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What changed in Teladoc Health, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Teladoc Health, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+679 added−591 removedSource: 10-K (2024-02-23) vs 10-K (2023-03-01)

Top changes in Teladoc Health, Inc.'s 2023 10-K

679 paragraphs added · 591 removed · 464 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

136 edited+36 added−21 removed71 unchanged
Biggest changeWe integrate capabilities for our members across health plan, employer, and health system relationships, in a way that we believe is unique in the industry. ​ Our platform features the full range of health support – from artificial intelligence (“AI”) engine-driven “nudges” and health coaches to therapists and board-certified physicians and the world’s leading specialists – available anytime, anywhere we operate to ensure the right care is always delivered. ​ Highly Scalable and Secure API-Driven Technology Integrated Platform ​ Our core platform is a highly scalable, integrated, application program interface (“API”) driven technology platform, for virtual healthcare delivery, with multiple real-time integrations spanning the healthcare ecosystem. ​ 6 Table of Contents The core platform is equipped to provide the same level of member support and response time for upwards of 100,000 visits per day.
Biggest changeHighly Scalable and Secure API-Driven Technology Integrated Platform Our core platform is a highly scalable, integrated, application program interface (“API”) driven technology platform, for virtual healthcare delivery, with multiple real-time integrations spanning the healthcare ecosystem. The core platform is equipped to provide the same level of member support and response time for upwards of 100,000 visits per day.
The customers of our Integrated Care segment primarily consist of employers, health plans, hospitals and health systems, insurance and financial services companies (collectively “Clients”), as well as individual members who utilize our solutions. Clients as well as individual consumers purchase our solutions to expand access to convenient, affordable, and high-quality healthcare to their constituents and to reduce their healthcare spending.
The customers of our Integrated Care segment primarily consist of employers, health plans, hospitals and health systems, insurance and financial services companies (collectively “Clients”), as well as individual members who utilize our solutions. Clients and individual consumers purchase our solutions to expand access to convenient, affordable, and high-quality healthcare to their constituents and to reduce their healthcare spending.
State and Federal Health Information Privacy and Security Laws ​ There are numerous U.S. federal and state laws and regulations related to the privacy and security of personally identifiable information (“PII”), including health information.
Health Information Privacy and Security Laws There are numerous U.S. federal and state laws and regulations related to the privacy and security of personally identifiable information (“PII”), including health information.
In addition, HIPAA mandates that HHS conduct periodic compliance audits of HIPAA covered entities and their business associates for compliance. It also tasks HHS with establishing a methodology whereby harmed individuals who were the victims of breaches of unsecured PHI may receive a percentage of the Civil Monetary Penalty fine paid by the violator.
In addition, HIPAA mandates that HHS conduct periodic compliance audits of HIPAA covered entities and their business associates for compliance. HIPAA also tasks HHS with establishing a methodology whereby harmed individuals who were the victims of breaches of unsecured PHI may receive a percentage of the Civil Monetary Penalty fine paid by the violator.
We are creating a truly unified and personalized consumer experience, developing technologies to connect patients and extend the reach of care providers, delivering the highest standard of clinical quality at every touchpoint, and enhancing health decisions and outcomes with smart data and actionable insights.
We are creating a unified and personalized consumer experience, developing technologies to connect patients and extend the reach of care providers, delivering the highest standard of clinical quality at every touchpoint, and enhancing health decisions and outcomes with smart data and actionable insights.
The non-medical functions and services we provide under the services agreement primarily include member management services, such as maintaining network operations centers for our members to request a visit with THMG’s providers, member billing and collection administration, and maintenance and storage of member medical records.
The non-clinical functions and services we provide under the services agreement primarily include member management services, such as maintaining network operations centers for our members to request a visit with THMG’s providers, member billing and collection administration, and maintenance and storage of member medical records.
In addition, the expansion of our operations into foreign countries increases our exposure to the anti-bribery, anti-corruption, and anti-money laundering provisions of U.S. law, including the U.S. Foreign Corrupt Practices Act of 1977 (the “FCPA”), and corresponding foreign laws, including the U.K. Bribery Act 2010 (the “U.K.
In addition, the expansion of our operations into foreign countries increases our exposure to the anti-bribery, anti-corruption, and anti-money laundering provisions of U.S. law, including the U.S. Foreign Corrupt Practices Act of 1977 (the “FCPA”), and corresponding foreign laws, including the U.K. Bribery Act 2010 (the “U.K. Bribery Act”).
THMG has agreed to provide our members, through our providers, access to telehealth services and recommended treatment 24 hours per day, 365 days per year. The services agreement also requires THMG to maintain the state licensure and other credentialing requirements of our providers.
THMG has agreed to provide our members, through its providers, access to telehealth services and recommended treatment 24 hours per day, 365 days per year. The services agreement also requires THMG to maintain the state licensure and other credentialing requirements of its providers.
Our solutions offer our Clients proven substantial savings opportunities and an attractive return on investment. As part of this segment, we sell to our Clients on behalf of their beneficiaries, including employees and health plan members.
Our solutions offer our Clients substantial savings opportunities and an attractive return on investment. As part of this segment, we sell to our Clients on behalf of their beneficiaries, including employees and health plan members.
See “Risk Factors—Risks Related to Our Business and Industry—Our quarterly results may fluctuate significantly, which could adversely impact the value of our common stock.” included elsewhere in this Annual Report on Form 10-K. ​ Health Equity ​ Our commitment to health equity is central to our mission of empowering all people everywhere to achieve their healthiest lives.
See “Risk Factors—Risks Related to Our Business and Industry—Our quarterly results may fluctuate significantly, which could adversely impact the value of our common stock.” included elsewhere in this Annual Report on Form 10-K. Health Equity Our commitment to health equity is central to our mission of empowering all people everywhere to live their healthiest lives.
The scale of our data and provider network, powered by our data science capabilities, creates a competitive advantage for us in providing an optimal match of an individual with a provider, increasing the rate of success in therapy. We leverage diverse customer acquisition channels and increased organic sources of traffic, which reduces dependence on any single source of member acquisition.
The scale of our data and provider network, powered by our data science capabilities, creates a competitive advantage for us in providing an optimal match of an individual with a provider, increasing the rate of success in therapy. We leverage diverse customer acquisition channels and increase organic sources of traffic, which reduces dependence on any single source of member acquisition.
We build a range of total reward programs that support employees through fair, equitable, and competitive pay and benefits, and we invest in technology, tools, and resources to transform and increase the quality of work. ​ As of December 31, 2022, we employed approximately 5,600 people, comprised of approximately 86% full-time employees and 14% part-time employees.
We build a range of total reward programs that support employees through fair, equitable, and competitive pay and benefits, and we invest in technology, tools, and resources to transform and increase the quality of work. As of December 31, 2023, we employed approximately 5,600 people, comprised of approximately 86% full-time employees and 14% part-time employees.
Our strategy is to deliver a reimagined model for primary care, build on a foundation of integrated, multi-source data, leveraging a unified whole person experience; dedicated care team of physicians and non-medical doctors for a personalized longitudinal care plan; continuous guidance and support; navigation and coordination with high quality providers; and “last mile” services like lab testing, prescriptions, and in-home exams.
Our strategy is to deliver 7 Table of Contents a reimagined model for primary care, build on a foundation of integrated, multi-source data, leveraging a unified whole person experience; dedicated care team of physicians and non-medical doctors for a personalized longitudinal care plan; continuous guidance and support; navigation and coordination with high quality providers; and “last mile” services like lab testing, prescriptions, and in-home exams.
Bribery Act”). ​ The FCPA prohibits offering, promising, or authorizing others to give anything of value to a foreign government official to obtain or retain business or otherwise secure a business advantage. We also are subject to applicable anti-corruption laws of the jurisdictions in which we operate.
The FCPA prohibits offering, promising, or authorizing others to give anything of value to a foreign government official to obtain or retain business or otherwise secure a business advantage. We also are subject to applicable anti-corruption laws of the jurisdictions in which we operate.
In addition, the government and some courts have taken the position that claims presented in violation of the various statutes, including the Stark Law can be considered a violation of the federal False Claims Act (described below) based on the contention that a provider impliedly certifies compliance with all applicable laws, regulations and other rules when submitting claims for reimbursement.
In addition, the government and some courts have taken the position that claims presented in violation of the various statutes, including the Stark Law can be considered a violation of the federal False Claims Act (described below) based on the contention that a provider impliedly certifies compliance with all 12 Table of Contents applicable laws, regulations and other rules when submitting claims for reimbursement.
Under the services agreement with THMG, we have agreed to serve, on an exclusive basis, as manager and administrator of THMG’s non-medical functions and services related to the provision of the telehealth services by providers employed by or under contract with THMG.
Under the services agreement with THMG, we have agreed to serve, on an exclusive basis, as manager and administrator of THMG’s non-clinical functions and services related to the provision of the telehealth services by providers employed by or under contract with THMG.
As a result of seasonal cold and flu trends, we historically have experienced our highest level of visit 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.
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.
We also provide a broad range of programs and services, including primary and specialty care telehealth solutions, chronic condition management, expert medical services, mental health solutions, and platform & program services. ​ 5 Table of Contents Global Footprint Spanning Clients, Medical Operations and Members We believe we have the only global virtual healthcare footprint spanning a diverse set of Client channels, medical operations, and members.
We also provide a broad range of programs and services, including primary and specialty care telehealth solutions, chronic condition management, expert medical services, mental health solutions, and platform & program services. Global Footprint Spanning Clients, Medical Operations and Members We believe we have the only global virtual healthcare footprint spanning a diverse set of Client channels, medical operations, and members.
We also have substantial room to drive cross-sell opportunities of chronic condition management products into our Client base of telehealth customers, as we see limited overlap of existing Client bases. ​ 9 Table of Contents Leverage Existing Distribution Channels and Expand Penetration of Global Markets ​ We have developed a highly effective and efficient global distribution network.
We also have substantial room to drive cross-sell opportunities of chronic condition management products into our Client base of telehealth customers, as we see limited overlap of existing Client bases. Leverage Existing Distribution Channels and Expand Penetration of Global Markets We have developed a highly effective and efficient global distribution network.
Under the corporate practice of medicine restrictions of certain states, decisions and activities such as scheduling, contracting, setting rates, and the hiring and management of non-clinical personnel may implicate the restrictions on the corporate practice of medicine. 13 Table of Contents State corporate practice of medicine and fee splitting laws vary from state to state and are not always consistent among states.
Under the corporate practice of medicine restrictions of certain states, decisions and activities such as scheduling, contracting, setting rates, and the hiring and management of non-clinical personnel may implicate the restrictions on the corporate practice of medicine. State corporate practice of medicine and fee splitting laws vary from state to state and are not always consistent among states.
In light of the HIPAA Omnibus Final Rule, recent enforcement activity, and statements from HHS, we expect increased federal and state HIPAA privacy and security enforcement efforts. ​ The privacy and security of personal information stored, maintained, received or transmitted electronically is an enforcement priority in the U.S. and internationally.
In light of the HIPAA Omnibus Final Rule, recent enforcement activity, and statements from HHS, we expect increased federal and state HIPAA privacy and security enforcement efforts. 14 Table of Contents The privacy and security of personal information stored, maintained, received or transmitted electronically is an enforcement priority in the U.S. and internationally.
Violations of the Anti-Kickback Statute can result in exclusion from Medicare, Medicaid or other governmental programs as well as civil and criminal penalties, including civil monetary penalties of up to $112,131, and criminal fines of $100,000 per violation, and three times the amount of the unlawful remuneration, and imprisonment of up to ten years.
Violations of the Anti-Kickback Statute can result in exclusion from Medicare, Medicaid or other governmental programs as well as civil and criminal penalties, including civil monetary penalties of up to $120,816, and criminal fines of $100,000 per violation, and three times the amount of the unlawful remuneration, and imprisonment of up to ten years.
For example, the California Consumer Privacy Act of 2018 (“CCPA”) protects the personal 16 Table of Contents information of California consumers regardless of the location of the business holding the information. The California Privacy Rights Act (“CPRA”) provides additional rights for California consumers and went into effect on January 1, 2023.
For example, the California Consumer Privacy Act of 2018 (“CCPA”) protects the personal information of California consumers regardless of the location of the business holding the information. The California Privacy Rights Act (“CPRA”) provides additional rights for California consumers and went into effect on January 1, 2023.
The penalties for violating the Stark Law include the denial of payment for services ordered in violation of the statute, mandatory refunds of any sums paid for such services, civil penalties of up to $27,750 for each violation, and twice the dollar value of each such service and possible exclusion from future participation in the federally funded healthcare programs.
The penalties for violating the Stark Law include the denial of payment for services ordered in violation of the statute, mandatory refunds of any sums paid for such services, civil penalties of up to $29,899 for each violation, and twice the dollar value of each such service and possible exclusion from future participation in the federally funded healthcare programs.
We offer a portfolio of services and solutions covering hundreds of medical subspecialties, bolstered by technology, machine learning and human expertise to provide an effective care experience that people value and trust.
We offer a portfolio of services and solutions covering hundreds of medical subspecialties, bolstered by technology, artificial intelligence ("AI"), machine learning and human expertise to provide an effective care experience that people value and trust.
We design a range of programs and initiatives to nurture talent, encourage curiosity and innovation, make room for diverse voices and perspectives, increase engagement and connectiveness, and mentor leaders for future roles.
We design a range of programs and initiatives to nurture talent, encourage curiosity and innovation, make room for diverse voices and 16 Table of Contents perspectives, increase engagement and connectiveness, and mentor leaders for future roles.
A person who engages in a scheme to circumvent the Stark Law’s prohibitions may be fined up to $185,009 for each applicable arrangement or scheme. The Stark Law is a strict liability statute, which means proof of specific intent to violate the law is not required.
A person who engages in a scheme to circumvent the Stark Law’s prohibitions may be fined up to $199,338 for each applicable arrangement or scheme. The Stark Law is a strict liability statute, which means proof of specific intent to violate the law is not required.
As we expand the range of products and services available to our members, we are investing in a seamless, relevant, and personalized mobile experience that provides smart guidance for our members.
As we expand the range of products and services available to our members, we are investing in a seamless, relevant, and personalized virtual and digital experience that provides smart guidance for our members.
Our principal marketing programs include use of our website to provide information about our company and our solutions, as well as learning opportunities for potential members; integrated marketing campaigns; and participation in industry events, trade shows, and conferences. ​ We sell our BetterHelp services principally through marketing our solution directly to potential users.
Our principal marketing programs include use of our website to provide information about our company and our solutions, as well as learning opportunities for potential members; integrated marketing campaigns; and participation in industry events, trade shows, and conferences. 9 Table of Contents We sell our BetterHelp services principally by marketing our solution directly to potential users.
Failure to comply with the requirements of GDPR and the applicable national data protection laws of the EU member states may result in fines of up to €10,000,000 or up to 2% of the total worldwide annual revenue from the preceding financial year, whichever is higher, and other administrative penalties. ​ We are also subject to EU laws on data export, as we may transfer personal data from the EU to other jurisdictions, in particular the U.S.
Failure to comply with the requirements of GDPR and the applicable national data protection laws of the EU member states may result in fines of up to €20,000,000 or up to 4% of the total worldwide annual revenue from the preceding financial year, whichever is higher, and other administrative penalties. 15 Table of Contents We are also subject to EU laws on data export, as we may transfer personal data from the EU to other jurisdictions, in particular the U.S.
In addition, we partner with companies, such as consumer telecommunications companies, in certain international markets to offer virtual care services on a co-branded or white-labelled basis directly to customers of those companies and other consumers. ​ Drive Direct-To-Consumer Channel Growth ​ We plan to continue driving growth through investments in our D2C channels, which includes our BetterHelp segment as well as mental health and general medicine in our Integrated Care segment.
In addition, we partner with companies, such as consumer telecommunications companies, in certain international markets to offer virtual care services on a co-branded or white-labelled basis directly to customers of those companies and other consumers. Drive Direct-To-Consumer Channel Growth We plan to continue driving growth through investments in our D2C channels, which primarily includes our BetterHelp segment.
Department of Health and Human Services (“HHS”) and certified by the Agency for Healthcare Research and Quality. ​ Our Growth Strategies ​ Enable A Virtual First Strategy for Consumer Healthcare Access ​ Our vision is to position virtual care as the first place individuals go to get the care they need and manage their health.
This PSO is formally recognized by the U.S. Department of Health and Human Services (“HHS”) and certified by the Agency for Healthcare Research and Quality. Our Growth Strategies Enable A Virtual First Strategy for Consumer Healthcare Access Our vision is to position virtual care as the first place individuals go to get the care they need and manage their health.
There are also active bills going through the legislative process in many more states. Where state laws are more protective than HIPAA or apply more broadly than HIPAA, or apply to different personal information than HIPAA, we must comply with the state laws we are subject to in addition to HIPAA.
There are also bills that have been approved or are going through the legislative process in many more states. Where state laws are more protective than HIPAA or apply more broadly than HIPAA, or apply to different personal information than HIPAA, we must comply with the state laws we are subject to in addition to HIPAA.
We have established systems for ensuring that our affiliated physicians and mental health professionals are appropriately licensed under applicable state law and that their provision of telehealth to our members occurs in each instance in compliance with applicable rules governing telehealth.
We have established systems for ensuring that our affiliated providers are appropriately licensed under applicable state law and that their provision of telehealth to our members occurs in each instance in compliance with applicable rules governing telehealth.
By combining the latest in data science and analytics with an award-winning user experience through a set of highly flexible integrated technology platforms, we completed approximately 18.5 million telehealth visits in 2022 through business to business and direct to consumer channels.
By combining the latest in data science and analytics with an award-winning user experience through a set of highly flexible integrated technology platforms, we completed approximately 18.4 million telehealth visits in 2023 through our business to business and direct-to-consumer ("D2C") channels.
In addition, we augment our employee base with contractors to meet resource needs and to increase flexibility in managing our expense base. Of the total employee population as of December 31, 2022, approximately 65% of our employees worked in the U.S. and 35% worked in our international locations.
In addition, we augment our employee base with contractors to meet resource needs and to increase flexibility in managing our expense base. Of the total employee population as of December 31, 2023, approximately 63% of our employees worked in the U.S. and 37% worked in our international locations.
For example, Brazil adopted the Brazilian General Data Protection Law, which is closely aligned with the EU GDPR and began to be enforced in August 2021. Additionally, China adopted the Personal Information Protection Law (“PIPL”), which also closely aligns with GDPR, although there are differences.
For example, Brazil adopted the Brazilian General Data Protection Law, which is closely aligned with the EU GDPR and began to be enforced in August 2021. Additionally, China adopted the Personal Information Protection Law (“PIPL”), which also closely aligns with GDPR, although there are differences. PIPL went into effect on November 1, 2021.
(“THMG”). We do not own THMG, which is a 100% physician owned independent entity, or the professional corporations with which it contracts. Instead, THMG and the professional corporations (collectively, the “THMG Association”) are owned by physicians licensed in their respective jurisdictions.
(“THMG”), which operate our Integrated Care telehealth provider network. We do not own THMG, which is a 100% physician-owned independent entity, or the professional corporations with which it contracts. Instead, THMG and the professional corporations (collectively, the “THMG Association”) are owned by physicians licensed in their respective jurisdictions.
These integrated member experiences drive higher member engagement, convenience, and utilization. ​ Expand Penetration of our Suite of Services Among Existing Clients ​ We believe that we offer a highly differentiated suite of solutions for a broad range of market channels, spanning the spectrum of traditional healthcare system participants such as employers, health plans, and health systems as well as global financial services businesses and other organizations.
Expand Penetration of our Suite of Services Among Existing Clients We believe that we offer a highly differentiated suite of solutions for a broad range of market channels, spanning the spectrum of traditional healthcare system participants such as employers, health plans, and health systems as well as global financial services businesses and other organizations.
We continue to work toward further mobilizing our workforce to give back to the communities where we live and work through new volunteer programs and corporate matching opportunities for giving. ​ We set out to advance positive social change in our communities with a 2022 goal of volunteering more than 15,000 hours around the globe – a goal we exceeded by more than 30%.
We continue to work toward further mobilizing our workforce to give back to the communities where we live and work through new volunteer programs and corporate matching opportunities for giving. We set out to advance positive social change in our communities with a 2023 achievement of volunteering more than 13,000 hours around the globe.
In our various sales channels, a range of third parties, including health plans, pharmacy benefits managers, financial institutions, brokers, agents, benefits consultants, and resellers, sell our solutions to various end markets around the world.
In our various sales channels, a range of third parties, including health plans, pharmacy benefits managers, financial institutions, brokers, agents, benefits consultants, and resellers, sell our solutions to various end markets around the world. Our BetterHelp segment primarily sells directly to individual consumers.
Penalties for False Claims Act violations include fines ranging from $12,537 to $25,076 for each false claim, plus up to three times the amount of damages sustained by the federal government. A False Claims Act violation may provide the basis for exclusion from the federally funded healthcare programs.
Penalties for False Claims Act violations include fines ranging from $13,058 to $27,018 for each false claim, plus up to three times the amount of damages sustained by the federal government. A False Claims Act violation may provide the basis for exclusion from the federally funded healthcare programs.
The THMG Association, our providers, and our health plan Clients are all regulated as covered entities under HIPAA.
Teladoc Health, the THMG Association, our providers, our health plan Clients and our employee welfare benefit plan Clients are all regulated as covered entities under HIPAA.
These laws and regulations are subject to frequent revisions and differing interpretations and have generally become more stringent over time. ​ The GDPR imposes many requirements for controllers and processors of personal data, including, for example, higher standards for obtaining consent from individuals to process their personal data, more robust disclosures to individuals, a strengthened individual data rights regime, shortened timelines for data breach notifications, limitations on retention and secondary use of information, increased requirements pertaining to health data and pseudonymized (i.e., key-coded) data, and additional obligations when we contract third-party processors in connection with the processing of personal data.
The GDPR imposes many requirements for controllers and processors of personal data, including, for example, higher standards for obtaining consent from individuals to process their personal data, more robust disclosures to individuals, a strengthened individual data rights regime, shortened timelines for data breach notifications, limitations on retention and secondary use of information, increased requirements pertaining to health data and pseudonymized (i.e., key-coded) data, and additional obligations when we contract third-party processors in connection with the processing of personal data.
While Schrems II affirmed the validity of corporate binding rules and standard contractual clauses as legal bases to transfer EU data to the U.S., it also put into place stricter requirements for transfers based on standard contractual clauses.
While Schrems II affirmed the validity of corporate binding rules and standard contractual clauses as legal bases to transfer EU data to the U.S., it also put into place stricter requirements for transfers based on standard contractual clauses. In July 2023, to replace the U.S.-EU Privacy Shield, the EU and U.S. developed and entered into force the EU-U.S.
This was an ambitious goal that was consistent with our values, including those of respecting and taking care of people, doing what’s right, and succeeding together.
This was a monumental achievement that was consistent with our values, including those of respecting and taking care of people, doing what’s right, and succeeding together.
We prioritize and invest in creating opportunities to help employees grow and build their careers, through training and development programs. These include online and self-paced courses, live in-class education, professional speaker series, peer-to-peer learning, certification programs, and on-the-job training, as well as executive talent and succession planning paired with an individualized development approach. ​ Expanding the Voice of the Employee.
These include online and self-paced courses, live in-class education, professional speaker series, peer-to-peer learning, certification programs, and on-the-job training, as well as executive talent and succession planning paired with an individualized development approach. Expanding the Voice of the Employee.
It also includes software engineering teams responsible for solution development and deployment, and a data science team providing the insight that powers our differentiated health actions.
Our multi-disciplinary team includes a product development team responsible for the design, development, testing, and certification of our solutions. It also includes software engineering teams responsible for solution development and deployment, and a data science team providing the insight that powers our differentiated health actions.
Clients have adopted Primary360 utilizing different models, including making it a care option for all members in a broad employee or health plan population, or offering a specific Virtual First Health Plan designed for Primary360 to be the access point for primary care for members.
Clients have adopted Primary360 utilizing different models, including making it a care option for all members in a broad employee or health plan population, or offering a specific Virtual First Health Plan designed for Primary360 to be the access point for primary care for members. We intend to continue to respond quickly to evolving market needs with innovative solutions.
We continuously focus on developing new products and further enhancing the usability, functionality, reliability, performance, and flexibility of our solutions. ​ Competition ​ We view as our competitors those companies that currently (or in the future will) (i) develop and market virtual care technology (devices, software, and systems) or (ii) provide virtual care services, such as the delivery of on-demand access to healthcare and chronic condition management.
Competition We view our competitors as those companies that currently (or in the future will) (i) develop and market virtual care technology (devices, software, and systems) and/or (ii) provide virtual care services, such as the delivery of on-demand access to healthcare and chronic condition management.
Any allegations about our practices with regard to the collection, use, disclosure, or security of personal information or other privacy-related matters, even if unfounded and even if we are in compliance with applicable laws, could damage our reputation and harm our business. ​ Many states in which we operate and in which our patients reside also have laws that protect the privacy and security of personal information, including health information.
Any allegations about our practices with regard to the collection, use, disclosure, or security of personal information or other privacy-related matters, even if unfounded and even if we are in compliance with applicable laws, could damage our reputation and harm our business.
We have implemented telehealth industry standard processes, policies, and tools through all levels of our software development and network administration, including regularly scheduled vulnerability scanning and third-party penetration testing to reduce the risk of vulnerabilities in our system.
We have a rigorous and comprehensive information security program managed by a dedicated team of security engineers and analysts. We have implemented telehealth industry standard processes, policies, and tools through all levels of our software development and network administration, including regularly scheduled vulnerability scanning and third-party penetration testing to reduce the risk of vulnerabilities in our system.
We do not believe that our operations or results will be materially adversely affected by a return to the status quo from a regulatory perspective. ​ For additional discussion of our regulatory environment, see “Risk Factors” included in Part I, Item 1A of this Annual Report on Form 10-K. ​ Telehealth Provider Licensing, Medical Practice, Certification and Related Laws and Guidelines ​ The practice of medicine, including the provision of mental health services, is subject to various federal, state, and local certification and licensing laws, regulations, and approvals, relating to, among other things, the adequacy of medical care, the practice of medicine (including the provision of remote care and cross coverage practice), equipment, personnel, operating policies and procedures, and the prerequisites for the prescription of medication.
For additional discussion of our regulatory environment, see “Risk Factors” included in Part I, Item 1A of this Annual Report on Form 10-K. 11 Table of Contents Telehealth Provider Licensing, Medical Practice, Certification and Related Laws and Guidelines The practice of medicine, including the provision of mental health services, is subject to various federal, state, and local certification and licensing laws, regulations, and approvals, relating to, among other things, the adequacy of medical care, the practice of medicine (including the provision of remote care and cross coverage practice), equipment, personnel, operating policies and procedures, and the prerequisites for the prescription of medication.
For whatever healthcare needs an individual has, across any site of care, we aim to provide the right level of personalized support to meet that need.
Regardless of people’s healthcare needs, across any site of care, we aim to provide the right level of personalized support to meet that need.
For example, changes were made to the Medicare and Medicaid programs (through waivers and other regulatory authority) to increase access to telehealth services by, among other things, increasing reimbursement, permitting the enrollment of out of state providers, and eliminating prior authorization requirements.
For example, changes were made to the Medicare and Medicaid programs (through waivers and other regulatory authority) to increase access to telehealth services by, among other things, increasing reimbursement, permitting the enrollment of out of state providers, and eliminating prior authorization requirements. It is uncertain how long these COVID-19 related regulatory changes will remain in effect.
For 2023, we have increased our goal to 20,000 volunteer hours and expanded these efforts to do good and give back to our communities. ​ 19 Table of Contents Intellectual Property ​ We own and use trademarks and service marks on or in connection with our services, including both unregistered common law marks and issued trademark registrations in the U.S. and around the world.
For 2024, we have continued to challenge ourselves and set goals for volunteer hours to do good and give back to our communities. 17 Table of Contents Intellectual Property We own and use trademarks and service marks on or in connection with our services, including both unregistered common law marks and issued trademark registrations in the U.S. and around the world.
For example, we provide a unique and proprietary blood glucose meter to members enrolled in our diabetes program. This patented device, which includes the Food and Drug Administration (“FDA”) Class II certified glucose testing along with a cellular antenna and color touchscreen, is seamlessly integrated with our platform.
For example, we provide a unique and proprietary blood glucose meter to members enrolled in our diabetes program. This Class II, Food and Drug Administration (“FDA”)-cleared medical device includes a cellular antenna and color touchscreen to provide seamless integration with our platform.
The software on the device can also be remotely upgraded through the cellular antenna to deliver usability improvements and program enhancements. ​ Our platform’s APIs power external connectivity and deep integration with a wide range of payors, electronic medical records, third-party applications, and other interfaces with employers, hospital systems, and health systems, which we believe uniquely positions us as a long-term partner meeting the unique needs of the rapidly changing healthcare industry.
Our platform’s APIs power external connectivity and deep integration with a wide range of payors, electronic medical records ("EMR"), third-party applications, and other interfaces with employers, hospital systems, and health systems, which we believe uniquely positions us as a long-term partner meeting the unique needs of the rapidly changing healthcare industry.
We use these capabilities, plus our engagement science, to drive awareness and utilization of Teladoc Health services through innovative media strategies designed to reach members in their homes, on the go and in their moments of need.
We use these capabilities, plus our engagement science, to drive awareness and utilization of Teladoc Health services through innovative media strategies designed to reach members in their homes, on the go, and in their moments of need. Our surround sound capabilities and strategies are continuously being evaluated, analyzed, and evolved to meet ever-shifting consumer behaviors.
Many states have responded to these incidents by enacting laws requiring holders of personal information to maintain safeguards and to take certain actions in response to a data breach, such as providing prompt notification of the breach to affected individuals and state officials. ​ We are also subject to laws and regulations in non-U.S. countries covering data privacy and the protection of health-related and other personal information.
Many states have responded to these incidents by enacting laws requiring holders of personal information to maintain safeguards and to take certain actions in response to a data breach, such as providing prompt notification of the breach to affected individuals and state officials.
The OIG emphasizes, however, that this exception should only be used occasionally to address special financial needs of a particular patient. 15 Table of Contents Although this prohibition applies only to federal healthcare program beneficiaries, the routine waivers of copayments and deductibles offered to patients covered by commercial payers may implicate applicable state laws related to, among other things, unlawful schemes to defraud, excessive fees for services, tortious interference with patient contracts, and statutory or common law fraud. ​ Foreign and U.S.
Although this prohibition applies only to federal healthcare program beneficiaries, the routine waivers of copayments and deductibles offered to patients covered by commercial payers may implicate applicable state laws related to, among other things, unlawful schemes to defraud, excessive fees for services, tortious interference with patient contracts, and statutory or common law fraud.
Regardless of people’s healthcare needs, across any site of care, we aim to provide the right level of personalized support to meet that need. ​ We believe that we have the largest breadth of integrated whole person products and services in the virtual care industry, enabling us to treat the whole person, from mental healthcare to physical healthcare, and from acute episodic needs to chronic needs.
We believe that we have the largest breadth of integrated whole person products and services in the virtual care industry, enabling us to treat the whole person, from mental healthcare to physical healthcare, and from acute episodic needs to chronic needs.
One example of such an independent third-party certification that we have achieved is HITRUST. ​ To meet the growing needs of hospitals and health systems, as well as multi-national insurers, our proprietary licensed platform enables Clients to fully integrate private instances of our platform alongside their traditional modes of delivering healthcare to their patients.
To meet the growing needs of hospitals and health systems, as well as multi-national insurers, our proprietary licensed platform enables Clients to fully integrate private instances of our platform alongside their traditional modes of delivering healthcare to their patients.
PIPL went into effect on November 1, 2021. ​ International Regulation ​ We expect to continue to expand our operations in foreign countries through both organic growth and acquisitions.
International Regulation We expect to continue to expand our operations in foreign countries through both organic growth and acquisitions.
Our competitive advantages allow us to deliver whole person care solutions that create and demonstrate positive clinical outcomes for our members, and strong return on investment for our Clients. ​ Comprehensive Suite of Virtual Healthcare Clinical Services ​ We believe that we are the first and only company to provide a comprehensive and integrated whole person virtual healthcare solution that both provides and enables care for a full spectrum of clinical conditions, including wellness and prevention, acute care, chronic conditions, and complex healthcare needs.
Comprehensive Suite of Virtual Healthcare Clinical Services We believe that we are the first and only company to provide a comprehensive and integrated whole person virtual healthcare solution that both provides and enables care for a full spectrum of clinical conditions, including wellness and prevention, acute care, chronic conditions, and complex healthcare needs.
Our management responsibilities to the THMG Association also include assisting it with its obligations under HIPAA’s breach notification rule. Under the breach notification rule, covered entities must notify affected individuals without unreasonable delay in the case of a breach of unsecured PHI, which has more than a low probability of compromising the privacy, security, or integrity of the PHI.
Under the breach notification rule, covered entities must notify affected individuals without unreasonable delay in the case of a breach of unsecured PHI, which has more than a low probability of compromising the privacy, security, or integrity of the PHI.
We maintain relationships with key industry participants including benefit consultants, brokers, group purchasing organizations, health plans, and hospital partners. ​ We generate Client leads, accelerate sales opportunities, and build brand awareness through our marketing programs. Our marketing programs target human resource, benefits, and finance executives in addition to technology and health professionals, senior business leaders, and healthcare channel partners.
We generate Client leads, accelerate sales opportunities, and build brand awareness through our marketing programs. Our marketing programs target human resource, benefits, and finance executives in addition to technology and health professionals, senior business leaders, and healthcare channel partners.
We intend to continue to respond quickly to evolving market needs with innovative solutions. ​ We have launched a new offering, Inpatient Connected Care, that enables hospitals, health systems, and other clinical facilities to turn the television in every patient room into a virtual care end-point, utilizing a special purpose set-top box, camera, microphone, software, and networking.
Our Inpatient Connected Care offering enables hospitals, health systems, and other clinical facilities to turn the television in every patient room into a virtual care end-point, utilizing a special purpose set-top box, camera, microphone, software, and networking.
Under HIPAA, these two additional federal crimes are: “Healthcare Fraud” and “False Statements Relating to Healthcare Matters.” The Healthcare Fraud statute prohibits knowingly and recklessly executing a scheme or artifice to defraud any healthcare benefit program, including private payors. A violation of this statute is a felony and may result in fines, imprisonment or exclusion from government sponsored programs.
Under HIPAA, these two additional federal crimes are: “Healthcare Fraud” and “False Statements Relating to Healthcare Matters.” The Healthcare Fraud statute prohibits 13 Table of Contents knowingly and recklessly executing a scheme or artifice to defraud any healthcare benefit program, including private payors.
A determination of liability under such state fraud, waste, and abuse laws could result in fines and penalties and restrictions on our ability to operate in these jurisdictions. ​ Other Healthcare Laws ​ The federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”) and their implementing regulations, (collectively, “HIPAA”), established several separate criminal penalties for making false or fraudulent claims to insurance companies and other non-governmental payors of healthcare services.
Other Healthcare Laws The federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”) and their implementing regulations, (collectively, “HIPAA”), established several separate criminal penalties for making false or fraudulent claims to insurance companies and other non-governmental payors of healthcare services.
We also rely on relationships for our BetterHelp business with a wide variety of third parties, including Internet search providers 10 Table of Contents such as Google, social networking platforms such as Facebook, internet advertising networks, co-registration partners, retailers, distributors, television advertising agencies, and direct marketers, to source new users and to promote or distribute our services and products. ​ Research and Development ​ Our ability to compete depends, in large part, on our continuous commitment to rapidly introduce new products, services, technologies, features, and functionality.
We also rely on relationships with a wide variety of third parties, including Internet search providers such as Google, social networking platforms such as Facebook, internet advertising networks, co-registration partners, retailers, distributors, television advertising agencies, and direct marketers, to source new users and to promote or distribute our services and products.
During 2022, we developed a new unified mobile app that seamlessly offers members access to all of our virtual health services within a single, modern, user-friendly digital experience, under the Teladoc Health brand. We believe this new integrated experience will help drive increased member engagement, enrollment in additional clinical programs, and support for longitudinal relationships with members.
During 2023, we launched a new unified mobile app that seamlessly offers members access to all of our virtual health services within a single, modern, user-friendly digital experience, under the Teladoc Health brand to support member engagement, multi-program enrollment, and longitudinal relationships with members.
Through our technology and workflows, Clients can more efficiently administer admissions, discharge planning, patient education, nursing coverage, and virtual provider consultations, improving efficiency and quality of care, and helping address hospital staffing challenges. 8 Table of Contents ​ We continue to invest in new expansions and innovation within our chronic care management and mental health suite of offerings, such as myStrength Complete and Chronic Care Complete. myStrength Complete is an integrated mental health service providing personalized, targeted care to consumers in a single, comprehensive experience. myStrength Complete’s proprietary stepped care model is designed to seamlessly combine app-based tools and coaching expertise with our therapists and psychiatrists to ensure that consumers get the level of mental health support and care they need, when they need it.
We continue to invest in new expansions and innovation within our chronic care management and mental health suite of offerings, such as myStrength Complete and Chronic Care Complete. myStrength Complete is an integrated mental health service providing personalized, targeted care to consumers in a single, comprehensive experience. myStrength Complete’s proprietary stepped care model is designed to seamlessly combine app-based tools and coaching expertise with our therapists and psychiatrists to ensure that consumers get the level of mental health support and care they need, when they need it.
Item 1. Business ​ Overview ​ Teladoc Health is the global leader in whole person virtual care, forging a new healthcare experience with better convenience, outcomes, and value.
Item 1. Business Overview Teladoc Health is the global leader in whole person virtual care, forging a new healthcare experience with better convenience, outcomes, and value. Our mission is to empower all people everywhere to live their healthiest lives by transforming the healthcare experience.
We provide access to healthcare through our portfolio of consumer brands 24 hours a day, 7 days a week, and 365 days a year. ​ Our Segments ​ In the fourth quarter of 2022, we adopted a new organizational and reporting structure based on two operating segments, Teladoc Health Integrated Care (“Integrated Care”) and BetterHelp.
We provide access to healthcare through our portfolio of consumer brands 24 hours a day, 7 days a week, and 365 days a year. We have two reportable segments: Teladoc Health Integrated Care (“Integrated Care”) and BetterHelp.
These data sets and insights are applied to enhance our providers’ ability to deliver quality care through tools such as our provider dashboards, as well as serving as a foundation for clinical innovation and collaboration with other leading healthcare organizations that are focused on the advancement of virtual care delivery. ​ We established The Institute for Patient Safety and Quality of Virtual Care in 2019, the healthcare industry’s first Patient Safety Organization (“PSO”) dedicated to virtual care with the mission of conducting quality and safety initiatives with and on behalf of key healthcare stakeholders, including other PSOs, to improve the delivery of virtual care.
These data sets and insights are applied to enhance our providers’ ability to deliver quality care through tools such as our provider dashboards, as well as serving as a foundation for clinical innovation and collaboration with other leading healthcare organizations that are focused on the advancement of virtual care delivery.
Recently, there has been an increase in public awareness of privacy issues in the wake of revelations about the activities of various government agencies and in the number of private privacy-related lawsuits filed against companies.
For example, we have been subject to litigation alleging improper disclosure and/or use of PII and PHI. Recently, there has been an increase in public awareness of privacy issues in the wake of revelations about the activities of various government agencies and in the number of private privacy-related lawsuits filed against companies.
We strive to build a culture of inclusion which includes soliciting employee feedback through our pulse engagement surveys, listening circles, and seeking opportunities to advance employee feedback. ​ Open Dialogue to Encourage Diverse Thinking and Voices. In 2022, we launched the Diversity in Health learning series to expand knowledge and awareness of diversity and health topics. ​ Business Resource Groups.
We strive to build a culture of inclusion which includes regularly soliciting employee feedback through our pulse engagement surveys, listening circles, and seeking opportunities to advance employee feedback. Open Dialogue to Encourage Diverse Thinking and Voices.
Our mission is to empower all people everywhere to live their healthiest lives by transforming the healthcare experience. ​ Teladoc Health was founded on a simple, yet revolutionary idea: that everyone should have access to the best healthcare, anywhere in the world on their terms.
Teladoc Health was founded on a simple, yet revolutionary idea: that everyone should have access to the best healthcare, anywhere in the world on their terms.
Some of our contracts place a portion of our fees at risk or provide for gain share opportunity based on achieving desired performance metrics, cost savings, and/or clinical outcomes improvements. ​ Our access fees comprise the majority of our revenue and therefore provide us with significant revenue visibility.
Some of our contracts place a portion of our fees at risk or provide for gain share opportunity based on achieving desired performance metrics, cost savings, and/or clinical outcomes improvements. Access fees comprise the significant majority of our Integrated Care segment revenue. We also generate revenue on a per-telehealth visit basis through certain Clients with visit fee only arrangements.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThese risks include, among others, the following: ​ • our history of losses and accumulated deficit and the risk that we may not achieve profitability; ​ • the potential for future non-cash charges for the impairment of goodwill and other intangible assets; ​ • our ability to compete successfully in competitive markets; ​ • the potential impact of the COVID-19 pandemic on the economy in general and on our business in particular , including recent cost inflation and supply chain disruptions; ​ • risk of the loss of any of our significant Clients or partners, or the loss of a significant number of BetterHelp users; ​ • risks associated with a decrease in the number of individuals offered benefits by our Clients or the number of products and services to which they subscribe, or a decrease in the number of members who utilize our BetterHelp service; ​ • rapid technological change in the virtual care market or the failure to innovate and develop new applications and services that are adopted; 20 Table of Contents ​ • our expectations and management of future growth, including our ability to introduce new products and any change in product mix that impacts our profitability; ​ • our ability to establish and maintain strategic relationships with third parties; ​ • our ability to recruit and retain a network of qualified providers; ​ • our dependence on a limited number of third-party suppliers for timely access to materials, and the risk of supply chain disruptions; ​ • risk specifically related to our ability to operate in competitive international markets and comply with complex non-U.S. legal requirements; ​ • our ability to recruit, retain and develop our workforce, and in particular software engineers; ​ • our level of indebtedness and our ability to fund debt obligations and comply with covenants in our debt instruments; ​ • our ability to obtain additional capital through debt or equity financings on commercially reasonable terms or at all; ​ • failures of our cyber-security measures that expose the confidential information of us, our Clients or members; ​ • ongoing legal challenges to, or new actions against, our business model, or the failure of the virtual care market to continue to develop; ​ • our dependence on our relationships with affiliated professional entities; ​ • evolving government regulations and our ability to stay abreast of new or modified laws and regulations that currently apply or become applicable to our business; ​ • our ability to operate in the heavily regulated healthcare industry; ​ • compliance with regulations concerning data privacy, including personally identifiable information and personal health information; ​ • risk that we may be subject to legal proceedings and the insurance we maintain may not fully cover all potential exposures; and ​ • our ability to integrate acquired businesses and achieve fully the strategic and financial objectives related thereto, and their impact on our financial condition and results of operations. ​ Risks Related to Our Financial Position ​ We have a history of cumulative losses, which we expect to continue, and we may never achieve or sustain profitability. ​ We have incurred significant losses in each period since our inception.
Biggest changeThese risks include, among others, the following: • our history of losses and accumulated deficit and the risk that we may not achieve profitability; • risk of the loss of any of our significant Clients or partners, or the loss of a significant number of members or BetterHelp users; • failures of our cyber-security measures that expose the confidential information of us, our Clients or members; • compliance with regulations concerning data privacy, including personally identifiable information and personal health information; • our ability to recruit, retain and develop our workforce, and in particular software engineers; • our ability to obtain additional capital through debt or equity financings on commercially reasonable terms or at all; • evolving government regulations and our ability to stay abreast of new or modified laws and regulations that currently apply or become applicable to our business; • our ability to operate in the heavily regulated healthcare industry; • ongoing legal challenges to, or new actions against, our business model, or the failure of the virtual care market to continue to develop; 18 Table of Contents • risks associated with a decrease in the number of individuals offered benefits by our Clients or the number of products and services to which they subscribe; • rapid technological change in the virtual care market or the failure to innovate and develop new applications and services that are adopted; • our expectations and management of future growth, including our ability to introduce new products and any change in product mix that impacts our profitability; • our ability to establish and maintain strategic relationships with third parties; • our ability to recruit and retain a network of qualified providers; • our dependence on a limited number of third-party suppliers for timely access to materials, and the risk of supply chain disruptions or further cost inflation; • our ability to compete successfully in competitive markets; • our level of indebtedness and our ability to fund debt obligations and comply with covenants in our debt instruments; • our dependence on our relationships with affiliated professional entities; • risks specifically related to our ability to operate in competitive international markets and comply with complex non-U.S. legal requirements; • the potential for future non-cash charges for the impairment of goodwill and other intangible assets; • risk that we may be subject to legal proceedings and the insurance we maintain may not fully cover all potential exposures; and • our ability to integrate acquired businesses and achieve fully the strategic and financial objectives related thereto, and their impact on our financial condition and results of operations.
In addition, because our board of directors is responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors.
In addition, because our board of directors (the "Board") is responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our Board.
Although we seek to substantially comply with applicable state prohibitions on the corporate practice of medicine and fee splitting, changes in, or subsequent interpretations of, the corporate practice of medicine laws could circumscribe our business operations, and state officials who administer these laws or other third parties may successfully challenge our existing organization and contractual arrangements.
Although we seek to comply with applicable state prohibitions on the corporate practice of medicine and fee splitting, changes in, or subsequent interpretations of, the corporate practice of medicine laws could circumscribe our business operations, and state officials who administer these laws or other third parties may successfully challenge our existing organization and contractual arrangements.
If we are unable to address the needs of our Clients or members, or our Clients or members are unsatisfied with the quality of our solutions or services, they may not renew 28 Table of Contents their contracts, seek to cancel or terminate their relationship with us, or renew on less favorable terms, any of which could cause our annual net dollar retention rate to decrease. ​ Failure to effectively manage our growth could also lead us to overinvest or underinvest in development and operations, result in weaknesses in our infrastructure, systems, or controls, give rise to operational mistakes, financial losses, loss of productivity or business opportunities and result in loss of employees and reduced productivity of remaining employees.
If we are unable to address the needs of our Clients or members, or our Clients or members are unsatisfied with the quality of our solutions or services, they may not renew their contracts, seek to cancel or terminate their relationship with us, or renew on less favorable terms, any of which could cause our annual net dollar retention rate to decrease. 25 Table of Contents Failure to effectively manage our growth could also lead us to overinvest or underinvest in development and operations, result in weaknesses in our infrastructure, systems, or controls, give rise to operational mistakes, financial losses, loss of productivity or business opportunities and result in loss of employees and reduced productivity of remaining employees.
Large Clients often require specific features or functions unique to their membership base, which, at a time of significant growth or during periods of high demand, may strain our implementation capacity and hinder our ability to successfully implement our solutions to our Clients in a timely manner.
Clients often require specific features or functions unique to their membership base, which, at a time of significant growth or during periods of high demand, may strain our implementation capacity and hinder our ability to successfully implement our solutions to our Clients in a timely manner.
Even if we are successful, we cannot assure you that these relationships will result in increased Client use of our applications or increased revenue. ​ Our business and growth strategy depend on our ability to maintain and expand a network of qualified providers.
Even if we are successful, we cannot assure you that these relationships will result in increased Client or member use of our applications or increased revenue. Our business and growth strategy depend on our ability to maintain and expand a network of qualified providers.
In any particular market, providers could demand higher payments 29 Table of Contents or take other actions that could result in higher medical costs, less attractive service for our Clients and members, or difficulty meeting regulatory or accreditation requirements. ​ Our ability to develop and maintain satisfactory relationships with providers also may be negatively impacted by other factors not associated with us, such as changes in Medicare and/or Medicaid reimbursement levels and other pressures on healthcare providers and consolidation activity among hospitals, physician groups, and healthcare providers.
In any particular market, providers could demand higher payments or take other actions that could result in higher medical costs, less attractive service for our Clients and members, or difficulty meeting regulatory or accreditation requirements. 26 Table of Contents Our ability to develop and maintain satisfactory relationships with providers also may be negatively impacted by other factors not associated with us, such as changes in Medicare and/or Medicaid reimbursement levels and other pressures on healthcare providers and consolidation activity among hospitals, physician groups, and healthcare providers.
Our brand promotion activities may not generate Client or member awareness or increase revenue, and even if they do, any increase in revenue may not offset the expenses we incur in building our brand.
Our brand promotion activities may not generate Client or member awareness or increase revenue, and even if they do, any increase in revenue may not offset the expenses we incur in building our brands.
Because of the extreme sensitivity of the information we store and transmit, the security features of our and our third-party vendors’ computer, network, and communications systems infrastructure are critical to the success of our business.
Because of the sensitivity of the information we store and transmit, the security features of our and our third-party vendors’ computer, network, and communications systems infrastructure are critical to the success of our business.
Unusual and unforeseen patterns of healthcare utilization by individuals with diseases or conditions for which we provide services could adversely affect our ability to achieve desired performance metrics, cost savings, and clinical outcomes. Our inability to meet or exceed the targets under our Client contracts could have a material adverse effect on our business and results of operations.
Unusual and unforeseen patterns of healthcare utilization by individuals with diseases or conditions for which we provide services could adversely affect our ability to achieve desired performance metrics, cost savings, and clinical outcomes. Our inability to meet or exceed the targets under our Client contracts could have a material adverse effect on our business, financial condition and results of operations.
Our business may not continue to generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures.
Our business may not continue to generate cash flow from operations in the future sufficient to service our debt, make necessary capital expenditures and fund our operations.
We may settle conversions of the Notes and the Livongo Notes through payment or delivery, as the case may be, of cash, shares of our common stock, or a combination of cash and shares of our common stock.
We may settle conversions of the Notes through payment or delivery, as the case may be, of cash, shares of our common stock, or a combination of cash and shares of our common stock.
If we are unable to recruit and retain board-certified physicians, mental health providers, and other healthcare professionals, or unable to augment our or the THMG Association’s employee base with contractors to meet resource needs, it would adversely affect our business, financial condition, results of operations, and ability to grow.
If we are unable to recruit and retain board-certified physicians, advanced practice providers, mental health providers, and other healthcare professionals, or unable to augment our or the THMG Association’s employee base with contractors to meet resource needs, it would adversely affect our business, financial condition, results of operations, and ability to grow.
If the Client implementation process is not executed successfully or if execution is delayed, we could incur significant costs, Clients could become dissatisfied and decide not to increase utilization of our solution or not to implement our solution beyond an initial period prior to their term commitment or, in some cases, revenue recognition could be delayed.
If the Client implementation process is not executed successfully or if execution is delayed, we could incur significant costs, Clients could become dissatisfied and decide not to increase utilization of our solutions or not to implement our solutions beyond an initial period prior to their term commitment or, in some cases, revenue recognition could be delayed.
We attempt to address these risks by requiring outsourcing subcontractors who handle Client and member information to sign business associate agreements contractually requiring those subcontractors to adequately safeguard personal health data to the same extent that applies to us and in some cases by requiring such outsourcing subcontractors to undergo third-party security examinations.
We attempt to address these risks by requiring outsourcing subcontractors who handle Client and member information to sign business associate agreements and/or data processing agreements contractually requiring those subcontractors to adequately safeguard personal health data to the same extent that applies to us and in some cases by requiring such outsourcing subcontractors to undergo third-party security examinations.
Business interruptions caused by current economic conditions have and may continue to delay or lengthen some of our Clients’ sales cycles.
Business interruptions caused by economic conditions have and may continue to delay or lengthen some of our Clients’ sales cycles.
Any potential security breach could also result in increased costs associated with liability for stolen assets or information, repairing system damage that may have been caused by such breaches, incentives offered to Clients or other business partners in an effort to maintain our business relationships after a breach, and implementing measures to prevent future occurrences, including organizational changes, deploying additional personnel and protection technologies, training employees, and engaging third-party experts and consultants.
Any potential security breach could also result in increased costs associated with liability for stolen assets or information, repairing system damage that may have been caused by such breaches, incentives offered to Clients or other business partners in an effort to maintain our business relationships after a breach, and implementing 41 Table of Contents measures to prevent future occurrences, including organizational changes, deploying additional personnel and protection technologies, training employees, and engaging third-party experts and consultants.
These SMS texting campaigns are potential sources of risk for our company since they are governed by the Telephone Consumer Protection Act, which allows for class action lawsuits and is enforced by the Federal Communications Commission.
These SMS texting campaigns are potential sources of risk for our company since they are governed by the Telephone Consumer Protection Act, which allows for private right of action and class action lawsuits and is enforced by the Federal Communications Commission.
In addition, any claims may adversely affect our reputation. ​ Risks Related to Intellectual Property ​ Any failure to protect our intellectual property rights could impair our ability to protect our technology and our brand. ​ Our success depends in part on our ability to enforce our intellectual property and other proprietary rights.
In addition, any claims may adversely affect our reputation. Risks Related to Intellectual Property Any failure to protect our intellectual property rights could impair our ability to protect our technology and our brands. Our success depends in part on our ability to enforce our intellectual property and other proprietary rights.
In addition, current and potential competitors have established, and may in the future establish, cooperative relationships with vendors of complementary products, technologies, or services to increase the availability of their solutions in the marketplace. Our competitors could also be better positioned to serve certain segments of our markets, which could create additional price pressure.
In addition, current and 21 Table of Contents potential competitors have established, and may in the future establish, cooperative relationships with vendors of complementary products, technologies, or services to increase the availability of their solutions in the marketplace. Our competitors could also be better positioned to serve certain segments of our markets, which could create additional price pressure.
In addition, if the accessibility of various apps is limited by government actions, the full functionality of devices may not be available to our members. Moreover, third-party 27 Table of Contents platforms, services, and offerings are constantly evolving, and we may not be able to modify our platform to assure its compatibility with those of third parties.
In addition, if the accessibility of various apps is limited by government actions, the full functionality of devices may not be available to our members. Moreover, third-party platforms, services, and offerings are constantly evolving, and we may not be able to modify our platform to assure its compatibility with those of third parties.
While HIPAA does not create a private right of action allowing individuals to sue us in civil court for violations of HIPAA, its standards have been used as the basis for duty of care in state civil suits such as those for negligence or recklessness in the misuse or breach of PHI.
While HIPAA does not create a private right of action allowing individuals to sue us in civil court for violations of HIPAA, its standards have been used as the basis for duty of care in state civil suits such as those for 40 Table of Contents negligence or recklessness in the misuse or breach of PHI.
In addition, competitors with more efficient operating models with lower implementation costs could jeopardize our Client relationships. ​ Our Clients and members depend on our support services to resolve any technical issues relating to our solution and services, and we may be unable to respond quickly enough to accommodate short-term increases in member demand 40 Table of Contents for support services, particularly as we increase the size of our Client and membership bases.
In addition, competitors with more efficient operating models with lower implementation costs could jeopardize our Client relationships. 36 Table of Contents Our Clients and members depend on our support services to resolve any technical issues relating to our solutions and services, and we may be unable to respond quickly enough to accommodate short-term increases in member demand for support services, particularly as we increase the size of our Client and membership bases.
We have from time to time in the past experienced, and we expect to continue to experience in the future, difficulty in hiring and retaining highly skilled 34 Table of Contents personnel with appropriate qualifications, in particular software engineers and product managers. The pool of qualified personnel with experience working in the healthcare market is limited overall.
We have from time to time in the past experienced, and we expect to continue to experience in the future, difficulty in hiring and retaining highly skilled personnel with appropriate qualifications, in particular software engineers and product managers. The pool of qualified personnel with experience working in the healthcare market is limited overall.
Although our reporting currency is the U.S. dollar, we operate in different geographical areas and transact in a range of currencies in addition to the U.S. dollar. As a result, movements in exchange rates may cause our revenue and expenses to fluctuate, impacting our profitability and cash flows.
Our business is exposed to fluctuations in exchange rates. Although our reporting currency is the U.S. dollar, we operate in different geographical areas and transact in a range of currencies in addition to the U.S. dollar. As a result, movements in exchange rates may cause our revenue and expenses to fluctuate, impacting our profitability and cash flows.
Even where we implement hedging strategies to mitigate foreign currency risk, these strategies might not eliminate our exposure to foreign exchange rate fluctuations and involve costs and risks of their own, such as ongoing management time and expertise, costs to implement the strategies, and potential accounting implications.
Even where we implement hedging strategies to mitigate foreign currency risk, these strategies might not eliminate our exposure to foreign currency exchange rate fluctuations and involve costs and risks of their own, such as ongoing management time and 33 Table of Contents expertise, costs to implement the strategies, and potential accounting implications.
HIPAA also implemented the use of standard transaction code sets 44 Table of Contents and standard identifiers that covered entities must use when submitting or receiving certain electronic healthcare transactions, including activities associated with the billing and collection of healthcare claims. ​ HIPAA imposes mandatory penalties for certain violations.
HIPAA also implemented the use of standard transaction code sets and standard identifiers that covered entities must use when submitting or receiving certain electronic healthcare transactions, including activities associated with the billing and collection of healthcare claims. HIPAA imposes mandatory penalties for certain violations.
To be substantially equivalent, the proposed device must have the same intended use as the predicate device, and either have the same technological characteristics as the predicate device or have different technological characteristics and not raise different questions of safety or effectiveness than the predicate device. Clinical data is sometimes required to support substantial equivalence.
To be substantially equivalent, the proposed device must have the same intended use as the predicate device, and either have the same technological characteristics as the predicate device or have different technological characteristics and not raise different questions of safety or effectiveness than the predicate device. Clinical data is sometimes required to support substantial 43 Table of Contents equivalence.
We attempt to limit our liability to Clients by contract; however, the limitations of liability set forth in the contracts may not be enforceable or may not otherwise protect us from liability for damages. Additionally, we may be subject to claims that are not explicitly covered by contract.
We attempt to limit our liability to Clients by contract; however, the limitations of liability set forth in the contracts may not be enforceable or may not 45 Table of Contents otherwise protect us from liability for damages. Additionally, we may be subject to claims that are not explicitly covered by contract.
Any debt financing secured by us in the future could become more expensive due to rising interest rates or involve restrictive covenants 36 Table of Contents relating to our capital-raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions.
Any debt financing secured by us in the future could become more expensive due to rising interest rates or involve restrictive covenants relating to our capital-raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions.
In each case, our revenue may decline, and our business, financial condition, and results of operations could be materially adversely affected. ​ Additionally, the introduction of new services may require us to comply with additional, yet undetermined, laws and regulations.
In each case, our revenue may decline, and our business, financial condition, and results of operations could be materially adversely affected. 38 Table of Contents Additionally, the introduction of new services may require us to comply with additional, yet undetermined, laws and regulations.
Unauthorized parties may also attempt to copy or obtain and use our technology to develop applications with the same functionality as our solutions. Policing unauthorized use of our technology and intellectual property rights is difficult and may not be 50 Table of Contents effective.
Unauthorized parties may also attempt to copy or obtain and use our technology to develop applications with the same functionality as our solutions. Policing unauthorized use of our technology and intellectual property rights is difficult and may not be effective.
In the event of a catastrophic event with respect to one or more of our systems, we may experience an extended period of system unavailability, which could negatively impact our relationship with Clients and members.
In the event of a catastrophic event with respect to one or more of our systems, we may experience an extended 34 Table of Contents period of system unavailability, which could negatively impact our relationship with Clients and members.
These contracts include management services agreements with our affiliated physician organizations pursuant to which the physician organizations reserve exclusive control and responsibility for all aspects of the practice of medicine and the delivery of medical services.
These contracts include management services 37 Table of Contents agreements with our affiliated physician organizations pursuant to which the physician organizations reserve exclusive control and responsibility for all aspects of the practice of medicine and the delivery of medical services.
A significant downturn in the economic activity attributable to any particular industry may cause organizations to react by reducing their capital and 30 Table of Contents operating expenditures in general or by specifically reducing their spending on healthcare matters, including chronic care and mental health solutions.
A significant downturn in the economic activity attributable to any particular industry may cause organizations to react by reducing their capital and operating expenditures in general or by specifically reducing their spending on healthcare matters, including chronic care and mental health solutions.
Further, the PPACA may adversely affect payors by increasing medical costs generally, which could have an effect on the industry and potentially impact our business and revenue as payors seek to offset these 23 Table of Contents increases by reducing costs in other areas.
Further, the PPACA may adversely affect payors by increasing medical costs generally, which could have an effect on the industry and potentially impact our business and revenue as payors seek to offset these increases by reducing costs in other areas.
Claims that we have violated individuals’ privacy rights or breached our data protection obligations, even if we are not found liable, could be expensive and time-consuming to defend and could result in adverse publicity that could harm our business.
Claims that we have 35 Table of Contents violated individuals’ privacy rights or breached our data protection obligations, even if we are not found liable, could be expensive and time-consuming to defend and could result in adverse publicity that could harm our business.
Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation; ​ • the federal False Claims Act that imposes civil and criminal liability on individuals or entities that knowingly submit false or fraudulent claims for payment to the government or knowingly making, or causing to be made, a false statement in order to have a false claim paid, including qui tam or whistleblower suits; ​ • reassignment of payment rules that prohibit certain types of billing and collection practices in connection with claims payable by the Medicare or Medicaid programs; ​ • similar state law provisions pertaining to anti-kickback, self-referral, and false claims issues, some of which may apply to items or services reimbursed by any payor, including patients and commercial insurers; ​ • state laws that prohibit general business corporations, such as us, from practicing medicine, controlling physicians’ medical decisions, or engaging in some practices such as splitting fees with physicians; ​ • laws that regulate debt collection practices as applied to our debt collection practices; ​ 43 Table of Contents • a provision of the Social Security Act that imposes criminal penalties on healthcare providers who fail to disclose, or refund known overpayments; ​ • federal and state laws that prohibit providers from billing and receiving payment from Medicare and Medicaid for services unless the services are medically necessary, adequately and accurately documented, and billed using codes that accurately reflect the type and level of services rendered; and ​ • federal and state laws and policies that require healthcare providers to maintain licensure, certification, or accreditation to enroll and participate in the Medicare and Medicaid programs, to report certain changes in their operations to the agencies that administer these programs. ​ Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of our business activities could be subject to challenge under one or more of such laws.
Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation; • the federal False Claims Act that imposes civil and criminal liability on individuals or entities that knowingly submit false or fraudulent claims for payment to the government or knowingly making, or causing to be made, a false statement in order to have a false claim paid, including qui tam or whistleblower suits; • reassignment of payment rules that prohibit certain types of billing and collection practices in connection with claims payable by the Medicare or Medicaid programs; • similar state law provisions pertaining to anti-kickback, self-referral, and false claims issues, some of which may apply to items or services reimbursed by any payor, including patients and commercial insurers; • state laws that prohibit general business corporations, such as us, from practicing medicine, controlling physicians’ medical decisions, or engaging in some practices such as splitting fees with physicians; • laws that regulate debt collection practices as applied to our debt collection practices; • a provision of the Social Security Act that imposes criminal penalties on healthcare providers who fail to disclose or refund known overpayments; 39 Table of Contents • federal and state laws that prohibit providers from billing and receiving payment from Medicare and Medicaid for services unless the services are medically necessary, adequately and accurately documented, and billed using codes that accurately reflect the type and level of services rendered; and • federal and state laws and policies that require healthcare providers to maintain licensure, certification, or accreditation to enroll and participate in the Medicare and Medicaid programs, to report certain changes in their operations to the agencies that administer these programs.
Our ability to conduct virtual care services internationally is subject to the applicable laws governing remote healthcare and the practice of medicine in such location, and the interpretation of these laws is evolving and vary significantly from country to county and are enforced by governmental, judicial, and regulatory authorities with broad discretion.
Our ability to conduct virtual care services internationally is subject to the applicable laws governing remote healthcare, including online counseling and therapy services, and the practice of medicine in such location, and the interpretation of these laws is evolving and vary significantly from country to country and are enforced by governmental, judicial, and regulatory authorities with broad discretion.
Our ability to make scheduled payments of the principal of, to pay interest on, or to refinance our indebtedness, including the Notes and the Livongo Notes, depends on our future performance, which is subject to economic, financial, competitive, and other factors beyond our control.
Our ability to make scheduled payments of the principal of, to pay interest on, or to refinance our 32 Table of Contents indebtedness, including the Notes, depends on our future performance, which is subject to economic, financial, competitive, and other factors beyond our control.
Our international solutions need to meet country-specific Client and member preferences as well as country-specific legal requirements, including those related to licensing, virtual care, privacy, data storage, location, protection, and security.
Our international solutions need to meet country-specific 29 Table of Contents Client and member preferences as well as country-specific legal requirements, including those related to licensing, virtual care, privacy, data storage, location, protection, and security.
As a result of these factors and cash flow needs, we may need to raise additional capital through debt or equity financings to fund our operations, and such capital may not be available on reasonable terms, if at all. ​ A significant portion of our revenue comes from a limited number of Clients, the loss of which could have a material adverse effect on our business, financial condition and results of operations. ​ Historically, we have relied on a limited number of Clients for a substantial portion of our total revenue.
As a result of these factors and cash flow needs, we may need to raise additional capital through debt or equity financings to fund our operations, and such capital may not be available on reasonable terms, if at all. 19 Table of Contents A significant portion of our revenue comes from a limited number of Clients, the loss of which could have a material adverse effect on our business, financial condition and results of operations.
In the 510(k) clearance process, the FDA must determine that a proposed device is “substantially equivalent” to a device 47 Table of Contents legally on the market, known as a “predicate” device, in order to clear the proposed device for marketing.
In the 510(k) clearance process, the FDA must determine that a proposed device is “substantially equivalent” to a device legally on the market, known as a “predicate” device, in order to clear the proposed device for marketing.
Our tax expense could also be impacted by changes in non-deductible expenses, changes in excess tax benefits on stock-based compensation, changes in the valuation of deferred tax assets and liabilities and our ability to utilize them, the applicability of withholding taxes and effects from acquisitions. ​ We are open to tax examinations in multiple jurisdictions.
Our tax expense could also be impacted by changes in non-deductible expenses, fluctuations in our stock price related to our stock-based compensation, changes in the valuation of deferred tax assets and liabilities and our ability to utilize them, the applicability of withholding taxes and effects from acquisitions. We are open to tax examinations in multiple jurisdictions.
In some countries we are required to, or choose to, operate with local business partners, which requires us to manage our partner relationships and may reduce our operational flexibility and ability to quickly respond to business challenges. ​ Our international operations are also subject to particular risks in addition to those faced by our domestic operations, including: ​ • the need to localize and adapt our solutions for specific countries, including translation into foreign languages and associated expenses; ​ • obtaining regulatory approvals or clearances where required for the sale of our solutions, devices, and services in various countries; ​ • potential loss of proprietary information due to misappropriation or laws that may be less protective of our intellectual property rights than U.S. laws or that may not be adequately enforced; ​ • requirements of foreign laws and other governmental controls, including compliance challenges related to the complexity of multiple, conflicting and changing governmental laws and regulations, including employment, healthcare, tax, privacy, and data protection laws and regulations; ​ • data privacy laws that require that Client and member data be stored and processed in a designated territory; ​ • new and different sources of competition and laws and business practices favoring local competitors; 33 Table of Contents ​ • local business and cultural factors that differ from our normal standards and practices, including business practices that we are prohibited from engaging in by the FCPA and other anti-corruption laws and regulations; ​ • changes to economic sanctions laws and regulations; ​ • central bank and other restrictions on our ability to repatriate cash from international subsidiaries; ​ • adverse tax consequences; ​ • fluctuations in currency exchange rates, economic instability, and inflationary conditions, which could make our solutions more expensive or increase our costs of doing business in certain countries; ​ • limitations on future growth or inability to maintain current levels of revenues from international sales if we do not invest sufficiently in our international operations; ​ • different pricing environments, longer sales cycles, and longer accounts receivable payment cycles and collections issues; ​ • difficulties in staffing, managing and operating our international operations, including difficulties related to administering our stock plans in some foreign countries and increased financial accounting and reporting burdens and complexities; ​ • difficulties in coordinating the activities of our geographically dispersed and culturally diverse operations; ​ • political unrest, war, terrorism, economic instability, curtailment of trade, epidemics (including the COVID-19 pandemic), or regional natural disasters, particularly in areas in which we have facilities. ​ For example, the conflict in Ukraine and the surrounding region has led to disruption, instability, and volatility in global markets, increased inflation and further disrupted supply chains.
Our international operations are also subject to particular risks in addition to those faced by our domestic operations, including: • the need to localize and adapt our solutions for specific countries, including translation into foreign languages and associated expenses; • obtaining regulatory approvals or clearances where required for the sale of our solutions, devices, and services in various countries; • potential loss of proprietary information due to misappropriation or laws that may be less protective of our intellectual property rights than U.S. laws or that may not be adequately enforced; • requirements of foreign laws and other governmental controls, including compliance challenges related to the complexity of multiple, conflicting and changing governmental laws and regulations, including employment, healthcare, tax, privacy, and data protection laws and regulations; • data privacy laws that require that Client and member data be stored and processed in a designated territory; • new and different sources of competition and laws and business practices favoring local competitors; • local business and cultural factors that differ from our normal standards and practices, including business practices that we are prohibited from engaging in by the FCPA and other anti-corruption laws and regulations; • changes to economic sanctions laws and regulations; • central bank and other restrictions on our ability to repatriate cash from international subsidiaries; • adverse tax consequences; • fluctuations in currency exchange rates, economic instability, and inflationary conditions, which could make our solutions more expensive or increase our costs of doing business in certain countries; • limitations on future growth or inability to maintain current levels of revenues from international sales if we do not invest sufficiently in our international operations; • different pricing environments, longer sales cycles, and longer accounts receivable payment cycles and collections issues; • difficulties in staffing, managing and operating our international operations, including difficulties related to administering our stock plans in some foreign countries and increased financial accounting and reporting burdens and complexities; 30 Table of Contents • difficulties in coordinating the activities of our geographically dispersed and culturally diverse operations; • political unrest, war, terrorism, economic instability, curtailment of trade, epidemics (including the COVID-19 pandemic), or regional natural disasters, particularly in areas in which we have facilities.
We do not have any control over these analysts. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause the share price or trading volume of our common stock to decline.
If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause the share price or trading volume of our common stock to decline.
There are also active bills going through the legislative process in many more states. In July 2022, a draft of the American Data Privacy and Protection Act (“ADPPA”) was released and would be a comprehensive federal data privacy law that would seek to ease the burden of a patchwork of overlapping but different state laws.
There are also bills that have been approved or are going through the legislative process in many more states. In 2022, a draft of the American Data Privacy and Protection Act was released and would be a comprehensive federal data privacy law that would seek to ease the burden of a patchwork of overlapping but different state laws.
Compliance may require obtaining appropriate licenses or certificates, increasing our security measures, 42 Table of Contents and expending additional resources to monitor developments in applicable rules and ensure compliance.
Compliance may require obtaining appropriate licenses or certificates, increasing our security measures, and expending additional resources to monitor developments in applicable rules and ensure compliance.
Achieving and sustaining compliance with these laws may prove costly. Failure to comply with these laws and other laws can result in civil and criminal penalties such as fines, damages, overpayment, recoupment, imprisonment, loss of enrollment status and exclusion from the Medicare and Medicaid programs.
Failure to comply with these laws and other laws can result in civil and criminal penalties such as fines, damages, overpayment, recoupment, imprisonment, loss of enrollment status and exclusion from the Medicare and Medicaid programs.
We earned approximately 13% of revenue internationally in 2022. ​ Our international operations require us to overcome logistical and other challenges based on differing languages, cultures, legal and regulatory schemes, and time zones. Our international operations encounter labor laws, customs, and employee relationships that can be difficult, less flexible than in our domestic operations and expensive to modify or terminate.
Our international operations require us to overcome logistical and other challenges based on differing languages, cultures, legal and regulatory schemes, and time zones. Our international operations encounter labor laws, customs, and employee relationships that can be difficult, less flexible than in our domestic operations and expensive to modify or terminate.
In addition, any insurance coverage would not address the reputational damage that could result from any legal or regulatory proceedings or claims. ​ We may become subject to medical liability claims, which could cause us to incur significant expenses and may require us to pay significant damages if not covered by insurance. ​ Our business entails the risk of medical liability claims against both our providers and us.
In addition, any insurance coverage would not address the reputational damage that could result from any legal or regulatory proceedings or claims. We may become subject to medical liability claims, which could cause us to incur significant expenses and may require us to pay significant damages if not covered by insurance.
Our quarterly financial results may fluctuate as a result of a variety of factors, many of which are outside of our control, including, without limitation, the following: ​ • the addition or loss of large Clients, including through acquisitions or consolidations of such Clients; ​ • seasonal and other variations in the timing of the sales of our services or the cost of BetterHelp customer acquisitions, as discussed above; ​ • the timing of recognition of revenue, including possible delays in the recognition of revenue due to sometimes unpredictable Client implementation timelines and performance guarantees; ​ • the amount and timing of operating expenses related to the maintenance and expansion of our business, operations, and infrastructure; ​ • our ability to effectively manage the size and composition of our proprietary network of healthcare professionals relative to the level of demand for services from our members; ​ • the timing and success of introductions of new applications and services by us or our competitors or any other change in the competitive dynamics of our industry, including consolidation among competitors, Clients, or strategic partners; ​ • Client renewal rates and the timing and terms of Client renewals; ​ • the mix of applications and services sold during a period; ​ • the timing of expenses related to the development or acquisition of technologies or businesses and potential future charges for impairment of goodwill and/or intangible assets; and ​ • changes in the value or useful lives of our assets. ​ 31 Table of Contents We are particularly subject to fluctuations in our quarterly results of operations because the costs associated with entering into Client contracts are generally incurred up front, while we generally recognize revenue over the term of the contract.
Our quarterly financial results may fluctuate as a result of a variety of factors, many of which are outside of our control, including, without limitation, the following: • the addition or loss of large Clients, including through acquisitions or consolidations of such Clients; • seasonal and other variations in the timing of the sales of our services or the cost of BetterHelp customer acquisitions, as discussed above; • the timing of recognition of revenue, including possible delays in the recognition of revenue due to sometimes unpredictable Client implementation timelines and performance guarantees; • the amount and timing of operating expenses related to the maintenance and expansion of our business, operations, and infrastructure; • our ability to effectively manage the size and composition of our proprietary network of healthcare professionals relative to the level of demand for services from our members; • the timing and success of introductions of new applications and services by us or our competitors or any other change in the competitive dynamics of our industry, including consolidation among competitors, Clients, or strategic partners; • Client renewal rates and the timing and terms of Client renewals; • the mix of applications and services sold during a period; • the timing of expenses related to the development or acquisition of technologies or businesses and potential future charges for impairment of goodwill and/or other assets; and • changes in the value or useful lives of our assets.
A determination that these arrangements violate state statutes, or our inability to successfully restructure our relationships with our providers to comply with these statutes, could eliminate Clients located in certain states from the market for our services, which would have a materially adverse effect on our business, financial condition, and results of operations.
A determination that these arrangements violate state statutes, or our inability to successfully restructure our relationships with our providers to comply with these statutes, could hinder our ability to provide services to Clients located in certain states, which would have a materially adverse effect on our business, financial condition, and results of operations.
Failure to attract new personnel or failure to retain and motivate our current personnel, could have a material adverse effect on our business, financial condition, and results of operations. ​ We are dependent on our ability to recruit, retain and develop a very large and diverse workforce.
Failure to attract new personnel or failure to retain and motivate our current personnel, could have a material adverse effect on our business, financial condition, and results of operations. We are dependent on our ability to recruit, retain and develop a very large and diverse workforce. We must evolve our culture in order to successfully grow our business.
(including the FCPA) and the United Kingdom (including the U.K. Bribery Act) and similar laws in other jurisdictions. These laws and regulations apply to companies, individual directors, officers, employees, and agents, and may restrict our operations, trade practices, investment decisions, and partnering activities. Where they apply, the FCPA and the U.K.
Bribery Act) and similar laws in other jurisdictions. These laws and regulations apply to companies, individual directors, officers, employees, and agents, and may restrict our operations, trade practices, investment decisions, 44 Table of Contents and partnering activities. Where they apply, the FCPA and the U.K.
In addition, the arrangement in which we have entered to comply with state corporate practice of medicine doctrines could subject us to additional scrutiny by federal and state regulatory bodies regarding federal and state fraud, waste, and abuse laws.
In addition, the arrangements in which we have entered to comply with state corporate practice of medicine doctrines could subject us to additional scrutiny by federal and state regulatory bodies, including with respect to federal and state fraud and abuse laws.
PPACA, among other things, increased the number of individuals with Medicaid and private insurance coverage, implemented reimbursement policies that tie payment to quality, facilitated the creation of accountable care organizations that may use capitation and other alternative payment methodologies, strengthened enforcement of fraud, waste, and abuse laws, and encouraged the use of information technology. ​ Other legislative changes have been proposed and adopted since the PPACA was enacted.
PPACA, among other things, increased the number of individuals with Medicaid and private insurance coverage, implemented reimbursement policies that tie payment to quality, facilitated the creation of accountable care organizations that may use capitation and other alternative payment methodologies, strengthened enforcement of fraud, waste, and abuse laws, and encouraged the use of information technology.
These areas include: rules governing the provision of telehealth; practice of medicine by physicians; licensure standards for doctors, physician assistants, advanced practice registered nurses, nurses, and mental health professionals; laws limiting the corporate practice of medicine; cybersecurity and privacy laws; laws and rules relating to the distinction between independent contractors and employees; and tax and other laws encouraging employer-sponsored health insurance and group benefits.
These areas include: rules governing the provision of telehealth, including, for example, rules that would require in person visits or consultations prior to the provision of telehealth, including, for example, rules that would require in person visits or consultations prior to provision of telehealth; practice of medicine by physicians; licensure standards for doctors, physician assistants, advanced practice registered nurses, nurses, and mental health professionals; laws limiting the corporate practice of medicine; cybersecurity and privacy laws; laws and rules relating to the distinction between independent contractors and employees; and tax and other laws encouraging employer-sponsored health insurance and group benefits.
The healthcare industry is subject to changing political, regulatory, and other influences. The Patient Protection and Affordable Care Act (“PPACA”) made major changes in how healthcare is delivered and reimbursed, and increased access to health insurance benefits to the uninsured and underinsured population of the U.S.
The Patient Protection and Affordable Care Act (“PPACA”) made major changes in how healthcare is delivered and reimbursed, and increased access to health insurance benefits to the uninsured and underinsured population of the U.S.
Most of our Clients have no obligation to renew their subscriptions for our solutions after the initial term expires. In addition, our Clients may negotiate terms less advantageous to us upon renewal, which may reduce our revenue from these Clients.
We generally enter into subscription access contracts with our Clients. Most of our Clients have no obligation to renew their subscriptions for our solutions after the initial term expires. In addition, our Clients may negotiate terms less advantageous to us upon renewal, which may reduce our revenue from these Clients.
If any of these events occurs, it could have a material adverse effect on our business, financial condition, and results of operations. ​ The impact of potential changes in the healthcare industry and in healthcare spending is currently unknown, but may adversely affect our business, financial condition, and results of operations. ​ Our revenue is dependent on the healthcare industry and could be affected by changes in healthcare spending and policy.
If any of these events occurs, it could have a material adverse effect on our business, financial condition, and results of operations. 20 Table of Contents The impact of potential changes in the healthcare industry and in healthcare spending is currently unknown, but may adversely affect our business, financial condition, and results of operations.
These changes include aggregate reductions to Medicare payments to providers of up to 2% per fiscal year pursuant to the Budget Control Act of 2011 and subsequent laws, which began in 2013 and due to subsequent legislative amendments, will stay in effect through 2030.
Other legislative changes have been proposed and adopted since the PPACA was enacted. These changes include aggregate reductions to Medicare payments to providers of up to 2% per fiscal year pursuant to the Budget Control Act of 2011 and subsequent laws, which began in 2013 and due to subsequent legislative amendments, will stay in effect through 2030.
Any fluctuation in our quarterly results may not accurately reflect the underlying performance of our business and could cause a decline in the trading price of our common stock. ​ We depend on a limited number of third-party suppliers for certain components of our medical devices, and the loss of any of these suppliers, or their inability to provide us with an adequate supply of materials, could harm our business. ​ We utilize sole source contract manufacturing vendors to build and assemble our medical device products.
Any fluctuation in our quarterly results may not accurately reflect the underlying performance of our business and could cause a decline in the trading price of our common stock. 28 Table of Contents We depend on a limited number of third-party suppliers for certain components of our medical devices, and the loss of any of these suppliers, or their inability to provide us with an adequate supply of materials, could harm our business.
If our solutions do not function reliably or fail to achieve Client or member expectations in terms of performance, Clients or members could assert liability claims against us or attempt to cancel their contracts with us.
If our solutions do not function reliably or fail to achieve Client or member expectations in terms of performance, Clients or members could assert liability claims against us or attempt to cancel their contracts with us. This could damage our reputation and impair our ability to attract or maintain Clients and members.
We also may not achieve the anticipated synergies or other benefits from the acquired business due to a number of factors, including, but not limited to: ​ • inability to integrate or benefit from acquired technologies or services in a profitable manner; ​ • unanticipated costs or liabilities associated with the acquisition; ​ • difficulty integrating the accounting systems, operations, and personnel of the acquired business; ​ • difficulties and additional expenses associated with supporting legacy products and hosting infrastructure of the acquired business; ​ • difficulty converting the Clients of the acquired business onto our platform and contract terms, including disparities in the revenue, licensing, support, or professional services model of the acquired company; ​ • diversion of management’s attention from other business concerns; ​ • adverse effects to our existing business relationships with business partners and Clients as a result of the acquisition; ​ • the potential loss of key employees; ​ • use of resources that are needed in other parts of our business; and ​ • use of substantial portions of our available cash to consummate the acquisition. ​ In addition, a significant portion of the purchase price of companies we acquire may be allocated to acquired goodwill and other intangible assets, which can result in the risk of impairment over time.
We also may not achieve the anticipated cost savings, synergies or other benefits from the acquired business due to a number of factors, including, but not limited to: • inability to integrate or benefit from acquired technologies or services in a profitable manner; • unanticipated costs or liabilities associated with the acquisition; • difficulty integrating the accounting and operational systems, operations, and personnel of the acquired business; • difficulties and additional expenses associated with supporting legacy products and hosting infrastructure of the acquired business; • difficulty converting the Clients of the acquired business onto our platform and contract terms, including disparities in the revenue, licensing, support, or professional services model of the acquired company; • diversion of management’s attention from other business concerns; • adverse effects to our existing business relationships with business partners and Clients as a result of the acquisition; • the potential loss of key employees; 48 Table of Contents • use of resources that are needed in other parts of our business; and • use of substantial portions of our available cash to consummate the acquisition.
Although we maintain insurance covering certain security and privacy damages and claim expenses, we may not carry insurance or maintain coverage sufficient to compensate for all liability and in any event, insurance coverage would not address the reputational damage that could result from a security incident. ​ We may experience cyber-security and other breach incidents that remain undetected for an extended period.
Although we maintain insurance covering certain security and privacy damages and claim expenses, we may not carry insurance or maintain coverage sufficient to compensate for all liability and in any event, insurance coverage would not address the reputational damage that could result from a security incident.
As a result, adequate professional liability insurance may not be available to our providers or to us in the future at acceptable costs or at all. ​ Any claims made against us that are not fully covered by insurance could be costly to defend against, result in substantial damage awards against us, and divert the attention of our management and our providers from our operations, which could have a material adverse effect on our business, financial condition, and results of operations.
Any claims made against us that are not fully covered by insurance could be costly to defend against, result in substantial damage awards against us, and divert the attention of our management and our providers from our operations, which could have a material adverse effect on our business, financial condition, and results of operations.
We cannot, however, be certain that our interpretation of such laws and regulations is correct in how we structure our operations, our arrangements with physicians, services agreements, and customer arrangements.
We cannot, however, be certain that our interpretation of such laws and regulations is correct in how we structure our operations, our arrangements with physicians, clinicians, services agreements, and customer arrangements. We earned approximately 14% of revenue internationally in 2023.
We cannot make any predictions or projections as to what the prevailing market price for our common stock will be at any time, including whether you will achieve any capital appreciation. ​ We have been, and in the future could be, subject to securities class action litigation. ​ In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities.
We cannot make any predictions or projections as to what the prevailing market price for our common stock will be at any time, including whether you will achieve any capital appreciation. We have been, and in the future could be, subject to securities class action litigation.
To operate without interruption, both we and our service providers must guard against: ​ • damage from fire, power loss, natural disasters, health epidemics (including the COVID-19 pandemic), and other force majeure events outside our control; ​ • communications failures; ​ • software and hardware errors, failures, and crashes; ​ • security breaches, computer viruses, hacking, denial-of-service attacks, and similar disruptive problems; and ​ • other potential interruptions. ​ We exercise limited control over third-party vendors, which increases our vulnerability to problems with technology and information services they provide.
To operate without interruption, both we and our service providers must guard against: • damage from fire, power loss, natural disasters, health epidemics (including the COVID-19 pandemic), and other force majeure events outside our control; • communications failures; • software and hardware errors, failures, and crashes; • security breaches, computer viruses, hacking, denial-of-service attacks, and similar disruptive problems; and • other potential interruptions.
If federal or state regulatory authorities or private litigants consider any portion of these statements to be untrue, we may be subject to claims of deceptive practices, which could lead to significant liabilities and consequences, including, without limitation, costs of responding to investigations, defending against litigation, settling claims, and complying with regulatory or court orders. ​ We engage in digital marketing which has come under additional scrutiny by the FTC and state regulators.
If federal or state regulatory authorities or private litigants consider any portion of these statements to be untrue, we may be subject to claims of deceptive practices, which could lead to significant liabilities and consequences, including, without limitation, costs of responding to investigations, defending against litigation, settling claims, and complying with regulatory or court orders.
Identifying and recruiting qualified personnel and training them requires significant time, expense, and attention. It can take six months or longer before a new sales representative is fully trained and productive. Our business may be adversely affected if our efforts to expand and train our direct sales force do not generate a corresponding increase in revenue.
It can take six months or longer before a new sales representative is fully trained and productive. Our business may be adversely affected if our efforts to expand and train our direct sales force do not generate a corresponding increase in revenue.
These losses and accumulated deficit reflect the substantial investments we have made to expand our business and scope of services, acquire new Clients and members, 21 Table of Contents build our proprietary network of healthcare providers, and develop our technology platform.
These losses and accumulated deficit reflect the large non-cash impairment charges for our goodwill and the substantial investments we have made to expand our business and scope of services, acquire new Clients and members, build our proprietary network of healthcare providers, and develop our technology platform.
Were this to occur, there is no guarantee that we would be able to compensate for the loss in revenue from employers by increasing sales of our solution to health insurance companies, individuals, or government agencies.
Were this to occur, there is no guarantee that we would be able to compensate for the loss in revenue from employers by increasing sales of our solution to health insurance companies, individuals, or government agencies. In such a case, our business, financial condition, and results of operations would be adversely affected.
Our results of operations would also suffer if our innovations are not responsive to the needs of our Clients and members, appropriately timed with market opportunity, or effectively brought to market. ​ Rapid technological change in our industry and the interoperability with third-party technologies presents us with significant risks and challenges. ​ The virtual care market is characterized by rapid technological change, changing consumer requirements, short product lifecycles, and evolving industry standards.
Our results of operations would also suffer if our innovations are not responsive to the needs of our Clients and members, appropriately timed with market opportunity, or effectively brought to market. Rapid technological change in our industry and the interoperability with third-party technologies presents us with significant risks and challenges.
Further, our current or potential competitors may be acquired by third parties with greater available resources. As a result, our competitors may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards, or customer requirements and may have the ability to initiate or withstand substantial price competition.
As a result, our competitors may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards, or customer requirements and may have the ability to initiate or withstand substantial price competition.
Many factors may lead to a decrease in the number of individuals covered by our Clients and the number of applications or services subscribed to by our Clients, including, but not limited to, the following: ​ • failure of our Clients to adopt or maintain effective business practices; ​ • changes in the nature or operations of our Clients; ​ • government regulations; and ​ • increased competition or other changes in the benefits marketplace. ​ The number of individuals employed by some of our Clients has decreased, and the number of individuals employed by our Clients may in the future decrease, as a result of economic conditions, which could negatively impact our revenue.
Many factors may lead to a decrease in the number of individuals covered by our Clients and the number of applications or services subscribed to by our Clients, including, but not limited to, the following: • failure of our Clients to adopt or maintain effective business practices; • changes in the nature or operations of our Clients; • government regulations; and • increased competition or other changes in the benefits marketplace.
We must evolve our culture in order to successfully grow our business. ​ Our products and services and our operations require a large number of employees. A significant number of employees have joined us in recent years as a result of our rapid growth, our acquisitions and our entry into new businesses.
Our products and services and our operations require a large number of employees. A significant number of employees have joined us in recent years as a result of our rapid growth, our acquisitions and our entry into new businesses.
Any scrutiny, investigation, or litigation with regard to our arrangement with THMG could have a material adverse effect on our business, financial condition, and results of operations. ​ Evolving government regulations may require increased costs or adversely affect our business, financial condition, and results of operations. ​ In a regulatory climate that is uncertain, our operations have been, and may in the future be, subject to direct and indirect adoption, expansion, or reinterpretation of various laws and regulations.
Evolving government regulations may require increased costs or adversely affect our business, financial condition, and results of operations. In a regulatory climate that is uncertain, our operations have been, and may in the future be, subject to direct and indirect adoption, expansion, or reinterpretation of various laws and regulations.
While we have succession plans in place and we have employment arrangements with a limited number of key executives, these do not guarantee that the services of these or suitable successor executives will continue to be available to us. ​ If we fail to develop widespread brand awareness cost-effectively, or are subject to widespread negative media coverage, our business may suffer. ​ We believe that developing and maintaining widespread awareness of our brand in a cost-effective manner is critical to achieving widespread adoption of our solutions and attracting new Clients and members.
While we have succession plans in place and we have employment arrangements with a limited number of key executives, these do not guarantee that the services of these or suitable successor executives will continue to be available to us. 31 Table of Contents If we fail to develop widespread brand awareness cost-effectively, or are subject to widespread negative media coverage, our business may suffer.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeProperties ​ We believe that our company’s offices and other facilities are, in general, in good operating condition and adequate for our current operations and that additional leased space in appropriate locations can be obtained on acceptable terms if needed. ​ We lease office space in Purchase, New York for our corporate headquarters and certain of our operations under a lease for which the term expires in August 2028.
Biggest changeItem 2. Properties We believe that our company’s offices and other facilities are, in general, in good operating condition and adequate for our current operations. We lease office space in Purchase, New York for our corporate headquarters and certain of our operations under a lease for which the term expires in August 2028.
We believe that our facilities are adequate to meet our needs for the immediate future, and that, should it be needed, suitable additional space will be available to accommodate any such expansion of our operations. ​ 55 Table of Contents
We believe that our facilities are adequate to meet our needs for the immediate future, and that, should it be needed, suitable additional space will be available to accommodate any such expansion of our operations.
We lease additional office space in the U.S. and other foreign locations. We have reduced our footprint in recent months reflecting post-pandemic remote work changes.
We lease additional office space in the U.S. and other foreign locations. 51 Table of Contents We have reduced our footprint over the past year reflecting post-pandemic remote work changes.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest change“Legal Matters,” to the consolidated financial statements included in Part II, of this Annual Report on Form 10-K and are incorporated by reference herein. ​ Item 4. Mine Safety Disclosures ​ Not applicable. ​ 56 Table of Contents PART II ​
Biggest change“Commitments and Contingencies,” to the consolidated financial statements included in Part II, of this Annual Report on Form 10-K and are incorporated by reference herein. Item 4. Mine Safety Disclosures Not applicable. PART II
Item 3. 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 19.
Item 3. 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 the Legal Matters section of Note 17.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeBecause many of our shares of Common Stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders. ​ Dividends ​ We have never declared or paid any cash dividends on our Common Stock, and we do not anticipate paying cash dividends in the foreseeable future. ​ Unregistered Sales of Equity Securities and Use of Proceeds ​ There were no unregistered sales of equity securities which have not been previously disclosed in a quarterly report on Form 10-Q or a current report on Form 8-K during the period covered by this report. ​ Purchase of Equity Securities ​ We did not purchase any of our registered equity securities during the period covered by this report. ​ ​ 57 Table of Contents Five-Year Stock Performance Graph ​ The following graph compares the cumulative total stockholder return on our common stock with the comparable cumulative total return of the Russell 2000 Composite Index, the S&P 500 Health Care Index, and S&P 500 Index for each of the five fiscal years ended December 31, 2022, assuming an investment of $100 at the beginning of such period and the reinvestment of any dividends in Teladoc Health Common Stock and in each index.
Biggest changePurchase of Equity Securities We did not purchase any of our registered equity securities during the period covered by this report. 52 Table of Contents Five-Year Stock Performance Graph The following graph compares the cumulative total stockholder return on our common stock with the comparable cumulative total return of the Russell 2000 Composite Index and the S&P 500 Health Care Index for each of the five fiscal years ended December 31, 2023, assuming an investment of $100 at the beginning of such period and the reinvestment of any dividends in Teladoc Health Common Stock and in each index.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities ​ Market Information ​ Our Common Stock trades on the New York Stock Exchange (“NYSE”) under the symbol “TDOC”. ​ Holders ​ On February 15, 2023, there were 91 shareholders of record of our Common Stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Market Information Our Common Stock trades on the New York Stock Exchange (“NYSE”) under the symbol “TDOC”. Holders On February 16, 2024, there were 91 shareholders of record of our Common Stock.
The stock price performance on the following graph is not necessarily indicative of future stock price performance.
The indexes are included for comparative purposes only. The stock price performance on the following graph is not necessarily indicative of future stock price performance.
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As a result of the declines in our market capitalization, we determined that the Russell 2000 Composite Index is a more appropriate benchmark to use because it is more representative of companies with market capitalizations comparable to ours.
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Because many of our shares of Common Stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders. Dividends We have never declared or paid any cash dividends on our Common Stock, and we do not anticipate paying cash dividends in the foreseeable future.
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As such, we have replaced the S&P 500 Index with the Russell 2000 Composite Index but will continue to present the return of the S&P 500 Index in the graph to aid in comparison for this transition year. The indexes are included for comparative purposes only.
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Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities which have not been previously disclosed in a quarterly report on Form 10-Q or a current report on Form 8-K during the period covered by this report.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeIt 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, incurred in connection with our acquisition and integration activities. 66 Table of Contents ​ Restructuring Costs ​ Restructuring costs consist primarily of certain lease impairment costs, certain losses related to early lease terminations, and severance. ​ Depreciation and Amortization ​ Depreciation and amortization consist primarily of depreciation of fixed assets, amortization of capitalized software development costs, and amortization of acquisition-related intangible assets. ​ Loss on Extinguishment of Debt ​ Loss on extinguishment of debt consists of costs associated with debt refinancing including the write-off of origination and termination financing fees and the redemption/conversion of convertible senior notes. ​ Other Expense (Income), Net Other expense (income), net includes the impact of foreign currency remeasurement, realized and unrealized gains on investment securities, and all other non-operating items not included in other financial statement lines. ​ Interest Expense, Net ​ Interest expense, net consists of interest costs associated with convertible senior notes and advances from financing companies, net of interest earned on cash and cash equivalents and short-term investments. ​ Provision for Income Taxes ​ Provision for income taxes reflects management’s best assessment of estimated current and future taxes to be paid.
Biggest changeOther (Income) Expense, Net Other (income) expense, net includes the impact of foreign currency remeasurement, realized gains on investment securities, and all other non-operating items not included in other financial statement lines. Provision for Income Taxes Provision for income taxes reflects management’s best assessment of estimated current and future taxes to be paid.
Goodwill represents the excess of the total purchase consideration over the fair value of the identifiable assets acquired and liabilities assumed in a business combination.
Goodwill Goodwill represents the excess of the total purchase consideration over the fair value of the identifiable assets acquired and liabilities assumed in a business combination.
Cost of revenue (exclusive of depreciation and amortization, which is shown separately) is driven primarily by the number of general medical visits, expert medical services, and other specialty visits completed in each period and are closely correlated or directly related to delivery of our solutions and monthly access fees.
Cost of revenue (exclusive of depreciation and amortization, which are shown separately) is driven primarily by the number of general medical visits, expert medical services, and other specialty visits completed in each period and are closely correlated or directly related to delivery of our solutions and monthly access fees.
Many of the elements of the cost of revenue (exclusive of depreciation and amortization, which is shown separately) are relatively variable, and can be reduced in the near-term to offset any decline in our revenue. Our business and operational models are designed to be highly scalable and leverage variable costs to support revenue-generating activities.
Many of the elements of the cost of revenue (exclusive of depreciation and amortization, which are shown separately) are relatively variable, and can be reduced in the near-term to offset any decline in our revenue. Our business and operational models are designed to be highly scalable and leverage variable costs to support revenue-generating activities.
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 Clients is a key indicator of our increasing market adoption, the growth of our business, and our future revenue potential.
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.
Our Client contracts include a per-member-per-month access fee as well as certain contracts that also include additional revenue on a per-virtual healthcare visit basis for general medical or other specialty visits, or expert medical service on a per case basis.
Our Client contracts include a per-member-per-month (“PMPM”) access fee as well as certain contracts that also include additional revenue on a per-virtual healthcare visit basis for general medical, or other specialty visits or expert medical service on a per case basis.
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 11.
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 10.
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 December 31, 2022. ​ Cash Flows from Operating Activities ​ Cash flows provided by operating activities consist of net loss adjusted for certain non-cash items and the cash effect of changes in assets and liabilities.
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 December 31, 2023. Cash from Operating Activities Cash flows provided by operating activities consist of net loss adjusted for certain non-cash items and the cash effect of changes in assets and liabilities.
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.
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.
For example, a sustained increase in the customer attrition rate related to customers acquired in the Livongo transaction could prompt us to reduce our estimate of the remaining useful life of the customer relationships. Should this occur, a one-year reduction to the estimated life would result in an annual increase in amortization expense of approximately $5 million.
For example, a sustained increase in the customer attrition rate related to customers acquired in the Livongo transaction could prompt us to reduce our estimate of the remaining useful life of the customer relationships. Should this occur, a one-year reduction to the estimated life would result in an annual increase in amortization expense of approximately $6 million.
The research and development expenses may enable future revenue growth but are not directly related to current revenues. ​ Technology and development expenses include personnel and related expenses (including salaries and benefits, incentive compensation, and stock-based compensation) for software engineering, information technology infrastructure, security and compliance, product development, and support for our efforts to add new features and ensure the reliability or scalability of our existing solutions.
The research and development expenses may enable future revenue growth but are not directly related to current revenues. 59 Table of Contents Technology and development expenses include personnel and related expenses (including salaries and benefits, incentive compensation, and stock-based compensation) for software engineering, information technology infrastructure, security and compliance, product development, and support for our efforts to add new features and ensure the reliability or scalability of our existing solutions.
In our Integrated Care segment, as a result of many Clients’ introduction of new services at the start of each year a concentration of our new Client contracts has an effective date of January 1. Therefore, while membership increases, utilization and enrollment rates are dampened until service delivery ramps up over the course of the year.
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.
We recorded non-cash goodwill impairment charges of $13,402.8 million for the year ended December 31, 2022, following goodwill impairment testings performed as a result of sustained decreases in our publicly quoted share price and our annual testing requirement. The non-cash charges had no impact on the provision for income taxes.
We recorded non-cash goodwill impairment charges of $13,402.8 million across several quarters in the year ended December 31, 2022, following goodwill impairment testings performed as a result of sustained decreases in our publicly quoted share price and our annual testing requirement. The non-cash charges had no impact on the provision for income taxes.
“Convertible Senior Notes” to the consolidated financial statements for additional information on our convertible senior notes. ​ We were in compliance with all debt covenants at December 31, 2022 and 2021. ​ 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.
“Convertible Senior Notes” to the consolidated financial statements for additional information on our convertible senior notes. We were in compliance with all debt covenants at December 31, 2023. 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.
Performance guarantees are estimated at each reporting period based on our historical performance of the underlying criteria or the customer’s specific performance as of that reporting date. Any estimated adjustments to the contract price for achieving or not achieving the performance guarantee are recognized as an adjustment to revenue in the period.
Performance guarantees are estimated at each reporting period based on our historical performance or other available information of the underlying criteria or the customer’s specific performance as of that reporting date. Any estimated adjustments to the contract price for achieving or not achieving the performance guarantee are recognized as an adjustment to revenue in the period.
During 2022, we experienced positive operating cash flow and we continue to anticipate increasing positive operating cash flow results for 2023. ​ 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.
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.
Cash provided by operating activities for the years ended December 31, 2022 and 2021 included approximately $19.1 million and $2.6 million, respectively, related to investments in and implementation of cloud computing applications, which are deferred and amortized over multiple years based on expected contract life.
Cash provided by operating activities for the years ended December 31, 2023 and 2022 included approximately $15.6 million and $19.1 million, respectively, related to investments in and implementation of cloud computing applications, which are deferred and amortized over multiple years based on the expected contract life.
Determination of valuation allowances recorded against deferred tax assets requires significant judgment and use of assumptions, including past operating results, estimates of future taxable income and the feasibility of tax planning strategies.
Determination of valuation allowances recorded against deferred tax assets requires significant 58 Table of Contents judgment and use of assumptions, including past operating results, estimates of future taxable income and the feasibility of tax planning strategies.
Technology and development expenses also include outsourced software engineering services, the costs of operating our on-demand technology infrastructure (whereas costs directly associated with revenue are presented separately in cost of revenues), and certain licensed applications.
Technology and development expenses also include outsourced software engineering services, the costs of operating our on-demand technology infrastructure (whereas costs directly associated with revenue are presented separately in cost of revenues), and certain licensed applications. Our technology and development expenses exclude capitalized software development costs and depreciation and amortization.
The objectives for accounting for income taxes, as prescribed by the relevant accounting guidance, are to recognize the amount of taxes payable or refundable for the current year and deferred tax assets and liabilities for future tax consequences of events that have been recognized in the financial statements.
The objectives for accounting for income taxes, as prescribed by the relevant accounting guidance, are to recognize the amount of taxes payable or refundable for the current year and deferred tax assets and liabilities for future tax consequences of events that have been recognized in the financial statements. See above for Critical Accounting Estimates and Policies.
Some of these limitations are: ● EBITDA and Adjusted EBITDA do not reflect goodwill impairment; ​ ● EBITDA and Adjusted EBITDA do not reflect the interest expense on our debt; ​ ● EBITDA and Adjusted EBITDA eliminate the impact of provision for income taxes on our results of operations; ​ ● EBITDA and Adjusted EBITDA do not reflect the loss on extinguishment of debt; ​ ● EBITDA and Adjusted EBITDA do not reflect other expense (income), net; ​ ● Adjusted EBITDA does not reflect restructuring costs.
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 goodwill impairment, interest income, interest expense or other (income) expense, net; • Adjusted EBITDA does not reflect restructuring costs.
Our ability to efficiently reach new potential paying users through various advertising channels helped us to increase BetterHelp paying users by 37% to 0.42 million as of December 31, 2022, compared to 0.31 million as of December 31, 2021. ​ As it relates to the Company: ​ Seasonality. Our business has historically been subject to seasonality.
Our ability to reach new potential paying users through various advertising channels helped us to increase BetterHelp paying users by 9% to 0.46 million as of December 31, 2023, compared to 0.42 million as of December 31, 2022. As it relates to the Company: Seasonality. Our business has historically been subject to seasonality.
The core principle of ASC 606 is to recognize revenue to depict the transfer of promised goods or services to Clients in an amount that reflects the consideration the entity expects to be entitled in exchange for those goods or services.
The core principle of ASC Topic 606 is to recognize revenue to depict the transfer of promised goods or services to Clients as well as individual members, in an amount that reflects the consideration the entity expects to be entitled in exchange for those goods or services.
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.
It also includes costs related to certain business transformation initiatives focused 61 Table of Contents on integrating and optimizing various operations and systems, including upgrading our CRM and ERP systems.
Substantially all of this revenue is derived from monthly access fees that are recognized as services are rendered and earned under subscription agreements with Clients that are based on a per-participant-per-month model, using the number of active enrolled members each month for the minimum enrollment period.
Revenue is also generated from contracts with Clients for our chronic care management solutions. Substantially all of this revenue is derived from monthly access fees that are recognized as services are rendered and earned under subscription agreements with Clients that are based on a per-participant-per-month model, using the number of active enrolled members each month for the minimum enrollment period.
In combination with the expansion of our capabilities, we believe that these trends present significant opportunities for virtual healthcare to address the most pressing, universal healthcare challenges through trusted solutions, such as ours, that deliver convenient, affordable, and high-quality care; empower individuals to manage and improve their health; and enable providers to offer their best care for their patients. ​ Revenue ​ We have a demonstrated track record of driving growth both organically and through acquisitions.
In combination with the expansion of our capabilities, we believe that these trends present significant opportunities for virtual healthcare to address the most pressing, universal healthcare challenges through trusted solutions, such as ours, that deliver convenient, affordable, and high-quality care; empower individuals to manage and improve their health; and enable providers to offer their best care for their patients.
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.
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.
We recorded an income tax benefit of $3.8 million for the year ended December 31, 2022, compared to an income tax expense of $44.1 million for the year ended December 31, 2021.
We recorded an income tax expense of $0.8 million for the year ended December 31, 2023, compared to an income tax benefit of $3.8 million for the year ended December 31, 2022.
They also include bank charges, most of the facilities costs including rent, utilities, and facilities maintenance, except for amounts allocated to cost of revenues, as well as therapists recruiting costs, related to BetterHelp, indirect taxes and certain licensed corporate applications.
They also include bank charges, most of the facilities costs including rent, utilities, and facilities maintenance, except for amounts allocated to cost of revenues, as well as therapists recruiting costs, related to BetterHelp, indirect taxes and certain licensed corporate applications. Our general and administrative expenses exclude any allocation of depreciation and amortization.
Adjusted EBITDA consists of net loss before interest expense, net; other expense (income), net, including foreign exchange gain or loss; provision for income taxes; depreciation and amortization; goodwill impairment; loss on extinguishment of debt; stock-based compensation; restructuring costs; and acquisition, integration, and transformation costs. ​ 67 Table of Contents Free cash flow is net cash (used in) provided by operating activities less capital expenditures and capitalized software.
Adjusted EBITDA consists of net loss before interest income; interest expense; other (income) expense, net, including foreign currency exchange gains or losses; provision for income taxes; depreciation; amortization; goodwill impairment; 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.
The increase in net revenues was primarily driven by higher chronic care enrollment and adoption, as well as higher telemedicine product revenue.
The increase in net revenues was primarily driven by higher chronic care program enrollment and adoption, as well as higher telemedicine product revenue, including higher revenues from our Primary360 offering.
Potential changes in useful lives, whether due to strategic decisions involving our brands, competitive forces, or other factors could result in additional amortization expense taking effect prospectively in the period of the change and could have a material impact on our consolidated financial statements. ​ Customer relationships are amortized over a period of two to 20 years in relation to expected future cash flows.
Potential changes in useful lives, whether due to strategic decisions involving our brands, competitive forces, or other factors could result in additional amortization expense taking effect prospectively in the period of the change and could have a material impact on our consolidated financial statements.
“Segment Information,” to the consolidated financial statements for further information about our reportable segments. ​ We believe that favorable existing secular trends in the healthcare industry were accelerated by the impacts of the COVID-19 pandemic, driving greater consumer awareness and use of virtual care and increased adoption by employers, health plans, hospitals and health systems, healthcare providers, and individuals.
We believe that favorable existing secular trends in the healthcare industry were accelerated by the impacts of the COVID-19 pandemic, driving greater consumer awareness and use of virtual care and increased adoption by employers, health plans, hospitals and health systems, healthcare providers, and individuals.
Cost of revenue (exclusive of depreciation and amortization, which is shown separately) does not include an allocation of depreciation and amortization. ​ Advertising and Marketing Expenses ​ Advertising and marketing expenses consist primarily of costs of digital and media advertisements, personnel and related expenses (including salaries and benefits, incentive compensation, and stock-based compensation) for our marketing staff and communications materials that are produced for member acquisition and to generate greater awareness and utilization among our Clients and members.
Advertising and Marketing Expenses Advertising and marketing expenses consist primarily of costs of digital and media advertisements, personnel, and related expenses (including salaries and benefits, incentive compensation, and stock-based compensation) for our marketing staff and communications materials that are produced for member acquisition and to generate greater awareness and utilization among our Clients and members.
This change increased annual amortization by approximately $23.2 million for the year ended December 31, 2022. ​ Definite-lived intangible assets are re-evaluated whenever events or changes in circumstances indicate that their estimated useful lives may require revision and/or the carrying value of the related asset group may not be recoverable by its projected undiscounted cash flows.
Definite-lived intangible assets are re-evaluated whenever events or changes in circumstances indicate that their estimated useful lives may require revision and/or the carrying value of the related asset group may not be recoverable by its projected undiscounted cash flows.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. ​ We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, including resolution of any related appeals or litigation processes, based on the technical merits of the position.
We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, including resolution of any related appeals or litigation processes, based on the technical merits of the position.
Technology is amortized over four to seven years using the straight-line method. Capitalized software development costs are amortized over three to five years using the straight-line method. ​ Through December 31, 2021, trademarks were amortized over three to 15 years using the straight-line method.
Acquired technology is amortized over four to seven years using the straight-line method. Capitalized software development costs are amortized over three to five years using the straight-line method.
Technology and development expenses were $333.6 million for the year ended December 31, 2022, compared to $311.9 million for the year ended December 31, 2021, an increase of $21.7 million, or 7%.
Technology and development expenses were $348.5 million for the year ended December 31, 2023, compared to $333.6 million for the year ended December 31, 2022, an increase of $14.9 million, or 4%.
BetterHelp paying users represent the global number of paid users who used our BetterHelp mental health 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 increasing market adoption of BetterHelp, the growth of that business, and future revenue potential.
We believe that our ability to add new paying users and retain existing users is a key indicator of the increasing market adoption of BetterHelp, the growth of that business, and future revenue potential.
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. ​ In the fourth quarter of 2022, we adopted a new organizational and reporting structure based on two operating segments, Integrated Care and BetterHelp.
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.
To the extent that new information becomes available which causes us to change our judgment regarding the adequacy of existing valuation allowances, such changes to tax liabilities will impact income tax expense in the period in which such determination is made. ​ Components of Results of Operations ​ Cost of Revenue (exclusive of depreciation and amortization, which is shown separately) ​ Cost of revenue (exclusive of depreciation and amortization, which is shown separately) primarily consists of fees paid to the physicians and other health professionals in our provider network; product cost; costs incurred in connection with our provider network operations and data center activities, which include employee-related expenses (including salaries and benefits, incentive compensation, and stock-based compensation), costs related to Client support; provider network, medical records, magnetic resonance imaging, medical lab tests, translation, postage, medical malpractice insurance, and deferred device costs.
Components of Results of Operations Cost of Revenue (exclusive of depreciation and amortization, which are shown separately) Cost of revenue (exclusive of depreciation and amortization, which are shown separately) primarily consists of fees paid to the physicians and other health professionals in our provider network; product cost; costs incurred in connection with our provider network operations and data center activities, which include employee-related expenses (including salaries and benefits, incentive compensation, and stock-based compensation); costs related to Client support; and provider network, medical records, magnetic resonance imaging, medical lab tests, translation, postage, medical malpractice insurance, and deferred device costs.
In some arrangements, our devices are rented to certain qualified Clients that qualify as either sales-type lease or operating lease arrangements and are subject to lease accounting guidance. ​ We record access fees from Clients accessing our professional provider network or hosted virtual healthcare platform or chronic care management platforms, visit fee revenue for general medical, expert medical service and other specialty visits as well as other revenue primarily associated with virtual healthcare device equipment included with our hosted virtual healthcare platform.
We record access fees from Clients accessing our professional provider network or hosted virtual healthcare platform or chronic care management platforms, visit fee revenue for general medical, expert medical service and other specialty visits as well as other revenue primarily associated with virtual healthcare device equipment included with our hosted virtual healthcare platform.
Historically, our cash compensation payments are at the highest level in the first quarter when we pay discretionary employee compensation related to the previous fiscal year. ​ Cash Flows from Investing Activities ​ Cash used in investing activities was $167.7 million for the year ended December 31, 2022 and primarily consisted of capitalized software development costs of $156.3 million and capital expenditures of $16.5 million.
Historically, cash compensation is at its highest level in the first quarter when discretionary employee compensation related to the previous fiscal year is paid. 67 Table of Contents Cash from Investing Activities Cash used in investing activities was $156.3 million for the year ended December 31, 2023 and primarily consisted of capitalized software development costs of $144.9 million and capital expenditures of $11.5 million.
As a result of this dynamic we have typically experienced fewer new member additions and the strongest operating income performance in the fourth quarter. 60 Table of Contents 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. ​ During the COVID-19 pandemic in 2021 and 2020, we did not experience the typical seasonality associated with cold and flu outbreaks, nor did we experience the typical seasonality associated with the BetterHelp business.
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.
Revenues are recognized when we satisfy our performance obligation to stand ready to provide virtual healthcare services which occurs when our Clients and members have access to and obtain control of the virtual healthcare service or platform. ​ For contracts where revenue is generated on a per healthcare visit basis, revenues are recognized when the visits are completed as we have delivered on our stand ready obligation to provide access.
For contracts where revenue is generated on a per healthcare visit basis, revenues are recognized when the visits are completed as we have delivered on our stand ready obligation to provide access.
Marketing costs also include third-party independent research, trade shows and brand messages, public relations costs, and stock-based compensation for our advertising and marketing employees.
Marketing costs also include third-party independent research, trade shows and brand messages, public relations costs, and stock-based compensation for our advertising and marketing employees. Our advertising and marketing expenses exclude certain allocations of occupancy expense as well as depreciation and amortization.
Deferred tax assets and 64 Table of Contents liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Our advertising and marketing expenses will fluctuate as a percentage of our total revenue from period to period due to the seasonality of our total revenue and the timing and extent of our advertising 65 Table of Contents campaigns and marketing expenses.
Our general and administrative expenses may fluctuate as a percentage of our total revenue from period to period due to the seasonality of our total revenue and the timing and extent of our general and administrative expenses.
Our technology and development expenses may fluctuate as a percentage of our total revenue from period to period due to the seasonality of our total revenue and the timing and extent of our technology and development expenses, including the ability to capitalize software development costs. ​ General and Administrative Expenses ​ General and administrative expenses include personnel and related expenses (including salaries and benefits, incentive compensation, and stock-based compensation) of, and professional fees incurred by our finance, legal and compliance, operations, human resources, clinical, corporate strategy, business development, strategies, quality and executive departments.
General and Administrative Expenses General and administrative expenses include personnel and related expenses (including salaries and benefits, incentive compensation, and stock-based compensation) of, and professional fees incurred by our finance, legal and compliance, operations, human resources, clinical, corporate strategy, business development, strategies, quality and executive departments.
We expect our sales expenses to continue to increase in the short-to-medium-term as we strategically invest to expand our business and to capture an increasing amount of our market opportunity. ​ Technology and Development Expenses ​ Technology and development expenses include the costs of operating our on-demand technology infrastructure that are not directly related to changes in revenue or volume of visits, including certain licensed applications, information technology infrastructure, security, and compliance.
Technology and Development Expenses Technology and development expenses include the costs of operating our on-demand technology infrastructure that are not directly related to changes in revenue or volume of visits, including certain licensed applications, information technology infrastructure, security, and compliance.
GAAP financial measures, to clarify and enhance an understanding of past performance. We believe that the presentation of these financial measures enhances an investor’s understanding of our financial performance.
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.
Integrated Care member decreased to $1.42 in the year ended December 31, 2022, from $1.46 in the same period in 2021, primarily due to the impact of new members onboarded over the course of year. ​ As it relates to the BetterHelp segment: ​ BetterHelp Paying Users .
Average monthly revenue per U.S. Integrated Care member decreased to $1.41 in the year ended December 31, 2023, from $1.42 in the same period in 2022, primarily due to the impact of new members onboarded over the course of the year.
We will continue to invest in advertising and marketing by promoting our brands through a variety of marketing and public relations activities. ​ Sales Expenses ​ Sales expenses consist primarily of employee-related expenses, including salaries, benefits, commissions, and incentive-based awards, employment taxes, travel and stock-based compensation costs for our employees engaged in sales, account management and sales support in addition to commissions paid to external brokers.
Sales Expenses Sales expenses consist primarily of employee-related expenses, including salaries, benefits, commissions, and incentive-based awards, employment taxes, travel and stock-based compensation costs for our employees engaged in sales, account management, and sales support in addition to commissions paid to external brokers. Our sales expenses exclude certain allocations of occupancy expense as well as depreciation and amortization.
This principle is achieved through applying the following five-step approach: ​ • Identification of the contract, or contracts, with a Client. ​ • Identification of the performance obligations in the contract. ​ • Determination of the transaction price. ​ • Allocation of the transaction price to the performance obligations in the contract. ​ • Recognition of revenue when, or as, we satisfy a performance obligation. ​ As it relates to the Integrated Care segment, we primarily generate virtual healthcare service revenue from contracts with Clients who purchase access to our professional provider network or medical experts for their employees, dependents and other beneficiaries.
Integrated Care Segment As it relates to the Integrated Care segment, we primarily generate virtual healthcare service revenue from contracts with Clients who purchase access to our professional provider network or medical experts for their employees, dependents and other beneficiaries.
We utilize Adjusted EBITDA as a key measure of our performance. ​ EBITDA consists of net loss before interest expense, net; other expense (income), net, including foreign exchange gain or loss; provision for income taxes; depreciation and amortization; goodwill impairment; and loss on extinguishment of debt.
EBITDA consists of net loss before interest income; interest expense; other (income) expense, net, including foreign currency exchange gains or losses; provision for income taxes; depreciation; amortization; and goodwill impairment.
Cost of revenue was $744.0 million for the year ended December 31, 2022, compared to $650.3 million for the year ended December 31, 2021, an increase of $93.7 million, or 14%, reflecting increased provider fees and physician network operation costs in line with revenue growth, partially offset by various optimization efforts. ​ Advertising and Marketing Expenses.
Cost of revenue was $760.0 million for year ended December 31, 2023, compared to $744.0 million for the year ended December 31, 2022, an increase of $16.0 million, or 2%, reflecting higher costs associated with the growth in revenue, offset by lower consultation costs, reflecting various operation optimization efforts to reduce provider costs, and lower expenses associated with devices.
We also review the useful lives on a quarterly basis to determine if the period of economic benefit has changed.
“Intangible Assets, Net and Certain Cloud Computing Costs” to the 57 Table of Contents consolidated financial statements. We also review the useful lives on a quarterly basis to determine if the period of economic benefit has changed.
These events include: (i) severe adverse industry or economic trends; (ii) significant company-specific actions, including exiting an activity in conjunction with restructuring of operations; (iii) current, historical or projected deterioration of our financial performance; or (iv) a sustained decrease in our market capitalization, as indicated by our publicly quoted share price, below our net book value. ​ When testing goodwill for impairment, we have the option of first performing a qualitative assessment to determine whether it is more likely than not that the fair value of our reporting unit is less than its carrying amount.
These events include: (i) severe adverse industry or economic trends; (ii) significant company-specific actions, including exiting an activity in conjunction with restructuring of operations; (iii) current, historical or projected deterioration of our financial performance; or (iv) a sustained decrease in our market capitalization, as indicated by our publicly quoted share price.
The useful lives of the customer relationships are subject to risks and uncertainties including future attrition rates.
Customer relationships are amortized over a period of two to 20 years in relation to expected future cash flows. The useful lives of the customer relationships are subject to risks and uncertainties including future attrition rates.
Cash provided by financing activities for the year ended December 31, 2021 was $40.9 million and primarily consisted of $25.8 million of proceeds from the exercise of employee stock options and $16.8 million of proceeds from participants in our employee stock purchase plan. ​ The following is a reconciliation of net cash provided by operating activities to free cash flow (in thousands, unaudited): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2022 2021 ​ 2020 ​ Net cash provided by (used in) operating activities ​ $ 189,292 ​ $ 193,990 ​ $ (53,511) ​ Capital expenditures ​ ​ (16,480) ​ ​ (8,534) ​ ​ (4,024) ​ Capitalized software ​ ​ (156,284) ​ ​ (55,400) ​ ​ (22,018) ​ Free Cash Flow ​ $ 16,528 ​ $ 130,056 ​ $ (79,553) ​ Free cash flow was $16.5 million for the year ended December 31, 2022, as compared to $130.1 million for the year ended December 31, 2021.
The following is a reconciliation of net cash provided by operating activities to free cash flow (in thousands, unaudited): Year Ended December 31, 2023 2022 2021 Net cash provided by operating activities $ 350,021 $ 189,292 $ 193,990 Capital expenditures (11,464) (16,480) (8,534) Capitalized software (144,884) (156,284) (55,400) Free Cash Flow $ 193,673 $ 16,528 $ 130,056 Free cash flow was $193.7 million for the year ended December 31, 2023, as compared to $16.5 million for the year ended December 31, 2022.
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. U.S. Integrated Care members increased by 5.8 million to 83.3 million at December 31, 2022, compared to the same period in 2021. ​ Chronic Care Program Enrollment .
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. U.S.
By geography, total revenue for the U.S. was $2,101.0 million and for International was $305.8 million for the year ended December 31, 2022, reflecting increases of 18% and 18%, respectively, compared to the year ended December 31, 2021. ​ Other revenue, which predominately includes visit fees, and to a lesser extent, revenues from the sales of our telehealth solutions for hospitals and health systems.
The increase in other revenues primarily related to higher revenues from sales of our telehealth solutions for hospitals and health systems. By geography, total revenue for the U.S. was $2,237.5 million and for International was $364.9 million for the year ended December 31, 2023, reflecting increases of 6% and 19%, respectively, compared to the year ended December 31, 2022.
General and administrative expenses were $449.9 million for the year ended December 31, 2022, compared to $438.0 million for the year ended December 31, 2021, an increase of $11.8 million, or 3%.
For the 64 Table of Contents year ended December 31, 2023 and 2022, research and development costs were $124.6 million and $106.9 million, respectively. General and Administrative Expenses. General and administrative expenses were $464.7 million for the year ended December 31, 2023, compared to $449.9 million for the year ended December 31, 2022, an increase of $14.8 million, or 3%.
Refer to Critical Accounting Estimates and Policies: Goodwill Impairment Charge and Note 7. “Goodwill,” to our consolidated financial statements. ​ Other Expense (Income), Net. Other expense (income), net was $0.9 million for the year ended December 31, 2022, compared to an income of ($5.1) million for the year ended December 31, 2021.
Refer to Critical Accounting Estimates and Policies: Goodwill and Note 6. “Goodwill,” to our consolidated financial statements. Interest Income. Interest income consisted of interest earned on cash and cash equivalents. Interest income was $46.8 million for the year ended December 31, 2023, compared to $12.7 million for the year ended December 31, 2022.
As a result of the introduction of segments in the fourth quarter of 2022, a recoverability test for the definite-lived intangible assets was performed and no impairment was identified. ​ Provision for Income Taxes ​ Our provision for income taxes, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits reflect management's best assessment of estimated current and future taxes to be paid.
As a result of the introduction of segments in the fourth quarter of 2022, a recoverability test for the definite-lived intangible assets was performed and no impairment was identified.
Our general and administrative expenses may fluctuate as a percentage of our total revenue from period to period due to the seasonality of our total revenue and the timing and extent of our general and administrative expenses. ​ 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.
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.
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 revenue per U.S.
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.
Chronic care program enrollment represents the total 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.
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 14% to 1.16 million at December 31, 2023, compared to 1.02 million at December 31, 2022. Average Monthly Revenue Per U.S.
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; ​ ● Adjusted EBITDA does not reflect the significant non-cash stock compensation expense which should be viewed as a component of recurring operating costs; and ​ ● Other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than we do, limiting the usefulness of these measures as comparative measures. ​ In addition, although depreciation and amortization 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. ​ We compensate for these limitations by using EBITDA, Adjusted EBITDA, and free cash flow along with other comparative tools, together with U.S.
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.
The year-over-year decrease was driven by expenditures for cloud computing assets as well as higher operating expenses, namely higher advertising and engagement marketing costs and, to a lesser extent, higher technology and development expenses. ​ Our primary uses of cash from operating activities are for the payment of cash compensation, provider fees, engagement marketing, D2C digital and media advertising, inventory, insurance, technology costs, interest costs, and 77 Table of Contents acquisition, integration, and transformation costs.
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.
The increase in capitalized software development costs of $100.9 million from 2021 relates to our ongoing investments to build out and optimize our products and platforms, including integrating consumer applications and new products and services including Primary360. ​ Cash Flows from Financing Activities Cash provided by financing activities for the year ended December 31, 2022 was $6.5 million and primarily consisted of $5.9 million of proceeds from the exercise of employee stock options and $6.5 million of proceeds from participants in our employee stock purchase plan, partially offset by payment against advances from financing companies.
Cash provided by financing activities for the year ended December 31, 2022 was $6.5 million and primarily consisted of $5.9 million of proceeds from the exercise of employee stock options and $6.5 million of proceeds from participants in our employee stock purchase plan.
See “Risk Factors—Risks Related to Our Business and Industry—Our quarterly results may fluctuate significantly, which could adversely impact the value of our common stock.” included elsewhere in this Annual Report on Form 10-K. ​ Critical Accounting Estimates and Policies ​ Revenue ​ We follow the revenue accounting requirements of Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” Accounting Standards Codification (“ASC”) 606 establishes a principle for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services.
Critical Accounting Estimates and Policies Revenue We follow the revenue accounting requirements of Accounting Standards Codification (“ASC”) Topic 606, which establishes a principle for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services.
We also have certain contracts that generate revenue based solely on a per healthcare visit basis for general medical and other specialty visits. For our BetterHelp product, members purchase access to our professional provider network for an access fee. ​ Revenues are also generated from contracts with Clients for our chronic care management solutions.
We also have certain contracts that generate revenue based solely on a per healthcare visit basis for general medical and other specialty visits.
Neither EBITDA, Adjusted EBITDA nor free cash flow should be considered as an alternative to net loss before provision for income taxes, net loss, net loss per share, net cash provided by operating activities or any other performance measures derived in accordance with U.S.
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.
This increase was substantially driven by higher digital and media advertising in support of BetterHelp, as well as higher engagement member marketing in the Integrated Care segment. ​ Sales Expenses. Sales expenses were $227.2 million for the year ended December 31, 2022, compared to $250.6 million for the year ended December 31, 2021, a decrease of $23.4 million, or 9%.
Advertising and Marketing Expenses. Advertising and marketing expenses were $688.9 million for the year ended December 31, 2023, compared to $623.5 million for the year ended December 31, 2022, an increase of $65.3 million, or 10%. This increase was substantially driven by higher digital and media advertising costs related to BetterHelp. Sales Expenses.
These services are consumed as they are received, and we recognize revenue each month using the variable consideration allocation exception since the nature of the obligations and the variability of the payment being based on the number of active members are aligned. ​ Revenue is also generated from contracts with Clients in hospital and health systems for the sale and rental of equipment consisting of virtual healthcare devices which allow physicians to access our hosted virtual healthcare platform.
These services are consumed as they are received, and we recognize revenue each month using the variable consideration allocation exception since the nature of the obligations and the variability of the payment being based on the number of active members are aligned. Our Client agreements generally have a term of one to three years for the Integrated Care segment.
Total revenue was $2,406.8 million for the year ended December 31, 2022, compared to $2,032.7 million for the year ended December 31, 2021, an increase of $374.1 million, or 18%. Total access fees increased $363.6 million, or 21%.
Total revenue was $2,602.4 million for the year ended December 31, 2023, compared to $2,406.8 million for the year ended December 31, 2022, an increase of $195.6 million, or 8%. The increase was driven by an 8% increase in access fees, primarily related to BetterHelp, as well as a 6% increase in other revenues.
Acquisition, integration, and transformation costs were $15.6 million for the year ended December 31, 2022, primarily consisting of costs to continue to integrate and upgrade our CRM and ERP ecosystem, compared to $26.6 million for the year ended December 31, 2021, a decrease of $11.0 million.
Acquisition, integration, and transformation costs were $21.1 million for the year ended December 31, 2023, compared to $15.6 million for the year ended December 31, 2022, an increase of $5.5 million. The costs and the related increase were primarily associated with integrating and upgrading our CRM and ERP systems. Restructuring Costs .
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 believe the above financial measures 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.
GAAP measurements, to assist in the evaluation of operating performance. Such U.S. GAAP measurements include net loss, net loss per share, net cash provided by operating activities, and other performance measures. ​ 68 Table of Contents In evaluating these financial measures, you should be aware that in the future we may incur expenses similar to those eliminated in this presentation.
In evaluating these financial measures, you should be aware that in the future we may incur expenses similar to those eliminated in this presentation.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk ​ Interest Rate Risk and Foreign Exchange Risk ​ Cash equivalents that are subject to interest rate volatility represent our principal market risk.
Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk and Foreign Currency Exchange Risk Cash equivalents that are subject to interest rate volatility represent our principal market risk. We do not expect cash flows to be affected to any significant degree by a sudden change in market interest rates as our Notes bear fixed interest rates.
We have not utilized hedging strategies with respect to our foreign exchange exposure as we believe it is not expected to have a material impact on our consolidated financial statements. ​
We do not enter into investments for trading or speculative purposes. We operate our business primarily within the U.S. which accounts for approximately 86% 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 consolidated financial statements.
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We do not expect cash flows to be affected to any significant degree by a sudden change in market interest rates as our Notes and Livongo Notes 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 87% of our revenues.
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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.
Added
Our short-term investments are comprised of a portfolio of government and institutional prime money market funds with maturity durations of one year or less. No Client represented over 10% of consolidated revenues for the years ended December 31, 2023 or 2022. For the Integrated Care Segment, a significant portion of our revenue is derived from large enterprises, mainly health plans.
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For the year ended December 31, 2023, revenue from the five largest customers was 34% 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. 68 Table of Contents Item 8.
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Financial Statements and Supplementary Data Our Consolidated Financial Statements are listed in the Index to Consolidated Financial Statements and Supplemental Data filed as part of this Annual Report on Form 10-K. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.

Other TDOC 10-K year-over-year comparisons