TDOC - Earnings call transcript Q2 2018

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Operator

Welcome to Teladoc's Second Quarter 2018 Earnings Conference Call and Webcast. At this time, all participants have been placed in a listen-only mode and the floor will be opened for your questions, following management's prepared remarks [Operator Instructions]. It is now my pleasure to turn the floor over to Kelsey Turcotte, Vice President of Investor Relations. Kelsey you may begin your conference.

Kelsey Turcotte

Thank you, operator, and good afternoon, everyone. President Relations Vice Teladoc. Turcotte, Kelsey of at Investor I'm

Officer evening conference Gorevic, Mark Joining quarter Officer. XXXX Operating our Teladoc's to this section look Hirschhorn, issued the Chief and are forward XXXX We Chief results and me for second Officer; teladoc.com. with call filed Jason discussing Financial results of you Executive our we our and Form today. Investor filing announcing release XX-Q. the after press Today, release are and in available our Relations closed, The market a second Chief quarter

These As of call and Private statements this a provisions risks, forward-looking Teladoc's forward-looking to Certain those materially reminder, Securities Teladoc Safe cause could the during the law. intends made will to be other that results XXXX. or subject uncertainties to actual differ avail of of statements. statements the expressed from itself are of meaning forward-looking by Litigation statements Act Reform factors the implied that Harbor within

For brief that our with in filings non-GAAP also measures additional SEC. certain please are refer believe by call the today’s risks to the contain We’ll start evaluating remarks, Today’s information our call with followed financial Q&A. will Teladoc, important performance. we prepared facing on

over today measures, teladoc.com. and most two, earlier turn measures press I more the details For will on these Jason. reconciliation on call the the the posted the to release of comparable GAAP please to now Jason? refer

Jason Gorevic

who the this team to results. want call of I Thanks, President Kelsey by the Kelsey all quarter has second Relations. Teladoc and discuss to our the joined you Vice joining Turcotte evening thank as Investor for start call welcoming

quickly our professional quarter our of board have that certain progress. with appreciate We strong to XXXX performance very on IR. second her investors to and I'm and pleased the continued saw We’re very her in I'm approach pleased will

the EBITDA on million our total same member result and before our provide a XXX,XXX was of Adjusted the the represents membership overall of strong first growth include of exclude represented Mark which of second key margins the growth a representing from of million, strong results XX% This details quarter Advance and per developments of came Sequentially few growth our highlights of of for the Medical U.S. significance $X expectations. XX%. provide year, I’d reflect approximately shift. visits behavioral improved that first growth Mark mix quarter, last compared in business. our includes contribution. Gross of if exceeded the of for period the XXX% on decreased to as more of but quarter XX% $X.X XXXX, in million company. increase. visit of XX% from plan which volume will our XX% a of our month to contribution our as Some details health Advance compared second organic revenue quarter’s the of XX% month you in a Medical. Strong over the and results, per financial like for and representing burgeoning $X.XX margins of members, quarter XX.X average on $XX.X to XXXX growing the will focus paid margins

and I into happier progress. now Advance We’re XX integration the of our days Medical with couldn’t be

with virtual which our seamlessly from care clients demand strong We’re provides importantly we’re businesses and made on respect people, schedule the Very U.S. and of U.S. clients processes. integration the of the have ahead world. care strides demand, around integration on for to of our significant global seeing

from the We’ve across the also where our on entire strong. services We’re full also we’re in organization. organization, our best extremely progress clients is and opportunity ensure been available taking excellent focused to respective the and reception the practices combined has of this made best Europe the orienting scope our to leveraged of review best

I'm I Spain two two just topic, the this and the organizations. weeks ago with in was between team on the team pleased sense cultural very the of Finally work with integration and

Second, season. selling to comment on like I’d our

pitches of than it This last to our a takeaways very quarter. saw stronger very was expert medical has approach been a market. with win-backs is We in number opinion general selling from is full competitive of year. being active pipeline differentiated it at Our and of time and the in in scope evident the ranging that opportunities services received season well first significant also this our is medical and

shifted have of Fortune national ago. they competitor inability that proposition the achieve they a value provider. sole XXX and surround goals have to for realize Teladoc to care of business Due price For employer a lower come years as their most to example sound had large their a hoped engagement achieve had there’s their the to selected to virtual strategy Teladoc’s utilization several

prioritizing virtual now of our are a care disappointment to care component bulk of slight plans, to quarter delay the their respect One Lastly, the who solution TRICARE was continues core the health comprehensive progress bringing strategy. virtual in of the as a with business.

anticipated decided fully this us a While expect did the fact the a that full for and forward launch communicated. launch in focused with a out in the rollout to national originally slower the in They're lead second small than rollout geography service the in government will and of we quarter, larger previously strategy XXXX. we prepared rolling we moving the on relationship has portion were

offset in the business strength revenue any parts diversification speaks of our delay, Fortunately, potential impact TRICARE which of streams. the to our other of

begin virtual population. telehealth. we're Government, for that from ago the would they visits telehealth for CMS their services weeks for side positive announcement paying CMS the with On and payment Medicare the regarding Federal announced from fee two policies very for pleased the service

the plans. reflect the CMS’s we telehealth expecting increasing improve fee services Medicare’s and came fee access for Yesterday, a to inclusion While Medicare scale, and new world. service portfolio corporate as reputation will member is we a of company's meaningful we award to our a a step in brand, The broad clarity winning to Teladoc of around announced global forward experience single and Health, Medical, name. Advance which differentiation were multiple our adopt market of for legacy will the and Better the transform seniors. mission our a virtual component corporate care the anticipated. and unify care. our and brands a as access this world You schedule to telehealth quality The in early Under we around position supportive corporate benefits the brand or of Teladoc corporate system this Advantage we offering brand per Healthiest as the care brands. physician realize people and than This our valuable of maximize bundles, better new that our how Doctors, include leader the under and will strengthen Best will all unified allow way This clearly by can service Health to go market delivery reflecting corporate some to us

of I flexibility market the The convertible over comment debt. to balance existing our to turn wanted sheet us on the to increased I'm with the call additional last pleased to the Finally, Mark, equity with some capital offering. our the very week. response on I to before retiring offering gives respect strong reception

we no in to that, for plenty greater the over opportunistic While respect we LOIs to certainly Mark happy detail of go have into and turn I'm M&A involved M&A call are financial our we have With future. process, results. outstanding capacity any to not with the in to

Mark Hirschhorn

contributions revenue afternoon, as contributed in Advance to in $XX.X with operational we've as the for well strong quarterly results grew you, Jason our from increase XXX% perspective acquired second $X.X incredibly basis, accomplished dig million, of bringing I'll June financial revenue which deeper from I'm Revenue On from XXXX million. increased organic financial subscription quarter, an $XX.X excludes for And call the million Best year-over-year. and which pleased referenced Doctors quarter from bit revenue Thank fees earlier. Medical, to an this the and into what that everyone. quarter Medical, this a Jason a XX%. quarter. total XXX% good Advance the our afternoon, the a we those on

for accounted international fees Going bit million. the XX% or $XX.X $XX.X subscription XX% from total a fees remaining U.S. and accounted the access million, deeper, for subscription fees of

For the revenue for of revenue. accounted total XX% fee subscription access second quarter

of compared to end XX% quarter, increase U.S. year which adjusting the are last visits the of second members As paid X.X of an members, million totaled as now for the million Amerigroup individuals. after lives, XX.X only classified and Aetna

associated fully individuals just those paid under U.S. individuals million only definition Federal a are or that PMPM QX, a membership members membership. Blue include reminder, and services Employee had fee access visit population. individuals. At from And Cross including our paid X.X As fee PEPM not the with of access insured totals only do we U.S. this or members the Program definition, of end Aetna's includes with Shield to visit Blue our approximately

As Jason TRICARE rollout QX. in the for X population a fee has mentioned, on million strategy going government visit live decided we additional the that anticipated slower only

the affect year. our for While we not into the financial anticipate not will XXXX. do full rollout outlook This

the on a was For X$ $X.XX per or the average to of or $X.XX in compared full first half pro-forma our second employee per month of XXXX, quarter PEPM XXXX, basis.

we medical divided membership total our members general with utilization, U.S. on access visits which those for Moving paid Teladoc’s calculate to as services.

period. that’s an represents in quarter increase Teladoc basis XX% During from annualized XXXX. This of the the in second utilization completed of the ago an point X% and we quarter, the visits, of second X.X% rate year the XXX,XXX XXX approximately quarter experienced from

and visit totaled fee visits. we segment memberships Visits XXX,XXX In of paid visits, into terms from U.S. visits U.S. only visits approximately from paid access. them membership from

remaining U.S. included these level our paid, visits paid of one Going XXX,XXX contracts. into under were XX% XXX,XXX visits the visits visits, were while membership or the deeper delivered

attributed comprised revenue of general visits paid specialty access. year generated million further quarter to behavior other same the medical representing on visits expert of down from services. a margins medical expectations. health is drilling first an of also increase can $X.X plan addition in this visits, completed revenue million and company Gross XX% the nearly to generated and as which and those with our we XX,XXX visits, fee $XX.X primarily of visit XX% fee only revenue U.S. level for the visits, the with commercial The in was remaining visit In the of be XXX,XXX second XXXX. quarter and membership million from visit The individual $XX.X

margins XX% second moderating quarter from the While strong and increase to to at shift evolving mix our Advance as in compared the expenses this the for behavioral decreased us $XX in operating came remainder The quarter a XXXX. results, the in approximately the Eliminating such of business XX% $XX.X specifically to the the quarter’s sale were margins a Medical’s lead as XX% QX gain of the of favorably margins XX% of Total in will of year. organization, representing non-core gross the million, principally of XXXX XX% XXXX. of and our some impact costs integration in $XX.X non-cash $XX.X the expenses million of QX QX operating depreciation revenue, million to on and in operating compares in which revenue stock expenses contract less compensation, charges, related health with XXXX. or

for told million to last to net quarter. adjusted remainder EBITDA at a we adjusted year. that earnings for contracts $X.XX, the $X.X $X.XX. QX issued Adjusted in of On within the to call, of loss compared guidance $XX.X we of quarter, acquisition per in $X.X the the loss the adjusted loss $X.XX, delivered of an been ago. the you million costs share in Net sale throughout in year Net compared adjust loss and a positive the million May was which and would came per on non-core confident $XX.X loss second certain have last quarter million for that similarly were compares outlook share net we XXXX we XXXX in and was the EBITDA EBITDA our of

Turning short-term cash to $XXX ended we the in sheet, quarter balance investment. million with approximately and the

Our cash $XXX to last balance today, after million. approximately week’s is offering giving effect

that million XXXX the $XXX of the convertible of XXXX. X.XXX $XXX.X quarter $XXX.X and consist total convertible notes two end of at notes which debt, our end in the mature note of issuances. as million million, that X% mature the The was Our

is loss it securities Our between this I equity visit which fee outlook like individuals, share. With outstanding to million total between between of of our component and to million and from in loss million GAAP on the a XXXX, of U.S. members total presentation and approximately individuals would and debt financial XX as revenues between the $X expected that, statements. provide as XX.X $X loss per visits $XXX a range million of X.X appears approximately $XXX between for we quarter in million per consolidated and third $XXX $X.XX $X currently our EBITDA average million loss of and EBITDA only adjusted million expect and the total $X shares membership based million, million, share to X.X is to XX.X of XXX,XXX million weighted of paid net XXX,XXX visits with and million a $X.XX million net

based the weighted globally. XX paid approximately X.X develop and to of another available XX for visits all million always $X.XX. Given their year EBITDA on you visits healthcare Operator? and to And we’ll individuals. approximately $XXX entire total a quarter to million loss evolve EBITDA visit million XX joining ways continues as do XXXX the share million virtual million to cylinders from strong this to fee million the full marks outstanding million up acquisition and questions. as million Thank revenue that to average services organization between afternoon. Advance to work This million shares million, all access want for outstanding our $X.XX us and team loss for for to ongoing fire for and with range thank XX effort it now between Teladoc as total is X.X open and $XX U.S. we million of this members Medical, the they adjusted between Teladoc and business $XX I deliver million, expected positive and expect $XXX on and $XX membership per $XX Total we net between only

Operator

from Lisa [Operator from Instructions] comes first Morgan. Gill question Our JP

Your line is open.

Lisa Gill

August in first pipeline substantially every visits, the pipeline Jason, year. last Would to be around prepared know you than of and way what you way first now the with good let and but as MA, my virtual around being see selling quantify quantify but know made service year talked afternoon. your this talked Medicare for comments question. we well? of a a opportunities start past I secondly the the much around that very ask Thanks being CMS a as I just is I any me you then And to for about with the about that in that And comments, season couple question, comments bigger for is XXXX? opportunity fee part your in expectation paying there you there

Jason Gorevic

throughout just Yes, process it’s thanks, on finished our is of pipeline which selling Lisa. things stronger the pipeline before. the A actually ever commercial review, season, very monthly we couple is our and rigorous been than that we run organization

our line was that significantly it’s to growth long-term as say very the our of across I'm percentage relative but sort I a and just the not are volume We opportunities relative the basis give an both it pleased years, going can years, prior you absolute than size as with both projections. to larger segments. in to well in of our prior expectations with

Lisa Gill

that the And give then there? CMS you on side, us any could color

Jason Gorevic

a that’s fee will have for foresee focus to they’ll because guidance more our and I were be to proposition economic reimbursed I to a sales plans That’s it very to sooner do for a direct platform proposed that service in that strong and obviously Medicare for wind for provide provide support members it’s their But do us. an I not respect so acquisition going in say think provides be us move reimbursement the providing we Medicare for fee by them Fee theirs service respect able don’t order CMS would MA do the in service consumer to opportunity to patients for is today the with expecting telehealth now with basis -- and out to expected probably us CMS population. and would I customer than already Medicare direct our services. fee strong of the population, providing symbolically are where we service. short-term. we service forward telemedicine business they for think Obviously service. the as for to to provider we With our in on to providers on Yes,

Lisa Gill

great. Okay,

Jason Gorevic

bodes for And then the lastly, we and we what more what the for I well round to It those have be that bullish house will still be do. that’s in where the addition the provide MA it of business we pleased of of out traditional to recent -- one very the if obviously we think passage think And services to exemption for been make center in I comments on expecting there. are as will certain [ph] the should well. sweet the of through spot HSA that we were changes from that is see telehealth likely through rigs the and that HSA

Lisa Gill

would just it follow-up and be, I had previously. I EBITDA your they Mark expectation are just what then us implies what at were that annual if look And or what previously for guidance Okay. Jason, revenue take new than the trends underlying the Medical were told you Advance and then stronger both

to not way that to you would can then it if trends you about had we potentially think the but you that a in that delay seeing impact want to at talk XXXX, those? sure made impact when secondly XXXX. what TRICARE the understand make So I are around am correctly. would should just the I think I both really just looking of comment and And

Mark Hirschhorn

well, lower Lisa, apparent the TRICARE we channels, having the end with including With and to million very were the strength contributions contribution we from solid EBITDA of Medical. adjusted that in respect the have of range able Very any it’s range, the as adjusted Advance the $X other and we thinking from business are year, to Medical. from Advance Mark. revenue, of delay about so the Hi, similar without EBITDA of an to increase side end still we’re upper absorbed the obviously increase

there suggest organic about the upper end for as would a the range of well. increase EBITDA adjusted also you is an basis in on So a XX%

that start XXXX. So both would have we expect even earlier business, have XXXX, in of TRICARE had just would roll-in again benefited the an stronger from but to we’d those

Jason Gorevic

respect And the accounting business. TRICARE to pipeline relative on then expectations, to with for Lisa that’s comments delay the in our my

that our think don’t we an XXXX. So going have on to impact that’s

Lisa Gill

quarter. on Okay, great great. Well congratulations another

Jason Gorevic

Lisa. you, Thank

Operator

Jefferies. question next from from Your Dodge Sean comes

Your line is now open.

Sean Dodge

bigger Yes, good Is there pipeline back because that it are significantly. so are with comments of number combination to swap deals a more a deals up of larger afternoon or of selling those? of or Jason involving it in of members -- payers Teladoc because part maybe you discussions covering thanks. your it the is having capabilities being about going just a engaging are both broader a discussions just simply more you’re those is

Jason Gorevic

the fortunately is answer Yes, both.

opportunities but as of the those therefore products strong We’re across can size that client the in is of well and per segments number membership we terms expect. multiple revenue and seeing as of increased of opportunities, the number

Sean Dodge

encouraging on that. the us national revenue you’re employers to with I performance. still integration so the first can progress Got on it, of there. Can far like there, and mentioned large are near-term update to are anything the quick there discussions answer you drive on levers Advance couple pulling early you the wins, on then us you anything on fast what okay. anecdotally things some appealing more And guess Is Medical focused you a give share

Jason Gorevic

integration of and bring forces where we the point sales first so the the opportunity together products. have is Yes, cross-sell sales to

in a multi-national an the a traditionally some may on has some on just of lot with side third, time we that we're rolling care opportunity space personally focused those lot global cross-sell as the at for see product our really I've together as demand had Medical bringing an global both from where strong, markets is clients two products companies. where together And employer Medical. bringing into population international as a of much interest footprint. And in of Teladoc Advance to the value on the those products of perspective. products. of on we well operational the but a to pleased would spent there I that the this point be was the as high been We're in Advanced Spain that U.S. and for teams bringing care with portfolio in clients example, see of insurance are multiple broader of And the largest not Second Teladoc insurance have demand and out where

Sean Dodge

good. you. Very Thank

Operator

Your next Hooker comes Donald question from from Capital Markets. Keybanc

open. is line Your

Donald Hooker

Wanted I rolled utilization talked I like in the about to in points on XXX And that? I'm know you utilization we sort kind afternoon. little to regime up, strategy we're think I we of strong Good that has of going out. row of thinking quarters different you've do bit, utilization focused it increases? we Should a kind Great. picked more forward of think maybe all -- got correct wrong a increases. about me are guess past I you utilization. In a here. if two hear digital start marketing that mean, XX of basis about How seems

Jason Gorevic

us on that we adjust where confidence basis? full saw give we second good and don't you Mark, comment quarter. year. feel for of to we and in that start to are it we're want future. year, into bit the And the I'll And in to we of our with We're seeing on maximize the back to Mark the our there. what then pleased to see little platform. a for surround into course behind know we a very utilization half guidance I which what No order put the spend of our dollar we're yield really sound the go benefit seeing it the get hand engagement question we the about if analytics about future the the rest I'll for the

Mark Hirschhorn

calendar find increasing. the less picked even XXX,XXX that lows the think are activity year obviously I the second would over second in and quarters. half we guidance those Yes, for that suggest our by that the We of there the where is third visits in fact periods

around to basis seeing the with So we be as prior XXX year-over-year. closer exhibited points the to years growth somewhere would We more basis noted XXX activity points. we're compared

are the to think going going highs and each be up frankly are to picking lows I quite quarter-over those quarter. be higher,

we're seeing exceed will likely ramp guidance. that would suggest the good all prior that just So signs utilization

Jason Gorevic

I I that guess just would one add clients too. thing our is noticing are

prospects difference seeing engagement utilization. the And and helping now. with our season are of and clients our it's our us selling both So right

Donald Hooker

you. Got I front, updates contract a all that following. on that maybe And guess different on any Aetna we're

year being I think about you talked maybe incremental you revenue we revenue and sort some give are of contract, next detail accretive neutral Can it still this pace year versus there? original the good there? us on

Jason Gorevic

slight still lot year up a XX% are projections roughly we more leverage more is us. year, perspective Absolutely, very which very, good over tracking get visit revenue Obviously a our from ahead last we with this of for utilization volume visits. is

pleased how so with contract very is that And progressing. we're

Donald Hooker

Okay, you so much. thank

Operator

from next question Your comes from Jamie Wells Stockton Fargo.

Your line is open.

Jamie Stockton

the for initially at to CMS saying, we'll conversations in next notably in have whether service they're how had stuff two evening. with good going was the with Medicare Maybe to you at here? fee Medicare's taking approach it maybe Jason, earlier. on Thanks with of questions. or Have long-term pay like my is least anyone seems or three that's type for touching years? the not do kind base any or hey, appointments. for quick expand start guess inside about I into Hey, anyone Because the some think any touching industry you

Jason Gorevic

CMS and the teams sort see is in scope the this if they for question that the chronic in expand coverage with you out the virtual role I the administration. population. So little telehealth a the there senior care put the to together the at to its It's telehealth of mind continue expansion an in Jamie, reimbursement telehealth’s me endorsement last my year, think within for year, will services. overall it's of clear look over that that of then role you and with that rolled me support and that management is we And of conversations clear to there long-term care

Jamie Stockton

And you MA Okay. Advantage as into provider maybe by It's next a offer the the on Teladoc plans that expectation Medicare more how get the near-term sold one like as that their maybe quick to Medicare a least sounds correct more members good they then benefiting for front. just as lot you is that of that benefit approach on of It either there a at the significant a telehealth it couple benefit catalyst much but deals? in you is see years? a to way, being opposed MA more thing read your

Jason Gorevic

our would our the more I Yes, MA see certainly would say we aligned MA with go-to-market expect and populations plans approach to with traditional plan come way.

for service fee-for-service and can it. see we from more provider where to think population health for a I Medicare the look and systems care and plans opportunity for fee-for-service get platform reimbursed where hospitals as on more under side is the to us provide Medicare will senior their are who

Jamie Stockton

thank Okay, you.

Jason Gorevic

you. Thank

Operator

from question Close Cannacord from Richard comes next Genuity. Your

line Your is open.

Richard Close

here. quarter. XX% for organic guess, third Surrounding Thanks upcoming Best roll to Doctors the extremely into congratulations. obviously, this Great, that number, impressive, going I growth, is question

organic how performance of view included. your had growth, So now Doctors do there, it year to be about Best going then overall you the and Doctors the is you've about that a And considering now? just think Best

Jason Gorevic

a or of Doctors pretty take operating year of with of would We pleased the we're continuum portfolio in and to the more we so now services, the get a is care go all the entire growth we're overall full Yes, and care again, those of right plans, to health the strategy. the full would see to XX% And strategic we with a virtual is we entire see us products. are this of really it see XXXX. there of that then services. what expected. line to having other in And you large a that as that Best range parts say said in as two expect now advantage We it market of XX% really as continuum thing selling to business I

of great at the certainly having components. the each we terms in of pickup of itself. in perspective, suite and to part one of it the pieces growth level adds another value it's and full look my the while So From of

Mark Hirschhorn

we're as as high-single-digit noted the And being shown that acquisition a it quite I about low-teens Best even improved time the their XX%. Medical. the would significantly well for that in we'd And is months of I trajectory between very add and or us We path levels Richard, the a see that frankly, might and back results think services. our suite mandate bring sold likely up to grower, growth was growth it's the year XX I historically of we're of at we going of XXXX, Advance there. think Teladoc to expect to traditional And summer shorter take to XX% now way Doctors to that alongside on

Richard Close

thank you much. very Great, Congratulations.

Operator

comes Charles Rhyee next Company. from Your question Cowen & from

open. Your line is

Charles Rhyee

Medical, a or -- to service it Yes, of about models more dedicated but and its sort about clients, right it of taking of the Staying can be model Advance of sort hey sort taking types also question. those opportunity services Europe, talk guys with maybe different a thanks of of talk a U.S. how to it in does might saying is has can for Advance how in the particularly Mark Jason Medical you deliver more broadly some Teladoc? model in applying you and to

Jason Gorevic

success if see solutions you they concierge Yes, very that have medical opportunity, an to providing no meeting Medical little good is there as more a as overall their We Advance virtual proposition like the bit that I of environment. their question of their clients in clients and so there’s will of their needs service. service a of over value relationships their part tailoring Medical a members in their component critical with of two clients of large in mentioned that and they clients that CEOs with to insurance was Advance concierge and with staying was the as see part their

So we’re product on well practices working both perspective and perspective take operational as learn to from organization. best the an across as now a how

for to very are because that There have a broad and is offer we of now that successful. different So having clients being a entire that against competed be the expand value them services, needs very, experience that desirable know able spectrum. is of sort range of can very part we and model sometimes from we levels the different can of

Charles Rhyee

about fee pricing really not understanding with really is model and the the give bit that? little more my component, more color kind how different that Can a maybe of talk with PMPM work you little a it visits bit less the on in

Mark Hirschhorn

correct, that’s Yes, Charles.

because a to either be us and We concierge, to to from services that Jason top have our enables service noted standalone leading of Teladoc. our premium of expert service Advance all up client a premium activate type customer the triage equivalent utilization base a as Best traditional medical combined base at medical services stronger on even and figures that of general price the opportunity that Doctors to for for that way the to Medical would

fee. member per we very competing up end and from on per we in the what of even will per per access So month XX% a member basis, month visible revenues that the expect Advance be traditionally there future Medical

Charles Rhyee

thanks lot. Great, a

Operator

Citi. Your next from question Demko from comes Stephanie

is line Your open.

Stephanie Demko

guys. question a Hey, congrats quarter. taking strong you my for and Thank on

Jason Gorevic

Thanks, Stephanie.

Stephanie Demko

you Could given given versus Advance within update base have the us synergy footprint? procurement a they second Medical opportunities on opinion their offering? indications an just broad U.S. any just there your Advance the still for more duplicative did Medical’s cost And early based offer give was are on

Mark Hirschhorn

to the that think to the accommodate certain that also that operations tweaks regard of we The identified regard really of services the while of have been strength Cisco have expert the prospects Google to companies enhanced like U.S. model number can and been and a in pipeline to services from in make that we of that earlier. in fact costs pipeline past. I again with Microsoft, Sure, their others operations here the of likely that the and Medical reflects business was Spain, Apple some are and clients and put the that Advance in to initial the suite will referring medical our synergies Jason procuring

can extend to clients. come them U.S. a them with we’re existing foot Asian legacy services But offering give and them of European the services contracts with triage, our side on doing the our only to offer the same not we medical general to thing Now clients the here. we with suite

presented the reflected again to is and of, adding very and that excitement of strong the pipeline. the all in So opportunities

question. of part Second your

Jason Gorevic

was that it client covered Advance the you think the for I Medical U.S.

Mark Hirschhorn

Okay.

Stephanie Demko

the an But, these opportunity? medical following has client greenfield general second marketing it or any U.S. of alternative to in purely provider part, is that

Mark Hirschhorn

have of -- some and service. No, incumbent of incumbents us them really are and not back they to fact but they come in entice us, the their utilizers strong of

clearly we costs. for offering are services of course a coming array of So, them and to incremental and back broader them right

Stephanie Demko

Thank housekeeping the you question me, you. for membership Medical’s to give for contribution quarter. could Advance one And

Mark Hirschhorn

Yes, had X,X million Advance Medical members.

Stephanie Demko

Congrats again. so Alright, thank much you guys.

Mark Hirschhorn

Sure.

Operator

comes from Your Jaffray. Piper Wieland from question next Sean

Your open. is line

Sean Wieland

Hi, thanks.

the us in a thing? So, looking an number Medicare and for you for given kind out on to just update take and strategy of on health that what the update free the pretty service. the engaged is market to system market critical provider go Can activity pipeline that’s

Jason Gorevic

and provider just very up excited has closed is was well at he see around well we Yes, additional The good deals hospitals new update close just point, XXX this Sean opportunities, a as in activity have Roga, great used with continue and to to extremely us I getting as to is market. several of continue very, hospitals as the coming as an a we rate Alan cases. with recently. number

with the And of so very, very that progress pleased business.

Sean Wieland

in going systems yet? for out actually specifically for Medicare or Health fee changes not the shopping service

Jason Gorevic

No, announced. not just was yet that Sean,

we hospitals as see for to a while just for that license health another but yet through, catalyst look to So and filter it to and takes that opportunity little platform. telehealth an a systems

Sean Wieland

still $XX quarter And from Mark, year? do on and million health to for you are did in get you the the pace behavioral the revenue

Mark Hirschhorn

of million, revenue likely visibility degree to quarter-over-quarter extremely and XXX% access with most $XX $XX exceed Yes, that come in great we’ll grew I’m million. confident that closer of

Sean Wieland

Great, thanks much. so

Mark Hirschhorn

Sean. Thank

Operator

from comes Your Ryan next question Daniels Blair. from William

line Your is open.

Ryan Daniels

thanks is you’ve expansion, Yes, the product kind here, or push do you, a the of assets. bolstering forward business be lot to with be acquired all team in the from you’ve strong question expansion and Jason, I’m of have very But focus going opportunities team? of you big guys. deals, different kind the the the you years a over may taking curious, a going that advantage kept take all the team to question the of going the for and for forward leadership geographic a these of bit feel Little given the place

Jason Gorevic

Ryan. Thanks,

as prior leaders to fortunate organization. you very a lot have as new into mentioned as from well We’re and been in acquisitions bringing able to the talent of retain

we’ve a as to be for a time we scalable have, mission. that’s the oriented long think focused being It also, on company’s I as, testament the and to execution frank, well an opportunity platform company.

including So, where our about we our plan and the that that, where we’re evaluating we’ve I ability Having said that done. on have what and we have good the needs and feel the organization business talent are acquisitions now to execute we looks always like.

certainly make we not and a ahead scale to organization static out and going we we’re at where need to the to So, we’re what ourselves we’re are continue to sure constantly make be to sure going business. that going challenging looking we

Ryan Daniels

it all also over months. there, for forward the can the areas kind are given to Both or of of also things And next early IT integration going the Thanks. to efforts and standpoint. I key investment but helpful maybe look curious from if That’s to the we variety developments you then as transactions the clients integrating relates new assets, XX as IT an color. outline looking am any come again that X

Jason Gorevic

sure, Yes Ryan.

provides is the for deeply for population in the bring rolling end technology of integration integrated for front that us of for a members to significant and world. to the So around services that's out bear point opportunity Medical couple experience our it of the we're Advance that involved and things. the products all app One

of that mentioned find the in a and which intuitive we’ve single will, helps you experience one to the a So that's different an the Because our guided we of number you that have make interface consumer consumer. we of one. for we all of of services. virtual sure services gives the concierge have products the Number make couple two, assistant it right if to sort dozen course before, now different a as

So deliver expect to out that. we're this still we've on said that and that we that expect year, focused

near-term two the really are those would say technology I So developments.

the the I course we maintain and point But probably and things to going to us see frontend, of two to scalability. Of refine the in terms are to. continue what make you're efficient focus those backend integration on our on

Ryan Daniels

Perfect, the thanks on for quarter. the Congrats color guys.

Jason Gorevic

Ryan. Thanks,

Operator

comes question from next Naidu from Mohan Your Oppenheimer.

open. Your line is

Mohan Naidu

you physicians you to some bypassing directly for Is the to to population do overhead to Jason, end if and offer guys eligible to Medicare that the for now. Thanks taking to telehealth do see questions. my trying on consumer? Medicare the side, you directly want going right platforms go, the of up

Jason Gorevic

directly It's to the Yes, a materialize, larger will way. We in it in eventually that market and Mohan. do the way or two the it's consumer and large question, the see probably doctors. thanks some it's three be And a right think to haven't organized multi-specialty systems multi-specialty that to with practitioners lot practitioner or of of virtual the now but or the practices, practices We honest individual small gone historically we cases the of individual aggregators practices. to a the an don't solo for groups. care. lot small practitioners for large see more systems terms trying from go small to We in

Mohan Naidu

financial in are side, recent Got it. big one competition quick on to of getting A any strengthen competition, offerings. you the What changes backing seeing on some their competitors quarters? your are the the

Jason Gorevic

and to that we're happy in we’ve honest, to we for our competitor sector that that good together, we're of our is set prospects. We've the overall strong into distance We think No, be have space. clients care a competitors. the money see really said we a And from who virtual we've in comprehensive flowing traditional pieces seeing really nature with And always ourselves great the with think are the and invest the to Having more offering space. that, put it's interactions those obviously. solution.

solution. about our So we're and globally. we position in the player feel competitive And global position confident ourselves today. our the as We've very only really defined only good comprehensive

those place two that's be. So put when to a you together great can

Mohan Naidu

hear. a to great lot. Thanks That's

Jason Gorevic

Thanks Mohan.

Operator

Chardan from Wardell Capital from comes Steven question next Markets. Your

line open. is Your

Steven Wardell

quarter. Hey congrats guys the on

Jason Gorevic

Thanks, Steve.

Steven Wardell

us Can products? every certain that an have overview kinds force sub-sales how sales sales do force, or you sells product, against do organize have you forces of aligned you of you give one are that your

Jason Gorevic

and customer we organized group, have is have that we an a focuses a team a plans, have focuses team have and sales employers, on international we by we focuses on that have team that Our brokers team, sales team. so on provider size sales a large employers, small health force we mid

a time from one that’s is we So different obviously been of account that one in maintained order that’s bought successful group organized to by of team value in an product because sales clients, we’re on a successful course to focus there those legacy there. we’ve and focused acquisitions have management doing we Underneath and the retaining bought who’s because done, an And of have extracting then very some which team those and that each who focused one services only on had of customers. bringing our the additional we of the maybe we they part clients of important products that in team be cross-selling, to of help primarily cross-selling, have so product.

into bringing they so clients. additional are product And those

Steven Wardell

Great, you. thank

Operator

question Capital. next from comes Hallum Eidson from Craig Charlie Your

is open. line Your

Charlie Eidson

taking Hi, questions. thanks for my

due color on First, could more greenfield how bit comprehensiveness given anticipated growing upselling provide of Teladoc customers? platform, hoping the to the much from I here the little was are revenues if versus of you a

Jason Gorevic

probably non-health greatest we into split. XXXX, customers new of the heading XX-XX at probably -- will least bulk at the to on the likely in Charlie, the plan additional an continuing look customers lift sales, Yes, new -- a side, provide

On XX-XX will the to a with in new probability a the we’ll clients uplift existing plan contribute those are significant pipeline very high contribution the from degree likely get of split sitting that a side, in most currently and health their revenues. to XXXX likely

Charlie Eidson

out you how And you like looks margin acquisition, the into you overtime and of put to integrated? one thanks. takes that went that rise advancement the margins as on following the Okay, gross margin, around through QX expect what And were number? gross then Can go gross the it puts gets XX%. on in the X-K

Jason Gorevic

operating closed gross delivery Doctors for in both Best medical we is other a done. Yes, Clearly certainly summer, acquisition Medical comparable through of Doctors mechanism significantly with lower not a this Teladoc. margin margin as The expert are metrics platform as to different the of both services, as basis. Advance done on had ran the cost what last some in well the those Medial companies at and summer Teladoc Advance Best

we to were signals, of about XX% quarter and to in XX% XXXX the see growth We business. we as more a than continue again the around the enabled I in I indicating quarter that first would And gross acquisition. these much result margins. at that to integrate, to XX% behavioral is have However Doctors and delivery efforts integration we’d delivery to doubled the past through Medical the as to the been over since earlier I’ve we a generating been because continue expect that Advance overall moving to and bring time overall stronger beyond. to services expect predictable, and see margin. The see the decrease from to of are while know the XX%. margin year But from Best that likely to the significantly. trend good margin have market we a as call continue had We this consecutive margin up be in behavioral our These indicating of saw produce able been continue we efficiencies stable contribution a stronger us platform define margin, in through quarter year-over-year at a to that’s most going

Charlie Eidson

Okay, the taking questions. for that’s Thanks great.

Jason Gorevic

Sure, thank you.

Operator

comes question Bank. Santangelo Your Glen from Deutsche next from

is line open. Your

Glen Santangelo

much posted taking how on the have visits Best to contributed that the had been questions. offline? thanks XXX,XXX How digital a about from maybe versus couple was, Could this the repeat give customers much quick have sense us how mix for I that questions and of my paid Yes, the wanted I follow-up membership U.S. of Doctors just you versus you new much may a visits, maybe just for number? and those to might quarter.

Jason Gorevic

basis. visits So, based an breakout product the we don’t business individual on

usage repeat delivered XX% participated on QX. see quarter’s services that’s did visits consistent then the in utilization in them of of what our with we’ve and were that we one QX. or visits However, in The participants first one individuals over been somewhat approximately past couple receive our for of of our trending And from those quarters.

Jason Gorevic

requests and coming actually and In the modality, see we We component telephonic vast terms of as relatively fastest majority stable source. the mobile. to visit our growth see the the mobile of of overall continue from growing web

Glen Santangelo

international as visits be, a quick follow-up, you much could Just the tell me in may were quarter? how

Jason Gorevic

were visits. were visits about XX,XXX between international -- approximately XX,XXX Yes, it and

Glen Santangelo

are and couple Okay. sort you last based? coming the a in new question utilization Are was, takeaways them contracts or And my of potentially quarter. of some then those wins discussed on subscription basis a in of

Jason Gorevic

additional Every come executed has either on new access year. only with in subscription included visits basis not a in has contract or fee this are traditional visit amount. to-date Teladoc of There fee contract visits a been

Glen Santangelo

Okay, the thanks comments. for

Jason Gorevic

Thank you.

Operator

Close last from Richard Cannacord Genuity. comes Your question from

Your line is open.

Richard Close

follow-up. Great, thanks for the

you the I mean, you strength. $XX for clarification still Medical XXXX? obviously million the it ownership the you since Advance of guidance, said, Just Are Mark, from on the core contemplating time raised just on

Mark Hirschhorn

shared what we Yes, consistent or take the with million last million give or $X month time at that’s announcement. of $X

Richard Close

Okay, you. great. Thank

Mark Hirschhorn

Sure.

Operator

have This joining concludes for today’s a good conference and call. us Thank you evening.

now disconnect. You may

Teladoc Health (TDOC) 1 Aug 182018 Q2 Earnings call transcript