テラドックヘルスの四半期報告

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________________________________________________________________________________

Form 10-Q


			x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024


			☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File Number: 001-37477

______________________________________

TELADOC HEALTH, INC.

(Exact name of registrant as specified in its charter)


Delaware						04-3705970
(State of incorporation)						(I.R.S. Employer Identification No.)

2 Manhattanville Road, Suite 203
Purchase, New York						10577
(Address of principal executive office)						(Zip code)

(203) 635-2002

(Registrant’s telephone number including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	TDOC	New York Stock Exchange

______________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of April 22, 2024, the Registrant had 169,588,171 shares of Common Stock outstanding.

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TELADOC HEALTH, INC.

QUARTERLY REPORT ON FORM 10-Q

For the period ended March 31, 2024

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		Page Number

PART I	Financial Information	2
Item 1.	Financial Statements	2
	Condensed Consolidated Balance Sheets as of March 31, 2024 (unaudited) and December 31, 2023	2
	Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited) for the three months ended March 31, 2024 and 2023	3
	Condensed Consolidated Statements of Stockholders’ Equity (unaudited) for the three months ended March 31, 2024 and 2023	4
	Condensed Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2024 and 2023	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	32
PART II	Other Information	34
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 5.	Other Information	36
Item 6.	Exhibits	34
Exhibit Index		35
Signatures		37

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PART I

FINANCIAL INFORMATION

ITEM 1. Financial Statements

TELADOC HEALTH, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data, unaudited)


	March 31, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	1,097,935	$	1,123,675
Accounts receivable, net of allowance for doubtful accounts of $3,530 and $4,240 at March 31, 2024 and December 31, 2023, respectively	214,293		217,423
Inventories	32,268		29,513
Prepaid expenses and other current assets	141,769		118,437
Total current assets	1,486,265		1,489,048
Property and equipment, net	29,550		32,032
Goodwill	1,073,190		1,073,190
Intangible assets, net	1,614,238		1,677,781
Operating lease - right-of-use assets	37,506		40,060
Other assets	80,007		80,258
Total assets	$	4,320,756	$	4,392,369
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	37,674	$	43,637
Accrued expenses and other current liabilities	199,418		178,634
Accrued compensation	50,523		102,686
Deferred revenue-current	101,229		95,659
Total current liabilities	388,844		420,616
Other liabilities	1,023		1,080
Operating lease liabilities, net of current portion	39,971		42,837
Deferred revenue, net of current portion	15,002		13,623
Deferred taxes, net	47,472		49,452
Convertible senior notes, net	1,539,546		1,538,688
Commitments and contingencies (Note 14)
Stockholders’ equity:
Common stock, $0.001 par value; 300,000,000 shares authorized; 169,314,029 shares and 166,658,253 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively	169		167
Additional paid-in capital	17,637,902		17,591,551
Accumulated deficit	(15,310,544)		(15,228,655)
Accumulated other comprehensive loss	(38,629)		(36,990)
Total stockholders’ equity	2,288,898		2,326,073
Total liabilities and stockholders’ equity	$	4,320,756	$	4,392,369

See accompanying notes to unaudited condensed consolidated financial statements.

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TELADOC HEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except share and per share data, unaudited)


	Three Months Ended March 31,
	2024		2023
Revenue	$	646,131	$	629,244
Expenses:
Cost of revenue (exclusive of depreciation and amortization, which are shown separately below)	194,538		190,107
Operating expenses:
Advertising and marketing	183,329		176,790
Sales	54,364		54,490
Technology and development	81,388		86,985
General and administrative	111,697		114,145
Acquisition, integration, and transformation costs	373		5,944
Restructuring costs	9,673		8,102
Amortization of intangible assets	95,057		66,860
Depreciation of property and equipment	2,834		2,923
Total expenses	733,253		706,346
Loss from operations	(87,122)		(77,102)
Interest income	(13,942)		(8,911)
Interest expense	5,649		5,263
Other expense (income), net	370		(4,907)
Loss before provision for income taxes	(79,199)		(68,547)
Provision for income taxes	2,690		681
Net loss	(81,889)		(69,228)
Other comprehensive loss, net of tax:
Currency translation adjustment	(1,639)		1,779
Comprehensive loss	$	(83,528)	$	(67,449)

Net loss per share, basic and diluted	$	(0.49)	$	(0.42)

Weighted-average shares used to compute basic and diluted net loss per share	167,730,746		162,922,691

See accompanying notes to unaudited condensed consolidated financial statements.

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TELADOC HEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share data, unaudited)


	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Gain (Loss)		Total Stockholders’ Equity
	Shares	Amount
Balance as of December 31, 2023	166,658,253	$	167	$	17,591,551	$	(15,228,655)	$	(36,990)	$	2,326,073
Exercise of stock options	24,072	—		131		—		—		131
Issuance of common stock upon vesting of restricted stock units	2,631,704	2		(2)		—		—		—
Stock-based compensation	—	—		46,222		—		—		46,222
Other comprehensive loss, net of tax	—	—		—		—		(1,639)		(1,639)
Net loss	—	—		—		(81,889)		—		(81,889)
Balances as of March 31, 2024	169,314,029	$	169	$	17,637,902	$	(15,310,544)	$	(38,629)	$	2,288,898

Balance as of December 31, 2022	162,840,360	$	163	$	17,358,645	$	(15,008,287)	$	(42,776)	$	2,307,745
Exercise of stock options	28,127	—		296		—		—		296
Issuance of common stock upon vesting of restricted stock units	1,050,907	1		(1)		—		—		—
Stock-based compensation	—	—		50,634		—		—		50,634
Other comprehensive income, net of tax	—	—		—		—		1,779		1,779
Net loss	—	—		—		(69,228)		—		(69,228)
Balance as of March 31, 2023	163,919,394	$	164	$	17,409,574	$	(15,077,515)	$	(40,997)	$	2,291,226

See accompanying notes to unaudited condensed consolidated financial statements.

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TELADOC HEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)


	Three Months Ended March 31,
	2024		2023
Cash flows from operating activities:
Net loss	$	(81,889)	$	(69,228)
Adjustments to reconcile net loss to net cash flows from operating activities:
Amortization of intangible assets	95,057		66,860
Depreciation of property and equipment	2,834		2,923
Amortization of right-of-use assets	2,614		3,056
Provision for allowances for doubtful accounts	86		3,794
Stock-based compensation	42,325		46,038
Deferred income taxes	(1,600)		(355)
Other, net	1,403		3,244
Changes in operating assets and liabilities:
Accounts receivable	2,133		(14,046)
Prepaid expenses and other current assets	(23,691)		(6,165)
Inventory	(3,091)		10,000
Other assets	1,009		(9,939)
Accounts payable	(5,870)		(9,132)
Accrued expenses and other current liabilities	25,185		15,452
Accrued compensation	(51,973)		(32,265)
Deferred revenue	7,297		5,648
Operating lease liabilities	(2,861)		(2,858)
Other liabilities	(48)		129
Net cash provided by operating activities	8,920		13,156
Cash flows from investing activities:
Capital expenditures	(1,149)		(2,363)
Capitalized software development costs	(34,363)		(43,261)
Net cash used in investing activities	(35,512)		(45,624)
Cash flows from financing activities:
Net proceeds from the exercise of stock options	131		296
Proceeds from employee stock purchase plan	1,516		2,731
Cash received for withholding taxes on stock-based compensation, net	106		496
Other, net	(2)		(170)
Net cash provided by financing activities	1,751		3,353
Net decrease in cash and cash equivalents	(24,841)		(29,115)
Effect of foreign currency exchange rate changes	(899)		(488)
Cash and cash equivalents at beginning of the period	1,123,675		918,182
Cash and cash equivalents at end of the period	$	1,097,935	$	888,579

Income taxes (refunded) paid, net	$	(245)	$	346

Interest paid	$	—	$	194

Supplemental disclosure of non-cash investing activities
Accruals related to Property and equipment, net and Intangible assets, net	$	3,673	$	5,516

See accompanying notes to unaudited condensed consolidated financial statements.

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TELADOC HEALTH, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Organization and Description of Business

Teladoc Health, Inc., together with its subsidiaries, is referred to herein as “Teladoc Health,” or the “Company,” and is the global leader in whole person virtual care, forging a new healthcare experience with better convenience, outcomes, and value. The Company’s mission is to empower all people everywhere to live their healthiest lives by transforming the healthcare experience.

The Company 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. The Company’s principal executive office is located in Purchase, New York.

Note 2. Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements for the three months ended March 31, 2024 and 2023, in the opinion of management, reflect all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the Condensed Consolidated Results of Operations, financial position and cash flows of Teladoc Health for the periods presented. However, the financial results for interim periods are not necessarily indicative of the results that may be expected for a full fiscal year or for any other future period.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States (“U.S.”) have been omitted or condensed pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The information in this report should be read in conjunction with the Company’s Annual Report on Form 10-K filed with the SEC for the fiscal year ended December 31, 2023 (the “2023 Form 10-K”), which includes a complete set of footnote disclosures, including the Company’s significant accounting policies.

These consolidated financial statements include the results of Teladoc Health, as well as two professional associations and 10 professional corporations (collectively, the “THMG Association”).

Teladoc Health Medical Group, P.A., formerly Teladoc Physicians, P.A. (“THMG”), is party to a Services Agreement by and among it and the professional associations and professional corporations pursuant to which each professional association and professional corporation provides services to THMG. Each professional association and professional corporation is established pursuant to the requirements of its respective domestic jurisdiction governing the corporate practice of medicine.

The Company holds a variable interest in the THMG Association, which contracts with physicians and other health professionals in order to provide services to Teladoc Health. The THMG Association is considered a variable interest entity (“VIE”) since it does not have sufficient equity to finance its activities without additional subordinated financial support. An enterprise having a controlling financial interest in a VIE must consolidate the VIE if it has both power and benefits—that is, it has (1) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance (power) and (2) the obligation to absorb losses of the VIE that potentially could be significant to the VIE or the right to receive benefits from the VIE that potentially could be significant to the VIE (benefits). The Company has the power and rights to control all activities of the THMG Association and funds and absorbs all losses of the VIE and appropriately consolidates the THMG Association.

Total revenue and net loss for the VIE were $70.0 million and $0.0 million and $61.6 million and $0.0 million for the three months ended March 31, 2024 and 2023, respectively. The VIE’s total assets, all of which were current, were $21.4 million and $20.6 million at March 31, 2024 and December 31, 2023, respectively. The VIE’s total liabilities, all of which were current, were $70.0 million and $69.2 million at March 31, 2024 and December 31, 2023, respectively. The VIE’s total stockholders’ deficit was $48.6 million and $48.6 million at March 31, 2024 and December 31, 2023, respectively.

All intercompany transactions and balances have been eliminated.

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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 condensed consolidated financial statements and accompanying notes. The Company bases its estimates on historical experience, current business and economic factors, and various other assumptions that the Company believes are necessary to form a basis for making judgments about the carrying values of assets and liabilities, the recorded amounts of revenue and expenses, and the disclosure of contingent assets and liabilities. The Company is subject to uncertainties such as the impact of future events, economic and political factors, and changes in the Company’s business environment; therefore, actual results could differ from these estimates. Accordingly, the accounting estimates used in the preparation of the Company’s condensed 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 condensed consolidated financial statements are reasonable; however, actual results could differ materially from these estimates.

Changes in estimates are made when circumstances warrant. Such changes in estimates and refinements in estimation methodologies are reflected in the Condensed Consolidated Statements of Operations; if material, the effects of changes in estimates are disclosed in the Notes to Unaudited Condensed Consolidated Financial Statements.

Significant estimates and assumptions by management affect areas including the value and useful life of long-lived assets (including intangible assets), the capitalization and amortization of software development costs, deferred device and contract costs, allowances for sales and for doubtful accounts, and the accounting for business combinations. Other significant areas include revenue recognition (including performance guarantees), the accounting for income taxes, contingencies, litigation and related legal accruals, the accounting for stock-based compensation awards, and other items as described in Note 2. “Basis of Presentation and Principles of Consolidation" in the Summary of Significant Accounting policies in the 2023 Form 10-K and as may be updated in this Quarterly Report in Note 2. “Basis of Presentation and Principles of Consolidation."

Fair Value Measurements

The carrying value of the Company’s cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximates fair value due to their short-term nature.

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.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

Recently Issued Accounting Standards

In November 2023, the FASB issued Accounting Standards Update ("ASU") 2023-07, “Segment Reporting (Topic 280)—Improvements to Report Segment Disclosures” which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses so that investors can better understand an entity’s overall performance. The amendments are effective for annual reporting periods beginning after December 15, 2023, and interim periods, beginning after December 15, 2024, with early adoption permitted. The provisions of ASU 2023-07 are to be applied retrospectively to all periods presented in the financial statements, unless it is impracticable. The segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption.

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The Company is currently evaluating the impact of adopting ASU 2023-07 on its financial disclosures.

In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvement to Income Tax Disclosures" to enhance the transparency and decision usefulness of income tax disclosures through expansion of disclosures in an entity’s income tax rate reconciliation table and regarding cash taxes paid both in the U.S. and foreign jurisdictions. ASU 2023-09 is effective for annual periods beginning after December 15, 2024 on a prospective basis with early adoption permitted. The Company is currently evaluating the impact of ASU 2023-09 on its financial disclosures.

In March 2024, the SEC issued Release Nos. 33-11275; 34-99678 "The Enhancement and Standardization of Climate-Related Disclosures for Investors" to improve the consistency, comparability, and reliability of disclosures on the financial effects of climate-related risks on a registrant's operations and how it manages these risks. The compliance date for this release was scheduled to be fiscal year 2025 for large accelerated filers. On April 4, 2024, the SEC voluntarily stayed implementation of this new rule pending judicial review. The Company is currently analyzing the impact that the new climate-related rules will have on its consolidated financial statements.

Note 3. Revenue, Deferred Revenue, and Deferred Device and Contract Costs

The Company generates access fees from customers, which primarily consist of employers, health plans, hospitals and health systems, insurance and financial services companies (collectively “Clients”), as well as individual paying users, accessing its professional provider network, hosted virtual healthcare platform, and chronic care management platforms. Visit fee revenue is generated for general medical, expert medical service, and other specialty visits and is reported as a component of other revenue in the financial statements. Revenue associated with virtual healthcare device equipment sales included with the Company’s hosted virtual healthcare platform is also reported in other revenue.

The following table presents the Company’s revenues disaggregated by revenue source and also by geography (in thousands):


	Three Months Ended March 31,
	2024		2023
Revenue by Type
Access fees	$	557,174	$	550,870
Other	88,957		78,374
Total Revenue	$	646,131	$	629,244

Revenue by Geography
U.S. Revenue	$	547,600	$	541,662
International Revenue	98,531		87,582
Total Revenue	$	646,131	$	629,244

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. The Company records deferred revenue when cash payments are received in advance of the Company’s performance obligation to provide services. Deferred revenue is derived from 1) upfront payments for a device, which is amortized ratably over the expected member enrollment period; 2) upfront payments for certain services where payment is required for future periods before the service is delivered to the member, which is recognized when the services are provided; and 3) upfront payments from third-party financing companies with whom the Company works to provide certain Clients with a rental option, which is recognized over the rental period. Deferred revenue that will be recognized during the next twelve-month period is recorded as current deferred revenue and the remaining portion is recorded as non-current deferred revenue.

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The following table summarizes deferred revenue activities for the periods presented (in thousands):


	Three Months Ended March 31,
	2024		2023
Beginning balance	$	109,283	$	113,786
Cash collected	63,061		67,242
Revenue recognized	(56,113)		(61,697)
Ending balance	$	116,231	$	119,331

The Company expects to recognize $94.0 million of revenue throughout the remainder of 2024, $17.3 million of revenue in the year ending December 31, 2025, and the remaining balance thereafter related to future performance obligations that are unsatisfied or partially unsatisfied as of March 31, 2024.

Deferred Device and Contract Costs

Deferred device and contract costs are classified as a component of prepaid expenses and other current assets or other assets, depending on term, and consisted of the following (in thousands):


	As of March 31, 2024		As of December 31, 2023
Deferred device and contract costs, current	$	34,199	$	32,703
Deferred device and contract costs, noncurrent	17,344		17,573
Total deferred device and contract costs	$	51,543	$	50,276

Deferred device and contract costs were as follows (in thousands):


	Deferred Device and Contract Costs
Beginning balance as of December 31, 2023	$	50,276
Additions	12,239
Cost of revenue recognized	(10,972)
Ending balance as of March 31, 2024	$	51,543

Note 4. Inventories

Inventories consisted of the following (in thousands):


	As of March 31, 2024		As of December 31, 2023
Raw materials and purchased parts	$	11,529	$	9,338
Work in process	678		299
Finished goods	20,061		19,876
Total inventories	$	32,268	$	29,513

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Note 5. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):


	As of March 31, 2024		As of December 31, 2023
Prepaid expenses	$	85,477	$	65,651
Deferred device and contract costs, current	34,199		32,703
Other receivables	13,559		12,640
Other current assets	8,534		7,443
Total prepaid expenses and other current assets	$	141,769	$	118,437

Note 6. Goodwill

Goodwill consisted of the following (in thousands):


	Teladoc Health Integrated Care		BetterHelp		Total
Balance as of December 31, 2023 and March 31, 2024	$	—	$	1,073,190	$	1,073,190

The Company performed a qualitative assessment of goodwill for its BetterHelp reporting unit as of October 1, 2023. As part of the Company's qualitative analysis, it considered the performance of the reporting unit compared to expectations, forecasts for revenue and margin, macroeconomic conditions, industry and market trends, as well as other relevant entity-specific items. Based on this qualitative assessment, no indicators of impairment were identified. While it is believed that the assumptions used were reasonable, changes in these assumptions for the BetterHelp reporting unit, including lowering forecasts for revenue and margin, lowering the long-term growth rate, or changes in the future discount rate assumptions, could result in a future impairment. In addition, if the Company experiences sustained significant decreases in its share price, this may also result in the need to perform impairment assessments of goodwill and long-lived assets including definite-lived intangibles that could also result in future impairments.

Note 7. Intangible Assets, Net and Certain Cloud Computing Costs

Intangible assets, net consisted of the following (in thousands, except years):


	Useful Life	Gross Value		Accumulated Amortization		Net Carrying Value		Weighted Average Remaining Useful Life (Years)
March 31, 2024
Client relationships	2 to 20 years	$	1,458,261	$	(415,879)	$	1,042,382	12.3
Trademarks	2 to 15 years	325,022		(214,080)		110,942		6.6
Software	3 to 5 years	489,041		(191,956)		297,085		2.4
Acquired technology	4 to 7 years	341,741		(177,912)		163,829		3.5
Intangible assets, net		$	2,614,065	$	(999,827)	$	1,614,238	9.2
December 31, 2023
Client relationships	2 to 20 years	$	1,460,857	$	(391,196)	$	1,069,661	12.5
Trademarks	2 to 15 years	325,479		(189,330)		136,149		6.9
Software	3 to 5 years	456,583		(161,108)		295,475		2.5
Acquired technology	4 to 7 years	341,814		(165,318)		176,496		3.7
Intangible assets, net		$	2,584,733	$	(906,952)	$	1,677,781	9.3

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The following table presents the Company's amortization of intangible assets expense by component (in thousands):


	Three Months Ended March 31,
	2024		2023
Amortization of acquired intangibles	$	64,181	$	50,259
Amortization of capitalized software development costs	30,876		16,601
Amortization of intangible assets expense	$	95,057	$	66,860

During the second half of 2023, the Company initiated a strategy to transition the majority of its chronic condition management Clients and members to the Teladoc Health brand on a phased basis, with a smaller subset continuing to be served under the Livongo trade name beyond 2024. In connection with the brand strategy, the Company has accelerated the amortization of intangible assets that are associated with the Livongo trademark, increasing amortization of intangible assets expense beginning in the second half of the year ending December 31, 2023 and continuing thereafter. The change in accounting estimate resulted in additional amortization of intangible assets expense of $18.6 million, or $0.11 per basic and diluted share for the three months ended March 31, 2024.

Periodic amortization of intangible assets that will be charged to expense over the remaining life of the intangible assets as of March 31, 2024 was as follows (in thousands):


Years Ending December 31,
2024	$	272,784
2025	280,727
2026	223,039
2027	163,836
2028 and thereafter	673,852
	$	1,614,238

Net cloud computing costs, which are primarily related to the implementation of the Company's customer relationship management ("CRM") and enterprise resource planning ("ERP") systems, are recorded in "Other assets" within the Company's Consolidated Balance Sheets. As of March 31, 2024 and December 31, 2023, those costs were $42.0 million and $41.1 million, respectively. The associated expense for cloud computing costs, which is recorded in general and administration expense, was $1.2 million and $0.8 million for the three months ended March 31, 2024 and 2023, respectively.

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Note 8. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):


	As of March 31, 2024		As of December 31, 2023
Client performance guarantees and accrued rebates	$	36,282	$	36,934
Marketing and advertising	38,724		34,427
Consulting fees/provider fees	16,443		16,416
Franchise, sales and other taxes	12,931		12,933
Operating lease liabilities – current	10,744		10,752
Professional fees	10,137		9,910
Information technology	7,968		7,605
Insurance	6,530		5,777
Interest payable	5,812		1,481
Income tax payable	4,127		621
Staff augmentation	3,532		4,287
Lease abandonment obligation - current	3,489		3,800
Other	42,699		33,691
Total	$	199,418	$	178,634

Note 9. Convertible Senior Notes

Outstanding Convertible Senior Notes

As of March 31, 2024, the Company had three series of convertible senior notes outstanding. The issuances of such notes originally consisted of (i) $1.0 billion aggregate principal amount of 1.25% convertible senior notes due 2027 (the “2027 Notes”), issued on May 19, 2020 for net proceeds to the Company of $975.9 million after deducting offering costs of approximately $24.1 million, (ii) $287.5 million aggregate principal amount of 1.375% convertible senior notes due 2025 (the “2025 Notes”), issued on May 8, 2018 for net proceeds to the Company of $279.1 million after deducting offering costs of approximately $8.4 million, and (iii) $550.0 million aggregate principal amount of 0.875% convertible senior notes due 2025 that were issued by Livongo Health, Inc. (“Livongo”) on June 4, 2020 for which the Company agreed to assume all of Livongo’s rights and obligations (the “Livongo Notes;” and together with the 2027 Notes and the 2025 Notes, the “Notes”).

The following table presents certain terms of the Notes that were outstanding as of March 31, 2024:


	2027 Notes			2025 Notes			Livongo Notes
Principal Amount Outstanding as of March 31, 2024 (in millions)	$	1,000.0		$	0.7		$	550.0
Interest Rate Per Year	1.25		%	1.375		%	0.875		%
Fair Value as of March 31, 2024 (in millions) (1)	$	843.0		$	0.2		$	519.8
Fair Value as of December 31, 2023 (in millions) (1)	$	822.0		$	0.3		$	513.7
Maturity Date	June 1, 2027			May 15, 2025			June 1, 2025
Optional Redemption Date	June 5, 2024			May 22, 2022			June 5, 2023
Conversion Date	December 1, 2026			November 15, 2024			March 1, 2025
Conversion Rate Per $1,000 Principal Amount as of March 31, 2024	4.1258			18.6621			13.9400
Remaining Contractual Life as of March 31, 2024	3.2 years			1.1 years			1.2 years

(1)The Company estimates the fair value of its Notes utilizing market quotations for debt that have quoted prices in active markets. Since the Notes do not trade on a daily basis in an active market, the fair value estimates

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are based on market observable inputs based on borrowing rates currently available for debt with similar terms and average maturities. The Notes would be classified as Level 2 within the fair value hierarchy, as defined in Note 2. “Basis of Presentation and Principles of Consolidation.”

All of the Notes are unsecured obligations of the Company and rank senior in right of payment to the Company’s indebtedness that is expressly subordinated in right of payment to such Notes; equal in right of payment to the Company’s liabilities that are not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities incurred by the Company’s subsidiaries.

Holders may convert all or any portion of their Notes in integral multiples of $1,000 principal amount, at their option, at any time prior to the close of business on the business day immediately preceding the applicable conversion date only under the following circumstances:

•during any quarter (and only during such quarter), if the last reported sale price of the shares of 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 quarter is greater than or equal to 130% of the conversion price for the applicable Notes on each applicable trading day;

•during the five business day period after any 10 consecutive trading day period (or five consecutive trading day period in the case of the Livongo Notes) in which the trading price was less than 98% of the product of the last reported sale price of Company’s common stock and the conversion rate for the applicable Notes on each such trading day;

•upon the occurrence of specified corporate events described under the applicable indenture; or

•if the Company calls the applicable Notes for redemption, at any time until the close of business on the second business day immediately preceding the redemption date.

On or after the applicable conversion date, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of such Notes, regardless of the foregoing circumstances.

The 2027 Notes and the 2025 Notes are convertible into shares of the Company’s common stock at the applicable conversion rate shown in the table above. 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 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 day observation period.

The Livongo Notes are convertible at the applicable conversion rate shown in the table above into “units of reference property,” each of which is comprised of 0.592 of a share of the Company’s common stock and $4.24 in cash, without interest. Upon conversion, the Company will pay or deliver, as the case may be, cash, 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 consecutive trading day observation period.

For each Note series, the Company may redeem for cash all or part of the Notes, at its option, on or after the applicable optional redemption date shown in the table above (and prior to the 41st scheduled trading day immediately preceding the maturity date in the case of the Livongo Notes) if the last reported sale price of its common stock exceeds 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading days ending on, and including, the trading day immediately preceding the date on which the Company provides notice of the redemption. The redemption price will be the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any. In addition, calling any 2027 Note or 2025 Note for redemption on or after the applicable optional redemption date will constitute a make-whole fundamental change with respect to that Note, in which case the conversion rate applicable to the conversion of that Note, if it is converted in connection with the redemption, will be increased in certain circumstances as described in the applicable indenture.

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If the Company undergoes a fundamental change (as defined in the applicable indenture) at any time prior to the maturity date of the Livongo Notes, holders will have the right, at their option, to require the Company 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.

The Company accounts for each Note series at amortized cost within the liability section of its Condensed Consolidated Balance Sheets. The Company has reserved an aggregate of 8.7 million shares of common stock for the Notes.

The net carrying values of the Notes consisted of the following (in thousands):


	As of March 31, 2024		As of December 31, 2023
2027 Notes
Principal	$	1,000,000	$	1,000,000
Less: Debt discount, net (1)	(11,175)		(12,033)
Net carrying amount	988,825		987,967

2025 Notes
Principal	725		725
Less: Debt discount, net (1)	(4)		(4)
Net carrying amount	721		721

Livongo Notes
Principal	550,000		550,000
Less: Debt discount, net (1)	—		—
Net carrying amount	550,000		550,000

Total net carrying amount	$	1,539,546	$	1,538,688

(1)Included in the accompanying Condensed Consolidated Balance Sheets within convertible senior notes and amortized to interest expense over the expected life of the Notes using the effective interest rate method.

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The following table sets forth total interest expense recognized related to the Notes (in thousands):


	Three Months Ended March 31,
2027 Notes	2024			2023
Contractual interest expense	$	3,125		$	3,125
Amortization of debt discount	858			844
Total	$	3,983		$	3,969
Effective interest rate	1.6		%	1.6		%

	Three Months Ended March 31,
2025 Notes	2024			2023
Contractual interest expense	$	2		$	2
Amortization of debt discount	1			1
Total	$	3		$	3
Effective interest rate	1.8		%	1.6		%

	Three Months Ended March 31,
Livongo Notes	2024			2023
Contractual interest expense	$	1,203		$	1,203
Amortization of debt discount	—			—
Total	$	1,203		$	1,203
Effective interest rate	0.9		%	1.3		%

Note 10. Leases

Operating Leases

The Company has operating leases for facilities, hosting co-location facilities, and certain equipment under non-cancelable leases in the U.S. and various international locations. The leases have remaining lease terms of less than one to nine years, with options to extend the lease term from one to five years. At the inception of an arrangement, the Company determines whether the arrangement is, or contains, a lease based on the terms covering the right to use property, plant or equipment for a stated period of time. For new and amended leases beginning in 2020 and after, the Company separately allocates the lease (e.g., fixed lease payments for right-to-use land, building, etc.) and non-lease components (e.g., common area maintenance) for its leases.

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The Company leases office space under non-cancelable operating leases in the U.S. and various international locations. The future minimum lease payments under non-cancelable operating leases were as follows (in thousands):


Operating Leases:	As of March 31, 2024
2024	$	9,979
2025	12,260
2026	11,101
2027	8,088
2028	5,918
2029 and thereafter	12,985
Total future minimum payments	60,331
Less: imputed interest	(9,616)
Present value of lease liabilities	$	50,715

Accrued expenses and other current liabilities	$	10,744
Operating lease liabilities, net of current portion	$	39,971

The Company rents certain virtual healthcare platforms to selected qualified customers under arrangements that qualify as either sales-type lease or operating lease arrangements. Leases have terms that generally range from two to five years.

The Company recorded certain restructuring costs related to lease impairments and the related charges due to the abandonment and/or exit of excess leased office space. However, the lease liabilities related to these spaces remain an outstanding obligation of the Company as of March 31, 2024. See Note. 11, “Restructuring,” for further information.

Note 11. Restructuring

The Company accounts for restructuring costs in accordance with ASC Subtopic 420-10, "Exit or Disposal Cost Obligations" and ASC Section 360-10-35, "Property, Plant and Equipment-Subsequent Measurement." The costs are recorded to the "Restructuring costs" line item within the Company's Condensed Consolidated Statements of Operations and Other Comprehensive Loss as they are recognized.

The Company previously disclosed that, as a result of its comprehensive operational review of the business and in order to drive efficiency to reduce costs and improve profit growth, it expected to incur pre-tax charges in the range of $12 million to $16 million in the year ending December 31, 2024. The charges will primarily relate to employee transition, severance, employee benefits, and related costs needed to execute on various optimization initiatives.

During the three months ended March 31, 2024, the Company recorded $9.7 million of restructuring costs, of which $7.0 million was for employee transition, severance, employee benefits, and related costs and $2.7 million was for other restructuring related costs. The portion of these expenses that are to be settled by cash disbursements were accounted for as a restructuring liability under the line item "Accrued expenses and other current liabilities" in the Company's Condensed Consolidated Balance Sheets.

During the three months ended March 31, 2023, the Company recorded $8.1 million of restructuring costs, of which $7.2 million was related to employee transition, severance, employee benefits, and related costs and $0.9 million was related to costs associated with office space reductions.

The table below summarizes the accrual and charges incurred and cash payments made with respect to the Company's restructurings, with the severance related portion included in the line item "Accrued compensation" and the lease termination and other related portion included in the line item "Accrued expenses and other current liabilities" in the Company's Condensed Consolidated Balance Sheet as of March 31, 2024 (in thousands):

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	Restructuring Plan
	Severance		Lease Termination		Other (1)		Total
Accrued Balance, December 31, 2023	$	—	$	3,800	$	—	$	3,800
Additional expenses (recoveries)	6,957		(14)		2,730		9,673
Cash payments	(6,769)		(297)		(953)		(8,019)
Accrued Balance, March 31, 2024	$	188	$	3,489	$	1,777	$	5,454

(1) Reflects amounts paid to other restructuring related costs.

Note 12. Common Stock and Stockholders’ Equity

Stock Plans

The Company’s 2023 Incentive Award Plan and 2023 Employment Inducement Incentive Award Plan (collectively, the “2023 Plans”) provide for the issuance of incentive and non-statutory options and other equity-based awards to its employees and non-employee service providers. Previously, the Company’s 2015 Incentive Award Plan, 2017 Employment Inducement Incentive Award Plan and Livongo Acquisition Incentive Award Plan (together with the 2023 Plans, collectively, the “Plans”) also provided for the issuance of such awards. The Company had 8,768,512 shares available for grant under the 2023 Plans at March 31, 2024.

All stock-based awards to employees are measured based on the grant-date fair value, or replacement grant date fair value in relation to the Livongo transaction, and are generally recognized on a straight line basis in the Company’s Condensed Consolidated Statements 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 restricted stock unit (“RSU”)). The Company recognizes the forfeiture of stock-based awards as they occur.

Stock Options

Options issued under the Plans are exercisable for periods not to exceed 10 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.

Stock option activity under the Plans was as follows (in thousands, except share and per share amounts and years):


	Number of Shares Outstanding	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life in Years	Aggregate Intrinsic Value
Balance at December 31, 2023	4,182,187	$	27.37	5.26	$	13,732
Stock option grants	32,477	$	20.66	N/A
Stock options exercised	(24,072)	$	5.45	N/A	$	291
Stock options forfeited	(148,705)	$	39.78	N/A
Balance at March 31, 2024	4,041,887	$	27.13	4.75	$	5,669
Vested or expected to vest at March 31, 2024	4,041,887	$	27.13	4.75	$	5,669
Exercisable at March 31, 2024	3,274,003	$	26.43	3.83	$	5,669

The total grant-date fair value of stock options granted during the three months ended March 31, 2024 and 2023 were $0.4 million and $0.2 million, respectively.

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The Company estimates the fair value of stock options granted using the Black-Scholes option pricing model.

The assumptions used are determined as follows:

Volatility. The expected volatility was derived from the historical stock volatility of the Company’s stock over a period equivalent to the expected term of the stock option grants.

Expected Term. The expected term represents the period that the stock-based awards are expected to be outstanding. When establishing the expected term assumption, the Company utilizes historical data.

Risk-Free Interest Rate. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with terms similar to the expected term on the options.

Dividend Yield. The Company has never declared or paid any cash dividends and does not plan to pay cash dividends in the foreseeable future and, therefore, it used an expected dividend yield of zero.

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:


	Three Months Ended March 31,
	2024	2023
Volatility	67.86% - 67.94%	65.58%
Expected term (in years)	4.3	4.3
Risk-free interest rate	3.85% - 3.90%	4.07%
Dividend yield	0%	0%
Weighted-average fair value of underlying stock options	$11.55	$12.85

For the three months ended March 31, 2024 and 2023, the Company recorded stock-based compensation expense related to stock options granted of $1.7 million and $2.2 million, respectively.

As of March 31, 2024, the Company had $11.2 million in unrecognized compensation cost related to non-vested stock options, which is expected to be recognized over a weighted-average period of approximately 2.0 years.

Restricted Stock Units

The fair value of RSUs is determined on the date of grant. The Company records compensation expense in the Consolidated Statements of Operations on a straight-line basis over the vesting period for RSUs. The vesting period for employees and members of the Board of Directors ranges from one to three years.

RSU activity under the Plans was as follows:


	RSUs	Weighted-Average Grant Date Fair Value Per RSU
Balance at December 31, 2023	9,452,412	$	34.70
Granted	4,447,425	$	15.09
Vested and issued	(2,451,940)	$	39.04
Forfeited	(571,190)	$	33.54
Balance at March 31, 2024	10,876,707	$	25.82
Vested and unissued at March 31, 2024	43,118	$	56.25
Non-vested at March 31, 2024	10,833,589	$	25.70

The total grant-date fair value of RSUs granted during the three months ended March 31, 2024 and 2023, was

$67.1 million and $169.1 million, respectively.

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For the three months ended March 31, 2024 and 2023, the Company recorded stock-based compensation expense related to RSUs of $37.3 million and $38.8 million, respectively.

As of March 31, 2024, the Company had $246.8 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

Stock-based compensation costs associated with the Company’s RSUs subject to performance criteria (“PSUs”) are initially determined using the fair market value of the Company’s common stock on the date the awards are granted (service inception date). The vesting of these PSUs is subject to certain performance conditions and a service requirement ranging from one to three years. Stock-based compensation costs associated with these PSUs are reassessed each reporting period based upon the estimated performance attainment on the reporting date until the performance conditions are met. 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 generally ranges from 0% to 200% of the initial grant. Stock compensation expense for PSUs is recognized on an accelerated tranche by tranche basis for performance-based awards.

PSU activity under the Plans was as follows:


	Shares	Weighted-Average Grant Date Fair Value Per PSU
Balance at December 31, 2023	1,452,387	$	36.82
Granted	1,359,651	$	15.03
Vested and issued	(179,764)	$	56.25
Forfeited	(23,240)	$	26.88
Performance adjustment (1)	(241,073)
Balance at March 31, 2024	2,367,961	$	22.73
Vested and unissued at March 31, 2024	—	$	—
Non-vested at March 31, 2024	2,367,961	$	22.73

(1)Based on the Company's 2023 results, PSUs were attained at rates ranging from 0% to 85.2% of the target award.

The total grant-date fair value of PSUs granted during the three months ended March 31, 2024 and 2023 was $20.4 million and $30.3 million, respectively.

For the three months ended March 31, 2024 and 2023, the Company recorded stock-based compensation expense related to PSUs of $2.6 million and $3.4 million, respectively.

As of March 31, 2024, the Company had $30.7 million in unrecognized compensation cost related to non-vested PSUs, which is expected to be recognized over a weighted-average period of approximately 2.2 years.

Employee Stock Purchase Plan

In July 2015, the Company adopted the 2015 Employee Stock Purchase Plan (“ESPP”) in connection with its initial public offering. At the Company’s 2023 annual meeting of stockholders, the Company’s stockholders approved an amendment to the ESPP to increase the number of shares of the Company’s common stock available for issuance under the ESPP by 3,000,000. A total of 4,113,343 shares of common stock have been reserved for issuance under this plan as of March 31, 2024. 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.

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During the three months ended March 31, 2024 and 2023, the Company did not issue any shares under the ESPP. As of March 31, 2024, 2,800,781 shares remained available for issuance.

For the three months ended March 31, 2024 and 2023, the Company recorded stock-based compensation expense related to the ESPP of $0.8 million and $1.6 million, respectively.

As of March 31, 2024, the Company had $0.3 million in unrecognized compensation cost related to the ESPP, which is expected to be recognized over a weighted-average period of approximately 0.1 years.

Total compensation costs for stock-based awards were recorded as follows (in thousands):


	Three Months Ended March 31,
	2024		2023
Cost of revenue (exclusive of depreciation and amortization, which are shown separately)	$	1,394	$	1,353
Advertising and marketing	3,789		3,126
Sales	7,967		8,075
Technology and development	9,299		12,729
General and administrative	19,876		20,755
Total stock-based compensation expense	42,325		46,038
Capitalized stock-based compensation	3,897		4,596
Total stock-based compensation	$	46,222	$	50,634

Note 13. Provision for Income Taxes

The Company recorded income tax expense of $2.7 million and $0.7 million for the three months ended March 31, 2024 and 2023, respectively. The tax expenses recorded were the result of the tax shortfall associated with the stock-based compensation awards that vested in the year.

Note 14. Commitments and Contingencies

Commitments

The Company has contractual obligations to make future payments related to its outstanding convertible senior notes, which are presented in Note 9. Convertible Senior Notes, and its long-term operating leases, which are presented in Note 10. Leases.

Legal Matters

From time to time, Teladoc Health is involved in various litigation matters arising in the normal course of business, including the matters described below. The Company consults with legal counsel on those issues related to litigation and seeks input from other experts and advisors with respect to such matters. Estimating the probable losses or a range of probable losses resulting from litigation, government actions, and other legal proceedings is inherently difficult and requires an extensive degree of judgment, particularly where the matters involve indeterminate claims for monetary damages, may involve discretionary amounts, present novel legal theories, are in the early stages of the proceedings, or are subject to appeal. Whether any losses, damages, or remedies ultimately resulting from such matters could reasonably have a material effect on the Company’s business, financial condition, results of operations, or cash flows will depend on a number of variables, including, for example, the timing and amount of such losses or damages (if any) and the structure and type of any such remedies. As of the date of these financial statements, Teladoc Health’s management does not expect any litigation matter to have a material adverse impact on its business, financial condition, results of operations, or cash flows.

On June 6, 2022, a purported securities class action complaint (Schneider v. Teladoc Health, Inc., et. al.) was filed in the U.S. District Court for the Southern District of New York against the Company and certain of the Company’s officers. The complaint was 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 October 28, 2021 through April 27, 2022.

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The complaint asserted violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder based on allegedly false or misleading statements and omissions with respect to, among other things, the Company’s business, operations, and prospects. The complaint seeks certification as a class action and unspecified compensatory damages plus interest and attorneys’ fees. On August 2, 2022, a duplicative purported securities class action complaint (De Schutter v. Teladoc Health, Inc., et.al.) was filed in the U.S. District Court for the Eastern District of New York. The claims and parties in De Schutter were substantially similar to those in Schneider. The De Schutter case was transferred on consent to the Southern District court, and the Schneider and De Schutter actions have now been consolidated under the caption In re Teladoc Health, Inc. Securities Litigation. On August 23, 2022, the court appointed Leadersel Innotech ESG as lead plaintiff pursuant to the Private Securities Litigation Reform Act of 1995. The lead plaintiff filed an amended complaint on September 30, 2022, 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 February 24, 2021 to July 27, 2022, and filed a second amended complaint on December 6, 2022, 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 February 11, 2021 to July 27, 2022. On July 5, 2023, the court granted the defendants’ motion to dismiss the complaint. On November 17, 2023, the lead plaintiff filed an appeal in the United States Court of Appeals for the Second Circuit. The Company believes that it has substantial defenses, and the Company and its named officers intend to defend the appeal and any further proceedings in the lawsuit vigorously.

On August 9, 2022, a verified shareholder derivative complaint (Vaughn v. Teladoc Health, Inc., et.al.) was filed in the U.S. District Court for the Southern District of New York against the Company as a nominal defendant and certain of the Company’s officers and directors. The complaint asserts violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, unjust enrichment, and waste of corporate assets in connection with factual assertions similar to those in the purported securities class action complaints described above. The complaint seeks damages to the Company allegedly sustained as a result of the acts and omissions of the named officers and directors and seeks an order directing the Company to reform and improve the Company’s corporate governance. On September 6, 2022, a duplicative verified stockholder derivative complaint (Hendry v. Teladoc Health, Inc., et. al.) was filed in the U.S. District Court for the Southern District of New York. The claims and parties in Hendry were substantially similar to those in Vaughn. The Vaughn and Hendry actions have now been consolidated under the caption In re Teladoc Stockholder Derivative Litigation, and a consolidated complaint was filed on November 29, 2022. The consolidated complaint also asserts violations of Section 14(a) of the Securities Exchange Act of 1934. The parties subsequently stipulated to transfer the action to the U.S. District Court for the District of Delaware, and on December 22, 2022 the parties agreed, and the Court ordered, to stay all proceedings until final resolution, including exhaustion of appeals, of the motion to dismiss filed in the purported securities class action complaint described above.

On July 30, 2020, the Company’s subsidiary BetterHelp, Inc. (“BetterHelp”) received a Civil Investigative Demand from the U.S. Federal Trade Commission (“FTC”) as part of its non-public investigation to determine whether BetterHelp engaged in unfair business practices in violation of the Federal Trade Commission Act. In March 2023, BetterHelp and the FTC entered into a tentative settlement of all claims arising from the FTC’s investigation and agreed to a consent order that required the Company to make a $7.8 million payment to the FTC. The settlement, including the consent order, received final approval from the FTC on July 14, 2023.

There have been multiple putative class-action litigations filed against BetterHelp in connection with the above-referenced FTC settlement and consent order. The actions have been filed in California federal and state courts and in Canada. The cases are substantially similar, involving allegations of misleading patients as to BetterHelp’s use of patient data and associated alleged violations of law involving privacy, advertising, contract, and tort. The Company believes that it has substantial defenses, and the Company intends to defend the lawsuits vigorously.

On February 13, 2023, Data Health Partners, Inc. (“Data Health Partners”) filed a lawsuit against the Company in the U.S. District Court for the District of Delaware alleging that certain of the Company’s products, including its blood glucose meter, infringe upon certain patents held by Data Health Partners and seeking unspecified damages, attorney’s fees and costs. The Company believes that it has substantial defenses, and the Company intends to defend the lawsuit vigorously.

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Note 15. Segments

ASC Subtopic 280-10, “Segment Reporting,” establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and assess performance. The Company’s Chief Executive Officer is the CODM and is responsible for reviewing financial information presented on a segment basis for purposes of making operating decisions and assessing financial performance.

The CODM measures and evaluates segments based on segment operating revenues together with Adjusted EBITDA. The Company excludes the following items from segment Adjusted EBITDA: provision for income taxes; other expense (income), net; interest income; interest expense; depreciation of property and equipment; amortization of intangible assets; stock-based compensation; restructuring costs; and acquisition, integration and transformation charges. Although these amounts are excluded from segment Adjusted EBITDA, they are included in reported consolidated net loss and are included in the reconciliation that follows.

The Company’s computation of segment Adjusted EBITDA may not be comparable to other similarly titled metrics computed by other companies because all companies do not calculate segment Adjusted EBITDA in the same fashion.

Operating revenues and expenses directly associated with each segment are included in determining its operating results. Other expenses that are not directly attributable to a particular segment are based upon allocation methodologies, including the following: revenue, headcount, time and other relevant usage measures, and/or a combination of such.

The Company has two reportable segments: Teladoc Health Integrated Care and BetterHelp. The Integrated Care segment includes a suite of global virtual medical services including general medical, expert medical services, specialty medical, chronic condition management, mental health, and enabling technologies and enterprise telehealth solutions for hospitals and health systems. The BetterHelp segment includes virtual therapy and other wellness services provided on a global basis which are predominantly marketed and sold on a direct-to-consumer basis.

The CODM does not review any information regarding total assets on a segment basis. Segments do not record intersegment revenues, and, accordingly, there is none to be reported. The accounting policies for segment reporting are the same as for the Company as a whole.

The following table presents revenues by segment (in thousands):


	Three Months Ended March 31,
	2024		2023
Teladoc Health Integrated Care	$	377,111	$	349,972
BetterHelp	269,020		279,272
Total Consolidated Revenue	$	646,131	$	629,244

The following table presents Adjusted EBITDA by segment (in thousands):


	Three Months Ended March 31,
	2024		2023
Teladoc Health Integrated Care	$	47,674	$	35,127
BetterHelp	15,466		17,638
Total Consolidated Adjusted EBITDA	$	63,140	$	52,765

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The following table presents a reconciliation of segment profitability (Adjusted EBITDA) to consolidated net loss (in thousands):


	Three Months Ended March 31,
	2024		2023
Teladoc Health Integrated Care	$	47,674	$	35,127
BetterHelp	15,466		17,638
Total consolidated Adjusted EBITDA	63,140		52,765
Less adjustments to reconcile to GAAP net loss
Interest income	(13,942)		(8,911)
Interest expense	5,649		5,263
Other expense (income), net	370		(4,907)
Amortization of intangible assets	95,057		66,860
Depreciation of property and equipment	2,834		2,923
Stock-based compensation	42,325		46,038
Acquisition, integration, and transformation costs	373		5,944
Restructuring costs	9,673		8,102
Loss before provision for income taxes	(79,199)		(68,547)
Provision for income taxes	2,690		681
Net loss	$	(81,889)	$	(69,228)

Geographic data for long-lived assets (representing property and equipment, net) were as follows (in thousands):


	As of March 31, 2024		As of December 31, 2023
United States	$	26,519	$	28,096
Other	3,031		3,936
Total long-lived assets	$	29,550	$	32,032

Note 16. Subsequent Event

As previously reported in a Form 8-K filed with the SEC on April 5, 2024, Teladoc Health’s Chief Executive Officer departed, effective immediately, and is eligible to receive the separation benefits pursuant to his employment agreement, subject to the execution and nonrevocation of a release of claims and other conditions of his employment agreement. In the three months ending June 30, 2024, the Company expects to recognize approximately $6.4 million of costs related to the separation, with $1.2 million for salary continuation and 2024 pro-rated annual bonus and $5.2 million for stock-based compensation, representing the impact of accelerations, modifications, and forfeitures.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Special Note Regarding Forward-Looking Statements

Many statements made in this Quarterly Report on Form 10-Q that are not statements of historical fact, including statements about our beliefs and expectations, are forward-looking statements and should be evaluated as such. Forward-looking statements include information concerning possible or assumed future results of operations, including descriptions of our business plan and strategies. These statements often include words such as “anticipates,” “believes,” “suggests,” “targets,” “projects,” “plans,” “expects,” “future,” “intends,” “estimates,” “predicts,” “potential,” “may,” “will,” “should,” “could,” “would,” “likely,” “foresee,” “forecast,” “continue” and other similar words or phrases, as well as statements in the future tense to identify these forward-looking statements. These forward-looking statements and projections are contained throughout this Form 10-Q, including the section entitled” “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We base these forward-looking statements or projections on our current expectations, plans and assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances and at such time. As you read and consider this Form 10-Q, you should understand that these statements are not guarantees of performance or results. The forward-looking statements and projections are subject to and involve risks, uncertainties, and assumptions and you should not place undue reliance on these forward-looking statements or projections. Although we believe that these forward-looking statements and projections are based on reasonable assumptions at the time they are made, you should be aware that many factors could affect our actual financial results or results of operations and could cause actual results to differ materially from those expressed in the forward-looking statements and projections. Factors that may materially affect such forward-looking statements and projections include, but are not limited to, the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”) and in our other reports and U.S. Securities and Exchange Commission (“SEC”) filings. These cautionary statements should not be construed by you to be exhaustive and are made only as of the date of this Form 10-Q. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You should evaluate all forward-looking statements made in this Form 10-Q in the context of these risks and uncertainties.

Overview

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,” the “Company,” or “we.” The Company’s principal executive office is located in Purchase, New York. Teladoc Health is the global leader in whole person virtual care focused on forging a new healthcare experience with better convenience, outcomes, and value around the world.

We were founded on a simple, yet revolutionary idea: that everyone should have access to the best healthcare, anywhere in the world on their terms. Today, we have a vision of making virtual care the first step on any healthcare journey, and we are delivering on this mission by providing whole person virtual care that includes primary care, mental health, chronic condition management, and more.

Key Factors Affecting Our Performance

We believe that our future performance will depend on many factors, including the following:

As it relates to the Integrated Care segment:

Number of U.S. Integrated Care Members. U.S. Integrated Care members represent the number of unique individuals who have paid access and visit fee only access to our suite of integrated care services in the U.S. at the end of the applicable period. Our revenue growth rate and long-term profitability are affected by our ability to increase cross selling capability among our existing members over time because we derive a substantial portion of our revenue from access and other fees via Client contracts that provide members access to our professional provider network in exchange for a contractual based periodic fee. Therefore, we believe that our ability to add new members and retain existing members, and to increase utilization and penetration further into existing and new health plan and employer Clients is a key indicator of our increasing market adoption, the growth of our business, and our future revenue potential. We further believe that increasing our membership is an integral objective that will provide us with the ability to continually innovate our services and support initiatives that will enhance members’ experiences.

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U.S. Integrated Care members increased by 6.9 million, or 8%, to 91.8 million at March 31, 2024, compared to the same period in 2023.

Chronic Care Program Enrollment. Chronic care program enrollment represents the total number of enrollees across our suite of chronic care programs at the end of a given period. Our chronic care program enrollments are one of the key components of our whole person virtual care platform that we believe positions us to drive greater engagement with our platforms and increased revenue. Chronic care program enrollment increased by 9% to 1.12 million at March 31, 2024, compared to 1.03 million at March 31, 2023.

Average Monthly Revenue Per U.S. Integrated Care Member. Average monthly revenue per U.S. Integrated Care member measures the average monthly amount of global revenue that we generate from a U.S. Integrated Care member for a particular period. It is calculated by dividing the total revenue generated from the Integrated Care segment by the average number of U.S. Integrated Care members during the applicable period. Approximately 20% of total Integrated Care revenues relates to international and hospital and health systems for which membership is not considered as a management metric. We believe that our ability to increase the revenue generated from each member over time is also a key indicator of our increasing market adoption, the growth of our business, and future revenue potential. Average monthly revenue per U.S. Integrated Care member was $1.38 in the three months ended March 31, 2024, compared to $1.39 in the same period in 2023. The change in average monthly revenue versus the indicated prior period is reflective of the growth of onboarding new members and the timing and mix of when fees are realized.

As it relates to the BetterHelp segment:

BetterHelp Paying Users. BetterHelp paying users represent the average number of global monthly paying users of our BetterHelp therapy services during the applicable period. We believe that our ability to add new paying users and retain existing users is a key indicator of the market adoption of BetterHelp, the growth of that business, and future revenue potential. BetterHelp paying users decreased by 11% to 0.42 million for the three months ended March 31, 2024, compared to 0.47 million for the three months ended March 31, 2023.

As it relates to the Company:

Seasonality. Our business has historically been subject to seasonality. In our Integrated Care segment, a concentration of our new Client contracts have an effective date of January 1 as a result of many Clients’ introduction of new services at the start of each calendar year. Therefore, while membership increases, utilization and enrollment rates are dampened until service delivery ramps up over the course of the year. In addition, as a result of seasonal cold and flu trends, we historically have experienced our highest level of visit and other fee revenue during the first and fourth quarters of each year.

Due to the higher cost of customer acquisition during the end-of-year holiday season, our BetterHelp segment has historically reduced marketing activity during the fourth quarter. As a result of this dynamic, we have typically experienced fewer new member additions and the strongest operating income performance in the fourth quarter. Conversely, as marketing activity typically resumes at the start of the year, we typically experience the weakest operating income performance during the first quarter as new customer acquisition and revenue growth lags marketing spend.

Critical Accounting Estimates and Policies

Our discussion and analysis of our results of operations, liquidity and capital resources are based on our condensed consolidated financial statements which have been prepared in conformity with accounting principles generally accepted in the U.S. (“GAAP”). The preparation of these condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities.

On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue recognition, business combinations, goodwill and other intangible assets, income taxes, and other items. We base our estimates on historical and anticipated results and trends and on various other assumptions that we believe are reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. By their nature, estimates are subject to an inherent degree of uncertainty. Actual results may differ from our estimates and could have a significant adverse effect on our results of operations and financial position. For a discussion of our critical accounting policies and estimates see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the 2023 Form 10-K.

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Non-GAAP Financial Measures

To supplement our financial information presented in accordance with GAAP, we use non-GAAP financial measures to clarify and enhance an understanding of past performance, which include EBITDA (as defined below), Adjusted EBITDA, and free cash flow. We believe that the presentation of these financial measures enhances an investor’s understanding of our financial performance, and are commonly used by investors to evaluate our performance and that of our competitors. We further believe that these financial measures are useful financial metrics to assess our operating performance and financial and business trends from period-to-period by excluding certain items that we believe are not representative of our core business, and that free cash flow reflects an additional way of viewing our liquidity that, when viewed together with GAAP results, provides management, investors, and other users of our financial information with a more complete understanding of factors and trends affecting our cash flows. We use these non-GAAP financial measures for business planning purposes and in measuring our performance relative to that of our competitors. We utilize Adjusted EBITDA as a key measure of our performance.

EBITDA consists of net loss before interest income; interest expense; other expense (income), net, including foreign currency exchange gains or losses; provision for income taxes; amortization of intangible assets; and depreciation of property and equipment. Adjusted EBITDA consists of net loss before interest income; interest expense; other expense (income), net, including foreign currency exchange gains or losses; provision for income taxes; amortization of intangible assets; depreciation of property and equipment; stock-based compensation; restructuring costs; and acquisition, integration, and transformation costs.

Free cash flow is net cash provided by operating activities less capital expenditures and capitalized software development costs.

Our use of these non-GAAP terms may vary from that of others in our industry, and other companies may calculate such measures differently than we do, limiting their usefulness as comparative measures.

Non-GAAP measures have important limitations as analytical tools and you should not consider them in isolation, and they should not be considered as an alternative to net loss before provision for income taxes, net loss, net loss per share, net cash from operating activities or any other measures derived in accordance with GAAP. Some of these limitations are:

•EBITDA and Adjusted EBITDA eliminate the impact of the provision for income taxes on our results of operations, and they do not reflect interest income, interest expense or other expense (income), net;

•Adjusted EBITDA does not reflect restructuring costs. Restructuring costs may include certain lease impairment costs, certain losses related to early lease terminations, and severance;

•Adjusted EBITDA does not reflect significant acquisition, integration, and transformation costs. Acquisition, integration and transformation costs include investment banking, financing, legal, accounting, consultancy, integration, fair value changes related to contingent consideration and certain other transaction costs related to mergers and acquisitions. It also includes costs related to certain business transformation initiatives focused on integrating and optimizing various operations and systems, including upgrading our CRM and ERP systems. These transformation cost adjustments made to our results do not represent normal, recurring, operating expenses necessary to operate the business but rather, incremental costs incurred in connection with our acquisition and integration activities; and

•Adjusted EBITDA does not reflect the significant non-cash stock-based compensation expense which should be viewed as a component of recurring operating costs.

In addition, although amortization of intangible assets and depreciation of property and equipment are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and both EBITDA and Adjusted EBITDA do not reflect any expenditures for such replacements.

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We compensate for these limitations by using these non-GAAP measures along with other comparative tools, together with GAAP measurements, to assist in the evaluation of operating performance. Such GAAP measurements include net loss, net loss per share, net cash provided by operating activities, and other performance measures.

In evaluating these financial measures, you should be aware that in the future we may incur expenses similar to those eliminated in this presentation. Our presentation of these non-GAAP measures should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items.

Condensed Consolidated Results of Operations

The following table sets forth our Condensed Consolidated Statements of Operations data for the three months ended March 31, 2024 and 2023 and the dollar and percentage change between the respective periods (in thousands, except per share data):


	Three Months Ended March 31,
	2024		2023		Variance		%
Revenue	$	646,131	$	629,244	$	16,887	3	%
Expenses:
Cost of revenue (exclusive of depreciation and amortization, which are shown separately below)	194,538		190,107		4,431		2	%
Operating expenses:
Advertising and marketing	183,329		176,790		6,539		4	%
Sales	54,364		54,490		(126)		—	%
Technology and development	81,388		86,985		(5,597)		(6)	%
General and administrative	111,697		114,145		(2,448)		(2)	%
Acquisition, integration, and transformation costs	373		5,944		(5,571)		(94)	%
Restructuring costs	9,673		8,102		1,571		19	%
Amortization of intangible assets	95,057		66,860		28,197		42	%
Depreciation of property and equipment	2,834		2,923		(89)		(3)	%
Total expenses	733,253		706,346		26,907		4	%
Loss from operations	(87,122)		(77,102)		(10,020)
Interest income	(13,942)		(8,911)		(5,031)		56	%
Interest expense	5,649		5,263		386		7	%
Other expense (income), net	370		(4,907)		5,277		(108)	%
Loss before provision for income taxes	(79,199)		(68,547)		(10,652)		16	%
Provision for income taxes	2,690		681		2,009		295	%
Net loss	$	(81,889)	$	(69,228)	$	(12,661)	18	%
Net loss per share, basic and diluted	$	(0.49)	$	(0.42)	$	(0.07)	17	%

EBITDA (1)	$	10,769	$	(7,319)	$	18,088	(247)	%
Adjusted EBITDA (1)	$	63,140	$	52,765	$	10,375	20	%

___________________________

(1)Non-GAAP Financial Measures

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The following table reconciles net loss, the most directly comparable GAAP financial measure, to EBITDA and Adjusted EBITDA for the three months ended March 31, 2024 and 2023 (in thousands):


	Three Months Ended March 31,
	2024		2023
Net loss	$	(81,889)	$	(69,228)
Add:
Interest income	(13,942)		(8,911)
Interest expense	5,649		5,263
Other expense (income), net	370		(4,907)
Provision for income taxes	2,690		681
Amortization of intangible assets	95,057		66,860
Depreciation of property and equipment	2,834		2,923
EBITDA	10,769		(7,319)
Stock-based compensation	42,325		46,038
Acquisition, integration, and transformation costs	373		5,944
Restructuring costs	9,673		8,102
Adjusted EBITDA	$	63,140	$	52,765

Teladoc Health Integrated Care	$	47,674	$	35,127
BetterHelp	15,466		17,638
Adjusted EBITDA	$	63,140	$	52,765

Revenue. Total revenue was $646.1 million for the three months ended March 31, 2024, compared to $629.2 million during the three months ended March 31, 2023, an increase of $16.9 million, or 3%. This increase in revenue was driven substantially by higher visit revenues in our Integrated Care segment. Total access fees were $557.2 million for the three months ended March 31, 2024, compared to $550.9 million for the three months ended March 31, 2023, an increase of $6.3 million, or 1%. Other revenue, which predominately includes visit fees and, to a lesser extent, revenue from the sales of our telehealth solutions for hospitals and health systems, was $89.0 million for the three months ended March 31, 2024, compared to $78.4 million for the three months ended March 31, 2023, an increase of $10.6 million, or 14%, primarily related to higher visit revenue. For the three months ended March 31, 2024, 86% of our revenue was derived from access fees and 14% was derived from other revenue, consistent with the three months ended March 31, 2023. By geography, U.S. revenue grew 1% to $547.6 million and International revenue grew 13% to $98.5 million compared to the three months ended March 31, 2023.

Cost of Revenue (exclusive of depreciation and amortization, which are shown separately below). Cost of revenue was $194.5 million for the three months ended March 31, 2024, compared to $190.1 million for the three months ended March 31, 2023, an increase of $4.4 million, or 2%. The increase was primarily driven by higher costs associated with the growth in revenue and higher amortization of device costs, offset by lower physician costs, reflecting various operation optimization efforts to reduce provider costs and overall product mix.

Advertising and Marketing Expenses. Advertising and marketing expenses were $183.3 million for the three months ended March 31, 2024, compared to $176.8 million for the three months ended March 31, 2023, an increase of $6.5 million, or 4%, driven mainly by higher engagement marketing in our Integrated Care segment and higher digital and media advertising costs in our BetterHelp segment.

Sales Expenses. Sales expenses were essentially flat at $54.4 million for the three months ended March 31, 2024, compared to $54.5 million for the three months ended March 31, 2023. This reflects lower costs related to sales conferences and events and commissions, offset by higher employee compensation.

Technology and Development Expenses. Technology and development expenses were $81.4 million for the three months ended March 31, 2024, compared to $87.0 million for the three months ended March 31, 2023, a decrease of $5.6 million, or 6%. This decrease reflects lower employee compensation costs and contract labor costs, offset by higher infrastructure and hosting costs associated with running operations and ongoing projects and services to continuously improve and optimize our products and services. For the three months ended March 31, 2024 and 2023, research and development costs, which exclude amounts reflected as capitalized software development costs, were $24.8 million and $30.4 million, respectively.

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General and Administrative Expenses. General and administrative expenses decreased $2.4 million, or 2%, to $111.7 million for the three months ended March 31, 2024, compared to $114.1 million for the three months ended March 31, 2023. The decrease was primarily driven by lower therapist onboarding costs, bad debt reserves, indirect taxes, insurance costs, employee compensation costs, and bank fees, partially offset by higher corporate software and infrastructure costs, legal costs, consultation costs, occupancy costs, and travel expenses.

As a result of the termination of the former Chief Executive Officer, we expect to recognize approximately $6.4 million of related costs in the three months ending June 30, 2024, with $1.2 million for cash severance costs and $5.2 million for stock-based compensation.

Acquisition, Integration, and Transformation Costs. Acquisition, integration, and transformation costs were $0.4 million and $5.9 million for the three months ended March 31, 2024 and 2023 respectively, and primarily consisted of costs to integrate and upgrade our CRM and ERP ecosystem.

Restructuring Costs. Restructuring costs for the three months ended March 31, 2024 were $9.7 million, of which $7.0 million was for employee transition, severance, employee benefits, and related costs and $2.7 million was for other restructuring related costs. Restructuring costs for the three months ended March 31, 2023, were $8.1 million which primarily consisted of employee transition, severance, employee benefits, and related costs.

Amortization of Intangible Assets.

The following table shows amortization of intangible assets broken down by components for the periods indicated (in thousands):


	Three Months Ended March 31,
	2024		2023		%
Amortization of acquired intangibles	$	64,181	$	50,259	28%
Amortization of capitalized software development costs	30,876		16,601		86%
Amortization of intangible assets expense	$	95,057	$	66,860	42%

Amortization of intangible assets was $95.1 million for the three months ended March 31, 2024, compared to $66.9 million for the three months ended March 31, 2023, an increase of $28.2 million, or 42%. The higher expense was driven by higher amortization of intangible assets due to the acceleration of amortization associated with the Livongo trademark as well as an increase in the amortization of capitalized software development costs related to our investment in platforms. In the second half of 2023, we initiated a strategy to transition the majority of our chronic condition management Clients and members to the Teladoc Health brand on a phased basis, with a smaller subset continuing to be served under the Livongo trade name beyond 2024. In connection with the brand strategy, we accelerated the amortization of intangible assets that are associated with the Livongo trademark, increasing amortization of intangible assets expense in the year ended December 31, 2023 and in the year ending December 31, 2024, with corresponding reductions thereafter. The change in accounting estimate resulted in additional amortization of intangible expense for acquired intangibles of $18.6 million, or $0.11 per basic and diluted share, for the three months ended March 31, 2024.

Depreciation of Property and Equipment. Depreciation of property and equipment was $2.8 million for the three months ended March 31, 2024, compared to $2.9 million for the three months ended March 31, 2023, a decrease of $0.1 million, or 3%.

Interest Income. Interest income consisted of interest earned on cash and cash equivalents. Interest income was $13.9 million for the three months ended March 31, 2024, compared to $8.9 million for the three months ended March 31, 2023. The increase was primarily driven by higher interest rate yields and an increase in cash and cash equivalent balances.

Interest Expense. Interest expense consisted of interest costs and the amortization of debt discounts primarily associated with the convertible senior notes. Interest expense was $5.6 million for the three months ended March 31, 2024, compared to $5.3 million for the three months ended March 31, 2023.

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Other Expense (Income), net. Other expense (income), net was an expense of $0.4 million for the three months ended March 31, 2024, compared to an income of $4.9 million for the three months ended March 31, 2023, primarily reflecting losses on foreign currency exchange rate fluctuations in 2024 and a gain on the partial sale of a business in 2023.

Provision for Income Taxes. We recorded an income tax expense of $2.7 million for the three months ended March 31, 2024, compared to $0.7 million for the three months ended March 31, 2023.

Segment Information

The following tables set forth the results of operations for the relevant segments for the three months ended March 31, 2024 and 2023 (dollars in thousands):


	Three Months Ended March 31,
Teladoc Health Integrated Care	2024			2023			Variance		%
Revenue	$	377,111		$	349,972		$	27,139	8	%
Adjusted EBITDA	$	47,674		$	35,127		$	12,547	36	%
Adjusted EBITDA Margin %	12.6		%	10.0		%	260 bps

Integrated Care total revenues increased by $27.1 million, or 8%, to $377.1 million for the three months ended March 31, 2024, primarily on higher chronic care results and higher visit revenue in the U.S., as well as strong growth internationally.

Integrated Care Adjusted EBITDA increased by $12.5 million, or 36%, to $47.7 million for the three months ended March 31, 2024, primarily reflecting higher gross profit and flat operating expenses.


	Three Months Ended March 31,
BetterHelp	2024			2023			Variance		%
Therapy Services	$	263,712		$	275,928		$	(12,216)	(4)	%
Other Wellness Services	5,308			3,344			1,964		59	%
Total Revenue	$	269,020		$	279,272		$	(10,252)	(4)	%
Adjusted EBITDA	$	15,466		$	17,638		$	(2,172)	(12)	%
Adjusted EBITDA Margin %	5.7		%	6.3		%	(60)bps

BetterHelp total revenues decreased by $10.3 million, or 4%, to $269.0 million for the three months ended March 31, 2024, primarily driven by a 11% decrease in average monthly paying users.

BetterHelp Adjusted EBITDA decreased by $2.2 million, or 12%, to $15.5 million for the three months ended March 31, 2024, primarily reflecting marginally lower gross profit on lower revenues and higher operating expenses.

Liquidity and Capital Resources

The following table presents a summary of our cash flow activity for the three months ended March 31, 2024 and 2023 (in thousands):


	Three Months Ended March 31,
Consolidated Statements of Cash Flows - Summary	2024		2023
Net cash provided by operating activities	$	8,920	$	13,156
Net cash used in investing activities	(35,512)		(45,624)
Net cash provided by financing activities	1,751		3,353
Effect of foreign currency exchange rate changes	(899)		(488)
Total decrease in cash and cash equivalents	$	(25,740)	$	(29,603)

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Our principal sources of liquidity are cash and cash equivalents, totaling $1,097.9 million as of March 31, 2024. During 2023, we experienced positive operating cash flow and we anticipate increasing positive operating cash flow results for 2024.

We believe that our existing cash and cash equivalents will be sufficient to meet our working capital, capital expenditure, and contractual obligation needs for at least the next 12 months. Our future capital requirements will depend on many factors including our growth rate, contract renewal activity, number of visits, the timing and extent of spending to support product development efforts, our expansion of sales and marketing activities, the introduction of new and enhanced services offerings, the continuing market acceptance of telehealth, and our debt service obligations. We may in the future enter into arrangements to acquire or invest in complementary businesses, services, technologies, and intellectual property rights. We may be required to seek additional equity or debt financing to fund working capital, capital expenditures and acquisitions, and to settle debt obligations. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all, which would adversely affect our business, financial condition and results of operations.

Historically, we have financed our operations primarily through sales of equity securities, debt issuance, and bank borrowings.

See Note 9. “Convertible Senior Notes” to the condensed consolidated financial statements for additional information on our convertible senior notes.

We were in compliance with all debt covenants at March 31, 2024.

We routinely enter into contractual obligations with third parties to provide professional services, licensing, and other products and services in support of our ongoing business. The current estimated cost of these contracts is not expected to be significant to our liquidity and capital resources based on contracts in place as of March 31, 2024.

Cash from Operating Activities

Cash flows provided by operating activities consisted of net loss adjusted for certain non-cash items and the cash effect of changes in assets and liabilities. Net cash provided by operating activities was $8.9 million for the three months ended March 31, 2024 compared to net cash provided by operating activities of $13.2 million for the three months ended March 31, 2023. The year-over-year change was primarily driven by higher incentive compensation payments, partially offset by growth in the business.

The primary uses of cash from operating activities are for the payment of cash compensation, provider fees, engagement marketing, direct-to-consumer digital and media advertising, inventory, insurance, technology costs, interest expense and acquisition, integration, and transformation costs. Historically, cash compensation is at its highest level in the first quarter when discretionary employee compensation related to the previous fiscal year is paid.

Cash from Investing Activities

Cash used in investing activities was $35.5 million for the three months ended March 31, 2024, and $45.6 million for the three months ended March 31, 2023. Amounts for both periods substantially relate to payments for capitalized software development costs associated with ongoing projects to continuously improve and optimize our products and services.

Cash from Financing Activities

Cash provided by financing activities for the three months ended March 31, 2024 was $1.8 million and $3.4 million for the three months ended March 31, 2023, reflecting lower proceeds from the employee stock purchase plan.

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The following is a reconciliation of net cash provided by operating activities to free cash flow (in thousands, unaudited):


	Three Months Ended March 31,
	2024		2023
Net cash provided by operating activities	$	8,920	$	13,156
Capital expenditures	(1,149)		(2,363)
Capitalized software development costs	(34,363)		(43,261)
Free cash flow	$	(26,592)	$	(32,468)

Free cash flow was negative $26.6 million for the three months ended March 31, 2024, compared to negative $32.5 million for the three months ended March 31, 2023. Cash flow is typically negative in the first quarter of each year, reflecting the payment of annual bonuses. The year-over-year change was driven by higher incentive compensation payments, partially offset by growth in the business as well as decreases in payments for capitalized expenditures and capitalized software development costs.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk and Foreign Currency Exchange Risk

Our cash and cash equivalents are subject to interest rate volatility, which impacts the amount of interest income earned, and represents our principal market risk. A 1% change in interest rates would result in a change of interest income generated from our cash and cash equivalents by approximately $11 million over the next 12 months. We do not expect cash flows related to our convertible senior notes to be affected by a sudden change in market interest rates as they bear fixed interest rates. We do not enter into investments for trading or speculative purposes.

We operate our business primarily within the U.S. which accounts for approximately 85% of our revenues. We have not utilized hedging strategies with respect to our foreign currency exchange exposure as we believe it is not expected to have a material impact on our condensed consolidated financial statements.

Concentrations of Risk and Significant Clients

Our financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. Although we deposit our cash with multiple financial institutions in the U.S. and in foreign countries, our deposits, at times, may exceed federally insured limits. Our cash equivalents are primarily invested in institutional money market funds.

No single Client represented over 10% of consolidated revenues for the three months ended March 31, 2024 or 2023. For the Integrated Care Segment, a significant portion of our revenue is derived from large enterprises, mainly health plans. For the three months ended March 31, 2024, revenue from the five largest customers was 31% of total Integrated Care segment revenue. For the BetterHelp segment, there is no significant concentration risk as substantially all revenue is generated from individuals in the direct-to-consumer market.

Item 4. Controls and Procedures

Management’s Report on Internal Control over Financial Reporting

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Our management, with the participation of our Acting Chief Executive Officer and Chief Financial Officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)).

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Based on that evaluation, our Acting Chief Executive Officer and Chief Financial Officer concluded that as of March 31, 2024, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and to provide reasonable assurance that such information is accumulated and communicated to our management, including our Acting Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are subject to legal proceedings, claims and litigation arising in the ordinary course of our business. Descriptions of certain legal proceedings to which we are a party are contained in Note 14. “Commitments and Contingencies,” to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q and are incorporated by reference herein.

Item 1A. Risk Factors

For a discussion of potential risks and uncertainties related to our Company see the information in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023. There have been no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in the “Special Note Regarding Forward-Looking Statements” section in Part I, Item 2, of this Quarterly Report on Form 10-Q.

Item 5. Other Information

(a) On April 26, 2024, the Company entered into a Retention Bonus Agreement with Adam Vandervoort, Chief Legal Officer and Secretary, pursuant to which Mr. Vandervoort will receive $94,000. The retention bonus is subject to Mr. Vandervoort’s continued employment with the Company through April 26, 2025 (the “Retention Period”).

If Mr. Vandervoort’s employment with the Company is terminated during the Retention Period (i) by the Company for “Cause” (as defined in his Executive Severance Agreement) or (ii) by Mr. Vandervoort in connection with an event or condition that does not constitute “Good Reason” (as defined in his Executive Severance Agreement), Mr. Vandervoort will be required to repay the full amount of the retention bonus to the Company. The foregoing description of the Retention Bonus Agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of the Retention Bonus Agreement, a copy of which is filed as Exhibit 10.3 to this Form 10-Q.

Also on April 26, 2024, the Company entered into an amendment to its Executive Severance Agreement with Mr. Vandervoort. The amendment becomes effective upon the earlier of (i) the date of public announcement by the Company of the selection of a permanent chief executive officer succeeding Jason Gorevic or (ii) January 1, 2025; and enhances the severance arrangements such that in the event that Mr. Vandervoort is terminated by the Company without cause or he resigns for good reason, subject to his timely executing a release of claims in favor of the Company, he is entitled to receive:

•continued base salary for 12 months;

•any earned but unpaid bonus for the year prior to the year of termination;

•premiums for continued medical, dental or vision coverage pursuant to COBRA, if elected, for up to 12 months; and

•accelerated vesting of his time-based equity awards that were scheduled to vest in the following 12 months and continued eligibility to vest in awards subject to performance-based vesting conditions if and to the extent such performance conditions are satisfied during that 12-month period.

The foregoing description of the amendment does not purport to be complete and is qualified in its entirety by reference to the complete text of the amendment, a copy of which is filed as Exhibit 10.4 to this Form 10-Q.

(c) Rule 10b5-1 Trading Plans. During the three months ended March 31, 2024, the following officer (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934) adopted a Rule 10b5-1 trading arrangement (as defined in Item 408 of Regulation S-K of the Securities Act of 1933), which was intended to satisfy the affirmative defense of Rule10b5-1(c):

On March 1, 2024, Vidya Raman-Tangella, our Chief Medical Officer, adopted a Rule 10b5-1 trading plan. Dr. Raman-Tangella's trading plan provides for the sale of up to 45,675 shares of our common stock through June 2025.

Item 6. Exhibits

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Exhibit

Index

Incorporated by Reference

Exhibit
Number

Exhibit Description

Form

File No.

Exhibit

Filing
Date

Filed
Herewith

3.1

Seventh Amended and Restated Certificate of Incorporation of Teladoc Health, Inc.

8-K

001-37477

3.1

6/2/22

3.2

S eventh Amended and Restated Bylaws of Teladoc Health, Inc.

10-K

001-37477

3.2

2/23/24

10.1

Letter Agreement, dated as of April 1, 2024, by and between Teladoc Health, Inc. and Mala Murthy.

10.2

Release and Separation Agreement, dated as of April 11, 2024, by and between Teladoc Health, Inc. and Jason Gorevic .

10.3

Retention Bonus Agreement, dated as of April 2 6 , 2024, by and between Teladoc Health, Inc. and Adam Vandervoort .

10.4

Amendment No. 2 to Executive Severance Agreement, dated April 26, 2024, by and between Teladoc Health, Inc. and Adam Vandervoort.

31.1

Acting Chief Executive Officer, Chief Financial Officer —Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

Acting Chief Executive Officer, Chief Financial Officer—Certification pursuant to Rule13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS

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101.SCH

XBRL Taxonomy Extension Schema Document.

101.CAL

XBRL Taxonomy Calculation Linkbase Document.

101.DEF

XBRL Definition Linkbase Document.

101.LAB

XBRL Taxonomy Label Linkbase Document.

101.PRE

XBRL Taxonomy Presentation Linkbase Document.

104

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___________________________

*Filed herewith.

**Furnished herewith.

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	TELADOC HEALTH, INC.

Date: April 26, 2024	By:	/s/ MALA MURTHY
	Name:	Mala Murthy
	Title:	Acting Chief Executive Officer, Chief Financial Officer

EX-10.1 2 tdoc-20240331xexx101.htm EX-10.1 Document

Exhibit 10.1

TELADOC HEALTH, INC.

April 1, 2024

Mala Murthy

via e-mail

Re: Interim CEO

Dear Mala:

We are pleased that you have agreed to serve as the Interim Chief Executive Officer (“Interim CEO”) of Teladoc Health, Inc. (the “Company”) effective April 5, 2024. The purpose of this letter agreement (the “Letter Agreement”) is to document your duties and the compensation that you will receive for your service as Interim CEO. Reference is made to your Executive Severance Agreement with the Company, dated as of June 24, 2019 (the “Severance Agreement”). Terms used but not otherwise defined herein shall have the meaning set forth in the Severance Agreement.

Duties and Responsibilities

While you serve as Interim CEO until a permanent CEO is appointed or an earlier termination of your employment (such period, the “Interim Period”), you will report directly to the Board of Directors of the Company (the “Board”) and will have such authority, duties and responsibilities as are customary for such position or as may be reasonably assigned to you by the Board.

Compensation

During the Interim Period, your salary shall be the equivalent of $750,008 on an annualized basis, which is equal to your current Base Salary plus an additional $18,334 for each month of the Interim Period (payable in accordance with the Company’s normal payroll practices).

In addition, during the Interim Period, your annual corporate bonus target opportunity will increase from 75% to 120% of your Base Salary. For the avoidance of doubt, any payment with respect to such opportunity at the end of fiscal year 2024 shall reflect a blended rate based on the proportion of the calendar year elapsed during the Interim Period. All payments will be subject to applicable withholdings and other required deductions.

In light of your new role, in addition to the 2024 annual Teladoc Health equity refresh award previously granted, on or around the date you assume the interim CEO role, you will receive an additional grant (the “Top Up Award”) with a target grant date value of $1,100,000, based on the closing price on the grant date (but resulting in no more than 110,000 additional shares at target), delivered as 50% RSUs and 50% PSUs; provided, that the Top Up Award will vest on the same schedule (with the same time-based and performance-based conditions, as applicable) as your initial 2024 annual Teladoc Health Equity refresh award, except that the first vesting date will be the first anniversary of the date of grant.

For the avoidance of doubt, (x) your return to the position of Chief Financial Officer following the completion of the Interim Period and/or (y) the reversion of your compensation following the completion of the Interim Period to the levels applicable as of immediately prior to your tenure as Interim CEO (as may be modified by the Board in connection with any periodic review of executive compensation) will not constitute a basis for Good Reason.

Anything herein to the contrary notwithstanding, concurrent with your becoming Interim CEO, the Company and you shall amend the Severance Agreement to as closely as possible reflect the intent of the parties that, following your return to the position of Chief Financial Officer, you have a guarantee of remaining in that role for not less than two years, on such specific terms as the Company and you shall reasonably agree.

Miscellaneous

Except as specifically modified by this Letter Agreement, this Letter Agreement shall not constitute a waiver, amendment or modification of any term or condition of the Severance Agreement and the provisions of the Severance Agreement shall remain in full force and effect. On and after the date hereof, each reference in the Severance Agreement to “this Agreement,” “herein,” “hereof,” “hereunder,” or words of similar import shall mean and be a reference to the Severance Agreement as amended by this Letter Agreement.

This Letter Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to the conflict of laws principles hereof. This Letter Agreement may be executed and transmitted by PDF or other form of electronic transmission, and any signature on a PDF or other form of electronic transmission shall be considered an original for all purposes and shall be fully enforceable. This Letter Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

Please indicate your agreement with the foregoing by signing and returning a copy of this Letter Agreement to me. Of course, if you have any questions regarding the foregoing, please feel free to contact me.

Sincerely,

TELADOC HEALTH, INC.

By: /s/ Adam Vandervoort__________

Name: Adam Vandervoort

Title: Chief Legal Officer

Acknowledged and Agreed

By: /s/ Mala Murthy_____________

EX-10.2 3 tdoc-20240331xexx102.htm EX-10.2 Document

Exhibit 10.2

TELADOC HEALTH, INC.

April 11, 2024

Jason Gorevic

Via e-mail

Re: Release and Separation Agreement

Dear Jason:

Your last day of employment with Teladoc Health, Inc. (the “Company”) was April 5, 2024 (“Separation Date”). In order to receive the separation benefits provided in Section 5(b)(i) of the Amended and Restated Executive Employment Agreement between you and the Company, dated as of June 16, 2015 (as amended October 29, 2019, the “Employment Agreement”) which are set forth in Exhibit A to this Release Agreement (“Separation Benefits”), less all required withholdings and deductions, as provided under the Employment Agreement, you must sign this Release Agreement (this “Release”).

You hereby confirm your resignation from the Board of Directors of the Company (the “Board”), as required by the Employment Agreement and effective immediately. In addition, you have resigned from any other directorships, offices or other positions that you may hold in the Company or any of its affiliates. In addition, following the Separation Date, you agree to no longer represent yourself as an employee, officer, associate, agent, or authorized representative of the Company, negotiate or enter into any agreements on behalf of the Company, or otherwise bind the Company in any way.

Your participation in any Company-sponsored health, dental and/or vision insurance benefit plans will terminate on April 30, 2024. Thereafter, you will be eligible to continue your health, dental and vision care coverages and/or Flexible Spending Accounts pursuant to the provisions of the Consolidated Omnibus Reconciliation Act of 1985 (“COBRA”) for an 18-month period (or such shorter period as may be applicable under the relevant provisions of COBRA), or you may choose to purchase insurance on the public exchange or elsewhere. Except as provided herein, all other benefits will end as of the Separation Date.

Regardless of whether you sign this Release, you will receive your final paycheck, which will include payment of your wages through the Separation Date, and the Company will pay you all unreimbursed business expenses you have incurred through the Separation Date that the Company would reimburse in the ordinary course, provided you submit them in accordance with Company policy and no later than three weeks after your Separation Date, or in accordance with relevant law. You shall retain any vested benefits under the Company’s ERISA-covered employee benefit plans. You shall also be covered under any applicable indemnification agreement and directors’ and officers’ liability insurance for any actions or inactions through the Separation Date.

1. No Other Compensation or Benefits. Except for the Separation Benefits set forth in this Release, you agree you are not entitled to any other or further compensation, remuneration, benefits, severance, reimbursement, or payments from the Company. You acknowledge and agree you have been paid any bonuses and/or any other awards you have earned under the terms of the plan or agreement where the amounts were payable to you prior to your Separation Date. You acknowledge and agree that no other compensation, bonuses or awards are payable to you. And therefore, you acknowledge and agree you have been paid for all time worked and are owed no further wages and/or compensation of any kind.

2. Release & Covenant Not To Sue. In exchange for the Separation Benefits, you (on behalf of yourself, your heirs, your executors, and your assigns and all persons who might have claims deriving from your own) unconditionally, and to the maximum extent permitted by law, waive and release any and all lawsuits, debts, obligations, demands, judgments, damages, or causes of action that may lawfully be released by private agreement (referred to in this Release as “claims”) you have or might have against the Company and any of its predecessors, parents, subsidiaries, divisions, affiliates, and related entities, including Teladoc Health, Inc. or any of their past and present owners, officers, directors, shareholders, members, managing members, agents, attorneys, employees, and successors (with regard to individuals, the definition includes in their individual capacity and corporate capacity other than with regard to owners, shareholders, agents and attorneys whom shall only be released from claims in their capacities as such), firms, or entities (“Released Parties”). These claims include, but are not limited to, all claims, whether known or unknown, arising up to and including the date you sign this Release, whether under contract, tort, statute, equity, or common law, including any and all foreign, federal, state, and/or local constitutional, statutory, regulatory, or common law. Released claims include, but are not limited to (i) claims covered by the Americans with Disabilities Act, the Age Discrimination in Employment Act (“ADEA”), Title VII of the Civil Rights Act, the Family and Medical Leave Act (“FMLA”), the Employee Income Retirement and Security Act (“ERISA”) (with respect to unvested benefits), the Equal Pay Act, the Sarbanes-Oxley Act of 2002, the Worker Adjustment and Retraining Notification Act, the National Labor Relations Act, the Genetic Information Nondiscrimination Act of 2008, the New York State and City Human Rights Laws, the New York Executive Law, the New York Labor Laws, the New York State Correction Law, the New York State Civil Rights Law, the New York Workers’ Compensation Law, the New York City Administrative Code and the New York State Worker Adjustment and Retraining Notification Act, all as amended and including all of their respective implementing regulations; (ii) any and all claims for compensation of any type whatsoever, including but not limited to claims for salary, wages, bonuses, commissions, incentive compensation, vacation and/or severance; (iii) any and all claims arising under tort, contract and/or quasi-contract law, including but not limited to claims of breach of an expressed or implied contract, tortious interference with contract or prospective business advantage, breach of the covenant of good faith and fair dealing, promissory estoppel, detrimental reliance, invasion of privacy, nonphysical injury, personal injury or sickness or any other harm, wrongful or retaliatory discharge, fraud, defamation, slander, libel, false imprisonment, negligent or intentional infliction of emotional distress; and (iv) any and all claims for monetary or equitable relief, including but not limited to attorneys’ fees, back pay, front pay, reinstatement, experts’ fees, medical fees or expenses, costs and disbursements. Damages released and waived include back pay, future pay, lost benefits, any and all wages, compensatory damages, emotional distress, physical injury damages, pain and suffering, liquidated damages, punitive damages, exemplary damages, attorney’s fees, costs, civil fines, penalties and interest. This is a general release. You expressly acknowledge that this general release includes, but is not limited to, any and all claims arising out of or related to your employment with and separation from the Company, whether or not they are known to you at the time you sign this Release.

By signing this Release, you expressly acknowledge and represent that (a) you have suffered no injuries or occupational diseases arising out of or in connection with your employment by the Company; (b) you have received all wages to which you were entitled as an employee of the Company; (c) you received all leave to which you were entitled under the FMLA; and (d) you are not aware of any facts or circumstances constituting a violation of the FMLA, the Fair Labor Standards Act, or any applicable state leave or wage payment law.

You expressly agree that this Release forever precludes you from bringing, instituting, maintaining, further pursuing, or participating in any lawsuit against the Released Parties for any causes or claims released herein, except as stated below. You further agree that this Release may be pleaded as a full defense to any action, suit, arbitration or other proceeding covered by the terms hereof which is or may be initiated, prosecuted or maintained by you, your descendants, dependents, heirs, executors, administrators or permitted assigns. You specifically waive any right to become, and promise not to become, a member of any class in which a claim against the Released Parties is made involving any events leading up to the date you sign this Release, except where such waiver is prohibited by law. You represent that you have not filed or otherwise initiated any lawsuit, charge, claim, or demand against any of the Released Parties. You further agree that should you or any person, organization, or other entity bring or file, or cause or permit to be brought or filed, any civil action, suit, or administrative or legal proceeding involving any matter occurring at any time prior to the date you sign this Release, you will not accept any personal, equitable, or monetary relief in such civil action, suit, or administrative or legal proceeding, except where such waiver is prohibited by law. You agree that the Separation Benefits fully satisfy any individual relief to which you are entitled as a result of your employment with and separation from the Company.

This Release expressly releases claims under the False Claims Act to the fullest extent permitted by law. To the extent that a court of competent jurisdiction were to conclude that pre-filing releases of claims under the False Claims Act are not enforceable absent government knowledge of the alleged claims, the parties agree that you will be permitted to participate in any legal proceedings under the False Claims Act. But, you specifically waive any rights you may have to receive any monetary award from such proceedings.

3. Reservation of Your Rights. You understand your release of claims herein does not apply to (i) claims for unemployment or workers’ compensation benefits, (ii) claims under this Release or claims or rights that may arise after the date that you sign this Release, (iii) claims for reimbursement of expenses under the Company’s expense reimbursement policies, (iv) any vested rights under the Company’s ERISA-covered employee benefit plans as applicable on the date you sign this Release, (v) claims relating to vesting of equity awards in accordance with this Release, (vi) claims for indemnification or for coverage under directors’ and officers’ liability insurance policies and (vii) any claims that controlling law clearly states may not be released by private agreement.

Moreover, nothing contained in this Release, including the Release & Covenant Not to Sue, and Confidentiality provisions, is intended to or will preclude you from communicating with, filing a charge or complaint with, providing documents or information voluntarily or in response to a subpoena or other information request to, or from participating in an investigation or proceeding conducted by a government agency, including, but not limited to, the Equal Employment Opportunity Commission and the National Labor Relations Board. However, by signing this Release, you are waiving your right to recover any individual relief (including any backpay, front pay, reinstatement or other legal or equitable relief) in any charge, complaint, or lawsuit or other proceeding brought by you or on your behalf by any third party, except for any right you may have to receive a payment or award from a government agency (and not the Company) for information provided to the government agency or where otherwise prohibited.

In addition, nothing in this Release, including the Release & Covenant Not to Sue and Confidentiality provisions prohibits you from testifying truthfully in any legal process between you and the Company or any of its affiliates.

In addition, nothing prevents you from discussing or disclosing conduct, or the existence of a settlement involving conduct, that you reasonably believed to be illegal discrimination, illegal harassment, illegal retaliation, a wage and hour violation, or sexual assault, or that is recognized as illegal under state, federal, or common law, or that is recognized as against a clear mandate of public policy, where the conduct occurred at the workplace, at work-related events coordinated by or through the employer, between employees, or between an employer and an employee, whether on or off the employment premises; provided, however, that you remain subject to the obligation to keep confidential the amount paid in settlement of any claim.

Nothing in this Release waives your right to testify in an administrative, legislative, or judicial proceeding concerning alleged criminal conduct or alleged sexual harassment on the part of the Company, or on the part of the agents or employees of the Company, including but not limited to when you have been required or requested to attend such a proceeding pursuant to a court order, subpoena, or written request from an administrative agency or the legislature.

4. Conditions Precedent. As required by Section 5(b)(iv) of the Employment Agreement, the following are conditions precedent to your receipt of the Separation Benefits:

(a) Confidentiality. You understand and agree that you remain subject to the covenants set forth in Section 7(a) of the Employment Agreement and your Employee Confidentiality Agreement.

(b) Noncompetition and Nonsolicitation and Other Restrictive Covenants. You acknowledge and agree that the restrictive covenants set forth in the Employment Agreement, including, without limitation, the restrictive covenants set forth in Section 7(c) of the Employment Agreement (Non-Solicitation and Non-Competition) shall remain in full force and effect pursuant to the applicable terms of such provisions following the Separation Date; provided that in addition to the exceptions set forth in Section 7(c) of the Employment Agreement, you may engage in (whether as an employee, agent, consultant, advisor, independent contractor, proprietor, partner, officer, director or otherwise) or participate in the financing, operation, management or control of any “Competing Entity” (as therein defined) so long as the businesses of the Competing Entity that compete with the products and services of the Company which report to you, or in which you engage or participate in any material respect, are limited to products and services which (individually or in the aggregate) make up no more than 5% of the Company’s annual revenues as of the date hereof.

(c) Non-Disparagement. You and the Company acknowledge and agree that the non-disparagement provision set forth in Section 8 of your Employment Agreement shall remain in full force and effect pursuant to the applicable terms of such provision following the Separation Date. This provision shall not preclude either party from (i) providing truthful testimony in response to legal process and (ii) correcting false or misleading statements made about you by the Company or any of its officers or directors on one hand, or correcting false or misleading statements made by you about the Company or any of its subsidiaries and their respective directors, officers and executives on the other.

(d) Acknowledgment. You agree that the foregoing commitments are a material part of this Release, that the Separation Benefits would not be made to you without you making those commitments, that those payments constitute full, fair, and independent consideration for those commitments and that receipt of the Separation Benefits are contingent on your continued compliance with such commitments.

5. Return of Company Property. Whether you enter into this Release or not, within ten (10) business days of your Separation Date, you must return to the Company all of the Company’s property in your possession (other than de minimis items) including, but not limited to: computers; PDAs; cellular phones; credit cards; files, notes, books, binders, manuals, and other printed material; computer disks and software; and all other tangible and intangible property belonging to the Company and obtained by you in connection with your employment with the Company, including all copies of such property, in any form, electronic or otherwise. You agree to provide the Company with any password(s) you installed and/or used on any Company computer or other Company property. You understand that the Company, in its sole discretion, may choose to delay any payments due to you under this Release unless and until you comply with this paragraph, but such delay shall not relieve you of your other obligations under this Release or your release of claims. Notwithstanding the foregoing, you may retain your contacts, calendars and personal correspondence and any information reasonably needed for your personal tax return preparation, and you may retain your laptop computer and related equipment and your iPad; provided, that you shall permit the Company a reasonable opportunity to remove any confidential information of the Company from such electronics.

6. Company Representation. Subject to your resignation from the Board, the Company represents and warrants that it, to the knowledge of its chief legal officer and members of the Board (other than you), is not aware of any claims (whether asserted or unasserted) that it has against you as of the date of this Agreement.

7. Attorney and Advisor Fees. The Company shall reimburse you for (or pay directly), your reasonable attorneys’ and advisors’ fees and costs incurred in connection with the negotiation of this Agreement and your pending employment termination, up to a cap of $50,000.

8. Miscellaneous

(a) Partial Invalidity. Should any portion, word, clause, phrase, sentence, or paragraph of this Release be declared void or unenforceable, other than the Release & Covenant Not To Sue, such portion will be considered independent and severable from the remainder, the validity of which will remain unaffected.

(b) Construction. This Release will not be construed in favor of one Party or against the other.

(c) Compliance with Terms. The failure to insist upon compliance with any provision contained in this Release will not be deemed a waiver of that provision or condition. If on one or more occasions a party waives or relinquishes a right or power it has in this Release, that shall not be deemed a waiver or relinquishment of any right or power at any other time or times.

(d) Remedy. Failure to abide by the terms of this Release will constitute a breach of this Release and will entitle the Company to cease any and all severance payments and, where appropriate, to immediate injunctive relief to enjoin further breaches of those paragraphs, consequential damages, and reimbursement of all previously paid severance payments (with the exception of one dollar ($1.00)), fees and costs actually incurred in bringing such legal action; provided, that the Company shall provide you with written notice of any such failure to abide and not less than 30 days to cure, if curable. However, you shall remain subject to your obligations under this Release, including your release of claims. This paragraph shall not limit any of your reserved rights under this Release nor impose any remedy for your doing so.

(e) Section 409A. This Release is intended to be interpreted and applied so that the payment of the Separation Benefits and any other benefits are exempt from, or comply with, the requirements of Internal Revenue Code Section 409A (“Section 409A”) under the short-term deferral and separation pay exemptions set forth in Treasury Regulation Sections 1.409A-1(b)(4) and (9), and shall be interpreted consistently with such provisions. The Company and its respective officers, directors, employees, or agents, however, make no guarantee that the terms of this Release are exempt from, the provisions of Section 409A, and you agree that none of them will have any liability if the payments provided for under this Release are subject to, but not in compliance with, the requirements of Internal Revenue Code Section 409A. Section 5(b)(v) of the Employment Agreement is incorporated herein by reference. For purposes of Section 409A, your right to receive any installment payments pursuant to this Release shall be treated as a right to receive a series of separate and distinct payments. Whenever a payment under this Release specifies a payment period with reference to a number of days and such period spans two of your taxable years, the actual date of payment within the specified period shall be in the second of the two taxable years to the extent required by Section 409A.

9. OWBPA. Pursuant to the OWBPA, you acknowledge and understand that:

(a) You are waiving claims for age discrimination under the ADEA in exchange for the payments described above;

(b) Under this Release, you will receive consideration beyond that to which you would be entitled without signing this Release;

(c) You have been advised in writing and are hereby advised through this Release of the right to consult with an attorney before signing this Release;

(d) You have been given a period of at least 21 days (from the original date you were given this Release) within which to review and consider this Release before signing it; and

(e) You may revoke this Release by providing written notice to the Company within seven days after you sign it, and this Release shall not become effective and enforceable until such seven-day period has expired. Any notice of revocation of this Release shall not be effective unless given in writing and received by Company within the seven day revocation period via e-mail as follows:

Adam Vandervoort

Chief Legal Officer

[______________]

10. Voluntary & Entire Agreement. Your signature below will indicate that you are entering into this Release freely and with a full understanding of its terms and not in reliance upon any representations other than those explicitly set forth in this Release. No changes to this Release will be valid unless in writing and signed by both you and the Company. With the exception of any fiduciary duties you may have to the Company, your obligation not to misappropriate trade secrets, and your obligations under any other restrictive covenants (including covenants not to compete, not to solicit Company employees, and not to solicit Company clients, customers, or business relationships) or confidentiality agreements you may have with the Company that survive termination, this Release constitutes the entire understanding and agreement of the parties related to the matters discussed in this Release and supersedes any agreement or plan that provides for severance benefits of any kind. This Release is in addition to any arbitration, confidentiality and/or lawful restrictive covenant agreements into which you may have entered during your employment with the Company, and your obligations under any such agreements which shall remain in full force and effect. This Release shall be interpreted and enforced in accordance with the laws of the State of New York.

* * *

If you are willing to enter into this Release with its terms becoming effective on the seventh day following the date signed below, please signify your acceptance in the space indicated below and return to me within 21 days of receiving this Release.

Sincerely,

/s/ Adam Vandervoort________

Adam Vandervoort
Chief Legal Officer

I, JASON GOREVIC, HAVE READ AND UNDERSTAND THIS RELEASE, AND I ACCEPT AND AGREE TO ALL OF ITS TERMS AND CONDITIONS. I ENTER INTO THIS RELEASE VOLUNTARILY, WITH FULL KNOWLEDGE THAT IT WILL BECOME EFFECTIVE FOLLOWING MY SIGNATURE AND THE TERMS OUTLINED IN THIS RELEASE.

/s/ Jason Gorevic 4/11/2024

Signature Date

(Signature Pages to Separation and Release of Claims Agreement)

Exhibit A

Separation Benefits

1. Salary Continuation. The Company will provide you separation pay in the form of continuation of your base salary in effect immediately prior to the Separation Date (which base salary is $800,000) for a period of 18 months following the Separation Date, to be paid periodically in accordance with the Company’s normal payroll practices, commencing no later than 45 calendar days following the date this Release becomes irrevocable under its terms (as set forth herein). The total amount of such payments will be $1,200,000.

2. 2024 Pro-Rated Annual Bonus. The Company will pay you a cash amount equal to the pro rata portion of your Bonus you would have earned for 2024, which Bonus shall be determined based on Company financial performance results against the Company financial performance objectives for 2024, payable in a lump sum at the same time bonuses are paid to Company senior executives generally (but in no event later than March 15, 2025).

3. Equity Grants. All unvested equity or equity-based awards granted to you under any equity compensation plans of the Company that were scheduled to vest within 12 months after the Separation Date will immediately become vested as to time, with any such awards that are subject to performance-based vesting conditions remaining eligible to vest to the extent such performance conditions are satisfied during that 12-month period (provided that nothing herein shall operate to extend the term, if any, of an award beyond the final expiration date provided in the applicable award agreement or prohibit the award from being treated in substantially the same manner as awards held by the Company’s other senior executives in the context of a Change of Control or other corporate transaction). You acknowledge and agree that the list of your outstanding equity grants that are eligible for vesting following the Separation Date (subject to performance conditions if applicable) is set forth on Schedule I. Except as provided in this paragraph, all unvested equity grants will be forfeited as of the Separation Date. Notwithstanding anything herein to the contrary, all equity grants (whether currently vested or that will become vested as outlined in this paragraph) shall be governed by the relevant terms of the award agreements and the equity incentive plan or plans under which such grants were issued, except as necessary to take into account modifications made by this paragraph.

4. Life Insurance. The Company will continue your group life insurance coverage (provided that you will reimburse the Company for any incremental cost of continuing such group life insurance coverage) in effect on the Separation Date for a period of 18 months following the Separation Date.

5. COBRA Payments. If you timely elect continued medical, dental or vision coverage under one or more of the Company’s group medical, dental or vision plans pursuant to COBRA, the Company will directly pay, or reimburse you for, the COBRA premiums for you and your covered dependents under such plans during the period commencing on the Separation Date and ending upon the earliest of (A) 18 months following the Separation Date, (B) the date you and/or your covered dependents become no longer eligible for COBRA and (C) the date you become eligible to receive such coverage from a subsequent employer (and you agree to promptly notify the Company of such eligibility) (such period, the “COBRA Period”). Notwithstanding the foregoing, if the Company determines that it cannot provide you the foregoing benefits without potentially violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act) or incurring an excise tax, the Company shall, in lieu of the foregoing, during the COBRA Period, provide you with a taxable monthly payment in an amount equal to the monthly COBRA premium that you would be required to pay to continue your and your covered dependents’ group health coverage in effect on the Separation Date, which amount shall be based on the premium for the first month of COBRA coverage.

Exhibit A

6. Stock Options. In addition, the Company shall provide that outstanding options set forth on Schedule II shall have their exercise periods extended until April 5, 2025; provided, that the foregoing shall not prevent the Company from terminating or cancelling such options in connection with a Change in Control pursuant to the terms of the equity plan and award agreement applicable to such options.

Schedule I

Equity Awards Eligible for Vesting Within One Year Following the Separation Date

Equity Grant

Grant

Date

Vesting Schedule

Number of Shares Eligible for Vesting in 12 months

Vesting and Settlement Date

2022 RSUs

03/01/2022

Vesting quarterly through March 2025

22,460

Promptly Following Separation Date

2022 PSUs

(3-year AEBITDA)*

03/01/2022

Vesting in March 2025 (subject to 3-year performance)

26,951 (at target; actual between 0% and 200% of target, depending on performance)

After performance is determined (March 2025)

2023 RSUs

03/03/2023

Vested 1/3 in March 2024, then quarterly through March 2026

62,004

Promptly Following Separation Date

2023 PSUs

(2023 AEBITDA)

03/03/2023

Vesting 1/3 in March 2024 (based on 2023 performance), then quarterly through March 2026

21,128

Promptly Following Separation Date

2023 PSUs

(2024 Revenue)*

03/03/2023

Vesting 2/3 in March 2025 (subject to 2024 performance), then quarterly through March 2026

49,603 (at target; actual between 0% and 200% of target depending on performance)

After performance is determined (March 2025)

2024 RSUs

03/19/2024

Vesting 1/3 in March 2025, then quarterly through March 2027

65,909

Promptly Following Separation Date

2024 PSUs
(2024 AEBITDA)*

03/19/2024

Vesting 1/3 in March 2025 (subject to 2024 performance), then quarterly through March 2027

26,363 (at target; actual between 0% and 200% of target depending on performance)

After performance is determined (March 2025)

2024 PSUs
(2024 FCF)*

03/19/2024

Vesting 1/3 in March 2025 (subject to 2024 performance), then quarterly through March 2027

6,591 (at target; actual between 0% and 200% of target depending on performance)

After performance is determined (March 2025)

*Vesting and determination of amount of shares that would have vested within 12 months remains subject to achievement of Company performance targets through the end of 2024.

Schedule II

Vested Stock Options Eligible for Extended Exercise Period


Shares subject to Stock Option			Exercise Price
400,116			$22.30

EX-10.3 4 tdoc-20240331xexx103.htm EX-10.3 Document

Exhibit 10.3

RETENTION BONUS AGREEMENT

This Retention Bonus Agreement (this “Agreement”) is made as of April 26, 2024 (the “Effective Date”), between Teladoc Health, Inc. (together with any of its successors or assigns, the “Company”), and Adam Vandervoort (the “Employee”). The Company and the Employee are sometimes hereinafter referred to individually as a “Party” and together as “Parties.”

WHEREAS, the Company and the Employee are parties to a certain Executive Severance Agreement, dated as of July 15, 2015, as amended (“Employment Agreement”); and

WHEREAS, the Employee has business knowledge and expertise in the conduct of the Company’s business and the Company desires to assure itself of the continued services of the Employee so it will have the continued benefit of their ability, experience and services.

NOW, THEREFORE, in consideration of the reciprocal obligations and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:

1. Retention Bonus

(a) Subject to Section 1(c) below, provided that from the Effective Date through the date that is twelve (12) months following the Effective Date (the “Retention Period”), Employee is continuously employed by the Company and available for work, the Company shall pay Employee a retention bonus equal to ninety-four thousand and no/100 dollars ($94,000.00) (the “Retention Bonus”). The Retention Bonus shall be payable to the Employee in one lump sum, less applicable withholdings, as soon as reasonably practicable hereafter, but in no event later than fifteen (15) days hereafter.

(b) The Employee’s entitlement to a Retention Bonus pursuant to this Agreement is in addition to any compensation and/or benefits to which the Employee is entitled pursuant to the Employment Agreement or any other agreement or plan in place between the Company and the Employee. Notwithstanding anything to the contrary in this Agreement, the Employee’s employment with the Company remains subject to the terms and conditions of the Employment Agreement. The Company and the Employee agree that nothing in this Agreement shall amend, alter or otherwise modify any of the terms in the Employment Agreement or any other agreement in place between the Company and the Employee. In the event of a conflict between this Agreement and the Employment Agreement (or with any other agreement in place between the Company and the Employee), the terms of such other agreement shall take precedence and control.

(c) If Employee’s employment with the Company is terminated during the Retention Period: (i) by the Company for “Cause” (as such term is defined in the Employment Agreement); or (ii) by the Employee in connection with an event or condition that does not constitute “Good Reason” (as such term is defined in the Employment Agreement), the Retention Bonus shall be considered unearned and not payable to the Employee (the “Unearned Compensation”):

Page 1 of 4

If the Company has already paid the Retention Bonus to the Employee at the time of termination, the Employee shall return the Unearned Compensation to the Company in an amount equal to the Retention Bonus within fourteen (14) days of termination.

To the extent permitted by law, the Employee hereby authorizes the Company to deduct from any amount due the Employee from the Company, including but not limited to the Employee’s final paycheck and any severance or other benefit, any Retention Bonus amount subject to this Section 1(c). If such deductions are insufficient to reimburse the Company for the full amount owed by the Employee, the Employee shall remain personally liable for the remaining balance.

(d) If the Employee’s employment with the Company is terminated during the Retention Period: (i) by the Company without “Cause” (as such term is defined in the Employment Agreement); or (ii) by the Employee in connection with an event or condition that constitutes “Good Reason” (as such term is defined in the Employment Agreement), and the Employee (y) executes a general release of claims in favor of the Company or its successor, its subsidiaries and their respective directors, officers and stockholders in a form acceptable to the Company or its successor; and (z) has not revoked or rescinded such release by the end of any period of time in which the Employee is legally entitled to revoke or rescind such release, then, so long as the Employee complies with the terms of this Agreement, the Employee shall be entitled to the Retention Bonus, in addition to any other accrued compensation or benefits due.

2. Employee’s Representations. The Employee hereby represents and warrants to the Company that (i) the Employee has entered into this Agreement of Employee’s own free will for no consideration other than as referred to herein, (ii) the execution, delivery and performance of this Agreement by him or her do not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which the Employee is a party or by which he or she is bound, and (iii) upon the execution and delivery of this Agreement by the Company, this Agreement shall be the valid and binding obligation of the Employee, enforceable in accordance with its terms. The Employee hereby acknowledges and represents that the Employee fully understands the terms and conditions contained herein.

3. Notices. Any notice provided for in this Agreement shall be in writing and shall be either personally delivered, sent by reputable overnight courier service, sent by telecopy (with hard copy to follow by regular mail) or mailed by first class mail, return receipt requested, to the recipient at the address below indicated:

Notices to the Employee

The address most recently on file with the Company.

Page 2 of 4

Notices to the Company

Teladoc Health, Inc.

Attn: Chief Legal Officer

2 Manhattanville Rd., Suite 203

Purchase, New York 10577

Any notice under this Agreement shall be deemed to have been given when so delivered, sent or mailed.

4. Choice of Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of the State of New York. Any legal suit, action or proceeding arising out of this Agreement or the matters contemplated hereunder shall be instituted exclusively in the federal courts of the United States or the courts of the State of New York in each case located in the city of New York and County of New York, and each Party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding and waives any objection based on improper venue or forum non conveniens. Service of process, summons, notice or other document by mail to such Party’s address set forth herein shall be effective service of process for any suit, action or other proceeding brought in any such court.

5. Mutual Waiver of Jury Trial. THE COMPANY AND THE EMPLOYEE EACH WAIVE THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OR RELATED TO THIS AGREEMENT IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AFFILIATE OF ANY OTHER SUCH PARTY, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS OR OTHERWISE. THE COMPANY AND THE EMPLOYEE EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.

6. No Right to Continued Employment. Nothing in this Agreement confers on you any right to continued employment with the Company or any of its affiliates or successors. You remain an at-will employee for the duration of your employment with the Company, which means you or the Company may terminate your employment at any time.

Page 3 of 4

7. Section 409A. This Agreement is intended to comply with Section 409A of the Internal Revenue Code (“Section 409A”) or an exemption thereunder and shall be construed and administered in accordance with Section 409A. Notwithstanding any other provision of this Agreement, payments provided under this Agreement may only be made upon an event and in a manner that complies with Section 409A or an applicable exemption. Any payments under this Agreement that may be excluded from Section 409A as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement comply with Section 409A, and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest, or other expenses that may be incurred by the Employee on account of non-compliance with Section 409A.

8. Amendment and Waiver. The provisions of this Agreement may be amended or waived only with the prior written consent of the Company and the Employee, and no course of conduct or course of dealing or failure or delay by any Party hereto in enforcing or exercising any of the provisions of this Agreement shall affect the validity, binding effect or enforceability of this Agreement or be deemed to be an implied waiver of any provision of this Agreement.

9. Counterparts. This Agreement or any amendment hereto may be executed in counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. This Agreement may be executed and delivered by facsimile or electronic transmission with the same force and effect as if the same were a fully executed and delivered original manual counterpart.

10. Survival. Sections 2 through 10 shall survive and continue in full force in accordance with their terms notwithstanding the termination of the Retention Period, Employee’s employment with the Company, or this Agreement.

[SIGNATURE PAGE FOLLOWS]

Page 4 of 4

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first above written.

TELADOC HEALTH, INC. EMPLOYEE

By: /s/Mala Murthy By: /s/ Adam Vandervoort________

Name: Mala Murthy Name: Adam Vandervoort

Date: April 26, 2024 Date: April 26, 2024

[Signature Page to Retention Bonus Agreement]

EX-10.4 5 tdoc-20240331xexx104.htm EX-10.4 Document

Exhibit 10.4

AMENDMENT NO. 2 TO EXECUTIVE SEVERANCE AGREEMENT

This Amendment No. 2 to Executive Severance Agreement (this “Amendment”), by and between Teladoc Health, Inc., a Delaware corporation (“Teladoc” or the “Company”), and Mr. Adam Vandervoort, an individual resident in the State of Connecticut (“Executive”), is made as of April 26, 2024.

Recitals

A. Teladoc and Executive are parties to that certain Executive Severance Agreement, dated as of July 15, 2015, as amended by instrument dated October 29, 2019 (the “Agreement”).

B. Teladoc and Executive desire to make certain changes to the Agreement, as set forth in this Amendment.

Terms and Conditions

In consideration of the mutual covenants contained herein, along with other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

1. Amendments.

1.1. Except as otherwise set forth in this Amendment, capitalized terms have the meaning given them in the Agreement.

1.2. The amendments set forth in this Amendment shall have effect automatically upon the earlier of: (i) the date of public announcement by Teladoc of the selection of a permanent Chief Executive Officer succeeding Mr. Jason Gorevic; or (ii) January 1, 2025 (such time of effectiveness, the “Effective Time”).

1.3. At the Effective Time, Section 1(h) of the Agreement is hereby amended by adding the following immediately at the end of such section:

“It is further understood and agreed that any change in the Company’s reporting structures that results in Executive not directly and exclusively reporting to the Company’s Chief Executive Officer (or most-senior officer in the enterprise, if not called “chief executive officer”) shall constitute a material reduction under clause (B) of this Section 1(h) such that “Good Reason” shall be deemed to exist.”

1.4. At the Effective Time, Section 2(a) of the Agreement is hereby deleted in its entirety and replaced with the following:

“(a) Severance Upon Qualifying Termination. If Executive has a Qualifying Termination that does not occur prior to but in connection with, on the date of, or within twelve (12) months following a Change of Control, then subject to (x) the requirements of this Section 2(a), (y) Executive’s continued compliance with the terms of the Confidentiality Agreement and Sections 4 and 5 hereof and (z) the terms of Section 8 hereof, Executive shall be entitled to receive the following payments and benefits:

Page 1 of 4

(i) The Company shall pay to Executive (A) his or her fully earned but unpaid base salary through the date of Executive’s Qualifying Termination, (B) any accrued but unpaid paid time off and (C) any other amounts or benefits, if any, under the Company’s employee benefit plans, programs or arrangements to which Executive is entitled pursuant to the terms of such plans, programs or arrangements or applicable law, payable in accordance with the terms of such plans, programs or arrangements or as otherwise required by applicable law (collectively, the “Accrued Rights”);

(ii) Executive shall receive continued payment of the Base Salary for a period of twelve (12) months following the termination date in accordance with the Company’s ordinary payroll practices;

(iii) The Company will pay Executive the amount of any earned but unpaid annual bonus for the calendar year immediately prior to the year in which Executive’s Qualifying Termination occurs, as determined by the Board (or an authorized committee) in its good faith discretion, payable in a lump sum at the same time annual bonuses are paid to other Company executives generally but in no event later than December 31 of the year in which Executive’s Qualifying Termination occurs;

(iv) If Executive timely elects continued coverage under COBRA for Executive and Executive’s covered dependents under the Company’s group health (medical, dental or vision) plans following such Qualifying Termination, then the Company shall pay the COBRA premiums necessary to continue Executive’s and his covered dependents’ health insurance coverage in effect on the termination date until the earliest of (x) twelve (12) months following the effective date of such Qualifying Termination, (y) the date when Executive becomes eligible for substantially equivalent health insurance coverage in connection with new employment or self-employment (and Executive agrees to promptly notify the Company of such eligibility) and (z) the date Executive ceases to be eligible for COBRA continuation coverage for any reason, including plan termination (such period from the Qualifying Termination date through the earlier of (x)-(z), in such case, the “COBRA Payment Period”). Notwithstanding the foregoing, if at any time the Company determines that its payment of COBRA premiums on Executive’s behalf would result in a violation of applicable law (including but not limited to the 2010 Patient Protection and Affordable Care Act, as amended by the 2010 Health Care and Education Reconciliation Act) or an excise tax, then in lieu of paying COBRA premiums pursuant to this Section 2(a)(iv), the Company shall pay Executive on the last day of each remaining month of the COBRA Payment Period, a fully taxable cash payment equal to the COBRA premium for such month, subject to applicable tax withholding, such payment to be made without regard to Executive’s payment of COBRA premiums; and

(v) All unvested equity or equity-based awards granted to Executive under any and all equity compensation plans of the Company that were scheduled to vest within twelve (12) months after the date of Executive’s termination or resignation shall become immediately vested as to time, with any such awards that are subject to performance-based vesting conditions remaining eligible to vest to the extent the performance conditions are satisfied during such twelve-month period (provided that nothing in this Section 2(a) shall operate to extend the term, if any, of an award beyond the final expiration date provided in the applicable award agreement).”

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2. Other Provisions. Except as expressly set forth above, each and every provision of the Agreement shall remain unchanged and in full force and effect.

3. General Provisions. The provisions of Section 8 of the Agreement shall govern this Amendment, to the fullest extent applicable and are hereby incorporated into this Amendment.

[Signature page follows.]

Page 3 of 4

IN WITNESS WHEREOF, the parties have executed and delivered this Amendment as of the date first written above.


MR. ADAM VANDERVOORT, an individual resident in the State of Connecticut /s/ Adam Vandervoort______________			TELADOC HEALTH, INC., a Delaware corporation By: _/s/ Mala Murthy______________ Name: Ms. Mala Murthy Title: Acting Chief Executive Officer and Chief Financial Officer

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EX-31.1 6 tdoc-20240331xexx311.htm EX-31.1 Document

Exhibit 31.1

Certification

I, Mala Murthy, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Teladoc Health, Inc. (the “registrant”) for the period ended March 31, 2024;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: April 26, 2024

/s/ MALA MURTHY
Mala Murthy
Acting Chief Executive Officer, Chief Financial Officer

EX-32.1 7 tdoc-20240331xexx321.htm EX-32.1 Document

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Teladoc Health, Inc. (the “Company”) for the period ended March 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mala Murthy, Acting Chief Executive Officer and Chief Financial Officer of the Company, certify, to my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Date: April 26, 2024

/s/ MALA MURTHY
Mala Murthy
Acting Chief Executive Officer, Chief Financial Officer