Teladoc Health, Inc.

Welcome to Teladoc's second quarter 2020 earnings conference call and webcast. At this time, all participants are in place on 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 touch-tone 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 headset for optimal sound quality. Lastly, if you should require operator assistance, please press star 0. It is now my pleasure to turn the floor over to Patrick Feely, Vice President of Investor Relations. You may begin.

Thank you, and good afternoon. Today, after the market closed, we issued a press release announcing our second quarter 2020 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 also provide our third quarter 2020 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 would now like to turn the call over to Jason.

Thanks, Patrick, and thank you everyone for joining us this afternoon. After the market closed, we reported the results of our second quarter 2020, which was characterized by outperformance across all key financial and operational metrics, driven by broad-based strength across the entire business. Particularly strong was our revenue in the quarter, which grew 85% over the prior year, to $241 million. As a result of the increased demand for our services from clients and consumers, as well as including the results of InTouch Health for the second half of the year, we are significantly raising forward guidance, including full-year revenue guidance of $980 to $995 million. This represents an increase of $170 to $180 million over our prior range including an organic increase of over $100 million. There's no doubt that the ongoing pandemic shines a spotlight on the integral role that virtual care plays within the healthcare system. I recently shared the virtual stage with USHHS Secretary Alex Azar, and when asked about virtual care, Secretary Azar said, I think we'd have a revolution if anyone tried to go backwards on telemedicine. This is now an embedded part of our healthcare system. I don't think I could have said it any better. The pandemic has accelerated the widespread adoption of virtual care, and I'm confident there's no going back. To that end, while it's earlier than usual for us to be looking ahead to the upcoming year, due to the significant amount of change experienced this year, we thought it would be helpful to provide you with a preliminary view on how we're thinking about 2021. The tremendous momentum and demand we're seeing across the business for our comprehensive product offering, including an impressive pipeline of new opportunities, gives us confidence in providing a preliminary outlook of 30% to 40% revenue growth for 2021. As the market leader, we've seen a significant acceleration in demand for our services. In the first half of the year, we onboarded nearly 15 million new paid members in the U.S., including 8.5 million new members during the second quarter, all of which have come on board under the traditional PMPM plus visit fee model. The marketplace has taken notice of our performance during the COVID outbreak. Our execution during the crisis, including the outstanding reliability of our platform and our ability to rapidly onboard physician capacity has enhanced our reputation and further distanced Teladoc Health from the competition. As a result, we are seeing increased inquiries for new potential client takeaways. For example, we recently signed a contract to provide our entire suite of clinical services to a Fortune 50 media company with well over 100,000 employees. This was a competitive takeaway that came to us due to our broad and comprehensive product portfolio and is scheduled to launch this fall. Turning to visit volumes, we provided approximately 2.8 million visits in the second quarter, representing growth of over 200% compared to the second quarter of 2019, and a 35% increase sequentially over the first quarter, despite the second quarter historically being a seasonally slower quarter. During this period of significant growth, we are extremely proud to see our patient satisfaction metrics climb as consumers benefit from the convenience, lower cost, and high quality service we provide. It's important to drill down into the drivers of the accelerating visit growth. While we're certainly seeing pandemic-related demand, long-term sustainable tailwinds are evident through a deeper look at the dynamic within the quarter. As discussed on last quarter's conference call, We experienced a sharp acceleration of visit volume during March and into the month of April as comprehensive national shelter-in-place orders began. Zero-dollar copays were implemented and brick-and-mortar facilities closed. Over the course of April and May, volume growth began to ease as the COVID curve flattened across the country and overall infectious disease rates fell due to social distancing. Utilization stabilized at a level roughly 40% higher than prior to COVID in late May and throughout most of June. As the state-level process of reopening began at the tail end of the quarter, we began to see volumes reaccelerate as COVID continues to flare up across various geographies. At the book of business level, we're currently experiencing visit volumes in the U.S. nearly double the level we would typically expect to see during these seasonally slower summer months. When we look at the individual state level, however, it highlights two distinct trends. On one hand, in several southern states where reopening was more rapid and COVID case volumes have accelerated, we are likewise experiencing a significant spike in demand and are now seeing visit volumes in these states exceed the initial peak levels of March and April. Conversely, over the past several weeks, in those states where reopening has been slower and COVID cases have remained well below the initial outbreak peak, we've seen visit volumes stabilize at levels well in excess of pre-COVID levels. In fact, we're seeing visit volumes grow in these states at more than double the rate of growth that we experienced just prior to COVID. It's worth noting that this is occurring despite the fact that physician office locations are now operating back near pre-COVID capacity levels after being down 70% at the April peak. This persistent strength in visit volumes reinforces our confidence in meaningfully higher sustained levels of utilization of virtual care going forward. Continuing on the theme of sustained levels of higher utilization, Our unmatched engagement capabilities have enabled us to fully capitalize on the current macro consumer tailwinds, fueling the acceleration of new registration growth, which was up 150% year-over-year in the second quarter. Visits from newly registered individuals represented over half of our visit volumes in the quarter, pointing to sustained utilization momentum going forward, as we benefit from the flywheel dynamic that we discussed at our Investor Day earlier this year. I am particularly pleased to see the strength in adoption and utilization continue to be broad-based as our diverse portfolio of services is enabling us to meet the varied needs of our members. While general medical visits continue to exhibit significant growth, demand for specialist care, including dermatology and mental health, continue to grow even faster. We're seeing tremendous demand for mental health visits in particular, as visit volumes have grown sequentially in every month of the year, both on the B2B and DTC sides of the business. BetterHelp, our direct-to-consumer mental health offering, is exhibiting accelerating traction and continues to significantly outperform our expectations. Turning now to our hospital and health systems channel, The second quarter saw us continue to experience tremendous growth in demand as provider clients are adopting our technology as a secure, effective, and efficient way to offer virtual visits at scale. The prolonged global crisis is highlighting the need for robust virtual care capabilities, and according to a recent survey conducted by McKinsey, About 60% of US providers now view telehealth more favorably than prior to the pandemic. In that same analysis, McKinsey estimated that over $250 billion worth of US healthcare spend could ultimately be virtualized, delivering material efficiencies to the system. Since the outbreak of the pandemic, we have seen a more than tenfold increase in utilization across our provider platform. as our clients shift more of their encounters to virtual. Of particular note, we have seen a tremendous increase in scheduled pre-admission and post-discharge follow-up visits as the number of clinical use cases continues to expand. As a result of investments we've made in our highly configurable and customizable offerings, we are uniquely equipped to meet the needs of integrated health plans looking to enable their own physician groups on our platform. including white-labeled solutions to both enable the practices to see their own patients virtually and to leverage Teladoc's own physician network to supplement these physician practices. As expected, we closed the acquisition of InTouch Health on July 1st, and I can confidently say this is the strongest integration we've had to date. I'm extremely excited to welcome Joe DeVivo, who is now officially the president of the newly combined hospital and health systems business and the entire InTouch team to the Teladoc Health family. Just last week, we were honored to host InTouch Health's 14th annual Telehealth Innovation Forum for the first time as a combined company and for the first time it was a fully virtual event. The Innovation Forum is the premier telehealth event of the year, attracting clients, healthcare leaders, and visionaries from around the world. This year, over 3,500 registered attendees participated in 55 sessions with more than 70 client speakers, covering topics ranging from virtual care best practices to clinical workflow models. The engagement within these sessions made it incredibly clear to me that the coming together of these two companies could not have been better timed and I could not be more excited about the tremendous opportunities ahead for the combined business. When it comes to the performance of the business, we are extremely pleased. The combined offering is resonating in the marketplace and our ability to deliver highly secure, interoperable and fully integrated platform backed by our large network of physicians is driving record pipeline growth. We have recently signed several significant new and expansion contracts with large clients, including new international deals with health systems in Germany, India, and the UK, demonstrating the ability of our team to close international deals and outpacing our own expectations for activating our international distribution channels. With that, I will turn the call over to Mala for a review of second quarter financials as well as detailed 2020 guidance.