10-Q 1 tdoc-20220930x10q.htm 10-Q
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DeferredTaxAssetsDeferredIncome

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     

to                     

Commission File Number: 001-37477

TELADOC HEALTH, INC.

(Exact name of registrant as specified in its charter)

Delaware

04-3705970

(State of incorporation)

(I.R.S. Employer Identification No.)

2 Manhattanville Road, Suite 203

Purchase, New York

10577

(Address of principal executive office)

(Zip code)

(203635-2002

(Registrant’s telephone number including area

code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

TDOC

The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes    No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes    No  

As of October 27, 2022, the Registrant had 161,927,087 shares of Common Stock outstanding.

TELADOC HEALTH, INC.

QUARTERLY REPORT ON FORM 10-Q

For the period ended September 30, 2022

TABLE OF CONTENTS

Page
Number

PART I

Financial Information

2

Item 1.

Financial Statements

2

Condensed Consolidated Balance Sheets as of September 30, 2022 (unaudited) and December 31, 2021

2

Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited) for the quarters and nine months ended September 30, 2022 and 2021

3

Condensed Consolidated Statements of Stockholders’ Equity (unaudited) for the quarters and nine months ended September 30, 2022 and 2021

4

Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2022 and 2021

5

Notes to Unaudited Condensed Consolidated Financial Statements

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

23

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

32

Item 4.

Controls and Procedures

33

PART II

Other Information

34

Item 1.

Legal Proceedings

34

Item 1A.

Risk Factors

34

Item 6.

Exhibits

35

Exhibit Index

35

Signatures

36

1

PART I

FINANCIAL INFORMATION

ITEM 1. Financial Statements

TELADOC HEALTH, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data, unaudited)

September 30,

December 31,

    

2022

    

2021

Assets

Current assets:

Cash and cash equivalents

$

899,631

$

893,480

Short-term investments

0

2,537

Accounts receivable, net of allowance of $15,311 and $12,384, respectively

 

201,701

 

168,956

Inventories

59,344

73,079

Prepaid expenses and other current assets

 

126,912

 

87,387

Total current assets

 

1,287,588

 

1,225,439

Property and equipment, net

 

27,270

 

27,234

Goodwill

 

4,846,001

 

14,504,174

Intangible assets, net

 

1,854,263

 

1,910,278

Operating lease - right-of-use assets

45,187

46,780

Other assets

 

43,656

 

20,703

Total assets

$

8,103,965

$

17,734,608

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$

70,783

$

47,257

Accrued expenses and other current liabilities

 

177,111

 

102,933

Accrued compensation

 

63,211

 

91,941

Deferred revenue-current

90,210

75,569

Advances from financing companies

10,086

13,313

Total current liabilities

 

411,401

 

331,013

Other liabilities

 

1,632

 

1,492

Operating lease liabilities, net of current portion

41,080

41,773

Deferred revenue, net of current portion

3,146

3,834

Advances from financing companies, net of current portion

7,855

9,291

Deferred taxes, net

 

51,742

 

75,777

Convertible senior notes, net

1,534,448

1,225,671

Commitments and contingencies (Note 10)

Stockholders’ equity:

Common stock, $0.001 par value; 300,000,000 shares authorized; 162,195,790 shares and 160,469,325 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

 

162

 

160

Additional paid-in capital

 

17,299,981

 

17,473,336

Accumulated deficit

 

(11,198,216)

 

(1,421,454)

Accumulated other comprehensive loss

(49,266)

(6,285)

Total stockholders’ equity

 

6,052,661

 

16,045,757

Total liabilities and stockholders’ equity

$

8,103,965

$

17,734,608

See accompanying notes to unaudited condensed consolidated financial statements.

2

TELADOC HEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except share and per share data, unaudited)

Quarter Ended September 30,

Nine Months Ended September 30,

 

    

2022

2021

2022

2021

 

Revenue

$

611,402

    

$

521,658

    

$

1,769,131

    

$

1,478,472

Expenses:

Cost of revenue (exclusive of depreciation and amortization, which is shown separately below)

185,619

 

169,041

 

555,114

 

475,273

Operating expenses:

Advertising and marketing

 

178,920

 

111,078

 

477,094

 

303,738

Sales

 

54,634

 

62,602

 

170,893

 

191,251

Technology and development

 

87,815

 

80,250

 

256,053

 

239,017

General and administrative

 

112,542

 

103,016

 

328,333

 

319,404

Acquisition, integration, and transformation costs

1,594

 

4,340

8,993

 

22,084

Depreciation and amortization

 

62,008

 

51,907

 

180,312

 

151,907

Goodwill impairment

0

0

9,630,000

0

Total expenses

683,132

582,234

11,606,792

1,702,674

Loss from operations

 

(71,730)

 

(60,576)

 

(9,837,661)

 

(224,202)

Loss on extinguishment of debt

0

 

850

0

 

43,728

Other expense (income), net

1,571

376

2,607

(5,493)

Interest expense, net

 

1,346

 

18,895

 

11,163

 

61,493

Net loss before provision for income taxes

 

(74,647)

 

(80,697)

 

(9,851,431)

 

(323,930)

Provision for income taxes

 

(1,171)

 

3,643

 

(1,971)

 

93,878

Net loss

(73,476)

(84,340)

(9,849,460)

(417,808)

Other comprehensive loss, net of tax:

Currency translation adjustment and other

(19,402)

(13,423)

(42,981)

(19,650)

Comprehensive loss

$

(92,878)

$

(97,763)

$

(9,892,441)

$

(437,458)

Net loss per share, basic and diluted

$

(0.45)

$

(0.53)

$

(61.09)

$

(2.68)

 

 

 

 

Weighted-average shares used to compute basic and diluted net loss per share

161,727,962

159,435,165

161,217,033

155,926,680

See accompanying notes to unaudited condensed consolidated financial statements.

3

TELADOC HEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share data, unaudited)

Accumulated

Additional

Other

Total

Common Stock

Paid-In

Accumulated

Comprehensive

Stockholders’

   

Shares

   

Amount

   

Capital

   

Deficit

   

Gain (Loss)

   

Equity

Balance as of June 30, 2022

161,892,008

$

162

$

17,239,092

$

(11,124,740)

$

(29,864)

$

6,084,650

Exercise of stock options

125,039

0

666

0

0

666

Issuance of common stock upon vesting of restricted stock units

178,743

0

0

0

0

0

Stock-based compensation

0

0

60,223

0

0

60,223

Other comprehensive loss, net of tax

0

0

0

0

(19,402)

(19,402)

Net loss

0

0

0

(73,476)

0

(73,476)

Balance as of September 30, 2022

162,195,790

$

162

$

17,299,981

$

(11,198,216)

$

(49,266)

$

6,052,661

Balance as of December 31, 2021

160,469,325

$

160

$

17,473,336

$

(1,421,454)

$

(6,285)

$

16,045,757

Cumulative effect adjustment due to adoption of ASU 2020-06 (see Note 2)

0

0

(363,731)

72,698

0

(291,033)

Exercise of stock options

552,400

1

5,645

0

0

5,646

Issuance of common stock upon vesting of restricted stock units

1,025,363

1

(1)

0

0

0

Issuance of stock under employee stock purchase plan

148,609

0

4,225

0

0

4,225

Issuance of common stock for 2025 Notes

93

0

7

0

0

7

Equity portion of extinguishment of 2025 Notes

0

0

(2)

0

0

(2)

Stock-based compensation

0

0

180,502

0

0

180,502

Other comprehensive loss, net of tax

0

0

0

0

(42,981)

(42,981)

Net loss

0

0

0

(9,849,460)

0

(9,849,460)

Balance as of September 30, 2022

162,195,790

$

162

$

17,299,981

$

(11,198,216)

$

(49,266)

$

6,052,661

Balance as of June 30, 2021

159,462,978

$

159

$

17,314,749

$

(1,326,129)

$

12,291

$

16,001,070

Exercise of stock options

216,882

1

5,174

0

0

5,175

Issuance of common stock upon vesting of restricted stock units

235,674

0

0

0

0

0

Issuance of common stock for 2025 Notes

98,217

0

14,868

0

0

14,868

Equity portion of extinguishment of 2025 Notes

0

0

(10,079)

0

0

(10,079)

Stock-based compensation

0

0

74,311

0

0

74,311

Other comprehensive loss, net of tax

0

0

0

0

(13,423)

(13,423)

Net loss

0

0

0

(84,340)

0

(84,340)

Balance as of September 30, 2021

160,013,751

$

160

$

17,399,023

$

(1,410,469)

$

(1,132)

$

15,987,582

Balance as of December 31, 2020

150,281,099

$

150

$

16,857,797

$

(992,661)

$

18,518

$

15,883,804

Exercise of stock options

2,123,935

3

22,953

0

0

22,956

Issuance of common stock upon vesting of restricted stock units

1,490,879

1

(1)

0

0

0

Issuance of stock under employee stock purchase plan

82,088

0

10,539

0

0

10,539

Issuance of common stock for 2022 Notes

1,058,373

1

270,111

0

0

270,112

Equity portion of extinguishment of 2022 Notes

0

0

(224,081)

0

0

(224,081)

Issuance of common stock for 2025 Notes

5,182,656

5

920,514

0

0

920,519

Equity portion of extinguishment of 2025 Notes

0

0

(668,507)

0

0

(668,507)

Recovery of excess common stock issued for acquisition

(205,279)

0

(40,329)

0

0

(40,329)

Stock-based compensation

0

0

250,027

0

0

250,027

Other comprehensive loss, net of tax

0

0

0

0

(19,650)

(19,650)

Net loss

0

0

0

(417,808)

0

(417,808)

Balance as of September 30, 2021

160,013,751

$

160

$

17,399,023

$

(1,410,469)

$

(1,132)

$

15,987,582

See accompanying notes to unaudited condensed consolidated financial statements.

4

TELADOC HEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

Nine Months Ended September 30,

 

    

2022

2021

 

Operating activities:

    

    

    

    

Net loss

$

(9,849,460)

$

(417,808)

Adjustments to reconcile net loss to net cash provided by operating activities:

Goodwill impairment

9,630,000

0

Depreciation and amortization

 

180,312

 

151,907

Depreciation of rental equipment

2,185

2,500

Amortization of right-of-use assets

9,266

8,185

Provision for allowances

 

8,867

 

11,353

Stock-based compensation

 

167,098

 

240,971

Deferred income taxes

 

(5,942)

 

91,414

Accretion of interest

2,496

46,843

Loss on extinguishment of debt

 

0

 

40,631

Gain on sale of investment

0

(5,901)

Other, net

3,677

38

Changes in operating assets and liabilities:

Accounts receivable

 

(45,267)

 

(19,407)

Prepaid expenses and other current assets

 

(39,177)

 

(34,566)

Inventory

13,709

(2,661)

Other assets

 

(22,854)

 

(3,432)

Accounts payable

 

24,067

 

(11,115)

Accrued expenses and other current liabilities

 

70,046

 

15,880

Accrued compensation

 

(32,028)

 

(17,352)

Deferred revenue

12,311

20,002

Operating lease liabilities

(8,111)

(8,202)

Other liabilities

 

2,548

 

1,502

Net cash provided by operating activities

 

123,743

 

110,782

Investing activities:

Capital expenditures

 

(10,285)

 

(5,611)

Capitalized software

 

(108,588)

 

(35,402)

Proceeds from marketable securities

2,507

50,000

Proceeds from the sale of investment

0

10,901

Acquisitions of businesses, net of cash acquired

 

0

 

(75,944)

Other, net

2,514

3,150

Net cash used in investing activities

 

(113,852)

 

(52,906)

Financing activities:

Net proceeds from the exercise of stock options

 

5,646

 

22,956

Repurchase of 2022 Notes

 

0

 

(139)

Proceeds from advances from financing companies

6,807

10,677

Payment against advances from financing companies

(11,470)

(12,053)

Proceeds from employee stock purchase plan

 

3,386

 

13,996

Cash received for withholding taxes on stock-based compensation, net

594

3,109

Other, net

(2,847)

(4,224)

Net cash provided by financing activities

 

2,116

 

34,322

Net increase in cash and cash equivalents

 

12,007

 

92,198

Foreign exchange difference

(5,856)

(1,694)

Cash and cash equivalents at beginning of the period

 

893,480

 

733,324

Cash and cash equivalents at end of the period

$

899,631

$

823,828

Income taxes paid

$

901

$

3,114

Interest paid

$

8,688

$

10,380

See accompanying notes to unaudited condensed consolidated financial statements.

5

TELADOC HEALTH, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Organization and Description of Business

Teladoc Health, Inc., together with its subsidiaries, is referred to herein as “Teladoc Health,” or the “Company,” and is the global leader in whole person virtual care, forging a new healthcare experience with better convenience, outcomes, and value. The Company’s mission is to empower all people everywhere to live their healthiest lives by transforming the healthcare experience.

The Company was incorporated in the State of Texas in June 2002 and changed its state of incorporation to the State of Delaware in October 2008. Effective August 10, 2018, Teladoc, Inc. changed its corporate name to Teladoc Health, Inc. The Company’s principal executive office is located in Purchase, New York.

On October 30, 2020, the Company completed the merger with Livongo Health, Inc. (“Livongo”), a transformational opportunity to improve the delivery, access and experience of chronic healthcare for individuals around the world.

On July 1, 2020, the Company completed the acquisition of InTouch Technologies, Inc. (“InTouch”), a leading provider of enterprise telehealth solutions for hospitals and health systems.

Note 2. Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements for the nine months ended September 30, 2022 and 2021, in the opinion of management, reflect all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the condensed consolidated results of operations, financial position and cash flows of Teladoc Health for the periods presented. However, the financial results for interim periods are not necessarily indicative of the results that may be expected for a full fiscal year or for any other future period.

 

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States (“U.S.”) have been omitted or condensed pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The information in this report should be read in conjunction with the Company’s Annual Report on Form 10-K filed with the SEC for the fiscal year ended December 31, 2021 (the “2021 Form 10-K”), which includes a complete set of footnote disclosures, including the Company’s significant accounting policies.

These financial statements include the results of Teladoc Health, as well as three professional associations and twelve professional corporations (collectively, the “THMG Association”). All intercompany transactions and balances have been eliminated.

Certain prior year amounts have been reclassified to conform to the current year presentation.

Teladoc Health Medical Group, P.A., formerly Teladoc Physicians, P.A. (“THMG”), is party to a Services Agreement by and among it and the professional associations and professional corporations pursuant to which each professional association and professional corporation provides services to THMG. Each professional association and professional corporation is established pursuant to the requirements of its respective domestic jurisdiction governing the corporate practice of medicine.

The Company holds a variable interest in the THMG Association, which contracts with physicians and other health professionals in order to provide services to the Company. The THMG Association is considered a variable interest entity (“VIE”) since it does not have sufficient equity to finance its activities without additional subordinated financial support. An enterprise having a controlling financial interest in a VIE must consolidate the VIE if it has both power and benefits—that is, it has (1) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance (power) and (2) the obligation to absorb losses of the VIE that potentially could be significant to the VIE or the right to receive benefits from the VIE that potentially could be significant to the VIE (benefits). The Company has the power and rights to control all activities of the THMG Association and funds and absorbs all losses of the VIE and appropriately consolidates the THMG Association.

6

Total revenue and net income (loss) for the VIE were $57.5 million and ($1.1) million, and $58.8 million and $1.0 million, for the quarters ended September 30, 2022 and 2021, respectively. Total revenue and net income (loss) for the VIE were $176.9 million and ($3.9) million, and $169.6 million and ($0.2) million, for the nine months ended September 30, 2022 and 2021, respectively. The VIE’s total assets, all of which were current, were $51.0 million and $58.5 million at September 30, 2022 and December 31, 2021, respectively. The VIE’s total liabilities, all of which were current, were $91.0 million and $94.6 million at September 30, 2022 and December 31, 2021, respectively. The VIE’s total stockholders’ deficit was $40.0 million and $36.1 million at September 30, 2022 and December 31, 2021, respectively.

Business Combinations

The Company accounts for its business combinations using the acquisition method of accounting. The purchase price is attributed to the fair value of the assets acquired and liabilities assumed. Transaction costs directly attributable to the acquisition are expensed as incurred. Identifiable assets and liabilities acquired or assumed are measured separately at their fair values as of the acquisition date. The excess of the purchase price of acquisition over the fair value of the identifiable net assets of the acquiree is recorded as goodwill. The results of businesses acquired in a business combination are included in the Company’s condensed consolidated financial statements from the date of acquisition.

When the Company issues stock-based or cash awards to an acquired company’s stockholders, the Company evaluates whether the awards are consideration or compensation for post-acquisition services. The evaluation includes, among other things, whether the vesting of the awards is contingent on the continued employment of the acquired company’s stockholders beyond the acquisition date. If continued employment is required for vesting, the awards are treated as compensation for post-acquisition services and recognized as expense over the requisite service period.

Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates, including the selection of valuation methodologies, estimates of future revenue and cash flows, discount rates and selection of comparable companies. The estimates and assumptions used to determine the fair values and useful lives of identified intangible assets could change due to numerous factors, including market conditions, technological developments, economic conditions, and competition. In connection with determination of fair values, the Company may engage a third-party valuation specialist to assist with the valuation of intangible and certain tangible assets acquired and certain obligations assumed. Acquisition-related transaction costs incurred by the Company are not included as a component of consideration transferred but are accounted for as an operating expense in the period in which the costs are incurred.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. The Company bases its estimates on historical experience, current business and economic factors, and various other assumptions that the Company believes are necessary to form a basis for making judgments about the carrying values of assets and liabilities, the recorded amounts of revenue and expenses, and the disclosure of contingent assets and liabilities. The Company is subject to uncertainties such as the impact of future events, economic and political factors, and changes in the Company’s business environment; therefore, actual results could differ from these estimates. Accordingly, the accounting estimates used in the preparation of the Company’s condensed consolidated financial statements will change as new events occur, as more experience is acquired, as additional information is obtained, and as the Company’s operating environment evolves. The Company believes that estimates used in the preparation of these condensed consolidated financial statements are reasonable; however, actual results could differ materially from these estimates.

Changes in estimates are made when circumstances warrant. Such changes in estimates and refinements in estimation methodologies are reflected in reported results of operations; if material, the effects of changes in estimates are disclosed in the notes to the condensed consolidated financial statements.

Significant estimates and assumptions by management affect areas including the carrying value and useful life of long-lived assets (including intangible assets), the carrying value of goodwill, the capitalization and amortization of software development costs, deferred device and contract costs, sales and bad debt allowances, and the accounting for business combinations. Other significant areas include revenue recognition (including performance guarantees), the

7

accounting for income taxes, contingences, litigation and related legal accruals, the accounting for stock-based compensation awards, and other items as described in the Summary of Significant Accounting policies in this Quarterly Report and in the 2021 Form 10-K.

Recently Adopted Accounting Standards

In August 2020, the financial accounting standards board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, "Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.” ASU 2020-06 simplifies the accounting for convertible instruments by eliminating the conversion option separation model for convertible debt that can be settled in cash and by eliminating the measurement model for beneficial conversion features. Convertible instruments that continue to be subject to separation models are (1) those with conversion options that are required to be accounted for as bifurcated derivatives and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. This ASU also requires entities to use the if-converted method for all convertible instruments in the diluted earnings per share calculation and include the effect of share settlement for instruments that may be settled in cash or shares, except for certain liability-classified share-based payment awards.

The Company adopted ASU 2020-06 as of January 1, 2022, under the modified retrospective transition method, and, accordingly, its prior period financial statements were not restated. Upon adoption of ASU 2020-06, the conversion feature of the Company’s convertible senior notes is no longer reported as a component of equity. Instead, the previously-separated equity component is now combined with the liability component, thereby eliminating the amortization of the debt discount arising from the conversion option separation model. As such, the Company currently anticipates a reduction of approximately $58 million in non-cash interest to be recorded on its convertible senior notes for the year ended December 31, 2022, as compared to the year ended December 31, 2021. To reflect the adoption of ASU 2020-06, the Company recorded an increase to convertible senior notes of $306.3 million and decreases to additional paid-in capital, accumulated deficit and net deferred tax liabilities of $363.7 million, $72.7 million and $15.3 million, respectively, as of January 1, 2022.

Recently Issued Accounting Standards

In June 2022, the FASB issued ASU 2022-03, “Fair Value Measurement (Topic 820)—Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions” to clarify that an equity security subject to a contractual sale restriction does not take that restriction into consideration when measuring its fair value and to require specific disclosures related to such an equity security. ASU 2022-03 is effective for annual reporting periods, including interim periods, beginning after December 15, 2023, with early adoption permitted. The provisions of ASU 2022-03 are to be applied prospectively with any adjustments made to earnings on the date of adoption. The adoption of ASU 2022-03 is not expected to have a material impact on the Company’s financial statements.

In September 2022, the FASB issued ASU 2022-04, “Liabilities – Supplier Finance Programs (Subtopic 405-50) – Disclosure of Supplier Finance Program Obligations,” to provide guidance on disclosure requirements for supplier finance programs and improve information transparency by requiring the disclosure of key terms of the program, amounts outstanding that remain unpaid, a description of where those amounts are presented in the balance sheet, and a rollforward of any outstanding obligations. ASU 2022-04 is effective for annual reporting periods, including interim periods therein, beginning after December 15, 2022, except for the amendment on roll forward information, which is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. The Company is currently evaluating what the impact of adopting ASU 2022-04 may have on its financial statements.

Note 3. Revenue, Deferred Revenue, and Deferred Device and Contract Costs

The Company generates access fees from customers, consisting of employers, health plans, hospitals and health systems, insurance companies, and financial services companies (collectively “Clients”), as well as individual members, accessing its professional provider network, hosted virtual healthcare platform, and chronic care management platforms. Visit fee revenue is generated for general medical, expert medical service, and other specialty visits. In addition, other revenue is primarily associated with virtual healthcare device equipment included with its hosted virtual healthcare platform. Access revenue accounted for 88% and 86% of the Company’s revenue for the quarters ended September 30,

8

2022 and 2021, respectively. Access revenue accounted for 88% and 85% of the Company’s revenue for the nine months ended September 30, 2022 and 2021, respectively.

The following table presents the Company’s revenues disaggregated by revenue source (in thousands):

Quarter Ended

Nine Months Ended 

September 30,

September 30,

    

2022

    

2021

    

2022

    

2021

    

Access Fees Revenue

U.S.

$

465,692

$

386,181

$

1,337,264

$

1,085,325

International

74,387

62,737

212,882

176,764

Total

540,079

448,918

1,550,146

1,262,089

Visit Fee Revenue

U.S.

62,766

 

59,863

 

191,479

 

176,187

International

2,800

2,690

8,748

9,131

Total

65,566

62,553

200,227

185,318

Other

U.S.

5,555

9,583

17,856

29,617

International

202

604

902

1,448

Total

5,757

10,187

18,758

31,065

Total Revenues

$

611,402

$

521,658

$

1,769,131

$

1,478,472

During the fourth quarter of 2021, the Company refined its definition of international revenues to reflect all international revenues based on location of the customer. Previously, Direct-to-Consumer (“DTC”) activities were primarily reflected based on the location of operations. In addition, certain activities related to the Company’s international operations are now reflected in visit revenues versus access fee revenues. Prior period amounts have been recast to conform with current presentation.

Deferred Revenue

Deferred revenue represents billed, but unrecognized revenue, and is comprised of fees received in advance of the delivery or completion of the services and amounts received in instances when revenue recognition criteria have not been met. Deferred revenue associated with upfront payments for a device is amortized ratably over the expected member enrollment period. Deferred revenue that will be recognized during the succeeding twelve-month period is recorded as current deferred revenue and the remaining portion is recorded as noncurrent deferred revenue.

For certain services, payment is required for future months before the service is delivered to the member. The Company records deferred revenue when cash payments are received in advance of the Company’s performance obligation to provide services. Deferred revenue, current plus long-term, was $93.4 million at September 30, 2022 and $76.9 million at September 30, 2021. The net increase of $14.0 million and $21.8 million in the deferred revenue balance for the nine months ended September 30, 2022 and 2021, respectively, was primarily driven by BetterHelp, the Company’s DTC mental health product, InTouch, and Livongo, and cash payments received or due in advance of satisfying the Company’s performance obligations, offset by revenue recognized that were included in the deferred revenue balance at the beginning of the period. The Company anticipates that it will satisfy most of its performance obligation associated with the deferred revenue within the prospective fiscal year. Revenue recognized during the quarters ended September 30, 2022 and 2021 that was included in deferred revenue at the beginning of the periods was $