UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2017
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-37477
TELADOC, INC.
(Exact name of registrant as specified in its charter)
Delaware |
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04-3705970 |
(State of incorporation) |
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(I.R.S. Employer Identification No.) |
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2 Manhattanville Road, Suite 203 |
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Purchase, New York |
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10577 |
(Address of principal executive office) |
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(Zip code) |
(203) 635-2002
(Registrant’s telephone number including area code)
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 ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
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. (Check one):
Large accelerated filer |
☐ |
Accelerated filer |
☒ |
Non-accelerated filer |
☐ |
Smaller reporting company |
☐ |
Emerging growth company ☒ |
(Do not check if a smaller reporting company) |
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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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes ☐ No ☒
As of July 31, 2017, the Registrant had 56,654,241 shares of Common Stock outstanding.
TELADOC, INC.
QUARTERLY REPORT ON FORM 10-Q
For the period ended June 30, 2017
i
FINANCIAL INFORMATION
TELADOC, INC.
(In thousands, except share and per share data, unaudited)
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June 30, |
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December 31, |
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2017 |
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2016 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
409,224 |
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$ |
50,015 |
Short-term marketable securities |
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31,070 |
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15,793 |
Accounts receivable, net of allowance of $2,010 and $2,422, respectively |
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14,229 |
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13,806 |
Prepaid expenses and other current assets |
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2,468 |
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3,103 |
Total current assets |
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456,991 |
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82,717 |
Property and equipment, net |
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7,424 |
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7,479 |
Goodwill |
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188,184 |
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188,184 |
Intangible assets, net |
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21,239 |
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24,875 |
Other assets |
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308 |
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|
415 |
Total assets |
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$ |
674,146 |
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$ |
303,670 |
Liabilities and stockholders’ equity |
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Current liabilities: |
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Accounts payable |
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$ |
1,150 |
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$ |
2,236 |
Accrued expenses and other current liabilities |
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9,684 |
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7,981 |
Accrued compensation |
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8,853 |
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8,856 |
Long term bank and other debt - current portion |
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— |
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2,000 |
Total current liabilities |
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19,687 |
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21,073 |
Other liabilities |
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9,254 |
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7,609 |
Deferred taxes |
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1,994 |
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1,694 |
Long term bank and other debt, net |
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42,440 |
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42,424 |
Convertible senior notes, net |
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201,395 |
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— |
Commitments and contingencies |
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Stockholders’ equity: |
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Common stock, $0.001 par value; 100,000,000 shares and 75,000,000 shares authorized as of June 30, 2017 and December 31, 2016, respectively; 54,798,273 shares and 46,201,563 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively |
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55 |
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46 |
Additional paid-in capital |
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635,186 |
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435,551 |
Accumulated deficit |
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(235,864) |
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(204,726) |
Accumulated other comprehensive loss |
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(1) |
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(1) |
Total stockholders’ equity |
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399,376 |
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230,870 |
Total liabilities and stockholders’ equity |
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$ |
674,146 |
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$ |
303,670 |
See accompanying notes to unaudited consolidated financial statements.
1
TELADOC, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data, unaudited)
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Quarters Ended June 30, |
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Six Months Ended June 30, |
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2017 |
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2016 |
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2017 |
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2016 |
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Revenue |
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$ |
44,591 |
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$ |
26,488 |
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$ |
87,489 |
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$ |
53,376 |
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Cost of revenue |
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10,026 |
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6,891 |
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22,165 |
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14,834 |
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Gross profit |
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34,565 |
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19,597 |
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65,324 |
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38,542 |
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Operating expenses: |
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Advertising and marketing |
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12,278 |
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7,804 |
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24,894 |
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15,854 |
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Sales |
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7,324 |
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5,860 |
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15,312 |
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11,130 |
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Technology and development |
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7,537 |
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4,829 |
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14,049 |
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10,054 |
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Legal |
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277 |
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1,193 |
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620 |
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2,315 |
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Regulatory |
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|
987 |
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772 |
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1,994 |
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1,620 |
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Acquisition related costs |
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2,113 |
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763 |
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2,113 |
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763 |
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General and administrative |
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15,873 |
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11,280 |
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30,361 |
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22,917 |
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Depreciation and amortization |
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2,668 |
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1,558 |
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5,275 |
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3,066 |
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Loss from operations |
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(14,492) |
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(14,462) |
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(29,294) |
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(29,177) |
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Interest expense, net |
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774 |
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|
407 |
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1,476 |
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|
834 |
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Net loss before taxes |
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(15,266) |
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(14,869) |
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(30,770) |
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(30,011) |
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Income tax provision |
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149 |
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10 |
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299 |
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172 |
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Net loss |
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$ |
(15,415) |
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$ |
(14,879) |
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$ |
(31,069) |
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$ |
(30,183) |
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Net loss per share, basic and diluted |
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$ |
(0.28) |
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$ |
(0.38) |
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$ |
(0.58) |
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$ |
(0.78) |
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Weighted-average shares used to compute basic and diluted net loss per share |
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54,572,862 |
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38,717,186 |
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53,389,435 |
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38,650,765 |
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See accompanying notes to unaudited consolidated financial statements.
2
TELADOC, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(In thousands, unaudited)
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Quarters Ended June 30, |
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Six Months Ended June 30, |
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2017 |
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2016 |
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2017 |
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2016 |
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Net loss |
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$ |
(15,415) |
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$ |
(14,879) |
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$ |
(31,069) |
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$ |
(30,183) |
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Other comprehensive income, net of tax: |
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|
|
|
|
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|
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Net change in unrealized gains on available-for-sale securities |
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3 |
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8 |
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— |
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67 |
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Other comprehensive income, net of tax |
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3 |
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8 |
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— |
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67 |
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Comprehensive loss |
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$ |
(15,412) |
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$ |
(14,871) |
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$ |
(31,069) |
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$ |
(30,116) |
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See accompanying notes to unaudited consolidated financial statements
3
TELADOC, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
(In thousands, except share data, unaudited)
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Accumulated |
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Additional |
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Other |
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Total |
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Common Stock |
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Paid-In |
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Accumulated |
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Comprehensive |
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Stockholders’ |
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|||||||
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Shares |
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Amount |
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Capital |
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Deficit |
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Income |
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Equity |
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|||||
Balance as of December 31, 2016 |
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46,201,563 |
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$ |
46 |
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$ |
435,551 |
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$ |
(204,726) |
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$ |
(1) |
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$ |
230,870 |
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Exercise of stock options |
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479,339 |
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1 |
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4,315 |
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— |
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— |
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4,316 |
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Exercise of warrants |
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138,903 |
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— |
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— |
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— |
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— |
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— |
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Issuance of common stock under employee stock purchase plan |
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90,968 |
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— |
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|
1,265 |
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|
— |
|
|
— |
|
|
1,265 |
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Equity component of Convertible Senior Notes, net of debt issuance costs |
|
— |
|
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— |
|
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62,404 |
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— |
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— |
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62,404 |
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Stock-based compensation (1) |
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— |
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— |
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7,731 |
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(69) |
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— |
|
|
7,662 |
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Follow-On Offering |
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7,887,500 |
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8 |
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123,920 |
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— |
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— |
|
|
123,928 |
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Net loss |
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— |
|
|
— |
|
|
— |
|
|
(31,069) |
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|
— |
|
|
(31,069) |
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Balance as of June 30, 2017 |
|
54,798,273 |
|
$ |
55 |
|
$ |
635,186 |
|
$ |
(235,864) |
|
$ |
(1) |
|
$ |
399,376 |
|
(1) |
The $0.1 million adjustment to accumulated deficit represents the adoption of ASU 2016-09 for cumulative forfeitures expense. See Note 2 for additional information. |
See accompanying notes to unaudited consolidated financial statements.
4
TELADOC, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
|
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Six Months Ended June 30, |
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2017 |
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2016 |
|
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Cash flows used in operating activities: |
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|
|
|
|
|
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Net loss |
|
$ |
(31,069) |
|
$ |
(30,183) |
|
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
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Depreciation and amortization |
|
|
5,275 |
|
|
3,066 |
|
Allowance for doubtful accounts |
|
|
764 |
|
|
1,429 |
|
Stock-based compensation |
|
|
7,662 |
|
|
2,922 |
|
Deferred income taxes |
|
|
299 |
|
|
172 |
|
Accretion of interest |
|
|
28 |
|
|
175 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Accounts receivable |
|
|
(1,186) |
|
|
(2,504) |
|
Prepaid expenses and other current assets |
|
|
700 |
|
|
435 |
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Other assets |
|
|
107 |
|
|
(12) |
|
Accounts payable |
|
|
(1,085) |
|
|
(1,707) |
|
Accrued expenses and other current liabilities |
|
|
1,703 |
|
|
(1,648) |
|
Accrued compensation |
|
|
(264) |
|
|
(1,695) |
|
Other liabilities |
|
|
1,645 |
|
|
616 |
|
Net cash used in operating activities |
|
|
(15,421) |
|
|
(28,934) |
|
Cash flows (used in) provided by investing activities: |
|
|
|
|
|
|
|
Purchase of property and equipment |
|
|
(1,299) |
|
|
(778) |
|
Purchase of internal-use software |
|
|
(285) |
|
|
(658) |
|
Purchase of marketable securities |
|
|
(34,954) |
|
|
(44,188) |
|
Proceeds from marketable securities |
|
|
19,677 |
|
|
69,749 |
|
Net cash (used in) provided by investing activities |
|
|
(16,861) |
|
|
24,125 |
|
Cash flows provided by financing activities: |
|
|
|
|
|
|
|
Net proceeds from the exercise of stock options |
|
|
4,316 |
|
|
590 |
|
Proceeds from issuance of convertible notes |
|
|
263,722 |
|
|
— |
|
Proceeds from borrowing under bank and other debt |
|
|
— |
|
|
5,500 |
|
Repayment of bank loan and other debt |
|
|
(2,000) |
|
|
(625) |
|
Proceeds from issuance of common stock |
|
|
123,928 |
|
|
— |
|
Proceeds from employee stock purchase plan |
|
|
1,265 |
|
|
— |
|
Cash for withholding taxes on stock-based awards, net |
|
|
260 |
|
|
59 |
|
Net cash provided by financing activities |
|
|
391,491 |
|
|
5,524 |
|
Net increase in cash and cash equivalents |
|
|
359,209 |
|
|
715 |
|
Cash and cash equivalents at beginning of the period |
|
|
50,015 |
|
|
55,066 |
|
Cash and cash equivalents at end of the period |
|
$ |
409,224 |
|
$ |
55,781 |
|
|
|
|
|
|
|
|
|
Interest paid |
|
$ |
1,847 |
|
$ |
1,050 |
|
See accompanying notes to unaudited consolidated financial statements.
5
Note 1. Organization and Description of Business
Teladoc, Inc. was incorporated in the State of Texas in June 2002 and changed its state of incorporation to the State of Delaware in October 2008. Unless the context otherwise requires, Teladoc, Inc., together with its subsidiaries, is referred to herein as “Teladoc” or the “Company”. The Company’s principal executive offices are located in Purchase, New York and Lewisville, Texas. Teladoc is the nation’s largest telehealth company.
On July 14, 2017, the Company completed the acquisitions of Best Doctors Holdings, Inc. (“Best Doctors”), the world’s leading expert medical consultation company focused on improving health outcomes for the most complex, critical and costly medical issues. See Note 13, “Subsequent Events”.
On January 24, 2017, Teladoc completed its follow on public offering (the “Follow-On Offering”) in which the Company issued and sold 7,887,500 shares of common stock, including the exercise of an underwriter option to purchase additional shares, at an issuance price of $16.75 per share. The Company received net proceeds of $123.9 million after deducting underwriting discounts and commissions of $7.6 million as well as other offering expenses of $0.6 million.
On July 1, 2016, the Company completed the acquisitions of HY Holdings, Inc. d/b/a HealthiestYou Corporation (“HealthiestYou”), a telehealth consumer engagement technology platform for the small to mid-sized employer market. Upon the effective date of the merger, HealthiestYou merged with and into Teladoc. See Note 3 “Business Acquisition”.
Note 2. Basis of Presentation and Principles of Consolidation
Basis of Presentation and Principles of Consolidation
The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring accruals and adjustments) necessary to present fairly the financial position, results of operations and cash flows of the Company at the dates and for the periods indicated. The interim results for the quarters and six months ended June 30, 2017 are not necessarily indicative of results for the full 2017 calendar year or any other future interim periods. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Form 10-K for the year ended December 31, 2016.
The unaudited consolidated financial statements include the results of Teladoc, two professional associations and twenty two professional corporations and a service corporation (collectively, the “Association”).
Teladoc Physicians, P.A. is party to several Services Agreements by and among it and the professional corporations pursuant to which each professional corporation provides services to Teladoc Physicians, P.A. Each professional corporation is established pursuant to the requirements of its respective domestic jurisdiction governing the corporate practice of medicine.
The Company holds a variable interest in the Association which contracts with physicians and other health professionals in order to provide services to Teladoc. The Association is considered a variable interest entity (“VIE”) since it does not have sufficient equity to finance its activities without additional subordinated financial support. An enterprise having a controlling financial interest in a VIE, must consolidate the VIE if it has both power and benefits—that is, it has (1) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance (power) and (2) the obligation to absorb losses of the VIE that potentially could be significant to the VIE or the right to receive benefits from the VIE that potentially could be significant to the VIE (benefits). The Company has the power and rights to control all activities of the Association and funds and absorbs all losses of the VIE.
Total revenue and net loss for the VIE were $7.1 million and $(1.8) million, respectively, for the quarter ended June 30, 2017 and $4.9 million and $(1.9) million, respectively, for the quarter ended June 30, 2016. Total revenue and
6
net loss for the VIE were $15.7 million and $(4.4) million, respectively, for the six months ended June 30, 2017 and $11.0 million and $(3.5) million, respectively, for the six months ended June 30, 2016. The VIE’s total assets were $2.7 million and $2.9 million at June 30, 2017 and December 31, 2016, respectively. Total liabilities for the VIE were $32.1 million and $27.8 million at June 30, 2017 and December 31, 2016, respectively. The VIE’s total stockholders’ deficit was $29.4 million and $25.0 million at June 30, 2017 and December 31, 2016, respectively.
All intercompany transactions and balances have been eliminated.
The Company adopted ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting during the quarter ended March 31, 2017 as described below. There have been no other changes to the significant accounting policies described in the Form 10-K that have had a material impact on the consolidated financial statements and related notes.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current year presentation.
Recently Issued Accounting Pronouncements
In March 2016, the FASB issued ASU 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The new standard is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years and early adoption is permitted. On January 1, 2017, the Company adopted this standard on a modified retrospective basis. As a result of the adoption of this standard, a deferred tax asset of approximately $1.3 million was recorded as a cumulative effect adjustment to accumulated deficit. The Company has also recorded a full valuation allowance for the deferred tax asset due to the uncertainty regarding the future realization and as a result, there was no change to stockholders’ equity. Additionally, the Company elected to change its policy from estimating forfeitures to recognizing forfeitures when they occur and recorded a cumulative adjustment to accumulated deficit of approximately $0.1 million as of January 1, 2017.
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), to achieve a consistent application of revenue recognition within the U.S., resulting in a single revenue model to be applied by reporting companies under GAAP. Under the new model, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the revised guidance requires that reporting companies disclose the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The revised guidance is effective for the Company beginning in the quarter ending March 31, 2018; early adoption is allowed. The revised guidance is required to be applied retrospectively to each prior reporting period presented or modified retrospectively applied with the cumulative effect of initially applying it recognized at the date of initial application. The Company has undergone a process of identifying the various types of revenue streams and has performed an initial evaluation of the components of the associated contractual arrangements. The Company will be assessing the impact of this standard on its revenue recognition policy and anticipates adopting the standard using the modified retrospective method.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 outlines a comprehensive lease accounting model and supersedes the current lease guidance. The new guidance requires lessees to recognize lease liabilities and corresponding right-of-use assets for all leases with lease terms of greater than 12 months. It also changes the definition of a lease and expands the disclosure requirements of lease arrangements. The new guidance must be adopted using the modified retrospective approach and will be effective for the Company starting in the first quarter of fiscal 2019. Early adoption is permitted. The Company is currently in the process of evaluating the impact of the adoption of this standard on our consolidated financial statements.
7
Note 3. Business Acquisition
On July 1, 2016, the Company completed the acquisition of HealthiestYou through a merger in which HealthiestYou became a wholly-owned subsidiary of the Company. The aggregate merger consideration paid was $151.5 million, which was comprised of 6,955,796 shares of Teladoc’s common stock valued at $108.3 million on July 1, 2016, and $43.2 million of cash, subject to post-closing working capital adjustments as defined in the merger agreement. The post-closing working capital adjustment was finalized in the amount of less than $0.1 million. HealthiestYou was a telehealth consumer engagement technology platform for the small to mid-sized employer market. Solutions provided by HealthiestYou included 24/7 access to telephone and video conferencing with doctors as well as the convenience of procedure price comparisons, prescription medicine price comparisons, health plan information and benefits eligibility and location information for wellness service providers. The acquisition was considered a stock acquisition for tax purposes and as such the goodwill resulting from this acquisition is not tax deductible. The total acquisition related costs of the acquisition were $6.9 million and included transaction costs for banker and other professional fees as well as $5.7 million of contract termination costs for certain HealthiestYou third party providers. The contract termination costs of $5.7 million were previously accrued by HealthiestYou and reflected in HealthiestYou’s financial statements as of June 30, 2016, prior to the acquisition. These non-cash expenses are also reflected in the Company’s financial results in the quarter ended September 30, 2016 as the Company benefited from the termination of these contracts.
The acquisition described above was accounted for using the acquisition method of accounting, which requires, among other things, the assets acquired and the liabilities assumed be recognized at their fair values as of the acquisition date. The results of the acquisition were included within the consolidated financial statements commencing on July 1, 2016.
The following table summarizes the fair value estimates of the assets acquired and liabilities assumed on July 1, 2016. The Company, with the assistance of a third-party valuation expert, estimated the fair value of the acquired tangible and intangible assets.
Identifiable assets acquired and liabilities assumed (in thousands):
|
|
HealthiestYou |
|
|
Purchase price |
|
$ |
151,484 |
|
Less: |
|
|
|
|
Cash |
|
|
6,204 |
|
Accounts receivable |
|
|
1,184 |
|
Other assets |
|
|
1,537 |
|
Client relationships |
|
|
10,930 |
|
Non-compete agreements |
|
|
70 |
|
Internal-use software |
|
|
2,220 |
|
Trademarks |
|
|
1,180 |
|
Accounts payable |
|
|
(836) |
|
Other liabilities |
|
|
(2,847) |
|
Goodwill |
|
$ |
131,842 |
|
The amount allocated to goodwill reflects the benefits Teladoc expects to realize from the growth of HealthiestYou’s operations.
8
Note 4. Intangible Assets, Net
Intangible assets, net consist of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average |
|
|
|
Useful |
|
|
|
|
Accumulated |
|
Net Carrying |
|
Remaining |
|
||
|
|
Life |
|
Gross Value |
|
Amortization |
|
Value |
|
Useful Life |
|
|||
June 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Client relationships |
|
2 to 10 years |
|
$ |
22,581 |
|
$ |
(8,295) |
|
$ |
14,286 |
|
7.9 |
|
Non-compete agreements |
|
1.5 to 5 years |
|
|
3,480 |
|
|
(2,743) |
|
|
737 |
|
1.1 |
|
Trademarks |
|
3 years |
|
|
1,320 |
|
|
(507) |
|
|
813 |
|
2.0 |
|
Patents |
|
3 years |
|
|
200 |
|
|
(39) |
|
|
161 |
|
2.4 |
|
Internal-use software |
|
3 to 5 years |
|
|
9,262 |
|
|
(4,020) |
|
|
5,242 |
|
2.4 |
|
Intangible assets, net |
|
|
|
$ |
36,843 |
|
$ |
(15,604) |
|
$ |
21,239 |
|
6.1 |
|
December 31, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Client relationships |
|
2 to 10 years |
|
$ |
22,581 |
|
$ |
(6,226) |
|
$ |
16,355 |
|
8.5 |
|
Non-compete agreements |
|
1.5 to 5 years |
|
|
3,480 |
|
|
(2,344) |
|
|
1,136 |
|
1.6 |
|
Trademarks |
|
3 years |
|
|
1,320 |
|
|
(287) |
|
|
1,033 |
|
2.4 |
|
Patents |
|
3 years |
|
|
200 |
|
|
(6) |
|
|
194 |
|
2.9 |
|
Internal-use software |
|
3 to 5 years |
|
|
8,976 |
|
|
(2,819) |
|
|
6,157 |
|
3.0 |
|
Intangible assets, net |
|
|
|
$ |
36,557 |
|
$ |
(11,682) |
|
$ |
24,875 |
|
6.5 |
|
Amortization expense for intangible assets was $2.0 million and $1.0 million for the quarters ended June 30, 2017 and 2016, respectively and $3.9 million and $2.1 million for the six months ended June 30, 2017 and 2016, respectively.
Note 5. Goodwill
Goodwill consists of the following (in thousands):
|
|
As of June 30, |
|
As of December 31, |
|
||
|
|
2017 |
|
2016 |
|
||
Beginning balance |
|
$ |
188,184 |
|
$ |
56,342 |
|
Additions associated with the acquisition of HealthiestYou |
|
|
- |
|
|
131,842 |
|
Goodwill |
|
$ |
188,184 |
|
$ |
188,184 |
|
9
Note 6. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the following (in thousands):
|
|
As of June 30, |
|
As of December 31, |
|
||
|
|
2017 |
|
2016 |
|
||
Professional fees |
|
$ |
885 |
|
$ |
292 |
|
Consulting fees/provider fees |
|
|
1,300 |
|
|
1,687 |
|
Legal fees |
|
|
2,050 |
|
|
897 |
|
Interest payable |
|
|
284 |
|
|
389 |
|
Marketing |
|
|
87 |
|
|
142 |
|
Earnout and compensation |
|
|
— |
|
|
1,045 |
|
Deferred revenue |
|
|
2,411 |
|
|
1,002 |
|
Other |
|
|
2,667 |
|
|
2,527 |
|
Total |
|
$ |
9,684 |
|
$ |
7,981 |
|
Note 7. Fair Value Measurements
The Company measures its financial assets and liabilities at fair value at each reporting period using a fair value hierarchy that requires it to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value:
Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active
markets.
Level 2—Include other inputs that are directly or indirectly observable in the marketplace.
Level 3—Unobservable inputs that are supported by little or no market activity.
The Company measures its cash equivalents at fair value on a recurring basis. The Company classifies its cash equivalents within Level 1 because they are valued using observable inputs that reflect quoted prices for identical assets in active markets and quoted prices directly in active markets.
The Company measures its short-term marketable securities at fair value on a recurring basis and classifies such as Level 2. They are valued using observable inputs that reflect quoted prices directly or indirectly in active markets. The short-term marketable securities amortized cost approximates fair value.
The Company measures its contingent consideration at fair value on a recurring basis and classifies such as Level 3. The Company estimates the fair value of contingent consideration as the present value of the expected contingent payments, determined using the weighted probability of the possible payments.
The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis using the above input categories (in thousands):
|
|
June 30, 2017 |
||||||||||
|
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
||||
Cash and cash equivalents |
|
$ |
409,224 |
|
$ |
— |
|
$ |
— |
|
$ |
409,224 |
Short-term marketable securities |
|
$ |
— |
|
$ |
31,070 |
|
$ |
— |
|
$ |
31,070 |
Contingent liability (included in other liabilities) |
|
$ |
— |
|
$ |
— |
|
$ |
3,798 |
|
$ |
3,798 |
10
|
|
December 31, 2016 |
||||||||||
|
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
||||
Cash and cash equivalents |
|
$ |
50,015 |
|
$ |
— |
|
$ |
— |
|
$ |
50,015 |
Short-term marketable securities |
|
$ |
— |
|
$ |
15,793 |
|
$ |
— |
|
$ |
15,793 |
Contingent liability (included in accrued expenses and other current liabilities and other liabilities) |
|
$ |
— |
|
$ |
— |
|
$ |
3,678 |
|
$ |
3,678 |
There were no transfers between fair value measurement levels during the six months ended June 30, 2017 and 2016.
The change in fair value of the Company’s contingent liability is recorded in general and administrative expenses in the consolidated statements of operations. The following table reconciles the beginning and ending balance of the Company’s Level 3 contingent liability:
|
|
|
|
Balance at December 31, 2016 |
|
$ |
3,678 |
Change in fair value |
|
|
120 |
Fair value at June 30, 2017 |
|
$ |
3,798 |
Note 8. Long Term Bank and Other Debt
Long‑term bank and other debt consist of the following (in thousands):
|
|
As of June 30, |
|
As of December 31, |
|
||
|
|
2017 |
|
2016 |
|
||
SVB Mezzanine Term Loan |
|
$ |
25,000 |
|
$ |
25,000 |
|
SVB Line of Credit Facility less debt discount of $50 and $66 |
|
|
17,440 |
|
|
17,424 |
|
Subordinated Promissory Note |
|
|
— |
|
|
2,000 |
|
Total |
|
|
42,440 |
|
|
44,424 |
|
Less: current portion of Subordinated Promissory Note |
|
|
— |
|
|
(2,000) |
|
Long term bank and other debt |
|
$ |
42,440 |
|
$ |
42,424 |
|
Long term bank and other debt are stated at amortized cost, which approximates fair value.
In July 2016, the Company entered into an Amended and Restated Loan and Security Agreement with Silicon Valley Bank (“SVB”), that provided for a $25 million Mezzanine Term Loan and a $25 million Line of Credit Facility. The Mezzanine Term Loan carries interest at a rate of 6.25% above the Wall Street Journal (“WSJ”) Prime Rate with a WSJ Prime Rate floor of 3.75% and matures in July 2019. Interest payments are payable monthly in arrears. The Company incurred a $250,000 loan origination fee and will be liable for a final payment fee of $750,000 payable at maturity or upon prepayment of the Mezzanine Term Loan. In connection with entry into the Mezzanine Term Loan, the Company granted two affiliates of SVB warrants to purchase an aggregate of 798,694 shares of common stock of the Company at an exercise price of $13.50 per share. The warrants are immediately exercisable and have a 10-year term. The fair value of the common stock warrants on the date of issue was approximately $7.7 million. The Company also granted SVB a security interest in significantly all of the Company’s assets. The Mezzanine Term Loan has been used to fund the expansion of the Company’s business.
The amended Line of Credit Facility provides for borrowings up to $25 million based on 300% of the Company’s monthly recurring revenue, as defined. In addition, there is an additional $25 million Uncommitted Incremental Facility permitted under the Line of Credit Facility. The Line of Credit Facility carries interest at a rate of 0.50% above the WSJ Prime Rate and matures in July 2019. The Company incurred an initial $75,000 loan origination fee and is responsible for additional $75,000 in annual fees on the anniversary of the Line of Credit Facility. The Company will also be liable for a $50,000 loan arrangement fee if and when the Company utilizes the Uncommitted Incremental Facility.
11
The Company determined that the 2014 Amended Term Loan Facility and Revolving Advance Facility were modified as part of the refinancing and as a result, less than $0.1 million of previous deferred loan costs will continue to be amortized to interest expense through July 2019.
On July 13, 2017, the Company repaid all the outstanding amounts under both of the SVB Line of Credit Facility and Mezzanine Term Loan of $17.5 million and $25 million, respectively, including early termination and final deferred origination fees of $1.7 million. See Note 13, “Subsequent Events”.
Effective with the purchase of AmeriDoc, LLC (“AmeriDoc”) in 2014, the Company executed a Subordinated Promissory Note in the amount of $3.5 million payable to the seller of AmeriDoc on April 30, 2015. The Subordinated Promissory Note carried interest at a rate of 10.00% annual interest and is subordinated to the SVB Facilities. In March 2015, the Company, the seller of AmeriDoc and SVB executed an Amended and Restated Subordinated Promissory Note that extended the maturity of the Amended and Restated Subordinated Promissory Note to April 30, 2017. In November 2015, the Company executed the Second Amended and Restated Subordinated Promissory Note with a revised annual interest rate of 7% commencing on January 1, 2016 and extended the maturity of the Second Amended and Restated Subordinated Promissory Note to April 30, 2018 with a seller put option effective on April 30, 2017. The Company repaid $1.0 million during 2016 and the remaining outstanding amount of $2.0 million was paid during the first quarter of 2017.
The Company was in compliance with all debt covenants at June 30, 2017 and December 31, 2016.
Note 9. Convertible Senior Notes
On June 27, 2017, the Company issued, at par value, $275 million aggregate principal amount of 3% convertible senior notes due 2022 (the “2022 Notes”). The 2022 Notes bear cash interest at a rate of 3% per year, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2017. The 2022 Notes will mature on December 15, 2022. The net proceeds to the Company from the offering were $263.7 million after deducting offering costs of approximately $11.3 million.
The 2022 Notes are senior unsecured obligations of the Company and rank senior in right of payment to the Company’s indebtedness that is expressly subordinated in right of payment to the 2022 Notes; equal in right of payment to the Company’s liabilities that is not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities incurred by the Company’s subsidiaries.
Holders may convert all or any portion of their 2022 Notes in integral multiples of $1,000 principal amount, at their option, at any time prior to the close of business on the business day immediately preceding June 15, 2022 only under the following circumstances:
•during any calendar quarter commencing after the calendar quarter ending on September 30, 2017 (and only during such calendar quarter), if the last reported sale price of the shares of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;
•during the five business day period after any ten consecutive trading day period (the ‘‘measurement period’’) in which the trading price (as defined in the 2022 Notes Indenture) per $1,000 principal amount of 2022 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day;
•upon the occurrence of specified corporate events described under the 2022 Notes Indenture; or
•if the Company calls the 2022 Notes for redemption, at any time until the close of business on the second business day immediately preceding the redemption date as described under the 2022 Notes Indenture.
12
•On or after June 15, 2022, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their 2022 Notes, in integral multiples of $1,000 principal amount, at the option of the holder regardless of the foregoing circumstances.
The conversion rate for the 2022 Notes was initially, and remains, 22.7247 shares of the Company’s common stock per $1,000 principal amount of the 2022 Notes, which is equivalent to an initial conversion price of approximately $44.00 per share of the Company’s common stock. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination thereof, at the Company’s election. If the Company elects (or are deemed to have elected) to satisfy the conversion obligation solely in cash or through payment and delivery, as the case may be, of a combination of cash and shares of the Company’s common stock, the amount of cash and shares of the Company’s common stock, if any, due upon conversion will be based on a daily conversion value calculated on a proportionate basis for each trading day in a 25 trading day observation period (as defined in the 2022 Notes Indenture).
The Company may redeem for cash all or any portion of the 2022 Notes, at its option, on or after December 22, 2020 if the last reported sale price of its common stock exceeds 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading days ending on, and including the trading day immediately preceding the date on which the Company provides notice of the redemption. The redemption price will be the principal amount of the 2022 Notes to be redeemed, plus accrued and unpaid interest, if any. In addition, calling any 2022 Note for redemption on or after December 22, 2020 will constitute a make-whole fundamental change with respect to that 2022 Note, in which case the conversion rate applicable to the conversion of that Note, if it is converted in connection with the redemption, will be increased in certain circumstances as described in the 2022 Notes Indenture.
In accounting for the issuance of the 2022 Notes, the Company separated the 2022 Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability, that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the par value of the 2022 Notes as a whole. The excess of the principal amount of the liability component over its carrying amount, referred to as the debt discount, is amortized to interest expense from the issuance date to June 15, 2022 (the first date on which the Company may be required to repurchase the 2022 Notes at the option of the holder). The equity component is not re-measured as long as it continues to meet the conditions for equity classification. The equity component related to the 2022 Notes is $62.4 million, net of debt issuance costs and is recorded in additional paid-in capital on the accompanying condensed consolidated balance sheet.
In accounting for the transaction costs related to the issuance of the 2022 Notes, the Company allocated the total costs incurred to the liability and equity components of the 2022 Notes based on their relative values. Transaction costs attributable to the liability component are amortized to interest expense over the five and a half year term of the 2022 Notes, and transaction costs attributable to the equity component are netted with the equity components in stockholders’ equity.
The 2022 Notes consist of the following (in thousands):
|
|
As of June 30, |
|
Liability component |
|
2017 |
|
Principal |
|
$ |
275,000 |
Less: Debt issuance costs, net (1) |
|
|
(73,605) |
Net carrying amount |
|
$ |
201,395 |
(1) |
Included in the accompanying consolidated balance sheets within convertible senior notes and amortized to interest expense over the expected life of the 2022 Notes using the effective interest rate method. |
The fair value of the 2022 Notes was approximately $290 million as of June 30, 2017. The Company estimates the fair value of its 2022 Notes utilizing market quotations for debt that have quoted prices in active markets. Since the 2022 Notes do not trade on a daily basis in an active market, the fair value estimates are based on market observable
13
inputs based on borrowing rates currently available for debt with similar terms and average maturities, which are classified as Level 2 measurements within the fair value hierarchy. See Note 7, “Fair Value Measurements,” for definitions of hierarchy levels. As of June 30, 2017, the remaining contractual life of the 2022 Notes is approximately 5.5 years.
The following table sets forth total interest expense recognized related to the 2022 Notes (in thousands):
|
|
Six Months Ended June 30, |
||
|
|
2017 |
|
|
Contractual interest expense |
|
$ |
68 |
|
Amortization of debt discount |
|
|
77 |
|
Total |
|
$ |
145 |
|
Effective interest rate of the liability component |
10.0 |
% |
Note 10. Commitments and Contingencies
Legal Matters
The Company may become subject to legal proceedings, claims and litigation arising in the ordinary course of its business. At June 30, 2017, the Company was party to the following legal proceedings:
On April 29, 2015, the Company filed a lawsuit against the Texas Medical Board (the ‘‘TMB’’) in the United States District Court for the Western District of Texas, Austin Division (the “District Court”) alleging that the TMB’s adoption on April 10, 2015 of an amendment to 22 T.A.C. 190.8(1)(L) that would require a prior in-person examination for a doctor validly to prescribe any controlled substance to a patient in Texas constitutes a violation, inter alia, of the Sherman Antitrust Act. The District Court held a hearing on May 22, 2015 on Teladoc’s motion for preliminary injunction of the effectiveness of such amendment, which otherwise was scheduled to take effect on June 3, 2015. On May 29, 2015, the District Court issued the preliminary injunction requested by Teladoc and enjoined the effectiveness of such rule amendment pending trial. On July 30, 2015, the TMB filed a motion to dismiss the suit, and the District Court denied this motion on December 14, 2015. On January 8, 2016, the TMB provided notice of its intent to appeal the District Court’s denial of its motion to dismiss to the U.S. Court of Appeals for the Fifth Circuit, which was filed on June 17, 2016 and voluntarily withdrawn by the TMB on October 17, 2016. On November 2, 2016, the District Court granted the parties’ joint motion to stay the trial case through April 19, 2017. On April 10, 2017, the District Court granted the parties’ joint motion to stay the trial case through September 1, 2017. Accordingly, no trial date has been set.
Business in the State of Texas accounted for approximately $8.5 million, or 10% and $15.1 million or 12% of the Company’s consolidated revenue for the six months ended June 30, 2017 and for the year ended December 31, 2016, respectively. If the TMB’s proposed rule amendments go into effect as written and Teladoc is unable to adapt its business model in compliance with the revised rules, its ability to operate its business in the State of Texas could be materially adversely affected, which would have a material adverse effect on its business, financial condition and results of operations.
Other than as stated the Company is not a party to any material legal proceeding, and it is not aware of any pending or threatened litigation that would have a material adverse effect on its business, results of operations, cash flows or financial condition should such litigation be resolved unfavorably.
The Company routinely assesses all of its litigation and threatened litigation as to the probability of ultimately incurring a liability and records its best estimate of the ultimate loss in situations where it assesses the likelihood of loss as probable and estimable. In this regard, the Company establishes accruals for various lawsuits, claims, investigations and proceedings when it is probable that an asset has been impaired or a liability incurred at the date of the financial statements and the loss can be reasonably estimated. At June 30, 2017, the Company has established accruals for certain of its lawsuits, claims, investigations and proceedings based upon estimates of the most likely outcome in a range of loss or the minimum amounts in a range of loss if no amount within a range is a more likely estimate. The Company does not
14
believe that at June 30, 2017 any reasonably possible losses in excess of the amounts accrued would be material to the unaudited consolidated financial statements.
Note 11. Common Stock and Stockholders’ Equity
Capitalization
On January 24, 2017, Teladoc closed on its Follow-On Offering in which the Company issued and sold 7,887,500 shares of common stock, including the exercise of an underwriter option to purchase additional shares, at an issuance price of $16.75 per share. The Company received net proceeds of $123.9 million after deducting underwriting discounts and commissions of $7.6 million as well as other offering expenses of $0.6 million.
Warrants
In July 2016, in conjunction with the debt refinancing of the Mezzanine Term Loan, the Company issued 798,694 common stock warrants to purchase an aggregate of 798,694 shares of its common stock at an exercise price of $13.50 per share to two entities affiliated with SVB. The common stock warrants were immediately exercisable upon issuance and had a 10-year term. The fair value of the common stock warrants on the date of issue was approximately $7.7 million.
On December 9, 2016, the Company issued an aggregate of 107,931 shares of common stock resulting from an SVB affiliate’s cashless exercise of 399,347 of these warrants at an exercise price of $13.50 per share.
On January 31, 2017, the Company issued an aggregate of 138,903 shares of common stock resulting from an SVB affiliate’s cashless exercise of the remaining 399,347 of these warrants at an exercise price of $13.50 per share.
The Company had no warrants outstanding as of June 30, 2017 and 399,347 warrants outstanding as of December 31, 2016.
Stock Plan and Stock Options
The Company’s 2015 Incentive Award Plan (the “Plan”) provides for the issuance of incentive and non-statutory options and other equity-based awards to its employees and non‑employees. Options issued under the Plan are exercisable for periods not to exceed ten years, and vest and contain such other terms and conditions as specified in the applicable award document. Prior to becoming a public enterprise, pursuant to the Company’s Second Amended and Restated Stock Incentive Plan which is now retired, the Company historically issued incentive and non-statutory stock options with exercise prices equal to the fair value of the Company’s common stock on the date of grant, as determined by the Company’s board of directors informed by third-party valuations. Subsequent to becoming a public enterprise, options to buy common stock have been issued under the Plan, with exercise prices equal to the closing price of shares of the Company’s common stock on the New York Stock Exchange on the trading day immediately preceding the date of award.
15
Activity under the Plan is as follows (in thousands, except share and per share amounts and years):
|
|
|
|
|
|
|
|
|
Weighted- |
|
|
|
|
|
|
|
|
|
|
Weighted- |
|
Average |
|
|
|
|
|
|
|
Shares |
|
Number of |
|
Average |
|
Remaining |
|
Aggregate |
|
||
|
|
Available |
|
Shares |
|
Exercise |
|
Contractual |
|
Intrinsic |
|
||
|
|
for Grant |
|
Outstanding |
|
Price |
|
Life in Years |
|
Value |
|
||
Balance at December 31, 2016 |
|
343,216 |
|
6,839,868 |
|
$ |
11.70 |
|
8.64 |
|
$ |
36,795 |
|
Increase in Plan authorized shares |
|
3,676,722 |
|
— |
|
$ |
— |
|
— |
|
$ |
— |
|
Restricted Stock Units granted |
|
(144,618) |
|
— |
|
$ |
— |
|
— |
|
$ |
— |
|
Stock option grants |
|
(2,979,721) |
|
2,979,721 |
|
$ |
22.52 |
|
— |
|
$ |
— |
|
Stock options exercised |
|
— |
|
(479,339) |
|
$ |
9.01 |
|
— |
|
$ |
8,810 |
|
Stock options forfeited |
|
519,361 |
|
(519,361) |
|
$ |
16.25 |
|
— |
|
$ |
3,377 |
|
Balance at June 30, 2017 |
|
1,414,960 |
|
8,820,889 |
|
$ |
15.24 |
|
8.65 |
|
$ |
171,676 |
|
Vested or expected to vest June 30, 2017 |
|
|
|
8,820,889 |
|
$ |
15.24 |
|
8.65 |
|
$ |
171,676 |
|
Exercisable as of June 30, 2017 |
|
|
|
2,166,249 |
|
$ |
8.13 |
|
7.33 |
|
$ |
57,552 |
|
The total grant‑date fair value of stock options granted during the quarter and six months ended June 30, 2017 were $6.4 million and $36.3 million, respectively.
Stock‑Based Compensation
All stock‑based awards to employees are measured based on the grant‑date fair value of the awards and are generally recognized in the Company’s consolidated statement of operations over the period during which the employee is required to perform services in exchange for the award (generally requiring a four‑year vesting period for each award). The Company estimates the fair value of stock options granted using the Black‑Scholes option‑pricing model. Compensation cost is generally recognized over the vesting period of the applicable award using the straight‑line method.
Given the absence of a public trading market prior to July 2015, the Company’s board of directors considered numerous objective and subjective factors to determine the fair value of its common stock at each grant date. These factors included, but were not limited to, (i) contemporaneous valuations of common stock performed by unrelated third‑party specialists; (ii) the prices for the preferred stock sold to outside investors; (iii) the rights, preferences and privileges of the preferred stock relative to the common stock; (iv) the lack of marketability of the common stock; (v) developments in the business; and (vi) the likelihood of achieving a liquidity event, such as an IPO or a merger or acquisition of the Company, given prevailing market conditions.
The assumptions used in the Black‑Scholes option‑pricing model were determined as follows:
Volatility. Since the Company does not have a trading history prior to July 2015 for its common stock, the expected volatility was derived from the historical stock volatilities of several unrelated public companies within its industry that it considers to be comparable to its business combined with the Company’s stock volatility over a period equivalent to the expected term of the stock option grants.
Risk‑Free Interest Rate. The risk‑free interest rate is based on U.S. Treasury zero‑coupon issues with terms similar to the expected term on the options.
Expected Term. The expected term represents the period that the stock‑based awards are expected to be outstanding. When establishing the expected term assumption, the Company utilized historical data.
Dividend Yield. The Company has never declared or paid any cash dividends and does not plan to pay cash dividends in the foreseeable future, and therefore, it used an expected dividend yield of zero.
Forfeiture rate. Prior to 2017, the Company used historical data to estimate pre‑ vesting option forfeitures and record stock‑based compensation expense only for those awards that are expected to vest. On January 1, 2017, the Company adopted ASU 2016-09 and elected to account for stock option forfeitures as they occur which resulted in a cumulative effect adjustment of $69,071 recorded to accumulated deficit and additional paid-in capital.
16
The fair value of each option grant was estimated on the date of grant using the Black‑Scholes option‑pricing model with the following assumptions and fair value per share:
|
|
Six Months Ended June 30, |
|
||||
|
|
2017 |
|
2016 |
|
||
Volatility |
|
|
45.8% – 47.7% |
|
|
44.7% – 46.0% |
|
Expected life (in years) |
|
|
6.1 |
|
|
6.0 |
|
Risk-free interest rate |
|
|
1.81% - 2.30% |
|
|
1.24% - 1.91% |
|
Dividend yield |
|
|
– |
|
|
– |
|
Weighted-average fair value of underlying common stock |
|
$ |
22.52 |
|
$ |
5.71 |
|
For the quarter ended June 30, 2017 and 2016, the Company recorded compensation expense related to stock options granted of $4.3 million and $1.6 million, respectively, and $7.2 million and $2.9 million for the six months ended June 30, 2017 and 2016, respectively.
As of June 30, 2017, the Company had $54.7 million in unrecognized compensation cost related to non‑vested stock options, which is expected to be recognized over a weighted‑average period of approximately 3.3 years.
Restricted Stock Units
In May 2017, the Company commenced issuing Restricted Stock Units (“RSU’s”) to certain employees and Board members under the 2017 Employment Inducement Incentive Award Plan.
The fair value of the RSU’s is determined on the date of grant. On a monthly basis, the Company will record compensation expense in the income statement on a straight-line basis over the vesting period and will also record a corresponding credit to unearned compensation. The vesting period for employees and members of the Board of Directors is four years and one year, respectively.
Activity under the RSU’s is as follows (in thousands, except share and per share amounts and years):
|
|
|
|
Weighted-Average |
|
|
|
|
|
Grant Date |
|
|
|
Shares |
|
Fair Value Per Share |
|
Outstanding at beginning of period |
|
— |
|
$ |
— |
Granted |
|
144,618 |
|
$ |
30.63 |
Outstanding at June 30, 2017 |
|
144,618 |
|
$ |
30.63 |
Vested and deferred at June 30, 2017 |
|
— |
|
$ |
— |
Non-vested at June 30, 2017 |
|
144,618 |
|
$ |
30.63 |
The total grant‑date fair value of RSU’s granted during the quarter and six months ended June 30, 2017 was $4.4 million.
For both of the quarter and six months ended June 30, 2017, the Company recorded stock based compensation expense related to the RSU’s of $0.1 million. There was no charge for the quarter and six months ended June 30, 2016.
Employee Stock Purchase Plan
In July 2015, the Company adopted the 2015 Employee Stock Purchase Plan, or ESPP, in connection with its initial public offering. A total of 458,024 shares of common stock were reserved for issuance under this plan. 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.
17
On May 8, 2017, the Company issued 90,968 shares under the ESPP and the Company had not issued any shares under the ESPP as of December 31, 2016. 367,056 shares remained available for issuance as of June 30, 2017.
For the quarter and six months ended June 30, 2017, the Company recorded stock-based compensation expense related to the ESPP of $0.1 million and $0.3 million, respectively, based on offerings made under the plan to-date, and there was no charge for the quarter and six months ended June 30, 2016.
Total compensation costs charged as an expense for stock‑based awards, including stock options, RSU’s and ESPP, recognized in the components of operating expenses are as follows (in thousands):