Teladoc business model

38th Annual J.P. Morgan Healthcare Conference January 13 Safe harbor • • • • At Teladoc Health, we are transforming how people access healthcare around the world. We are creating a new kind of healthcare experience – one with greater convenience, outcomes, and value. The Only Comprehensive Virtual Care Solution Industry Leader with Differentiated Assets, Capabilities and Scale Global Leadership Position Across Channels Consistent Track Record of Delivering Strong Revenue Growth Compelling Financial Model Boston Toronto Phoenix Dallas Melbourne Key Metrics YTD 3Q 2019 Visit Growth +63% Revenue Growth +34% Gross Margin Adj. EBITDA 68% +119% Key Metrics Revenue Visits 4Q19 Expected Results Prior 4Q19 Guidance $155-156m $149-153m >1.2m 1.0-1.2m FY2019 Expected Results Prior FY2019 Guidance $552-553m $546-550m >4.1m 3.9-4.1m >4,100,000 >60% CAGR >60% CAGR $552-553m $600 $418m $500 2,641,000 952,000 $400 1,464,000 $233m $300 $200 $123m $100 $0 2016 2017 2018 2019E $12m -$5m -$34m -$52m 2016 2017 2018 YTD 3Q19 Strong demand across all channels RFP pipeline up ~10% y/y Bookings up ~30% y/y Larger average deal size 39 40 41 42 43 44 45 46 47 48 49 2016-2017 50 51 52 2017-2018 1 2 3 2018-2019 4 5 2019-2020 6 7 8 9 10 11 12 13 14 43% 40% 32% 32% 23% 22% 19% 18% 14% 11% 11% 10% 8% Source: 2019 J.P. Morgan Hospital Survey ~$80M ’19E Revenue (1) ~35% ’19E Revenue Growth(2) Mid-60’s Gross Margin ~70% Recurring Revenue(3) 30 of 50 Largest US Health Systems as Clients(4) #1 KLAS Rated Virtual Care Platform ’18 &‘19 Representative Clients % of 2019 Contract Value(1) InTouch leadership position in critical, Provider to Provider Virtual Care Critical Hospital ED Ambulance Post-Acute Chronic Teladoc leadership in Consumer Virtual Care Physician Office Retail Clinic Pharmacy Everyday Care Worksite Home Teladoc Health Note: Competitor information represents Teladoc management estimates and other industry data. ~$630m in • • • • • • • • • • ✓ Existing distribution channels ✓ Product cross sell/upsell ✓ Government programs • Direct to consumer • Global markets leadership • Virtual primary care ✓ Integrated behavioral health solutions • • ✓ Virtual Center of Excellence specialty services ✓ Chronic care ✓ Clinical quality leadership • Integrated, intuitive consumer experiences Engagement science and surround sound investments Virtual first experience ✓ Expanding access points and modalities ✓ Significant expansion from InTouch Health ✓ Health system use cases ✓ Insurer scope of services ✓ In home solutions ✓ Integration with local delivery system 54m ✓ 32m 12m 2015 18m 2016 23m ✓ 2017 2018 2019E ✓ ✓ o o o Source: US Kaiser Family Foundation, AIS 1st Year Current Year (2019) 2.0x 1.7x 1.0x 1.1x 2018 Cohort 1.3x 1.0x 2017 Cohort 1.0x 2016 Cohort 1.0x 2015 Cohort (1) First year utilization measured as annualized utilization of first calendar year with eligibility. Current year utilization reflects annualized YTD 2019 through Dec 15th. Min. membership size of 300. Usage Case Study2: Utilization following product additions 2.3X 1.6X 1.0X PEPM Prior to Product Add PEPM After Product Add (1) Represents average change in PEPM for 40+ employer clients lives adding product in 2019. 2017 2018 2019 (2) Represents large client that rolled our behavioral and dermatology products over 4Q17 and 1Q18. High degree of visibility Gross margin strength Customer acquisition and engagement spending efficiency Operating efficiencies and leverage Global leadership position across channels Key terms Transaction structure Process and timing Financial impact • Purchase price of approximately $600 million; consideration consisting of: • $150 million of cash • $450 million in Teladoc Health stock • Cash portion of consideration funded by cash on hand • Implied 5.4M TDOC shares issued to sellers (subject to customary lock-up)(1) • Transaction is expected to close in Q2’20 • Upon closing of the transaction, Teladoc Health will provide an updated full-year 2020 financial outlook and guidance for the combined company after completing valuation and related purchase accounting considerations • $300+ million cash on balance sheet post-transaction (1) Based on TDOC 10 day VWAP as of 1/7/20. TELADOC HEALTH INC. One of the biggest beneficiaries of Covid-19 appears to be telehealth. That’s why I want us to study Teladoc as our lead off case for discussion. Teladoc is the world’s largest telehealth company and has thrived in the pandemic. You don’t have a written case for Teladoc. Instead, you have the following documents: • • Morningstar July 2020 analyst report. I picked Morningstar over other analysts’ reports because Morningstar’s write-up covers a lot of strategy issues in addition to the usual financial analysis. Please remember, though, that what is contained in the report is, for the most part, the opinion of the analyst writing the report.