Teladoc Health, Inc.

Welcome to Teladoc's second quarter 2019 earnings conference call and webcast. At this time, all participants have been placed in a listen-only mode, and the floor will be open for your questions following management's prepared remarks. If you would like to ask a question at that time, please press star 1 on your touchtone phone. If at any point your question has been answered, you may remove yourself from the queue by pressing the pound key. We ask that you please pick up your handset for optimal sound quality. Lastly, if you should require operator assistance, please press star zero. It is now my pleasure to turn the floor over to Adam Vandervoort, Chief Legal Officer. You may begin.

Thank you, and good afternoon. Today, after the market closed, we issued a press release announcing our second quarter 2019 financial results. This press release is available in the Investor Relations section of the TeladocHealth.com website. On this call to discuss the results are Jason Gorovic, our Chief Executive Officer, and Mala Murthy, our Chief Financial Officer. During this call, we will provide our third quarter and full year outlook, and our prepared remarks will be followed by a question and answer session. Please note that we will be discussing certain non-GAAP financial measures that we believe are important in evaluating Teladoc Health's performance. Details on the relationship between these non-GAAP measures to the most comparable GAAP measures and reconciliations thereof can be found in the press release that is posted on our website. Also, please note that certain statements made during this call will be forward-looking statements, as defined by the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks, uncertainties, and other factors that could cause the actual results for Teladoc Health to differ materially from those expressed or implied on this call. For additional information, please refer to our cautionary statement in our press release and our filings with the SEC, all of which are available on our website. I now turn the call over to Jason.

Thanks, Adam, and thank you, everyone, for joining us this afternoon. I'm incredibly excited to start off the call today by making two highly anticipated introductions. The first is to Mala Murthy, who joined us at the end of June as our Chief Financial Officer. Many of you have had a chance to speak with Mala since she came on board, but as a refresher, Mala joins us most recently from American Express and brings with her an accomplished track record of success across a diverse set of leading public companies and industries. I'm pleased to say that she has hit the ground running and is already having an impact with the team. The second introduction is to our new Chief Operating Officer, David Sides. We're very excited to have David come on board as he brings a unique combination of strong technical, commercial, and strategic skills that are perfectly suited to our profitable growth trajectory. As a former CEO with deep healthcare tech and public company experience, David understands well the broader strategic healthcare landscape and comes in with a clear view of the exciting opportunities ahead of Teladoc Health. David and his family will be relocating to the New York area later this summer. Our search process to fill both of these roles was a thorough one, as we held our standards high for both the right functional capabilities as well as the appropriate mission-oriented cultural fit. I know I speak for the entire Teladoc Health team when I say we're very pleased to have both Mala and David join the company and I look forward to introducing many of you to them in person in the coming months. Before we dig into the second quarter, I'd be remiss if I didn't take this opportunity to thank Peter McLennan and Gabe Capucci for their leadership during this transition period. Under their stewardship, we operated seamlessly continuing to deliver for our members, clients, and shareholders. Lastly, I'd like to thank Valerie Hartel for her oversight of investor relations during this transitional period and wish her well in her future endeavors. Turning to our results for the second quarter, we saw the momentum from the first quarter continue with particular strength in revenue and visit volumes, both coming in at the high end of our expectations. In comparison to Q2 2018, total revenue grew 38% to $130.3 million, including 24% organic growth when you exclude Advanced Medical. Visit volume of 908,000 visits increased 70% or 46% excluding Advanced Medical. U.S. paid membership grew to 26.8 million members, adding 100,000 new members in the quarter and 4.3 million new members when compared to the 22.5 million members in the second quarter of 2018. This maintains our consistent track record of growing membership seven of the last eight quarters, and adjusted EBITDA came in within our expected range at $6.3 million. Drilling down a bit deeper into visits, I'm particularly pleased to see utilization increase more than 100 basis points as we continue to realize the benefits of our diversification strategy. We are uniquely able to capitalize on the growing macro consumer adoption tailwinds, both domestically and abroad, with our international populations and associated visits included seeing some of the fastest rates of growth across our total book of business. Domestically, I'm pleased to see strong utilization in our pay-for-performance deals and robust growth across all our clinical specialties persisting in Q2. As an example, behavioral health stands out as one of the strongest drivers of visit growth. During the quarter, we set several single-day high watermarks for our B2B service in terms of number of visits, with members coming to us for an increasing number of conditions. On BetterHelp in the second quarter, the team continued to improve member retention metrics through the launch of member experience enhancements, which we expect to be sustainable over time. These outstanding results provide proof that our portfolio of solutions is extremely well positioned to address the massive unmet global need in the mental health arena. In terms of our selling season, the excellent momentum we continue to see across all dimensions speaks to the long-term benefits of our diversified growth strategy. Overall, RFP volume continued to accelerate this quarter, remaining well above second quarter of 2018. The team is seeing wins across all our channels and products. We are seeing increasing success in selling multiple products to our clients, and our bookings year-to-date for deals with multiple products continues to accelerate. In our employer business, we are seeing robust activity, both with new and existing clients. We have several new Fortune 500 logos in late stage contracting, many of which are for multiple products. This also extends to our existing client base, reflecting a healthy appetite to add a combination of additional products and populations. In our health plan business, we are also seeing very strong growth, both in terms of new distribution as well as penetration of existing relationships. This area continues to diversify with wins in new lines of business, populations, and geographies, both commercial and government programs. In this strategic growth channel, we recently expanded our relationship with a major blues plan and continue to increase penetration into our largest clients' books of business, where our sales velocity is healthy and on track with expectations. Another exciting development from the second quarter was our announcement in June of our strategic partnership with Vita Health, an early stage company that provides virtual chronic disease management programs to members of large payer and employer group populations across the U.S. This minority investment is a great example of our stated build, buy, or partner strategy, accelerating our path to market with new products through selective deployment of capital. As we identified Vita as a potential partner and got to know them through this process, it became clear that their multi-condition, coach-led model and overlapping key client base made them the right partner to enable us to deliver on our long-term strategic plan to offer chronic care solutions to our members. In 2020, we will deliver an integrated virtual care experience across platforms, supporting acute, complex, and chronic care needs and addressing the mental health and physical health challenges that often go hand in hand. Before I turn the call over to Mala for a more detailed review of our second quarter financial results, I want to provide an update on some of our strategic investments. Our expansion into Canada is progressing on schedule. With the product launch in the second quarter and the signing of our first client, a TPA channel partner that will afford us significant access to the Canadian market. Here in the U.S., our integration work with United and the development of Medicare capabilities are both also progressing on schedule, and I'm optimistic about the revenue impact these initiatives will have in 2020 and beyond. Finally, we're encouraged by the recent CVS announcement regarding MinuteClinic virtual visits expansion to eight additional states, as well as the broader Health Hub expansion. were actively engaging with CVS Health leadership on their enterprise virtual care strategy, including potential applications of our wide range of services, as well as joint development areas in connection with their health hub strategy. With that, I'll turn the call over to Mala.