Teladoc(TDOC) - 2025 Q2 - Quarterly Report

PART I Financial Information Item 1. Financial Statements This section presents Teladoc Health, Inc.'s unaudited condensed consolidated financial statements for Q2 and H1 2025, covering balance sheets, operations, and cash flows Condensed Consolidated Balance Sheets Total assets decreased to $2.89 billion from $3.52 billion due to reduced cash, while total liabilities fell to $1.47 billion from $2.03 billion primarily from note repayment Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $679,621 | $1,298,327 | | Total current assets | $1,073,270 | $1,663,907 | | Goodwill | $283,190 | $283,190 | | Intangible assets, net | $1,383,306 | $1,431,360 | | Total assets | $2,894,004 | $3,516,524 | | Liabilities & Equity | | | | Total current liabilities | $401,767 | $941,535 | | Convertible senior notes, net—non-current | $993,165 | $991,418 | | Total liabilities | $1,471,865 | $2,025,445 | | Total stockholders' equity | $1,422,139 | $1,491,079 | Condensed Consolidated Statements of Operations and Comprehensive Loss Q2 2025 revenue decreased 2% to $631.9 million, while net loss significantly narrowed to $32.7 million from $837.7 million due to a prior-year goodwill impairment Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $631,900 | $642,444 | $1,261,269 | $1,288,575 | | Loss from operations | ($54,385) | ($841,148) | ($174,996) | ($928,270) | | Goodwill impairment | $0 | $790,000 | $59,138 | $790,000 | | Net loss | ($32,660) | ($837,671) | ($125,672) | ($919,560) | | Net loss per share | ($0.19) | ($4.92) | ($0.72) | ($5.44) | Condensed Consolidated Statements of Cash Flows Net cash from operations increased to $107.4 million, while significant cash was used in investing ($183.0 million) and financing ($549.2 million) due to note repayments, resulting in a $624.8 million net cash decrease Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $107,351 | $97,603 | | Net cash used in investing activities | ($182,964) | ($63,260) | | Net cash (used in) provided by financing activities | ($549,164) | $5,556 | | Net (decrease) increase in cash | ($624,777) | $39,899 | - The significant use of cash in financing activities was due to the repayment of $550.6 million in convertible senior notes[16] - Investing activities included $65.3 million for a business combination (Catapult Health), $29.6 million for an asset acquisition (Uplift), and $27.1 million for other investments[16] Notes to Unaudited Condensed Consolidated Financial Statements These notes detail revenue breakdown, recent acquisitions, a $59.1 million goodwill impairment, repayment of convertible notes, restructuring activities, and segment performance Revenue Breakdown for Six Months Ended June 30 (in thousands) | Revenue Source | 2025 | 2024 | | :--- | :--- | :--- | | By Type | | | | Access Fees | $1,049,439 | $1,116,822 | | Other | $211,830 | $171,753 | | By Geography | | | | U.S. Revenue | $1,044,659 | $1,088,402 | | International Revenue | $216,610 | $200,173 | | Total Revenue | $1,261,269 | $1,288,575 | - The company acquired Catapult Health for $65.3 million (business combination) and Uplift Health Technologies for $29.6 million (asset acquisition) in Q1 and Q2 2025, respectively[47][49] - A goodwill impairment charge of $59.1 million was recognized in Q1 2025 for the Integrated Care reporting unit after the Catapult Health acquisition[51][54] - The company repaid $0.6 million of 2025 Notes and $550.0 million of Livongo Notes upon maturity in May and June 2025, leaving only the $1.0 billion principal 2027 Notes outstanding[61] - Subsequent to quarter end, on July 17, 2025, the company established a new five-year, $300.0 million senior secured revolving credit facility[105] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the 2% revenue decrease in Q2 and H1 2025, segment performance, operational metrics, expense changes, liquidity, and cash flows, including note repayments and a new credit facility Key Factors Affecting Our Performance Integrated Care saw 11% U.S. membership growth to 102.4 million, but chronic care enrollment and average revenue per member declined, while BetterHelp's paying users decreased 5% in Q2 Key Operating Metrics | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | U.S. Integrated Care Members (millions) | 102.4 | 92.4 | +11% | | Chronic Care Program Enrollment (millions) | 1.117 | 1.173 | -5% | | Avg. Monthly Revenue Per U.S. Integrated Care Member | $1.27 | $1.36 | -7% | | BetterHelp Paying Users (millions, avg. for Q) | 0.388 | 0.407 | -5% | Condensed Consolidated Results of Operations Analysis Q2 2025 total revenue decreased 2% to $631.9 million, net loss narrowed significantly to $32.7 million, and Adjusted EBITDA fell 23% to $69.3 million - Total revenue for Q2 2025 decreased by 2% year-over-year, primarily due to lower BetterHelp segment revenue, with acquisitions contributing approximately 2 percentage points to growth[136] - Technology and development expenses decreased by 10% in Q2 2025, mainly due to lower employee compensation costs[141] - A goodwill impairment of $59.1 million was recognized in H1 2025 related to the Catapult Health acquisition within the Integrated Care segment[144] Adjusted EBITDA Reconciliation Summary (in thousands) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net loss | ($32,660) | ($837,671) | ($125,672) | ($919,560) | | Adjusted EBITDA | $69,311 | $89,481 | $127,404 | $152,621 | Segment Information Analysis Integrated Care revenue grew 4% to $391.5 million but Adjusted EBITDA fell 10%, while BetterHelp revenue declined 9% to $240.4 million and Adjusted EBITDA dropped 53% Integrated Care Segment Performance (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $391,510 | $377,421 | +4% | | Adjusted EBITDA | $57,450 | $64,028 | -10% | | Adjusted EBITDA Margin | 14.7% | 17.0% | -230 bps | BetterHelp Segment Performance (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $240,390 | $265,023 | -9% | | Adjusted EBITDA | $11,861 | $25,453 | -53% | | Adjusted EBITDA Margin | 4.9% | 9.6% | -470 bps | Liquidity and Capital Resources The company held $679.6 million in cash, generated $45.5 million in free cash flow in H1 2025, and established a new $300 million revolving credit facility for enhanced flexibility - The company's primary source of liquidity is cash and cash equivalents, totaling $679.6 million as of June 30, 2025[166] Free Cash Flow Reconciliation (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $107,351 | $97,603 | | Capital expenditures | ($3,994) | ($3,061) | | Capitalized software development costs | ($57,824) | ($60,199) | | Free Cash Flow | $45,533 | $34,343 | - On July 17, 2025, the company established a five-year, $300.0 million revolving credit facility to enhance financial and operational flexibility[168] Item 3. Quantitative and Qualitative Disclosures About Market Risk Primary market risk is interest rate volatility on cash, with a 1% change impacting interest income by $7.0 million annually, alongside significant client concentration in Integrated Care - The company's principal market risk is interest rate volatility on its $679.6 million cash and cash equivalents; a 1% rate change would alter annual interest income by approximately $7.0 million[176] - The Integrated Care segment faces significant client concentration risk, with its five largest customers accounting for 31% of segment revenue in H1 2025[179] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls, excluding recent acquisitions - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[182] - No material changes occurred in internal control over financial reporting during the quarter, with the evaluation excluding the newly acquired Catapult Health and Uplift businesses[183] PART II Other Information Item 1. Legal Proceedings This section refers to Note 15 for details on legal proceedings, including securities class actions, shareholder derivative complaints, and BetterHelp patient data lawsuits - The company is involved in various litigation matters, including securities class action complaints and shareholder derivative suits, with details provided in Note 15 of the financial statements[186][88][89] Item 1A. Risk Factors No material changes to risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K have occurred - There have been no material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K[187] Item 5. Other Information No directors or officers adopted, terminated, or modified Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q2 2025 - No directors or officers adopted, terminated, or modified a Rule 10b5-1 trading plan during the three months ended June 30, 2025[189] Item 6. Exhibits This section provides an index of exhibits filed with the Form 10-Q, including CEO/CFO certifications and XBRL data files