee Stock Purchase Plan, or ESPP, in connection with its initial public offering. A total of 832,492 shares of common stock were reserved for issuance under this plan as of December 31, 2020. The Company’s ESPP permits eligible employees to purchase common stock at a discount through payroll deductions during defined offering periods. Under the ESPP, the Company may specify offerings with durations of not more than 27 months , and may specify shorter purchase periods within each offering. Each offering will have one or more purchase dates on which shares of its common stock will be purchased for employees participating in the offering. An offering may be terminated under certain circumstances. The price at which the stock is purchased is equal to the lower of 85% of the fair market value of the common stock at the beginning of an offering period or on the date of purchase. During 2020 and 2019, the Company issued 49,781 shares and 64,497 shares, respectively, under the ESPP. As of December 31, 2020, 505,486 shares remained available for issuance. For the year ended December 31, 2020, 2019 and 2018, the Company recorded stock-based compensation expense related to the ESPP of $2.8 million, $1.2 million, and $1.0 million, respectively, based on offerings made under the plan to-date. As of December 31, 2020, the Company had $1.0 million in unrecognized compensation cost related to the ESPP, which is expected to be recognized over a weighted-average period of approximately 0.4 Total compensation costs charged as an expense for stock-based awards, including stock options, RSUs, PSUs and ESPP, recognized in the components of operating expenses are as follows (in thousands): Year Ended December 31, 2020 2019 2018 Cost of revenue (exclusive of depreciation and amortization, which is shown separately) $ 2,700 $ 0 $ 0 Advertising and marketing 26,995 4,956 2,091 Sales 65,730 10,286 7,638 Technology and development 60,556 7,573 6,000 General and administrative 319,550 43,887 28,040 Total stock-based compensation expense $ 475,531 $ 66,702 $ 43,769 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2020 | |
Income Taxes | |
Income Taxes | Note 16. Income Taxes The Company follows the provisions of the accounting guidance on accounting for income taxes which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. A valuation allowance is provided to reduce the deferred tax asset to a level which, more likely than not, will be realized. For financial reporting purposes, income (loss) before income taxes for the years ended December 31, 2020, 2019 and 2018 include the following components (in thousands): Year Ended December 31, 2020 2019 2018 Domestic $ (566,266) $ (95,476) $ (91,142) International (9,727) (13,979) (5,824) Total $ (575,993) $ (109,455) $ (96,966) The provision (benefit) for income taxes is comprised of the following components: Year Ended December 31, 2020 2019 2018 Current federal $ (1,954) $ 239 $ 0 Current state 27 300 6 Current foreign 1,605 (262) 2,011 Total current (322) 277 2,017 Deferred federal (60,008) (5,043) (499) Deferred state (26,775) (1,783) 416 Deferred foreign (3,752) (4,042) (1,816) Total deferred (90,535) (10,868) (1,899) Total (Benefit) / Provision $ (90,857) $ (10,591) $ 118 The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before provision for income taxes. The sources and tax effects of the differences are as follows: Year Ended December 31, 2020 2019 2018 Tax at federal statutory rate 21.0 % 21.0 % 21.0 % State and local tax 2.3 % 4.6 % 4.8 % Acquisition expenses (2.2) % (0.4) % (1.3) % Stock compensation 11.3 % 11.5 % 16.5 % Executive compensation (12.5) % (3.8) % 0 % Non-deductible expenses (0.1) % (0.2) % (0.3) % Foreign rate differential 0.3 % 2.2 % 0 % Change in valuation allowance (5.4) % (25.3) % (41.5) % Other 1.0 % 0.1 % 0.7 % Effective tax rate 15.8 % 9.7 % (0.1) % The Company’s deferred tax assets and liabilities consist of the following (in thousands): As of December 31, 2020 2019 Deferred tax assets: Net operating loss carryforwards $ 497,603 $ 158,520 Accrued expenses and compensation 7,016 2,168 Uncertain tax positions, including interest 232 352 Stock-based compensation 94,029 14,914 Foreign tax credits and alternative minimum tax credits 5,727 5,871 Research and development credits 14,666 0 Depreciation of property and equipment 83 323 Interest expense carryforward 6,620 1,295 Operating lease assets (1) 13,978 7,492 Deferred revenue 2,917 0 Other 3,058 127 Deferred tax assets 645,929 191,062 Valuation allowance (107,984) (121,186) Net deferred tax assets 537,945 69,876 Deferred tax liabilities: Debt related (105,063) (27,545) Operating lease liabilities (12,117) (6,889) Prepaid insurance and deferred commissions (995) 0 Depreciation of property and equipment (2,476) (1,667) Intangible assets (519,397) (55,453) Deferred tax liabilities (640,048) (91,554) Net deferred tax liabilities $ (102,103) $ (21,678) (1) As discussed in Note 14 to the consolidated financial statements, in 2019, we adopted an updated lease accounting standard that resulted in the recognition of operating lease right-of-use assets and lease liabilities. We adopted this standard using a transition method that does not require application to periods prior to adoption. As of December 31, 2020, the Company has a valuation allowance of approximately $108.0 million against a portion of its net operating loss carryforwards, foreign tax credits in the U.S., and certain foreign deferred tax assets, for which realization cannot be considered more likely than not at this time. The net deferred tax liability is primarily the result of acquired intangibles for which there is no tax basis. The decrease in the valuation allowance of $(13.2) million is primarily due to the stock acquisitions of InTouch Health and Livongo whereby the acquired intangible assets have no tax basis and result in significant deferred tax liabilities which can serve as a source of taxable income to realize the existing deferred tax assets. Management assesses the need for the valuation allowance on a quarterly basis. In assessing the need for a valuation allowance, the Company considers all positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and past financial performance. The Company is in a net deferred tax liability position as of December 31, 2020 and, as a result, a portion of the valuation allowance on U.S. net operating losses was released. Management believes a valuation allowance against the Company’s remaining net operating losses, foreign tax credits in the U.S., and certain foreign deferred tax assets is warranted as of December 31, 2020. The valuation allowance against the remaining deferred tax assets may require adjustment in the future based on changes in the mix of temporary differences, changes in tax laws, and operating performance. If and when the Company determines the valuation allowance should be released (i.e., reduced), the adjustment would result in a tax benefit reported in that period’s Consolidated Statements of Operations, the effect of which would be an increase in reported net income. The amount of any such tax benefit associated with release of our valuation allowance in a particular reporting period may be material. As of December 31, 2020, the Company has approximately $2,030.1 million of federal net operating loss carryforwards, $1,035.9 million of state net operating loss carryforwards, and $45.1 million of foreign net operating loss carryforwards. The federal net operating loss carryforwards generated after December 31, 2017 of $1,477.0 million carry forward infinitely, while the remaining federal net operating loss carryforwards of $553.1 million began to expire in 2020. The state net operating loss carryforwards began to expire in 2020, and the foreign net operating loss carryforwards begin to expire in 2021. As of December 31, 2020, the Company has approximately $5.7 million of foreign tax credits, which begin to expire in 2021. As of December 31, 2020, the Company has approximately $8.4 million of federal research and development credits, and $5.3 million of state research and development credits, which begin to expire in 2022 and can be carried forward indefinitely, respectively. The Company also has $0.9 million in foreign research and development credits which will be carried for three years from the period realized, then refunded to the Company if not utilized against income tax expense. Utilization of the net operating loss carryforwards and foreign tax credits may be subject to a substantial annual limitation under Section 382 of the Internal Revenue Code of 1986 due to ownership change limitations that have occurred previously or that could occur in the future in accordance with Section 382 of the Internal Revenue Code of 1986, or Section 382, as well as similar state provisions. These ownership changes may limit the amount of NOL carryforwards that can be utilized annually to offset future taxable income. In general, an ownership change, as defined by Section 382 results from transactions increasing the ownership of certain shareholders or public groups in the stock of a corporation by more than 50 percentage points over a three-year period. The Company is subject to income taxes in the U.S. and numerous foreign jurisdictions. Significant judgment is required in evaluating our tax positions and determining our provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. The Company establishes reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These reserves are established when we believe that certain positions might be challenged despite our belief that our tax return positions are fully supportable. The Company adjusts these reserves in light of changing facts and circumstances, such as the outcome of tax audit. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands): Balance on January 1, 2020 $ 2,912 Additions assumed in a business combination 15,850 Additions based on current year tax positions 4,990 Statute of limitations expirations (2,390) Balance on December 31, 2020 $ 21,362 The Company anticipates $14.1 million of unrecognized tax benefits may decrease within the next 12 months, without impacting the effective tax rate. The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal and state jurisdictions in the United States and other countries, where applicable. The Company thus is still open under the U.S. statute from 2017 to the present and as early as 2006 to the present for foreign jurisdictions. Earlier years may be examined to the extent that loss carryforwards are used in future periods. The Company is currently under audit in certain tax jurisdictions. There are no tax matters under discussion with taxing authorities that are expected to have a material effect on the Company's consolidated financial statements. The Company’s policy is to include interest and penalties related to unrecognized tax benefits as a component of interest expense, net in the consolidated statements of operations. The Company’s consolidated financial statements provide for any related tax liability on amounts that may be repatriated, aside from undistributed earnings of $6.0 million for certain of the Company’s foreign subsidiaries that are intended to be indefinitely reinvested in operations outside the U.S. as of December 31, 2020. The amount of any unrecognized deferred tax liability on these undistributed earnings would be immaterial. |
Sale of Assets
Sale of Assets | 12 Months Ended |
Dec. 31, 2020 | |
Sale of Assets | |
Sale of Assets | Note 17. Sale of Assets On June 29, 2018, the Company completed the sale of certain assets, primarily contracts for services provided in the workers compensation field for total consideration of $5.5 million. The Company recorded a gain on this sale of $5.5 million which is included in the consolidated statements of operations for the year ended December 31, 2018. |
Net Loss per Share
Net Loss per Share | 12 Months Ended |
Dec. 31, 2020 | |
Net Loss per Share | |
Net Loss per Share | Note 18. Net Loss per Share Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock of the Company outstanding during the period. Diluted net loss per share is computed by giving effect to all potential shares of common stock of the Company, including outstanding stock options, warrants and convertible notes, to the extent dilutive. Basic and diluted net loss per share was the same for each period presented as the inclusion of all potential shares of common stock of the Company outstanding would have been anti-dilutive. The Company has 5.8 million outstanding stock options, 3.5 million outstanding RSUs, 0.4 million outstanding PSUs and 0.1 million issuable shares of common stock associated with the ESPP. The following table presents the calculation of basic and diluted net loss per share for the Company’s common stock (in thousands, except shares and per share data): Year Ended December 31, 2020 2019 2018 Net loss $ (485,136) $ (98,864) $ (97,084) Weighted-average shares used to compute basic and diluted net loss per share 90,509 71,845 65,845 Net loss per share, basic and diluted $ (5.36) $ (1.38) $ (1.47) |
401(k) Plan
401(k) Plan | 12 Months Ended |
Dec. 31, 2020 | |
401(k) Plan | |
401(k) Plan | Note 19. 401(k) Plan The Company has established a 401(k) plan that qualifies as a deferred compensation arrangement under Section 401 of the Internal Revenue Code. All U.S. employees over the age of 21 are eligible to participate in the plan. The Company contributes 100% of eligible employee’s elective deferral up to 4% of $0.3 million of eligible earnings. The Company made matching contributions to participants’ accounts totaling $4.9 million, $3.2 million and $2.7 million during the years ended December 31, 2020, 2019 and 2018, respectively. |
Legal Matters
Legal Matters | 12 Months Ended |
Dec. 31, 2020 | |
Legal Matters | |
Legal Matters | Note 20. 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 seeks input from other experts and advisors with respect to such matters. Estimating the probable losses or a range of probable losses resulting from litigation, government actions and other legal proceedings is inherently difficult and requires an extensive degree of judgment, particularly where the matters involve indeterminate claims for monetary damages, may involve discretionary amounts, present novel legal theories, are in the early stages of the proceedings, or are subject to appeal. Whether any losses, damages or remedies ultimately resulting from such matters could reasonably have a material effect on our business, financial condition, results of operations, or cash flows will depend on a number of variables, including, for example, the timing and amount of such losses or damages (if any) and the structure and type of any such remedies. 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 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. 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 (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. On November 30, 2020, the SDNY granted the Company’s motion to dismiss the complaint, but granted the plaintiff the opportunity to refile, which refiling was made on December 30, 2020. The Company believes that the claims against the Company and its officers continue to be without merit, and the Company and its named officers intend to defend the Company vigorously, including filing a motion to dismiss the amended 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 and the Company’s motion to dismiss the lawsuit is pending before the SDNY. Several purported class action complaints were filed in connection with the merger between Livongo and the Company, including (1) Kent v. Livongo Health, Inc., et al., filed on September 10, 2020 in the United States District Court for the District of Delaware, (2) Raheja v. Livongo Health, Inc., et al., filed on September 11, 2020 in the United States District Court for the Northern District of California, (3) Hart v. Livongo Health, Inc., et al., filed on September 14, 2020 in the United States District Court for the District of Delaware, (4) Kubus v. Livongo Health, Inc., et al., filed on September 16, 2020 in the United States District Court for the Southern District of New York, (5) Jones v. Livongo Health, Inc., et al., filed on September 17, 2020 in the United States District Court for the Eastern District of New York, (6) Anthony v. Livongo Health, Inc., et al., filed on September 18, 2020 in the United States District Court for the Southern District of New York, (7) Banner v. Livongo Health, Inc., et al., filed on September 29, 2020 in the United States District Court for the Northern District of California, (8) Vea v. Livongo Health, Inc., et al., filed on October 2, 2020 in the United States District Court for the Southern District of New York, (9) Ormesher v. Livongo Health, Inc., et al., filed on October 13, 2020 in the United States District Court for the Northern District of California, and (10) O'Connor v. Livongo Health, Inc., et al., filed on October 16, 2020 in the United States District Court for the Northern District of California (collectively, the Merger Litigations). The Merger Litigations generally named as defendants Livongo and the members of its board of directors, and certain of the complaints also asserted claims against the Company and Tempranillo Merger Sub, Inc., a wholly owned subsidiary of the Company that was merged with and into Livongo. The Merger Litigations generally allege that the registration statement and/or the joint proxy statement/prospectus filed in connection with the merger between Livongo and the Company omitted material information in violation of Sections 14(a) and 20(a) of the Securities Exchange Act of 1934, rendering the statements false and misleading. Certain of the complaints also alleged that certain defendants breached their fiduciary duties in connection with the merger. The Merger Litigations sought, among other things, an order enjoining the merger; rescinding the merger, to the extent it closes, and recovering damages; and awarding costs, including attorneys’ fees and expenses. The Company believes that the claims asserted were wholly without merit, and as of November 19, 2020, all of the Merger Litigations were voluntarily dismissed. |
Subsequent Event
Subsequent Event | 12 Months Ended |
Dec. 31, 2020 | |
Subsequent Event | |
Subsequent Event | Note 21. Subsequent Event In February 2021, the Company issued notice to holders that it has called for redemption all of the outstanding 2022 Notes. As of December 31, 2020, the principal amount of 2022 Notes outstanding was $46.8 million. |
Schedule II - Valuation and Qua
Schedule II - Valuation and Qualifying Accounts | 12 Months Ended |
Dec. 31, 2020 | |
Schedule II - Valuation and Qualifying Accounts | |
Schedule II - Valuation and Qualifying Accounts | Allowance for Doubtful Accounts Receivable (in thousands): Balance at Balance at Beginning End of Period Provision Write-offs Other of Period Fiscal Year Ended December 31, 2020 $ 3,787 $ 5,284 $ (2,787) $ 128 $ 6,412 Fiscal Year Ended December 31, 2019 $ 3,382 $ 2,665 $ (2,264) $ 4 $ 3,787 Fiscal Year Ended December 31, 2018 $ 2,422 $ 2,243 $ (1,263) $ (20) $ 3,382 Income Taxes Valuation Allowance (in thousands): Balance at Balance at Beginning End of Period Provision Write-offs Other of Period Fiscal Year Ended December 31, 2020 $ 121,186 $ 2,146 $ 0 $ (15,348) $ 107,984 Fiscal Year Ended December 31, 2019 $ 93,572 $ 36,124 $ 0 $ (8,510) $ 121,186 Fiscal Year Ended December 31, 2018 $ 73,786 $ 41,093 $ 0 $ (21,307) $ 93,572 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Summary of Significant Accounting Policies | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation These consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The consolidated financial statements include the results of Teladoc Health, three professional associations, twelve professional corporations and a service corporation (collectively, the “Association”). Teladoc Health Medical Group, P.A., formerly 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 Health Medical Group, P.A. Each professional corporation is established pursuant to the requirements of its respective domestic jurisdiction governing the corporate practice of medicine. The Company holds a variable interest in the Association which contracts with physicians and other health professionals in order to provide services to Teladoc Health. The Association is considered a variable interest entity (“VIE”) since it does not have sufficient equity to finance its activities without additional subordinated financial support. An enterprise having a controlling financial interest in a VIE, must consolidate the VIE if it has both power and benefits—that is, it has (1) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance (power) and (2) the obligation to absorb losses of the VIE that potentially could be significant to the VIE or the right to receive benefits from the VIE that potentially could be significant to the VIE (benefits). The Company has the power and rights to control all activities of the Association and funds and absorbs all losses of the VIE and appropriately consolidates the Association. Total revenue and net income (loss) for the VIE were $199.3 million and $0.6 million, $83.6 million and $(3.2) million and $58.1 million and $(2.5) million for the years ended December 31, 2020, 2019 and 2018, respectively. The VIE’s total assets, all of which were current were $28.7 million and $13.6 million at December 31, 2020 and 2019, respectively. Total liabilities, all of which were current for the VIE were $65.8 million and $51.3 million at December 31, 2020 and 2019, respectively. The VIE’s total stockholders’ deficit was $37.1 million and $37.7 million at December 31, 2020 and 2019, respectively. All intercompany transactions and balances have been eliminated. |
Business Combinations | Business Combinations The Company accounts for its business combinations using the acquisition method of accounting. The purchase price is attributed to the fair value of the assets acquired and liabilities assumed. Transaction costs directly attributable to the acquisition are expensed as incurred. Identifiable assets and liabilities acquired or assumed are measured separately at their fair values as of the acquisition date. The excess of the purchase price of acquisition over the fair value of the identifiable net assets of the acquiree is recorded as goodwill. The results of businesses acquired in a business combination are included in the Company’s consolidated financial statements from the date of acquisition. When the Company issues stock-based or cash awards to an acquired company’s shareholders, the Company evaluates whether the awards are consideration or compensation for post-acquisition services. The evaluation includes, among other things, whether the vesting of the awards is contingent on the continued employment of the acquired company’s stockholders beyond the acquisition date. If continued employment is required for vesting, the awards are treated as compensation for post-acquisition services and recognized as expense over the requisite service period. Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates, including the selection of valuation methodologies, estimates of future revenue and cash flows, discount rates and selection of comparable companies. The estimates and assumptions used to determine the fair values and useful lives of identified intangible assets could change due to numerous factors, including market conditions, technological developments, economic conditions and competition. In connection with determination of fair values, the Company may engage a third-party valuation specialist to assist with the valuation of intangible and certain tangible assets acquired and certain assumed obligations. Acquisition-related transaction costs incurred by the Company are not included as a component of consideration transferred but are accounted for as an operating expense in the period in which the costs are incurred. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company bases its estimates on historical experience, current business factors, and various other assumptions that the Company believes are necessary to form a basis for making judgments about the carrying values of assets and liabilities, the recorded amounts of revenue and expenses, and the disclosure of contingent assets and liabilities. The Company is subject to uncertainties such as the impact of future events, economic and political factors, and changes in the Company’s business environment; therefore, actual results could differ from these estimates. Accordingly, the accounting estimates used in the preparation of the Company’s consolidated financial statements will change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment evolves. The Company believes that estimates used in the preparation of these consolidated financial statements are reasonable; however, actual results could differ materially from these estimates. Changes in estimates are made when circumstances warrant. Such changes in estimates and refinements in estimation methodologies are reflected in reported results of operations; if material, the effects of changes in estimates are disclosed in the notes to the consolidated financial statements. Significant estimates and assumptions by management affect the allowance for doubtful accounts, the carrying value of long-lived assets (including goodwill and intangible assets), capitalization and amortization of software development costs, the finalization of purchase accounting adjustments, Client performance guarantees, the calculation of a contingent liability in connection with an acquisition earn-out, the provision for income taxes and related deferred tax accounts, certain accrued liabilities, revenue recognition, contingencies, litigation and related legal accruals and the value attributed to employee stock options and other stock-based awards and the periods of benefit for deferred costs. |
Segment Information | Segment Information The Company operates an integrated virtual care system for delivering, enabling, and empowering whole-person health. As a result, the Company’s chief operating decision maker, its Chief Executive Officer (“CEO”), reviews the financial information presented on a consolidated basis, reflecting this integration, for purposes of allocating resources and evaluating its financial performance. Accordingly, the Company has determined that it operates as a single reportable segment—health services. |
Fair Value Measurements | Fair Value Measurements The carrying value of our financial instruments, including cash equivalents, short-term investments, accounts receivable, accounts payable, and accrued liabilities approximates fair value due to their short-term nature. The Company measures its financial assets and liabilities at fair value at each reporting period using a fair value hierarchy that requires it to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. |
Revenue Recognition | Revenue Recognition The Company follows the revenue accounting requirements of Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASC 606”). ASC 606 establishes a principle for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. The core principle of ASC 606 is to recognize revenue to depict the transfer of promised goods or services to Clients in an amount that reflects the consideration the entity expects to be entitled in exchange for those goods or services. This principle is achieved through applying the following five-step approach: • • • • • The Company primarily generates virtual healthcare service revenue from contracts with Clients who purchase access to the Company’s professional provider network or medical experts for their employees, dependents and other beneficiaries. The Company’s Client contracts include a per-Member-per-month access fee as well as certain contracts that generate additional revenue on a per-virtual healthcare visit basis for general medical, other specialty visits and expert medical service on a per case basis. The Company also has certain contracts that generate revenue based solely on a per healthcare visit basis for general medical and other specialty visits. For the Company’s direct-to-consumer behavioral health product, Members purchase access to the Company’s professional provider network for an access fee. Revenues are also generated from contracts with Clients for the Company’s chronic care management solutions. Substantially all of this revenue is derived from monthly subscription fees that are recognized as services are rendered and earned under the subscription agreements with Clients that are based on a per participant per month model, from the number of active enrolled Members each month for the minimum enrollment period. These solutions integrate devices, supplies, access to the Company’s web-based platform, and clinical and data services to provide an overall health management solution. The promises to transfer these goods and services are not separately identifiable and is considered a single continuous service comprised of a series of distinct services that are substantially the same and have the same pattern of transfer (i.e., distinct days of service). These services are consumed as they are received, and the Company recognizes revenue each month using the variable consideration allocation exception since the nature of the obligations and the variability of the payment being based on the number of active Members are aligned . Revenue is also generated from contracts with Clients for the sale and rental of access to the Company’s hosted virtual healthcare platform. These contracts include equipment consisting of virtual health devices which allow physicians access to the platform. These contracts also include multiple performance obligations, and the Company determines the standalone selling prices based on overall pricing objectives. In some arrangements, the Company’s hosted virtual health platform are rented to certain qualified Clients that qualify as either sales-type lease or operating lease arrangements and are subject to lease accounting guidance. The Company generates access fees from Clients accessing its professional provider network or hosted virtual healthcare platform or chronic care management platforms, visit fee revenue for general medical, expert medical service and other specialty visits as well as other revenue primarily associated with virtual healthcare device equipment included with its hosted virtual healthcare platform. The Company’s agreements have a term of one The Company generally bills for the virtual healthcare services on a monthly basis with payment terms generally being 30 days . There are not significant differences between the timing of revenue recognition and billing. Consequently, the Company has determined that Client contracts do not include a financing component. Revenue is recognized in an amount that reflects the consideration that is expected in exchange for the service and for certain contracts includes a variable transaction price as the number of Members may vary from period to period. Based on historical experience, the Company estimates this amount. 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 $11.2 million, $3.6 million and $3.0 million for the year ended December 31, 2020, 2019 and 2018, respectively. Additionally, certain of the Company’s contracts include Client performance guarantees and pricing adjustments that are based upon minimum Member utilization and guarantees by the Company for specific service level performance, Member satisfaction scores, cost savings guarantees, and health outcome guarantees. If Client performance guarantees are not met, 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 years ended December 31, 2020, 2019 and 2018, revenue recognized from performance obligations related to prior periods for the changes in transaction price or Client performance guarantees was $1.9 million, $0.8 million, and $0.8 million, respectively. 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. For additional revenue, deferred revenue, deferred costs and disclosures, refer to Note 3 Revenue, Deferred Revenue, Deferred Costs and Other Deferred Revenue Deferred revenue represents billed, but unrecognized revenue, and is comprised of fees received in advance of the delivery or completion of the services and amounts received in instances when revenue recognition criteria have not been met. Deferred revenue associated with upfront payments for a device is amortized ratably over the expected Member enrollment period. Deferred revenue that will be recognized during the succeeding twelve-month period is recorded as current deferred revenue and the remaining portion is recorded as noncurrent deferred revenue. Deferred Costs and Other Deferred costs and other consist of deferred device costs and deferred contract costs. Deferred device costs consist of cost of inventory incurred in connection with delivery of services that are deferred and amortized over the shorter of the expected Member enrollment period or the expected device life and recorded as cost of revenue. Deferred contract costs represent the incremental costs of obtaining a contract with a Client if we expect to recover such costs. The primary example of our costs to obtain a contract include incremental sales commissions to obtain contracts paid to our sales organization. These incremental costs to obtain Client contracts are deferred and then amortized on a straight-line basis over the period of benefit which has been determined to be four years. Amortization expense is included in sales and marketing expenses in the consolidated statement of operations. Deferred costs and other that are to be amortized within twelve months are recorded to deferred costs and other, current and the remainder is recorded to deferred costs and other, noncurrent on our consolidated balance sheets. |
Cost of Revenue | Cost of Revenue (exclusive of depreciation and amortization, which is shown separately) Cost of revenue (exclusive of depreciation and amortization shown separately) primarily consists of fees paid to the physicians and other health professionals; product costs; costs incurred in connection with the Company’s provider network operations and data center activities, which include employee-related expenses (including salaries and benefits) costs related to Client support; provider network operations center activities; medical records; magnetic resonance imaging; medical lab tests; translation; postage and medical malpractice insurance, and deferred device costs. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less from the date of purchase and restricted cash of $62.6 million at December 31, 2020. The Company’s cash and cash equivalents generally consist of investments in money market funds. Cash and cash equivalents are stated at fair value. |
Short-Term Investments | Short-Term Investments The Company holds short-term investments primarily consisting of corporate bonds, commercial paper, U.S. treasuries and asset backed securities with maturities of less than one year. These short-term investments are classified as available-for-sale and are carried at fair value with unrealized gains or losses recorded as a separate component of stockholders’ equity in accumulated other comprehensive income (loss). Realized gains or losses are recognized in the consolidated statements of operations upon disposition of the securities. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Realized gains and losses for the years ended December 31, 2020, 2019 and 2018 were less than $0.1 million in each year and were recognized in the Company’s consolidated statements of operations. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are recorded at the invoiced amount, net of allowances for doubtful accounts. The allowance for doubtful accounts reflects the Company’s best estimate of expected losses inherent in the accounts receivable balance. The Company determines the allowance based on historical experience, specific account information and other currently available evidence. Accounts receivable deemed uncollectable are charged against the allowance for doubtful accounts when identified. |
Inventories | Inventories Inventories consist of purchased components for assembling welcome kits, refill kits, and replacement components for the Company’s chronic care management solutions, and virtual health devices manufactured for sale or lease as part of the Company’s hosted virtual healthcare platform solution. Inventories are stated at the lower of cost and net realizable value. The cost of inventories is determined on a first-in, first out (FIFO) basis or on a weighted average cost basis which approximates the FIFO basis. Inventory costs include direct materials, direct labor and contracting costs, certain indirect labor and manufacturing overhead and inbound shipping charges. Inventories are assessed on a periodic basis for potential obsolete and slow-moving inventory with write-downs being recorded when identified. Write-downs are measured as the difference between cost of the inventory and net realizable value based upon assumptions about future demand and charged to cost of revenue (exclusive of depreciation and amortization shown separately) in the accompanying consolidated statement of operations. At the point of the loss recognition, a new lower cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation is recorded using the straight-line method over the estimated useful lives of the respective asset as follows: Computer equipment 3 years Furniture and equipment 5 years Leasehold improvements Shorter of the lease term or the estimated useful lives of the improvements Product tooling 2 years Rental equipment 4.3 |
Operating Leases | Operating Leases The Company adopted the new leases standard set forth under Accounting Standards Codification Topic 842, “Leases,” or ASC Topic 842, as of January 1, 2019 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 Leases of Hosted Virtual Health Platform The Company rents its hosted virtual health platform for certain Clients under arrangements that qualify as either sales-type leases or operating lease arrangements. The contracts include equipment consisting of virtual health devices which allow physicians access to the platform and there are multiple performance obligations where the Company determines the standalone selling prices based on overall selling prices and pricing objectives. In determining whether a transaction should be classified as a sales-type or operating lease, the Company considers the following terms: (1) ownership of the virtual health device transfers to the lessee by the end of the term of the lease, (2) the lease grants the lessee an option to purchase the virtual health device that the lessee is reasonably certain to exercise, (3) the lease term is for the major part of the remaining useful life of the virtual health device, (4) the present value of the sum of the lease payments equals or exceeds substantially all of the fair value of the virtual health device, and (5) it is expected that there will be no alternative use for the virtual health device at the end of the lease term. The Company generally recognizes revenue for virtual health devices in sales-type leases at the time of acceptance by the Client provided all other revenue recognition criteria have been met and these leases are not material. For operating lease arrangements, revenue for the virtual health device is recognized over the lease term and generally on a straight-line basis. For both sales-type and operating lease arrangement, revenue associated with virtual health platform access is recognized over the lease term on a straight-line basis. |
Rental Equipment | Rental Equipment Equipment is assigned to the rental pool upon the execution of a sales leasing arrangement. Rental equipment assets are generally stated at cost, less accumulated depreciation and reflected in property and equipment, net. Depreciation of rental equipment is provided on a straight-line basis, over the estimated useful lives of the respective assets, which is generally 4.3 Maintenance and repairs are charged to expense as incurred while improvements are capitalized. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in the consolidated statement of operations in the period realized. |
Capitalized Software Development Costs | Capitalized Software Development Costs Capitalized software development costs are included in intangible assets and are amortized on a straight-line basis over 3 to 5 years. For the Company’s development costs related to its software development tools that enable its Members and providers to interact, the Company capitalizes costs incurred during the application development stage. Costs related to minor upgrades, minor enhancements and maintenance activities are expensed as incurred. |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired in a business combination. Goodwill is not amortized but is tested for impairment annually on October 1 or more frequently if events or changes in circumstances indicate that the asset may be impaired. The Company operates as one reporting unit and the fair value of the reporting unit is estimated using quoted market prices in active markets of the Company’s stock. An impairment charge is recognized for the excess of the carrying value of goodwill over its implied fair value. The Company’s annual goodwill impairment test resulted in no impairment charges in any of the periods presented in the consolidated financial statements. Other intangible assets include Client relationships, non-compete agreements, acquired technology, patents, trademarks resulting from business acquisitions, and capitalized software development costs. The Company amortizes such definite-lived intangible assets over their estimated useful lives. The Company reviews the useful lives on a quarterly basis to determine if the period of economic benefit has changed. Client relationships are amortized over a period of 2 1.5 3 5 3 Definite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. If the carrying value of an intangible asset exceeds its fair value, an impairment charge would be recognized in an amount equal to the amount by which the carrying value of the intangible asset exceeds its fair value. There were no events or changes in circumstances that would indicate that the carrying value of the definite-lived intangible assets may not be recoverable during the years ended December 31, 2020, 2019 or 2018. |
Investments in Equity Securities | Investments in Equity Securities Investments in equity securities, other than those of our consolidated subsidiaries, are accounted for at fair value or under the measurement alternative of the Financial Accounting Standards Board's ("FASB") ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, following its adoption on January 1, 2018, with any changes to fair value recognized within other income (expense), net each reporting period. Under the measurement alternative, equity investments without readily determinable fair values are carried at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar securities of the same issuer; value is generally determined based on a market approach as of the transaction date. The Company reviews its investments in equity securities without readily determinable fair values for impairment each reporting period when there are qualitative factors or events that indicate possible impairment. If our assessment indicates that the fair value of the investment is below its carrying value, the Company will write down the investment to its fair value and record the corresponding charge within other income (expense), net. |
Convertible Senior Notes | Convertible Senior Notes Convertible Senior Notes (the Notes) are accounted for in accordance with FASB ASC Subtopic 470-20, Debt with Conversion and Other Options. Pursuant to ASC Subtopic 470-20, issuers of certain convertible debt instruments, such as the Notes, that have a net settlement feature and may be settled wholly or partially in cash upon conversion are required to separately account for the liability (debt) and equity (conversion option) components of the instrument. The carrying amount of the liability component of the instrument is computed by estimating the fair value of a similar liability without the conversion option using an income-based approach. For the income-based approach, the Company uses a convertible bond lattice model that includes assumptions such as volatility and the risk-free rate. The amount of the equity component is then calculated by deducting the fair value of the liability component from the principal amount of the Notes or the fair value of the total Livongo Notes assumed on consummation of the merger, as applicable. The difference between the principal amount and the liability component represents a debt discount that is amortized to interest expense over the contractual term of the Notes and the Livongo Notes using an effective interest rate method. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. In accounting for the issuance costs related to the Notes, the allocation of issuance costs, if applicable, incurred between the liability and equity components were based on their relative values. |
Stock-Based Compensation | Stock-Based Compensation Stock-based compensation for stock options and restricted stock units granted is measured based on the grant-date fair value of the awards and recognized on a straight-line basis over the period during which the employee is required to perform services in exchange for the award (generally the vesting period of the award). The Company estimates the fair value of employee stock options using the Black-Scholes option-pricing model, except as noted. Stock-based compensation for performance stock units (PSU) granted is measured based on the grant- date fair value of the awards and recognized on an accelerated tranche by tranche basis over the period during which the employee is required to perform services in exchange for the award (generally the vesting period of the award). The ultimate number of PSUs that are issued to an employee is the result of the actual performance of the Company at the end of the performance period compared to the performance targets and can range from 50% to 225% of the initial grant. For stock-based compensation assumed in the Livongo merger, the Monte Carlo valuation model was the most suitable for valuation of options for the replaced and replacement awards from the merger. The Company’s Employee Stock Purchase Plan (“ESPP”) permits eligible employees to purchase common stock at a discount through payroll deductions during defined offering periods. Under the ESPP, the Company may specify offerings with durations of not more than 27 months and may specify shorter purchase periods within each offering. Each offering will have one or more purchase dates on which shares of its common stock will be purchased for employees participating in the offering. An offering may be terminated under certain circumstances. The price at which the stock is purchased is equal to the lower of 85% of the fair market value of the common stock at the beginning of an offering period or on the date of purchase. |
Foreign Currency | Foreign Currency The functional currency for each of our 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) . For the year ended December 31, 2020, 2019 and 2018, realized foreign exchange (loss) gain of $(0.6) million, $0.2 million and $(0.1) million, respectively, that was recognized in the Company’s consolidated statement of operations in interest expense, net. |
Advances From Financing Companies | Advances from Financing Companies The Company utilizes a third-party financing company to provide certain Clients with a rental option. Under these arrangements, the Company receives payment up front from the financing companies and the financing companies collect the Client rental payments over the life of the rental agreement on a nonrecourse basis. The principal portion of these up-front payments are reported as advances from financing companies in the accompanying consolidated balance sheet. The Company indemnifies the financing companies for any loss or expenses resulting from its failure to provide the ongoing necessary system services and support to the Client. |
Income Taxes | Income Taxes The Company accounts for income taxes using the liability method, under which deferred tax assets and liabilities are determined based on the future tax consequences attributable to differences between the financial reporting carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry forwards and net operating loss carryforwards. Deferred tax assets and liabilities are measured using the enacted tax rates that are expected to be in effect when the differences are expected to reverse. The Company assesses the likelihood that deferred tax assets will be recovered from future taxable income, and a valuation allowance is established when necessary to reduce deferred tax assets to the amounts more likely than not expected to be realized. The Company recognizes and measures uncertain tax positions using a two-step approach. The first step is to evaluate the tax position taken or expected to be taken by determining if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained in an audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. Significant judgment is required to evaluate uncertain tax positions. The Company evaluates its uncertain tax positions on a regular basis. Its evaluations are based on a number of factors, including changes in facts and circumstances, changes in tax law, correspondence with tax authorities during the course of audit and effective settlement of audit issues. The Company’s policy is to include interest and penalties related to unrecognized tax benefits as a component of interest expense, net in the consolidated statements of operations. |
Comprehensive Loss | Comprehensive Loss Comprehensive loss consists of net loss and unrealized gains or losses on short-term investments and cumulative translation gains or losses. Unrealized gains or losses on short-term investments are net of any reclassification adjustments for realized gains and losses included in the consolidated statements of operations. |
Net Loss Per Share | Net Loss Per Share Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock of the Company outstanding during the period. Diluted net loss per share is computed by giving effect to all potential shares of common stock, including outstanding stock options, and convertible notes, to the extent dilutive. Basic and diluted net loss per share was the same for each period presented as the inclusion of all potential shares of common stock outstanding would have been anti-dilutive. |
Advertising and Marketing Expenses | Advertising and Marketing Expenses Advertising and marketing include all communications and campaigns to the Company’s Clients and Members, digital and media advertising and are expensed as incurred. For the years ended December 31, 2020, 2019 and 2018, advertising expenses were $165.0 million, $88.8 million and $70.6 million, respectively. |
Concentrations of Risk | Concentrations of Risk The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents, short-term investments and accounts receivable. Although the Company deposits its cash with multiple financial institutions in the U.S. and in foreign countries, its deposits, at times, may exceed federally insured limits. The Company’s short-term investments are comprised of a portfolio of diverse high credit rating instruments with maturity durations of one year or less. No Client represented over 10% of revenues for the years ended December 31, 2020, 2019 or 2018. No Client represented over 10% of accounts receivable at December 31, 2020 or 2019. Revenue from Clients located in the United States for the year ended December 31, 2020, 2019 and 2018 were $967.4 million, $445.3 million and $342.7 million, respectively. Revenue from Clients located outside the United States for the year ended December 31, 2020, 2019 and 2018 were $126.6 million, $108.0 million, and $75.2 million, respectively. |
Reclassifications | Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. |
Seasonality | Seasonality The Company typically experiences the strongest increases in consecutive quarterly revenue during the fourth and first quarters of each year, which coincides with traditional annual benefit enrollment seasons. In particular, as a result of many Clients’ introduction of new services at the very end of a calendar year, or the start of each calendar year, the majority of the Company’s new Client contracts have an effective date of January 1. As a result of national seasonal cold and flu trends, the Company typically experiences the highest level of visit fees during the first and fourth quarters of each year when compared to other quarters of the year. However, during the COVID-19 pandemic in 2020, we did not experience the typical seasonality associated with national cold and flu outbreaks. |
Recently Issued and Adopted Accounting Pronouncements | Recently Issued and Adopted Accounting Pronouncements In December 2019, the FASB issued Accounting Standards Update No. 2019-12, “Simplification of Income Taxes (Topic 740) Income Taxes” or ASU 2019-12. ASU 2019-12 . ASU 2019-12 is effective for public companies for annual periods beginning after December 15, 2020, including interim periods within those fiscal years. The Company early-adopted ASU 2019-12 on the Company’s consolidated financial statements and disclosures effective January 1, 2020, with no material impact to the financial statements. In January 2017, the FASB issued Accounting Standards Update No. 2017-04, “Goodwill Simplifications (Topic 350)” or ASU 2017-04. ASU 2017-04 simplifies the test for goodwill impairment. The new guidance eliminates Step 2 from the goodwill impairment test as currently prescribed in GAAP. This ASU is the result of the FASB project focused on simplifications to accounting for goodwill. The new guidance was effective for the first quarter of 2020 and was early adopted in the quarter-ended December 31, 2019. In June 2016, the FASB issued Accounting Standards Update No. 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” or ASU 2016-13. The amendments in ASU 2016-13 introduce an approach based on expected losses to estimated credit losses on certain types of financial instruments, modify the impairment model for available-for-sale debt securities and provide for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The FASB issued Accounting Standards Update No. 2018-19, “Codification Improvements to Topic 326, Financial Instruments—Credit Losses,” or ASU 2018-19, Accounting Standards Update No. 2019-04, “Codification Improvements to Topic 326, Financial Instruments—Credit Losses,” or ASU 2019-04, Accounting Standards Update No. 2019-05, “Financial Instruments-Credit Losses (Topic 326): Targeted Transition Relief,” or ASU 2019-05, Accounting Standards Update No. 2019-10, “Financial Instruments-Credit Losses (Topic 326): Effective Dates,” or ASU 2019-10 and Accounting Standards Update No. 2019-11, “Codification Improvements to Topic 326, Financial Instruments—Credit Losses,” or ASU 2019-11. The amendments in these ASUs provide clarifications to ASU 2016-13. The Company adopted ASU 2016-13 and the related clarifications effective January 1, 2020. The adoption did not have a material effect on the Company’s consolidated financial statements. In August 2018, the FASB issued Accounting Standards Update No. 2018-15, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” or ASU 2018-15 Subtopic 350-40, which aligns the requirements for capitalizing implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use-software. The standard is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. Early adoption is permitted. The Company adopted ASU 2018-15 Subtopic 350-40 effective January 1, 2020. The adoption did not have a material impact on the consolidated financial statements and disclosures. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Summary of Significant Accounting Policies | |
Summary of useful life of property and equipment | Computer equipment 3 years Furniture and equipment 5 years Leasehold improvements Shorter of the lease term or the estimated useful lives of the improvements Product tooling 2 years Rental equipment 4.3 |
Revenue, Deferred Revenue, De_2
Revenue, Deferred Revenue, Deferred Costs and Other (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Revenue, Deferred Revenue, Deferred Costs and Other | |
Schedule of disaggregation of revenue | The following table presents the Company’s revenues disaggregated by revenue source (in thousands): Year Ended December 31, 2020 2019 2018 Access Fees Revenue U.S. $ 737,408 $ 356,656 $ 277,091 International 124,392 106,640 73,693 Total 861,800 463,296 350,784 Visit Fee Revenue U.S. 206,093 88,669 65,582 International 818 1,342 1,541 Total 206,911 90,011 67,123 Other U.S. 23,888 0 0 International 1,363 0 0 Total 25,251 0 0 Total Revenues $ 1,093,962 $ 553,307 $ 417,907 |
Schedule of deferred costs and other | Deferred costs and other as of December 31, 2020 consist of the following (in thousands): Year Ended December 31, 2020 Deferred device cost, current $ 3,384 Deferred device cost, noncurrent 2,179 Total Deferred cost and other $ 5,563 Deferred costs and other activity are as follows (in thousands): Year Ended December 31, 2020 Deferred Device Beginning balance as of January 1, 2020 $ 0 Additions 6,007 Cost of revenue recognized (444) Ending balance as of December 31, 2020 $ 5,563 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Fair Value Measurements | |
Schedule assets and liabilities measured at fair value on a recurring basis | The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis using the above input categories (in thousands): December 31, 2020 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 733,324 $ 0 $ 0 $ 733,324 Short-term investments $ 0 $ 53,245 $ 0 $ 53,245 Contingent liability $ 0 $ 0 $ 4,514 $ 4,514 December 31, 2019 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 514,353 $ 0 $ 0 $ 514,353 Short-term investments $ 0 $ 2,711 $ 0 $ 2,711 Contingent liability $ 0 $ 0 $ 4,769 $ 4,769 |
Schedule of reconciliation of company's Level 3 liabilities | The contingent liability is based on future revenue and profitability expectations. The following table reconciles the beginning and ending balance of the Company’s Level 3 contingent liability (in thousands): Fair value at December 31, 2019 $ 4,769 Assumed from business combinations 357 Payments 0 Change in fair value (1,058) Currency translation adjustment 446 Fair value at December 31, 2020 $ 4,514 |
Business Acquisitions (Tables)
Business Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Business Acquisitions | |
Summary of identifiable assets acquired and liabilities assumed | Identifiable assets acquired and liabilities assumed (in thousands): Livongo InTouch Purchase price, net of cash acquired $ 13,938,039 $ 1,069,759 Less: Accounts receivable 80,084 16,986 Short term investment 52,500 0 Inventory 24,299 8,492 Property and equipment, net 8,952 11,366 Right of use assets 15,056 4,965 Other assets 17,337 2,541 Client relationships 1,050,000 164,580 Technology 300,000 29,190 Trademarks 250,000 32,630 Advances from financing companies 0 (26,012) Accounts payable (119,302) (5,589) Deferred revenue (997) (20,729) Convertible notes (453,417) 0 Deferred taxes (139,516) (30,102) Lease liabilities (18,834) (5,495) Other liabilities (40,343) (13,042) Goodwill $ 12,912,220 $ 899,978 |
Schedule of unaudited pro forma revenue and net loss | Unaudited Pro Forma Year Ended December 31, (in thousands) 2020 2019 Revenue $ 1,445,766 $ 798,384 Net loss $ (396,791) $ (787,185) |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Inventories | |
Schedule of inventories | Inventories consisted of the following as of December 31, 2020: As of December 31, 2020 Raw materials and purchased parts $ 19,591 Work in process 1,431 Finished goods 35,476 Total inventories $ 56,498 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Property and Equipment, Net | |
Summary of property and equipment, net | Property and equipment, net, consist of the following (in thousands): As of December 31, 2020 2019 Computer equipment $ 22,129 $ 15,219 Furniture and equipment 6,486 3,458 Leasehold improvement 12,831 7,022 Rental Equipment 8,413 0 Construction in progress 657 359 Total 50,516 26,058 Accumulated depreciation (21,965) (15,762) Property and equipment, net $ 28,551 $ 10,296 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Intangible Assets, Net | |
Schedule of finite lived intangible assets | Intangible assets consist of the following (in thousands): Weighted Average Useful Accumulated Net Carrying Remaining Life Gross Value Amortization Value Useful Life December 31, 2020 Client relationships 2 to 20 years $ 1,460,648 $ (100,844) $ 1,359,804 15.4 Non-compete agreements 1.5 to 5 years 5,097 (4,872) 225 0.4 Trademarks 3 to 15 years 326,786 (15,576) 311,210 10.5 Patents 3 years 200 (200) 0 0 Capitalized software development costs 3 52,518 (24,771) 27,747 2.8 Technology 5 338,150 (16,272) 321,878 6.6 Intangible assets, net $ 2,183,399 $ (162,535) $ 2,020,864 9.2 December 31, 2019 Client relationships 2 $ 237,182 $ (60,647) $ 176,535 13.1 Non-compete agreements 1.5 4,958 (4,260) 698 1.4 Trademarks 3 42,606 (7,143) 35,463 12.9 Patents 3 years 200 (200) 0 0 Capitalized software development costs 3 28,890 (16,415) 12,475 2.3 Technology 5 5,960 (5,678) 282 0.5 Intangible assets, net $ 319,796 $ (94,343) $ 225,453 12.4 |
Schedule of amortization to be charged to expense over the remaining life of the intangible assets | Periodic amortization that will be charged to expense over the remaining life of the intangible assets as of December 31, 2020 is as follows (in thousands): Years Ending December 31, 2021 $ 196,019 2022 186,860 2023 188,386 2024 183,409 2025 and thereafter 1,266,190 $ 2,020,864 |
Goodwill (Tables)
Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill | |
Summary of goodwill | Goodwill consists of the following (in thousands): As of December 31, As of December 31, 2020 2019 Beginning balance $ 746,079 $ 737,197 Additions associated with acquisitions 13,812,198 10,604 Cumulative translation adjustment 22,978 (1,722) Goodwill $ 14,581,255 $ 746,079 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Accrued Expenses and Other Current Liabilities | |
Schedule of accrued expenses and other current liabilities | Accrued expenses and other current liabilities consist of the following (in thousands): 2020 2019 Professional fees $ 4,717 $ 1,535 Consulting fees/provider fees 23,167 10,618 Client performance guarantees 7,215 3,298 Legal fees 2,419 1,077 Interest payable 2,049 838 Income tax payable 1,627 2,859 Insurance 3,139 1,263 Marketing 2,815 2,810 Operating lease liabilities - current 11,438 5,088 Earnout 4,514 0 Other 20,557 5,054 Total $ 83,657 $ 34,440 |
Convertible Senior Notes (Table
Convertible Senior Notes (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
2027 Notes | |
Convertible Senior Notes | |
Summary of the Notes | The 2027 Notes consist of the following (in thousands): As of December 31, Liability component 2020 Principal $ 1,000,000 Less: Debt discount, net (1) (287,916) Net carrying amount $ 712,084 (1) Included in the accompanying consolidated balance sheet within convertible senior notes and amortized to interest expense over the expected life of the 2027 Notes using the effective interest rate method. |
Schedule of total interest expense recognized related to the Notes | The following table sets forth total interest expense recognized related to the 2027 Notes (in thousands): Year Ended December 31, 2020 Contractual interest expense $ 7,743 Amortization of debt discount 21,756 Total $ 29,499 Effective interest rate of the liability component 3.4% |
Livongo Notes | |
Convertible Senior Notes | |
Summary of the Notes | As of December 31, Liability component 2020 Principal $ 550,000 Less: Debt discount, net (1) (93,357) Net carrying amount $ 456,643 (1) Included in the accompanying consolidated balance sheet within convertible senior notes and amortized to interest expense over the expected life of the Livongo 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 Livongo Notes subsequent to the acquisition of Livongo (in thousands): Year Ended December 31, 2020 Contractual interest expense $ 829 Amortization of debt discount 3,226 Total $ 4,055 Effective interest rate of the liability component 5.2% |
2025 Notes | |
Convertible Senior Notes | |
Summary of the Notes | The 2025 Notes consist of the following (in thousands): As of December 31, As of December 31, Liability component 2020 2019 Principal $ 276,788 $ 287,500 Less: Debt discount, net (2) (65,923) (81,207) Net carrying amount $ 210,865 $ 206,293 (2) Included in the accompanying consolidated balance sheets within convertible senior notes and amortized to interest expense over the expected life of the 2025 Notes using the effective interest rate method. |
Schedule of total interest expense recognized related to the Notes | The following table sets forth total interest expense recognized related to the 2025 Notes (in thousands): Year Ended December 31, 2020 2019 2018 Contractual interest expense $ 3,900 $ 3,953 $ 2,578 Amortization of debt discount 12,532 11,706 6,831 Total $ 16,432 $ 15,659 $ 9,409 Effective interest rate of the liability component 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 December 31, As of December 31, Liability component 2020 2019 Principal $ 46,762 $ 274,995 Less: Debt discount, net (3) (4,202) (40,878) Net carrying amount $ 42,560 $ 234,117 (3) Included in the accompanying consolidated balance sheets within convertible senior notes and amortized to interest expense over the expected life of the 2022 Notes using the effective interest rate method. |
Schedule of total interest expense recognized related to the Notes | The following table sets forth total interest expense recognized related to the 2022 Notes (in thousands): Year Ended December 31, 2020 2019 2018 Contractual interest expense $ 4,047 $ 8,250 $ 8,250 Amortization of debt discount 7,553 14,026 12,726 Total $ 11,600 $ 22,276 $ 20,976 Effective interest rate of the liability component 9.6% 10.0% 10.0% |
Advances from Financing Compa_2
Advances from Financing Companies (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Advances from Financing Companies | |
Schedule of client lease payments to third party financing companies | As of December 31, 2020 2021 $ 13,453 2022 7,909 2023 2,017 $ 23,379 |
Leases and Contractual Obliga_2
Leases and Contractual Obligations (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Leases and Contractual Obligations | |
Schedule of components of operating lease expense | The components of operating lease expense reflected in the consolidated statements of operations were as follows (in thousands): Year Ended December 31, 2020 Lease cost Operating lease cost $ 10,823 Short Term lease cost 1,107 Variable lease cost 3 Total lease cost $ 11,933 |
Schedule of supplemental information | Supplemental information related to operating leases was as follows (in thousands): Year Ended Consolidated Statements of Cash Flows December 31, 2020 Cash payment for operating cash flows used for operating leases $ 10,654 Operating lease liabilities arising from obtaining right-of-use assets $ 8,134 Other Information Weighted-average remaining lease term 4.69 Weighted-average discount rate 5.64% |
Schedule of future minimum lease payments | As of December 31, 2020, the future minimum lease payments under non-cancelable operating leases are as follows (in thousands): Operating Leases 2021 $ 14,193 2022 14,159 2023 13,946 2024 8,918 2025 and thereafter 12,049 Sub-total 63,265 Less: imputed interest 8,685 Minimum lease payments $ 54,580 |
Common Stock and Stockholders_2
Common Stock and Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Common Stock and Stockholders'Equity | |
Summary of stock option activity under the Plan | Activity under the Plans is as follows (in thousands, except share and per share amounts and years): Weighted- Weighted- Average Number of Average Remaining Aggregate Shares Exercise Contractual Intrinsic Outstanding Price Life in Years Value Balance at December 31, 2019 5,206,980 $ 24.47 7.03 $ 308,538 Stock option grants and assumed awards 6,892,990 $ 188.31 N/A $ Stock options exercised (6,104,718) $ 9.00 N/A $ (1,165,746) Stock options forfeited (168,567) $ 36.12 N/A $ Balance at December 31, 2020 5,826,685 $ 17.19 5.31 $ 1,064,944 Vested or expected to vest at December 31, 2020 5,826,685 $ 17.19 5.31 $ 1,064,944 Exercisable at December 31, 2020 3,903,612 $ 16.36 5.55 $ 716,706 |
Assumptions used for estimate of fair value of options | Year Ended December 31, 2020 2019 2018 Volatility 46.1% - 56.6% 46.8% – 47.6% 43.4% – 46.1% Expected life (in years) 4.1 5.2 6.0 Risk-free interest rate 0.22%-1.64% 1.35% - 2.55% 2.45% - 3.03% Dividend yield 0 0 0 Weighted-average fair value of underlying stock options $ $48.74 $ 28.37 $ 20.26 |
Schedule of activity under the RSUs | Activity under the RSUs is as follows: Weighted-Average Grant Date RSUs Fair Value Per RSU Balance at December 31, 2019 1,483,558 $ 54.13 Granted including replacement awards for merger 4,205,573 $ 190.46 Vested and issued (1,819,566) $ 142.84 Forfeited (318,970) $ 148.43 Balance at December 31, 2020 3,550,595 $ 161.68 Vested and unissued at December 31, 2020 13,755 $ 50.90 Non-vested at December 31, 2020 3,536,840 $ 162.11 |
Schedule of activity under the PSUs | Activity under the PSUs is as follows: Weighted-Average Grant Date Shares Fair Value Per Share Balance at December 31, 2019 512,482 $ 62.51 Granted 114,613 $ 118.01 Vested and issued (197,776) $ 64.31 Balance at December 31, 2020 429,319 $ 76.60 Vested and unissued at December 31, 2020 0 $ 0 Non-vested at December 31, 2020 429,319 $ 76.60 |
Components of operating expense charged for compensation cost expense | Total compensation costs charged as an expense for stock-based awards, including stock options, RSUs, PSUs and ESPP, recognized in the components of operating expenses are as follows (in thousands): Year Ended December 31, 2020 2019 2018 Cost of revenue (exclusive of depreciation and amortization, which is shown separately) $ 2,700 $ 0 $ 0 Advertising and marketing 26,995 4,956 2,091 Sales 65,730 10,286 7,638 Technology and development 60,556 7,573 6,000 General and administrative 319,550 43,887 28,040 Total stock-based compensation expense $ 475,531 $ 66,702 $ 43,769 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Taxes | |
Schedule of components of income (loss) from continuing operations before income taxes | For financial reporting purposes, income (loss) before income taxes for the years ended December 31, 2020, 2019 and 2018 include the following components (in thousands): Year Ended December 31, 2020 2019 2018 Domestic $ (566,266) $ (95,476) $ (91,142) International (9,727) (13,979) (5,824) Total $ (575,993) $ (109,455) $ (96,966) |
Schedule of components of provision (benefit) for income taxes | The provision (benefit) for income taxes is comprised of the following components: Year Ended December 31, 2020 2019 2018 Current federal $ (1,954) $ 239 $ 0 Current state 27 300 6 Current foreign 1,605 (262) 2,011 Total current (322) 277 2,017 Deferred federal (60,008) (5,043) (499) Deferred state (26,775) (1,783) 416 Deferred foreign (3,752) (4,042) (1,816) Total deferred (90,535) (10,868) (1,899) Total (Benefit) / Provision $ (90,857) $ (10,591) $ 118 |
Schedule of reconciliation of the statutory federal income tax rate to the effective income tax rate | The sources and tax effects of the differences are as follows: Year Ended December 31, 2020 2019 2018 Tax at federal statutory rate 21.0 % 21.0 % 21.0 % State and local tax 2.3 % 4.6 % 4.8 % Acquisition expenses (2.2) % (0.4) % (1.3) % Stock compensation 11.3 % 11.5 % 16.5 % Executive compensation (12.5) % (3.8) % 0 % Non-deductible expenses (0.1) % (0.2) % (0.3) % Foreign rate differential 0.3 % 2.2 % 0 % Change in valuation allowance (5.4) % (25.3) % (41.5) % Other 1.0 % 0.1 % 0.7 % Effective tax rate 15.8 % 9.7 % (0.1) % |
Schedule of components of deferred tax assets and liabilities | The Company’s deferred tax assets and liabilities consist of the following (in thousands): As of December 31, 2020 2019 Deferred tax assets: Net operating loss carryforwards $ 497,603 $ 158,520 Accrued expenses and compensation 7,016 2,168 Uncertain tax positions, including interest 232 352 Stock-based compensation 94,029 14,914 Foreign tax credits and alternative minimum tax credits 5,727 5,871 Research and development credits 14,666 0 Depreciation of property and equipment 83 323 Interest expense carryforward 6,620 1,295 Operating lease assets (1) 13,978 7,492 Deferred revenue 2,917 0 Other 3,058 127 Deferred tax assets 645,929 191,062 Valuation allowance (107,984) (121,186) Net deferred tax assets 537,945 69,876 Deferred tax liabilities: Debt related (105,063) (27,545) Operating lease liabilities (12,117) (6,889) Prepaid insurance and deferred commissions (995) 0 Depreciation of property and equipment (2,476) (1,667) Intangible assets (519,397) (55,453) Deferred tax liabilities (640,048) (91,554) Net deferred tax liabilities $ (102,103) $ (21,678) (1) As discussed in Note 14 to the consolidated financial statements, in 2019, we adopted an updated lease accounting standard that resulted in the recognition of operating lease right-of-use assets and lease liabilities. We adopted this standard using a transition method that does not require application to periods prior to adoption. |
Schedule of reconciliation of beginning and ending amount of unrecognized tax benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands): Balance on January 1, 2020 $ 2,912 Additions assumed in a business combination 15,850 Additions based on current year tax positions 4,990 Statute of limitations expirations (2,390) Balance on December 31, 2020 $ 21,362 |
Net Loss per Share (Tables)
Net Loss per Share (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Net Loss per Share | |
Schedule of calculation of basic and diluted net loss per share | The following table presents the calculation of basic and diluted net loss per share for the Company’s common stock (in thousands, except shares and per share data): Year Ended December 31, 2020 2019 2018 Net loss $ (485,136) $ (98,864) $ (97,084) Weighted-average shares used to compute basic and diluted net loss per share 90,509 71,845 65,845 Net loss per share, basic and diluted $ (5.36) $ (1.38) $ (1.47) |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - VIE (Details) | 12 Months Ended | |||
Dec. 31, 2020USD ($)item | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Variable interest entity | ||||
Number of professional associations consolidated as VIEs | item | 3 | |||
Number of professional corporations consolidated as VIEs | item | 12 | |||
Number of service corporations consolidated as VIEs | 1 | |||
Revenue | $ 1,093,962,000 | $ 553,307,000 | $ 417,907,000 | |
Net (loss) income | (485,136,000) | (98,864,000) | (97,084,000) | |
Assets | 17,755,281,000 | 1,602,827,000 | ||
(Equity) deficit | (15,883,804,000) | (1,014,025,000) | (1,013,119,000) | $ (558,903,000) |
Primary beneficiary | ||||
Variable interest entity | ||||
Revenue | 199,300,000 | 83,600,000 | 58,100,000 | |
Net (loss) income | 600,000 | (3,200,000) | $ (2,500,000) | |
Assets | 28,700,000 | 13,600,000 | ||
Liabilities | 65,800,000 | 51,300,000 | ||
(Equity) deficit | $ 37,100,000 | $ 37,700,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Segment Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Revenue Recognition | |||
Contract term | 1 year | ||
Payment terms | 30 days | ||
Contract with Customer Refunds Issued | $ 11.2 | $ 3.6 | $ 3 |
Revenue recognized related to prior periods | $ 1.9 | $ 0.8 | $ 0.8 |
Amortization term of deferred contract cost | 4 years | ||
Minimum | |||
Revenue Recognition | |||
Contract term | 1 year | ||
Maximum | |||
Revenue Recognition | |||
Contract term | 3 years |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Cash and Cash Equivalents and Short-Term Investments (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Restricted cash | $ 62.6 | ||
Maximum | |||
Realized gains and losses | $ 0.1 | $ 0.1 | $ 0.1 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - PPE (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Computer equipment | |
Property and Equipment | |
Useful life | 3 years |
Furniture and equipment | |
Property and Equipment | |
Useful life | 5 years |
Product tooling | |
Property and Equipment | |
Useful life | 2 years |
Rental equipment | |
Property and Equipment | |
Useful life | 4 years 3 months 18 days |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Operating Leases (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 | Jan. 01, 2019 |
Recently Issued Accounting Pronouncements | |||
Operating lease liability | $ 54,580 | ||
Operating lease liability | us-gaap:OperatingLeaseLiability | ||
Right of use assets | $ 46,647 | $ 26,452 | |
Accounting Standards Update 2016-02 | Adjustment | |||
Recently Issued Accounting Pronouncements | |||
Operating lease liability | $ 34,000 | ||
Right of use assets | $ 34,000 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Intangibles (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020USD ($)item | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Intangible assets | |||
Number of reporting units | item | 1 | ||
Goodwill impairment charges | $ 0 | $ 0 | $ 0 |
General and administrative expenses | |||
Intangible assets | |||
Impairment loss | $ 0 | $ 0 | $ 0 |
Client relationships | Minimum | |||
Intangible assets | |||
Useful life | 2 years | 2 years | |
Client relationships | Maximum | |||
Intangible assets | |||
Useful life | 20 years | 20 years | |
Non-compete agreements | Minimum | |||
Intangible assets | |||
Useful life | 1 year 6 months | 1 year 6 months | |
Non-compete agreements | Maximum | |||
Intangible assets | |||
Useful life | 5 years | 5 years | |
Trademarks | Minimum | |||
Intangible assets | |||
Useful life | 3 years | 3 years | |
Trademarks | Maximum | |||
Intangible assets | |||
Useful life | 15 years | 15 years | |
Patents | |||
Intangible assets | |||
Useful life | 3 years | 3 years | |
Technology | Minimum | |||
Intangible assets | |||
Useful life | 5 years | 5 years | |
Technology | Maximum | |||
Intangible assets | |||
Useful life | 7 years | 7 years | |
Capitalized software development costs | Minimum | |||
Intangible assets | |||
Useful life | 3 years | 3 years | |
Capitalized software development costs | Maximum | |||
Intangible assets | |||
Useful life | 5 years | 5 years |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Stock-Based Compensation (Details) | 1 Months Ended | 12 Months Ended |
Jul. 31, 2015 | Dec. 31, 2020 | |
ESPP | ||
Common Stock and Stockholders' Equity | ||
Maximum offering period | 27 months | 27 months |
Stock purchase price as a percentage of fair value (as a percent) | 85.00% | 85.00% |
PSUs | Minimum | ||
Common Stock and Stockholders' Equity | ||
Actual performance compared to performance conditions percentage | 50.00% | |
PSUs | Maximum | ||
Common Stock and Stockholders' Equity | ||
Actual performance compared to performance conditions percentage | 225.00% |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Foreign Currency (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Summary of Significant Accounting Policies | |||
Realized foreign exchange (loss) gain | $ (0.6) | $ 0.2 | $ (0.1) |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Advertising and Marketing Expenses (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Summary of Significant Accounting Policies | |||
Advertising expense | $ 165 | $ 88.8 | $ 70.6 |
Summary of Significant Accou_13
Summary of Significant Accounting Policies - Concentrations (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Concentrations of Risk and Significant Clients | |||
Revenue | $ 1,093,962 | $ 553,307 | $ 417,907 |
United States | |||
Concentrations of Risk and Significant Clients | |||
Revenue | 967,400 | 445,300 | 342,700 |
Foreign. | |||
Concentrations of Risk and Significant Clients | |||
Revenue | $ 126,600 | $ 108,000 | $ 75,200 |
Revenue, Deferred Revenue, De_3
Revenue, Deferred Revenue, Deferred Costs and Other - Other Disclosures (Details) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Product and Service Concentration Risk | Revenue from Contract with Customer | Access Fees Revenue | |||
Revenue, Deferred Revenue, Deferred Costs and Other | |||
Concentration risk (as a percent) | 79.00% | 84.00% | 84.00% |
Revenue, Deferred Revenue, De_4
Revenue, Deferred Revenue, Deferred Costs and Other - Disaggregation and Other (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Revenue | |||
Revenue | $ 1,093,962 | $ 553,307 | $ 417,907 |
Accounts receivable, net of allowance for doubtful accounts | 169,281 | 56,948 | |
Net increase in deferred revenue | 40,000 | 7,100 | |
Deferred revenue assumed from business combinations | 21,700 | ||
Revenue recognized, included in deferred revenue balance at beginning of period | 12,500 | 7,100 | |
United States | |||
Revenue | |||
Revenue | 967,400 | 445,300 | 342,700 |
Foreign. | |||
Revenue | |||
Revenue | 126,600 | 108,000 | 75,200 |
Access Fees Revenue | |||
Revenue | |||
Revenue | 861,800 | 463,296 | 350,784 |
Access Fees Revenue | United States | |||
Revenue | |||
Revenue | 737,408 | 356,656 | 277,091 |
Access Fees Revenue | Foreign. | |||
Revenue | |||
Revenue | 124,392 | 106,640 | 73,693 |
Visit Fee Revenue | |||
Revenue | |||
Revenue | 206,911 | 90,011 | 67,123 |
Visit Fee Revenue | United States | |||
Revenue | |||
Revenue | 206,093 | 88,669 | 65,582 |
Visit Fee Revenue | Foreign. | |||
Revenue | |||
Revenue | 818 | 1,342 | 1,541 |
Other | |||
Revenue | |||
Revenue | 25,251 | 0 | 0 |
Other | United States | |||
Revenue | |||
Revenue | 23,888 | 0 | 0 |
Other | Foreign. | |||
Revenue | |||
Revenue | $ 1,363 | $ 0 | $ 0 |
Revenue, Deferred Revenue, De_5
Revenue, Deferred Revenue, Deferred Costs and Other - Revenue Remaining Performance Obligation (Details) $ in Millions | Dec. 31, 2020USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Future Performance Obligations | |
Revenue recognized, performance obligation | $ 52.4 |
Period of performance obligation | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Future Performance Obligations | |
Revenue recognized, performance obligation | $ 2 |
Period of performance obligation | 12 months |
Revenue, Deferred Revenue, De_6
Revenue, Deferred Revenue, Deferred Costs and Other - Deferred Cost and Other (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2020 | |
Deferred Device Cost And Other | ||
Deferred device cost, current | $ 3,384 | |
Deferred device cost, noncurrent | 2,179 | |
Total Deferred cost and other | $ 5,563 | $ 5,563 |
Change in Deferred Device Cost And Other | ||
Beginning balance | 0 | |
Additions | 6,007 | |
Cost of revenue recognized | (444) | |
Ending Balance | $ 5,563 |
Fair Value Measurements - Recur
Fair Value Measurements - Recurring (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Fair Value | ||
Short-term investments | $ 53,245 | $ 2,711 |
Fair Value, Assets, Level 1 to Level 2 Transfers, Amount | 0 | 0 |
Fair Value, Assets, Level 2 to Level 1 Transfers, Amount | 0 | 0 |
Fair Value, Liabilities, Level 1 to Level 2 Transfers, Amount | 0 | 0 |
Fair Value, Liabilities, Level 2 to Level 1 Transfers, Amount | 0 | 0 |
Fair value assets level 3 net transfers | 0 | 0 |
Fair value liabilities level 3 net transfers | 0 | 0 |
Recurring | ||
Fair Value | ||
Cash and cash equivalents | 733,324 | 514,353 |
Short-term investments | 53,245 | 2,711 |
Contingent liability | 4,514 | 4,769 |
Level 1 | Recurring | ||
Fair Value | ||
Cash and cash equivalents | 733,324 | 514,353 |
Short-term investments | 0 | 0 |
Contingent liability | 0 | 0 |
Level 2 | Recurring | ||
Fair Value | ||
Cash and cash equivalents | 0 | 0 |
Short-term investments | 53,245 | 2,711 |
Contingent liability | 0 | 0 |
Level 3 | Recurring | ||
Fair Value | ||
Cash and cash equivalents | 0 | 0 |
Short-term investments | 0 | 0 |
Contingent liability | $ 4,514 | $ 4,769 |
Fair Value Measurements - Level
Fair Value Measurements - Level 3 (Details) - Contingent Liability $ in Thousands | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Reconciliation of Level 3 liabilities | |
Fair value at beginning of period | $ 4,769 |
Assumed from business combinations | 357 |
Payments | 0 |
Change in fair value | (1,058) |
Currency translation adjustment | 446 |
Fair value at end of period | $ 4,514 |
Business Acquisitions - Transac
Business Acquisitions - Transactions (Details) $ / shares in Units, $ in Millions | Oct. 30, 2020USD ($)$ / sharesshares | Jul. 01, 2020USD ($)shares | May 31, 2018USD ($)shares | Apr. 30, 2019USD ($) |
Livongo Health | ||||
Business acquisition | ||||
Merger, conversion of common shares ratio | 0.5920 | |||
Merger, conversion price (in dollars per share) | $ / shares | $ 4.24 | |||
Merger, special cash dividend | $ / shares | $ 7.09 | |||
Consideration paid | $ 13,938 | |||
Cash paid for acquisition | 401 | |||
Amount related to conversion feature of the Livongo Notes guaranteed by the Company | $ 555.4 | |||
Equity consideration (in shares) | shares | 60,400,000 | |||
Equity consideration | $ 12,981.6 | |||
Acquisition related costs | $ 59 | |||
InTouch | ||||
Business acquisition | ||||
Consideration paid | $ 1,069.8 | |||
Cash paid for acquisition | $ 166.5 | |||
Equity consideration (in shares) | shares | 4,600,000 | |||
Equity consideration | $ 903.3 | |||
Acquisition related costs | $ 21.4 | |||
MedecinDirect | ||||
Business acquisition | ||||
Consideration paid | $ 11.2 | |||
Advance Medical | ||||
Business acquisition | ||||
Consideration paid | $ 351.7 | |||
Cash paid for acquisition | $ 283.1 | |||
Equity consideration (in shares) | shares | 1,344,387 | |||
Equity consideration | $ 68.6 | |||
Acquisition related costs | $ 5.8 |
Business Acquisitions - Assets
Business Acquisitions - Assets Acquired, Liabilities Assumed, Pro forma (Details) - USD ($) $ in Thousands | Oct. 30, 2020 | Jul. 01, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Less: | |||||
Deferred revenue | $ (21,700) | ||||
Goodwill | 14,581,255 | $ 746,079 | $ 737,197 | ||
Livongo Health | |||||
Identifiable assets acquired and liabilities assumed: | |||||
Purchase price, net of cash acquired | $ 13,938,039 | ||||
Less: | |||||
Accounts receivable | 80,084 | ||||
Short term investment | 52,500 | ||||
Inventory | 24,299 | ||||
Property and equipment, net | 8,952 | ||||
Right of use assets | 15,056 | ||||
Other assets | 17,337 | ||||
Advances from financing companies | 0 | ||||
Accounts payable | (119,302) | ||||
Deferred revenue | (997) | ||||
Convertible notes | (453,417) | ||||
Deferred taxes | (139,516) | ||||
Lease liabilities | (18,834) | ||||
Other liabilities | (40,343) | ||||
Goodwill | 12,912,220 | ||||
Livongo Health | Client relationships | |||||
Less: | |||||
Finite-lived intangibles | 1,050,000 | ||||
Livongo Health | Technology | |||||
Less: | |||||
Finite-lived intangibles | 300,000 | ||||
Livongo Health | Trademarks | |||||
Less: | |||||
Finite-lived intangibles | $ 250,000 | ||||
InTouch | |||||
Identifiable assets acquired and liabilities assumed: | |||||
Purchase price, net of cash acquired | $ 1,069,759 | ||||
Less: | |||||
Accounts receivable | 16,986 | ||||
Short term investment | 0 | ||||
Inventory | 8,492 | ||||
Property and equipment, net | 11,366 | ||||
Right of use assets | 4,965 | ||||
Other assets | 2,541 | ||||
Advances from financing companies | (26,012) | ||||
Accounts payable | (5,589) | ||||
Deferred revenue | (20,729) | ||||
Convertible notes | 0 | ||||
Deferred taxes | (30,102) | ||||
Lease liabilities | (5,495) | ||||
Other liabilities | (13,042) | ||||
Goodwill | 899,978 | ||||
InTouch | Client relationships | |||||
Less: | |||||
Finite-lived intangibles | 164,580 | ||||
InTouch | Technology | |||||
Less: | |||||
Finite-lived intangibles | 29,190 | ||||
InTouch | Trademarks | |||||
Less: | |||||
Finite-lived intangibles | $ 32,630 | ||||
Livongo and InTouch | |||||
Pro forma information | |||||
Revenue | 1,445,766 | 798,384 | |||
Net loss | (396,791) | (787,185) | |||
Revenue of acquiree | $ 128,300 | ||||
Net loss of acquiree | $ (409,900) |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Inventories | ||
Raw materials and purchased parts | $ 19,591 | |
Work in process | 1,431 | |
Finished goods | 35,476 | |
Total inventories | $ 56,498 | $ 0 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Total | $ 50,516 | $ 26,058 | |
Accumulated depreciation | (21,965) | (15,762) | |
Property and equipment, net | 28,551 | 10,296 | |
Depreciation | 4,800 | 3,400 | $ 4,100 |
Computer equipment | |||
Total | 22,129 | 15,219 | |
Furniture and equipment | |||
Total | 6,486 | 3,458 | |
Leasehold improvement | |||
Total | 12,831 | 7,022 | |
Rental equipment | |||
Total | 8,413 | 0 | |
Construction in progress | |||
Total | $ 657 | $ 359 |
Intangible Assets, Net - Summar
Intangible Assets, Net - Summary (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Intangible assets | |||
Gross Value | $ 2,183,399 | $ 319,796 | |
Accumulated Amortization | (162,535) | (94,343) | |
Net Carrying Value | 2,020,864 | 225,453 | |
Amortization expense for intangible assets | $ 64,700 | $ 35,600 | $ 31,500 |
Weighted Average | |||
Intangible assets | |||
Weighted Average Remaining Useful Life | 9 years 2 months 12 days | 12 years 4 months 24 days | |
Client relationships | |||
Intangible assets | |||
Gross Value | $ 1,460,648 | $ 237,182 | |
Accumulated Amortization | (100,844) | (60,647) | |
Net Carrying Value | $ 1,359,804 | $ 176,535 | |
Client relationships | Minimum | |||
Intangible assets | |||
Useful life | 2 years | 2 years | |
Client relationships | Maximum | |||
Intangible assets | |||
Useful life | 20 years | 20 years | |
Client relationships | Weighted Average | |||
Intangible assets | |||
Weighted Average Remaining Useful Life | 15 years 4 months 24 days | 13 years 1 month 6 days | |
Non-compete agreements | |||
Intangible assets | |||
Gross Value | $ 5,097 | $ 4,958 | |
Accumulated Amortization | (4,872) | (4,260) | |
Net Carrying Value | $ 225 | $ 698 | |
Non-compete agreements | Minimum | |||
Intangible assets | |||
Useful life | 1 year 6 months | 1 year 6 months | |
Non-compete agreements | Maximum | |||
Intangible assets | |||
Useful life | 5 years | 5 years | |
Non-compete agreements | Weighted Average | |||
Intangible assets | |||
Weighted Average Remaining Useful Life | 4 months 24 days | 1 year 4 months 24 days | |
Trademarks | |||
Intangible assets | |||
Gross Value | $ 326,786 | $ 42,606 | |
Accumulated Amortization | (15,576) | (7,143) | |
Net Carrying Value | $ 311,210 | $ 35,463 | |
Trademarks | Minimum | |||
Intangible assets | |||
Useful life | 3 years | 3 years | |
Trademarks | Maximum | |||
Intangible assets | |||
Useful life | 15 years | 15 years | |
Trademarks | Weighted Average | |||
Intangible assets | |||
Weighted Average Remaining Useful Life | 10 years 6 months | 12 years 10 months 24 days | |
Patents | |||
Intangible assets | |||
Gross Value | $ 200 | $ 200 | |
Accumulated Amortization | (200) | (200) | |
Net Carrying Value | $ 0 | $ 0 | |
Useful life | 3 years | 3 years | |
Patents | Weighted Average | |||
Intangible assets | |||
Weighted Average Remaining Useful Life | 0 years | 0 years | |
Capitalized software development costs | |||
Intangible assets | |||
Gross Value | $ 52,518 | $ 28,890 | |
Accumulated Amortization | (24,771) | (16,415) | |
Net Carrying Value | $ 27,747 | $ 12,475 | |
Capitalized software development costs | Minimum | |||
Intangible assets | |||
Useful life | 3 years | 3 years | |
Capitalized software development costs | Maximum | |||
Intangible assets | |||
Useful life | 5 years | 5 years | |
Capitalized software development costs | Weighted Average | |||
Intangible assets | |||
Weighted Average Remaining Useful Life | 2 years 9 months 18 days | 2 years 3 months 18 days | |
Technology | |||
Intangible assets | |||
Gross Value | $ 338,150 | $ 5,960 | |
Accumulated Amortization | (16,272) | (5,678) | |
Net Carrying Value | $ 321,878 | $ 282 | |
Technology | Minimum | |||
Intangible assets | |||
Useful life | 5 years | 5 years | |
Technology | Maximum | |||
Intangible assets | |||
Useful life | 7 years | 7 years | |
Technology | Weighted Average | |||
Intangible assets | |||
Weighted Average Remaining Useful Life | 6 years 7 months 6 days | 6 months |
Intangible Assets, Net - Amorti
Intangible Assets, Net - Amortization (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Periodic amortization that will be charged to expense over the remaining life of the intangible assets | ||
2021 | $ 196,019 | |
2022 | 186,860 | |
2023 | 188,386 | |
2024 | 183,409 | |
2025 | 1,266,190 | |
Net Carrying Value | $ 2,020,864 | $ 225,453 |
Goodwill (Details)
Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Goodwill | ||
Beginning balance | $ 746,079 | $ 737,197 |
Additions associated with acquisitions | 13,812,198 | 10,604 |
Cumulative translation adjustment | 22,978 | (1,722) |
Goodwill | $ 14,581,255 | $ 746,079 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Accrued Expenses and Other Current Liabilities | ||
Professional fees | $ 4,717 | $ 1,535 |
Consulting fees/provider fees | 23,167 | 10,618 |
Client performance guarantees | 7,215 | 3,298 |
Legal fees | 2,419 | 1,077 |
Interest payable | 2,049 | 838 |
Income tax payable | 1,627 | 2,859 |
Insurance | 3,139 | 1,263 |
Marketing | 2,815 | 2,810 |
Operating lease liabilities - current | 11,438 | 5,088 |
Earnout | 4,514 | 0 |
Other | 20,557 | 5,054 |
Total | $ 83,657 | $ 34,440 |
Current operating lease liabilities | us-gaap:OperatingLeaseLiabilityCurrent | us-gaap:OperatingLeaseLiabilityCurrent |
Revolving Credit Facility (Deta
Revolving Credit Facility (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revolving Credit Facility | ||||
Payment of assumed indebtedness | $ 10,000 | $ 0 | $ 0 | |
Livongo Health | ||||
Revolving Credit Facility | ||||
Amount outstanding | 0 | |||
Payment of assumed indebtedness | $ 10,000 | |||
Revolving Credit Facility | ||||
Revolving Credit Facility | ||||
Maximum borrowings | $ 10,000 | |||
Amount outstanding | 0 | |||
Letters of credit outstanding | $ 2,200 |
Convertible Senior Notes - Due
Convertible Senior Notes - Due 2027 - Terms (Details) - 2027 Notes $ / shares in Units, shares in Millions | May 19, 2020USD ($)D$ / sharesshares | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) |
Convertible Senior Notes | ||||
Face amount | $ | $ 1,000,000,000 | $ 1,000,000,000 | ||
Interest rate (as a percent) | 1.25% | |||
Proceeds from the sale of capped call related to the Livongo Notes | $ | $ 975,900,000 | 1,000,000,000 | $ 0 | $ 0 |
Offering costs | $ | 24,100,000 | $ 24,070,000 | $ 0 | $ 0 |
Principal multiple amount used in the conversion of the debt instrument | $ | $ 1,000 | |||
Convertible debt, threshold, trading days | 20 | |||
Convertible debt, threshold, consecutive trading days | 30 | |||
Minimum percentage of common stock price as a percentage of the conversion price | 130.00% | |||
Convertible debt, number of business days, measurement period | 5 | |||
Convertible debt, number of consecutive trading days, measurement period | 10 | |||
Trading price expressed as a percentage of the last reported sales price and conversion rate after the specified consecutive trading day period | 98.00% | |||
Convertible debt, conversion rate | 4.1258 | |||
Convertible debt, conversion price (in dollars per share) | $ / shares | $ 242.38 | |||
Trading day observation period used to determine the amount of cash and shares, if any, that are due upon conversion | 25 | |||
Convertible debt, equity component | $ | $ 286,000,000 | |||
Shares reserved for issuance (in shares) | shares | 5.4 | |||
Debt term | 7 years | |||
On or after June 5, 2024 | ||||
Convertible Senior Notes | ||||
Convertible debt, threshold, trading days | 20 | |||
Convertible debt, threshold, consecutive trading days | 30 | |||
Minimum percentage of common stock price as a percentage of the conversion price | 130.00% |
Convertible Senior Notes - Du_2
Convertible Senior Notes - Due 2027 - Summary (Details) - 2027 Notes - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | May 19, 2020 | |
Convertible Senior Notes | ||
Principal | $ 1,000,000 | $ 1,000,000 |
Less: Debt discount, net | (287,916) | |
Net carrying amount | $ 712,084 | |
Remaining contractual life | 6 years 4 months 24 days | |
Interest Expense | ||
Contractual interest expense | $ 7,743 | |
Amortization of debt discount | 21,756 | |
Total | $ 29,499 | |
Effective interest rate of the liability component (as a percent) | 3.40% | |
Level 2 | ||
Convertible Senior Notes | ||
Fair value | $ 1,188,900 |
Convertible Senior Notes - Livo
Convertible Senior Notes - Livongo Notes Due 2025 - Terms (Details) | 1 Months Ended | |
Oct. 31, 2020USD ($)itemD$ / shares | Dec. 31, 2020USD ($) | |
Livongo Health | ||
Convertible Senior Notes | ||
Convertible debt, conversion rate | 13.94 | |
Livongo Notes | ||
Convertible Senior Notes | ||
Face amount | $ | $ 550,000,000 | $ 550,000,000 |
Interest rate (as a percent) | 0.875% | |
Principal multiple amount used in the conversion of the debt instrument | $ | $ 1,000 | |
Convertible debt, threshold, trading days | item | 20 | |
Convertible debt, threshold, consecutive trading days | item | 30 | |
Minimum percentage of common stock price as a percentage of the conversion price | 130.00% | |
Convertible debt, number of business days, measurement period | 5 | |
Convertible debt, number of consecutive trading days, measurement period | 5 | |
Trading price expressed as a percentage of the last reported sales price and conversion rate after the specified consecutive trading day period | 98.00% | |
Convertible debt, conversion rate | 13.2329 | |
Convertible debt, Reference property rate | 0.5920 | |
Convertible debt, Reference property , conversion price (in dollars per share) | $ / shares | $ 4.24 | |
Trading day observation period used to determine the amount of cash and shares, if any, that are due upon conversion | $ | 40 | |
Percentage of principal for repurchase price (as percent) | 100 | |
Livongo Notes | On or after June 5, 2023 | ||
Convertible Senior Notes | ||
Convertible debt, threshold, trading days | 20 | |
Convertible debt, threshold, consecutive trading days | 30 | |
Minimum percentage of common stock price as a percentage of the conversion price | 130.00% |
Convertible Senior Notes - Li_2
Convertible Senior Notes - Livongo Notes Due 2025 - Summary (Details) - Livongo Notes - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Oct. 31, 2020 | |
Convertible Senior Notes | ||
Principal | $ 550,000 | $ 550,000 |
Less: Debt discount, net | (93,357) | |
Net carrying amount | $ 456,643 | |
Remaining contractual life | 4 years 4 months 24 days | |
Interest Expense | ||
Contractual interest expense | $ 829 | |
Amortization of debt discount | 3,226 | |
Total | $ 4,055 | |
Effective interest rate of the liability component (as a percent) | 5.20% | |
Level 2 | ||
Convertible Senior Notes | ||
Fair value | $ 988,500 |
Convertible Senior Notes - Du_3
Convertible Senior Notes - Due 2025 - Terms (Details) - 2025 Notes | May 08, 2018USD ($)D$ / shares | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) |
Convertible Senior Notes | ||||
Face amount | $ | $ 287,500,000 | $ 276,788,000 | $ 287,500,000 | |
Interest rate (as a percent) | 1.375% | |||
Proceeds from the sale of capped call related to the Livongo Notes | $ | $ 279,100,000 | $ 0 | $ 0 | $ 279,152,000 |
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 | 25 | |||
Debt term | 7 years | |||
Convertible debt, equity component | $ | $ 91,400,000 | |||
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 | |||
Minimum percentage of common stock price as a percentage of the conversion price | 130.00% | |||
Convertible debt, threshold, trading days | 20 | |||
Convertible debt, threshold, consecutive trading days | 30 | |||
Convertible debt, number of business days, measurement period | 5 | |||
Convertible debt, number of consecutive trading days, measurement period | 10 | |||
Trading price expressed as a percentage of the last reported sales price and conversion rate after the specified consecutive trading day period | 98.00% | |||
On or after May 22, 2022 | ||||
Convertible Senior Notes | ||||
Minimum percentage of common stock price as a percentage of the conversion price | 130.00% | |||
Convertible debt, threshold, trading days | 20 | |||
Convertible debt, threshold, consecutive trading days | 30 |
Convertible Senior Notes - Du_4
Convertible Senior Notes - Due 2025 - Summary (Details) - 2025 Notes - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | May 08, 2018 | |
Convertible Senior Notes | ||||
Principal | $ 276,788 | $ 287,500 | $ 287,500 | |
Less: Debt discount, net | (65,923) | (81,207) | ||
Net carrying amount | $ 210,865 | 206,293 | ||
Remaining contractual life | 4 years 4 months 24 days | |||
Interest Expense | ||||
Contractual interest expense | $ 3,900 | 3,953 | $ 2,578 | |
Amortization of debt discount | 12,532 | 11,706 | 6,831 | |
Total | $ 16,432 | $ 15,659 | $ 9,409 | |
Effective interest rate of the liability component (as a percent) | 7.90% | 7.90% | 7.90% | |
Level 2 | ||||
Convertible Senior Notes | ||||
Fair value | $ 1,032,900 |
Convertible Senior Notes - Du_5
Convertible Senior Notes - Due 2022 - Terms (Details) - 2022 Notes | Jun. 27, 2017USD ($)D$ / shares | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) |
Convertible Senior Notes | |||
Face amount | $ | $ 275,000,000 | $ 46,762,000 | $ 274,995,000 |
Interest rate (as a percent) | 3.00% | ||
Proceeds from the sale of capped call related to the Livongo Notes | $ | $ 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 | 25 | ||
Convertible debt, equity component | $ | $ 62,400,000 | ||
Debt term | 5 years 6 months | ||
At any time prior to close of business on the business day immediately preceding June 15, 2022 | |||
Convertible Senior Notes | |||
Principal multiple amount used in the conversion of the debt instrument | $ | $ 1,000 | ||
Convertible debt, threshold, trading days | 20 | ||
Convertible debt, threshold, consecutive trading days | 30 | ||
Minimum percentage of common stock price as a percentage of the conversion price | 130.00% | ||
Convertible debt, number of business days, measurement period | 5 | ||
Convertible debt, number of consecutive trading days, measurement period | 10 | ||
Trading price expressed as a percentage of the last reported sales price and conversion rate after the specified consecutive trading day period | 98.00% | ||
On or after December 22, 2020 | |||
Convertible Senior Notes | |||
Convertible debt, threshold, trading days | 20 | ||
Convertible debt, threshold, consecutive trading days | 30 | ||
Minimum percentage of common stock price as a percentage of the conversion price | 130.00% |
Convertible Senior Notes - Du_6
Convertible Senior Notes - Due 2022 - Summary (Details) - 2022 Notes - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Jun. 27, 2017 | |
Convertible Senior Notes | ||||
Principal | $ 46,762 | $ 274,995 | $ 275,000 | |
Less: Debt discount, net | (4,202) | (40,878) | ||
Net carrying amount | $ 42,560 | 234,117 | ||
Remaining contractual life | 2 years | |||
Interest Expense | ||||
Contractual interest expense | $ 4,047 | 8,250 | $ 8,250 | |
Amortization of debt discount | 7,553 | 14,026 | 12,726 | |
Total | $ 11,600 | $ 22,276 | $ 20,976 | |
Effective interest rate of the liability component (as a percent) | 9.60% | 10.00% | 10.00% | |
Level 2 | ||||
Convertible Senior Notes | ||||
Fair value | $ 212,500 |
Convertible Senior Notes - Du_7
Convertible Senior Notes - Due 2022 - Other (Details) - USD ($) $ in Thousands, shares in Millions | May 19, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Jun. 27, 2017 |
Convertible Senior Notes | |||||
Loss on extinguishment of debt | $ 9,077 | $ 0 | $ 0 | ||
2022 Notes | |||||
Convertible Senior Notes | |||||
Principal amount of debt exchanged for shares of the Company's common stock in private placement transactions | $ 228,200 | ||||
Payment of cash for repurchase of convertible debt | $ 231,100 | ||||
Shares issued for exchange of debt | 3.9 | ||||
Loss on extinguishment of debt | $ 7,800 | ||||
Face amount | $ 46,762 | $ 274,995 | $ 275,000 |
Convertible Senior Notes - Exti
Convertible Senior Notes - Extinguishment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Convertible Senior Notes | |||
Loss on extinguishment of debt | $ 9,077 | $ 0 | $ 0 |
2025 Notes | |||
Convertible Senior Notes | |||
Loss on extinguishment of debt | $ 1,300 |
Advances from Financing Compa_3
Advances from Financing Companies (Details) $ in Thousands | Dec. 31, 2020USD ($) |
2021 | $ 13,453 |
2022 | 7,909 |
2023 | 2,017 |
Total | $ 23,379 |
Minimum | |
Advances from financing companies, interest rate (as a percent) | 2.47% |
Maximum | |
Advances from financing companies, interest rate (as a percent) | 8.75% |
Leases and Contractual Obliga_3
Leases and Contractual Obligations - Other (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Mar. 01, 2020 | Dec. 31, 2019 | |
Leases and Contractual Obligations | |||
Operating lease - right-of-use assets | $ 46,647 | $ 26,452 | |
Operating lease liability | $ 54,580 | ||
Options to extend | true | ||
Minimum | |||
Leases and Contractual Obligations | |||
Lease term | 1 year | ||
Remaining lease terms | 1 year | ||
Options to extend lease terms | 1 year | ||
Lessor lease term | 2 years | ||
Maximum | |||
Leases and Contractual Obligations | |||
Lease term | 11 years | ||
Remaining lease terms | 11 years | ||
Options to extend lease terms | 6 years | ||
Lessor lease term | 5 years | ||
Office Lease, Santa Clara, CA | |||
Leases and Contractual Obligations | |||
Lease term | 5 years | ||
Remaining lease terms | 5 years | ||
Operating lease - right-of-use assets | $ 6,800 | ||
Operating lease liability | $ 6,800 |
Leases and Contractual Obliga_4
Leases and Contractual Obligations - Lease Cost (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Lease cost | |
Operating lease cost | $ 10,823 |
Short-term Lease, Cost | 1,107 |
Variable lease cost | 3 |
Total lease cost | $ 11,933 |
Leases and Contractual Obliga_5
Leases and Contractual Obligations - Supplemental Information (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Leases | |
Cash payment for operating cash flows used for operating leases | $ 10,654 |
Operating lease liabilities arising from obtaining right-of-use assets | $ 8,134 |
Weighted-average remaining lease term | 4 years 8 months 8 days |
Weighted-average discount rate | 5.64% |
Leases and Contractual Obliga_6
Leases and Contractual Obligations - Future Minimum Lease Payments (Details) $ in Thousands | Dec. 31, 2020USD ($) |
Future minimum lease payments under non cancelable operating leases: | |
2021 | $ 14,193 |
2022 | 14,159 |
2023 | 13,946 |
2024 | 8,918 |
2025 and thereafter | 12,049 |
Sub-total | 63,265 |
Less: imputed interest | 8,685 |
Minimum lease payments | $ 54,580 |
Common Stock and Stockholders_3
Common Stock and Stockholders' Equity - Capitalization (Details) - USD ($) $ / shares in Units, $ in Millions | Jul. 26, 2018 | Dec. 31, 2020 | Oct. 30, 2020 | Oct. 29, 2020 | Dec. 31, 2019 |
Capitalization | |||||
Number of common stock shares authorized | 300,000,000 | 300,000,000 | 150,000,000 | 150,000,000 | |
Follow-On Offering | |||||
Capitalization | |||||
Follow-on Offerings (in shares) | 5,000,000 | ||||
Price of stock issued (in dollars per share) | $ 66.28 | ||||
Proceeds received, net of issuance costs | $ 330.9 | ||||
Payment of deferred offering costs | $ 0.5 |
Common Stock and Stockholders_4
Common Stock and Stockholders' Equity (Deficit) - Warrants (Details) - shares | Dec. 31, 2020 | Dec. 31, 2019 |
Common stock warrants | ||
Warrants | ||
Warrants outstanding (in shares) | 0 | 0 |
Common Stock and Stockholders_5
Common Stock and Stockholders' Equity - Stock Plan and Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands | Oct. 29, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Common Stock and Stockholders' Equity | ||||
Trading days | 4 days | |||
Stock options | ||||
Common Stock and Stockholders' Equity | ||||
Vesting period | 4 years | |||
Stock options | Maximum | ||||
Common Stock and Stockholders' Equity | ||||
Exercisable period (in years) | 10 years | |||
Shares available for grant | 13,012,602 | |||
RSUs | ||||
Common Stock and Stockholders' Equity | ||||
Vesting period | 3 years | |||
RSUs | Maximum | ||||
Common Stock and Stockholders' Equity | ||||
Vesting period | 4 years | |||
2015 Incentive Award Plan | ||||
Number of Shares Outstanding | ||||
Balance, beginning of period (in shares) | 5,206,980 | |||
Stock option grants and assumed awards (in shares) | 6,892,990 | |||
Stock option exercised (in shares) | (6,104,718) | |||
Stock options forfeited (in shares) | (168,567) | |||
Balance, end of period (in shares) | 5,826,685 | 5,206,980 | ||
Vested or expected to vest at end of period (in shares) | 5,826,685 | |||
Exercisable as of end of period (in shares) | 3,903,612 | |||
Weighted-Average Exercise Price | ||||
Balance, beginning of period (in dollars per share) | $ 24.47 | |||
Stock option grants and assumed awards (in dollars per share) | 188.31 | |||
Stock option exercised (in dollars per share) | 9 | |||
Stock options forfeited (in dollars per share) | 36.12 | |||
Balance, end of period (in dollars per share) | 17.19 | $ 24.47 | ||
Vested or expected to vest at end of period (in dollars per share) | 17.19 | |||
Exercisable as of end of period (in dollars per share) | $ 16.36 | |||
Weighted-average remaining contractual life in Years | ||||
Weighted-average remaining contractual life (in years) | 5 years 3 months 21 days | 7 years 10 days | ||
Vested or expected to vest at end of period (in years) | 5 years 3 months 21 days | |||
Exercisable as of end of period (in years) | 5 years 6 months 18 days | |||
Aggregate Intrinsic Value | ||||
Aggregate Intrinsic Value | $ 1,064,944 | $ 308,538 | ||
Stock options exercised | (1,165,746) | |||
Vested or expected to vest at end of period | 1,064,944 | |||
Exercisable as of end of period | 716,706 | |||
Grant-date fair value of stock options granted during the period | $ 4,700 | $ 27,000 | ||
2015 Incentive Award Plan | Stock options | ||||
Aggregate Intrinsic Value | ||||
Grant-date fair value of stock options granted during the period | 1,298,000 | |||
Assumed Plan | Stock options | ||||
Aggregate Intrinsic Value | ||||
Grant-date fair value of stock options granted during the period | $ 1,266,300 |
Common Stock and Stockholders_6
Common Stock and Stockholders' Equity - Fair Value Assumptions (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Other disclosures | |||
Compensation expense | $ 475,531 | $ 66,702 | $ 43,769 |
Stock options | |||
Fair value assumptions | |||
Volatility, minimum (as a percent) | 46.10% | 46.80% | 43.40% |
Volatility, maximum (as a percent) | 56.60% | 47.60% | 46.10% |
Expected life (in years) | 4 years 1 month 6 days | 5 years 2 months 12 days | 6 years |
Risk-free interest rate, minimum | 0.22% | 1.35% | 2.45% |
Risk-free interest rate, maximum | 1.64% | 2.55% | 3.03% |
Dividend yield (as a percent) | 0.00% | 0.00% | 0.00% |
Weighted-average fair value of the underlying stock options | $ 48.74 | $ 28.37 | $ 20.26 |
Other disclosures | |||
Compensation expense | $ 134,900 | $ 20,400 | $ 24,600 |
Unrecognized compensation cost | $ 138,000 | ||
Period over which unrecognized compensation cost is expected to be recognized | 1 year 9 months 18 days | ||
Stock options | Assumed Plan | |||
Other disclosures | |||
Accelerated cost | $ 91,500 |
Common Stock and Stockholders_7
Common Stock and Stockholders' Equity - Restricted Stock Units (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Other disclosures | |||
Stock-based compensation | $ 475,531 | $ 66,702 | $ 43,769 |
RSUs | |||
Common Stock and Stockholders' Equity | |||
Vesting period | 3 years | ||
Shares | |||
Outstanding at beginning of period (in shares) | 1,483,558 | ||
Granted including replacement awards for merger (in shares) | 4,205,573 | ||
Vested and issued (in shares) | (1,819,566) | ||
Forfeited (in shares) | (318,970) | ||
Outstanding at end of period (in shares) | 3,550,595 | 1,483,558 | |
Vested and unissued (in shares) | 13,755 | ||
Nonvested (in shares) | 3,536,840 | ||
Weighted-Average Grant Date Fair Value Per Share | |||
Outstanding at beginning of period (in dollars per share) | $ 54.13 | ||
Granted including replacement awards for merger (in dollars per share) | 190.46 | ||
Vested and issued (in dollars per share) | 142.84 | ||
Forfeited (in dollars per share) | 148.43 | ||
Outstanding at end of period (in dollars per share) | 161.68 | $ 54.13 | |
Vested and unissued (in dollars per share) | 50.90 | ||
Non-vested (in dollars per share) | $ 162.11 | ||
Other disclosures | |||
Grant date fair value of RSUs granted | $ 801,000 | $ 56,700 | 49,300 |
Stock-based compensation | 314,100 | $ 30,500 | $ 16,700 |
Unrecognized compensation cost related to non vested awards | $ 460,900 | ||
Period over which unrecognized compensation cost is expected to be recognized | 2 years | ||
Minimum | RSUs | |||
Common Stock and Stockholders' Equity | |||
Vesting period | 1 year | ||
Maximum | RSUs | |||
Common Stock and Stockholders' Equity | |||
Vesting period | 4 years | ||
Assumed Plan | RSUs | |||
Other disclosures | |||
Grant date fair value of RSUs granted | $ 712,400 | ||
Accelerated cost | $ 240,400 |
Common Stock and Stockholders_8
Common Stock and Stockholders' Equity - Performance Stock Units (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Other disclosures | |||
Stock-based compensation | $ 475,531 | $ 66,702 | $ 43,769 |
PSUs | |||
Shares | |||
Outstanding at beginning of period (in shares) | 512,482 | ||
Granted | 114,613 | ||
Vested and issued (in shares) | (197,776) | ||
Outstanding at end of period (in shares) | 429,319 | 512,482 | |
Vested and unissued (in shares) | 0 | ||
Nonvested (in shares) | 429,319 | ||
Weighted-Average Grant Date Fair Value Per Share | |||
Outstanding at beginning of period (in dollars per share) | $ 62.51 | ||
Granted (in dollars per share) | 118.01 | ||
Vested and issued (in dollars per share) | 64.31 | ||
Outstanding at end of period (in dollars per share) | 76.60 | $ 62.51 | |
Vested and unissued (in dollars per share) | 0 | ||
Non-vested (in dollars per share) | $ 76.60 | ||
Other disclosures | |||
Grant date fair value of PSUs granted | $ 25,000 | $ 31,600 | 3,500 |
Stock-based compensation | 24,000 | $ 14,600 | $ 1,500 |
Unrecognized compensation cost related to non vested awards | $ 20,400 | ||
Period over which unrecognized compensation cost is expected to be recognized | 1 year 6 months | ||
PSUs | Minimum | |||
Common Stock and Stockholders' Equity | |||
Vesting period | 1 year | ||
Actual performance compared to performance conditions percentage | 50.00% | ||
PSUs | Maximum | |||
Common Stock and Stockholders' Equity | |||
Vesting period | 3 years | ||
Actual performance compared to performance conditions percentage | 225.00% |
Common Stock and Stockholders_9
Common Stock and Stockholders' Equity - Employee Stock Purchase Plan (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Jul. 31, 2015 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Employee Stock Purchase Plan | ||||
Stock-based compensation | $ 475,531 | $ 66,702 | $ 43,769 | |
ESPP | ||||
Employee Stock Purchase Plan | ||||
Shares reserved for issuance under the plan (in shares) | 832,492 | |||
Maximum offering period | 27 months | 27 months | ||
Stock purchase price as a percentage of fair value (as a percent) | 85.00% | 85.00% | ||
Issuance of stock under employee stock purchase plan (in shares) | 49,781 | 64,497 | ||
Remaining shares available for issuance under the plan (in shares) | 505,486 | |||
Stock-based compensation | $ 2,800 | $ 1,200 | $ 1,000 | |
Unrecognized compensation cost | $ 1,000 | |||
Period over which unrecognized compensation cost is expected to be recognized | 6 months |
Common Stock and Stockholder_10
Common Stock and Stockholders' Equity - Compensation Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Compensation costs charged as an expense | |||
Stock-based compensation | $ 475,531 | $ 66,702 | $ 43,769 |
Cost of revenue (exclusive of depreciation and amortization, which is shown separately) | |||
Compensation costs charged as an expense | |||
Stock-based compensation | 2,700 | 0 | 0 |
Advertising and marketing | |||
Compensation costs charged as an expense | |||
Stock-based compensation | 26,995 | 4,956 | 2,091 |
Sales | |||
Compensation costs charged as an expense | |||
Stock-based compensation | 65,730 | 10,286 | 7,638 |
Technology and development | |||
Compensation costs charged as an expense | |||
Stock-based compensation | 60,556 | 7,573 | 6,000 |
General and administrative expenses | |||
Compensation costs charged as an expense | |||
Stock-based compensation | $ 319,550 | $ 43,887 | $ 28,040 |
Income Taxes - Components (Deta
Income Taxes - Components (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Components of income (loss) from continuing operations before income taxes | |||
Domestic | $ (566,266) | $ (95,476) | $ (91,142) |
International | (9,727) | (13,979) | (5,824) |
Net loss before taxes | (575,993) | (109,455) | (96,966) |
Components of provision (benefit) for income taxes | |||
Current federal | (1,954) | 239 | 0 |
Current state | 27 | 300 | 6 |
Current foreign | 1,605 | (262) | 2,011 |
Total current | (322) | 277 | 2,017 |
Deferred federal | (60,008) | (5,043) | (499) |
Deferred state | (26,775) | (1,783) | 416 |
Deferred foreign | (3,752) | (4,042) | (1,816) |
Total deferred | (90,535) | (10,868) | (1,899) |
Total (Benefit) / Provision | $ (90,857) | $ (10,591) | $ 118 |
Income Taxes - Statutory Income
Income Taxes - Statutory Income Tax Rate Reconciliation (Details) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Reconciliations of the statutory federal income tax rate and effective tax rate, Percent | |||
Tax at federal statutory rate (as a percent) | 21.00% | 21.00% | 21.00% |
State and local tax (as a percent) | 2.30% | 4.60% | 4.80% |
Acquisition expenses (as a percent) | (2.20%) | (0.40%) | (1.30%) |
Stock compensation (as a percent) | 11.30% | 11.50% | 16.50% |
Executive compensation (as a percent) | (12.50%) | (3.80%) | 0.00% |
Non-deductible expenses (as a percent) | (0.10%) | (0.20%) | (0.30%) |
Foreign rate differential (as a percent) | 0.30% | 2.20% | 0.00% |
Change in valuation allowance (as a percent) | (5.40%) | (25.30%) | (41.50%) |
Other (as percent) | 1.00% | 0.10% | 0.70% |
Effective tax rate | 15.80% | 9.70% | (0.10%) |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets, Liabilities and Valuation Allowance (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 497,603 | $ 158,520 |
Accrued expenses and compensation | 7,016 | 2,168 |
Uncertain tax positions, including interest | 232 | 352 |
Stock-based compensation | 94,029 | 14,914 |
Foreign tax credits and alternative minimum tax credits | 5,727 | 5,871 |
Research and development credits | 14,666 | 0 |
Depreciation of property and equipment | 83 | 323 |
Interest expenses carryforward | 6,620 | 1,295 |
Operating lease assets | 13,978 | 7,492 |
Deferred revenue | 2,917 | 0 |
Other | 3,058 | 127 |
Deferred tax assets | 645,929 | 191,062 |
Valuation allowance | (107,984) | (121,186) |
Net deferred tax assets | 537,945 | 69,876 |
Deferred tax liabilities: | ||
Debt related | (105,063) | (27,545) |
Operating lease liabilities | (12,117) | (6,889) |
Prepaid insurance and deferred commissions | (995) | 0 |
Depreciation of property and equipment | (2,476) | (1,667) |
Intangible assets | (519,397) | (55,453) |
Deferred tax liabilities | (640,048) | (91,554) |
Net deferred tax liabilities | (102,103) | (21,678) |
Other disclosures | ||
Valuation allowance | 107,984 | $ 121,186 |
Decrease in valuation allowance | $ 13,200 |
Income Taxes - Carryforwards (D
Income Taxes - Carryforwards (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Income taxes | ||
Research and development credits | $ 14,666 | $ 0 |
Federal | ||
Income taxes | ||
Net operating loss carryforwards | 2,030,100 | |
Operating loss carryforward, infinitely | $ 1,477,000 | |
Operating loss carryforward, subject to expiration | 553,100 | |
Research and development credits | 8,400 | |
State | ||
Income taxes | ||
Net operating loss carryforwards | 1,035,900 | |
Research and development credits | 5,300 | |
Foreign | ||
Income taxes | ||
Net operating loss carryforwards | 45,100 | |
Tax credits | 5,700 | |
Research and development credits | $ 900 |
Income Taxes - Unrecognized Tax
Income Taxes - Unrecognized Tax Benefits (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Unrecognized Tax Benefits | |
Balance at beginning of period | $ 2,912 |
Additions assumed in a business combination | 15,850 |
Additions based on current year tax positions | 4,990 |
Statute of limitations expirations | (2,390) |
Balance at end of period | 21,362 |
Decrease in unrecognized tax benefits in next 12 months | 14,100 |
Undistributed earnings | $ 6,000 |
Sale of Assets (Details)
Sale of Assets (Details) - USD ($) $ in Thousands | Jun. 29, 2018 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Sale of Assets | ||||
Consideration from sale of assets | $ 5,500 | $ 0 | $ 0 | $ 5,530 |
Gain on sale of assets | $ 0 | $ 0 | $ 5,500 |
Net Loss per Share (Details)
Net Loss per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Basic and diluted net loss per share: | |||
Net loss | $ (485,136) | $ (98,864) | $ (97,084) |
Weighted-average shares used to compute basic and diluted net loss per share | 90,509,229 | 71,844,535 | 65,844,908 |
Net loss per share, basic and diluted | $ (5.36) | $ (1.38) | $ (1.47) |
Stock options | |||
Net Loss per Share | |||
Antidilutive securities (in shares) | 5,800,000 | ||
RSUs | |||
Net Loss per Share | |||
Antidilutive securities (in shares) | 3,500,000 | ||
PSUs | |||
Net Loss per Share | |||
Antidilutive securities (in shares) | 400,000 | ||
ESPP | |||
Net Loss per Share | |||
Antidilutive securities (in shares) | 100,000 |
401(k) Plan (Details)
401(k) Plan (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
401(k) Plan | |||
Minimum age of employee eligible to participate in the plan | 21 years | ||
Employer contributions (as a percent) | 100.00% | ||
Percentage of eligible compensation, matched by the employer | 4.00% | ||
Employee's elective deferral, maximum contribution | $ 0.3 | ||
Matching contribution made | $ 4.9 | $ 3.2 | $ 2.7 |
Subsequent Events (Details)
Subsequent Events (Details) $ in Millions | Dec. 31, 2020USD ($) |
2022 Notes | |
Subsequent events | |
Amount outstanding | $ 46.8 |
Schedule II - Valuation and Q_2
Schedule II - Valuation and Qualifying Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Allowance for Doubtful Accounts Receivable | |||
Valuation And Qualifying Accounts | |||
Balance at Beginning of Period | $ 3,787 | $ 3,382 | $ 2,422 |
Provisions | 5,284 | 2,665 | 2,243 |
Write-offs | (2,787) | (2,264) | (1,263) |
Other | 128 | 4 | (20) |
Balance at End of Period | 6,412 | 3,787 | 3,382 |
Income Taxes Valuation Allowance | |||
Valuation And Qualifying Accounts | |||
Balance at Beginning of Period | 121,186 | 93,572 | 73,786 |
Provisions | 2,146 | 36,124 | 41,093 |
Write-offs | 0 | 0 | 0 |
Other | (15,348) | (8,510) | (21,307) |
Balance at End of Period | $ 107,984 | $ 121,186 | $ 93,572 |