10-Q 1 tdoc-20210930x10q.htm 10-Q
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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, 2021

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 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, 2021, the Registrant had 160,086,661 shares of Common Stock outstanding.

TELADOC HEALTH, INC.

QUARTERLY REPORT ON FORM 10-Q

For the period ended September 30, 2021

TABLE OF CONTENTS

Page
Number

PART I

Financial Information

2

Item 1.

Financial Statements

2

Consolidated Balance Sheets as of September 30, 2021 (unaudited) and December 31, 2020

2

Consolidated Statements of Operations and Comprehensive Loss (unaudited) for the quarters and nine months ended September 30, 2021 and 2020

3

Consolidated Statements of Stockholders’ Equity (unaudited) for the quarters and nine months ended September 30, 2021 and 2020

4

Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2021 and 2020

5

Notes to Unaudited Consolidated Financial Statements

6

Item 2.

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

26

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

35

Item 4.

Controls and Procedures

35

PART II

Other Information

37

Item 1.

Legal Proceedings

37

Item 1A.

Risk Factors

37

Item 6.

Exhibits

38

Exhibit Index

38

Signatures

40

1

PART I

FINANCIAL INFORMATION

ITEM 1. Financial Statements

TELADOC HEALTH, INC.

CONSOLIDATED BALANCE SHEETS

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

September 30,

December 31,

    

2021

    

2020

Assets

Current assets:

Cash and cash equivalents

$

823,828

$

733,324

Short-term investments

2,538

53,245

Accounts receivable, net of allowance of $11,277 and $6,412, respectively

 

178,072

 

169,281

Inventories

56,937

56,498

Prepaid expenses and other current assets

 

95,941

 

47,259

Total current assets

 

1,157,316

 

1,059,607

Property and equipment, net

 

27,027

 

28,551

Goodwill

 

14,470,399

 

14,581,255

Intangible assets, net

 

1,932,012

 

2,020,864

Operating lease - right-of-use assets

47,935

46,647

Other assets

 

17,890

 

18,357

Total assets

$

17,652,579

$

17,755,281

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$

34,655

$

46,030

Accrued expenses and other current liabilities

 

106,252

 

83,657

Accrued compensation

 

75,891

 

94,593

Deferred revenue-current

72,865

52,356

Advances from financing companies

12,442

13,453

Current portion of long-term debt

0

42,560

Total current liabilities

 

302,105

 

332,649

Other liabilities

 

1,328

 

1,616

Operating lease liabilities, net of current portion

42,729

43,142

Deferred revenue, net of current portion

4,075

2,449

Advances from financing companies, net of current portion

9,561

9,926

Deferred taxes

 

93,824

 

102,103

Convertible senior notes, net

1,211,375

1,379,592

Commitments and contingencies

Stockholders’ equity:

Common stock, $0.001 par value; 300,000,000 shares authorized as of September 30, 2021 and December 31, 2020; 160,013,751 shares and 150,281,099 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

 

160

 

150

Additional paid-in capital

 

17,399,023

 

16,857,797

Accumulated deficit

 

(1,410,469)

 

(992,661)

Accumulated other comprehensive (loss) gain

(1,132)

18,518

Total stockholders’ equity

 

15,987,582

 

15,883,804

Total liabilities and stockholders’ equity

$

17,652,579

$

17,755,281

See accompanying notes to unaudited consolidated financial statements.

2

TELADOC HEALTH, INC.

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,

    

2021

2020

2021

2020

Revenue

$

521,658

    

$

288,812

    

$

1,478,472

    

$

710,641

    

Expenses:

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

169,041

 

104,725

 

475,273

 

267,887

Operating expenses:

Advertising and marketing

 

111,078

 

52,302

 

303,738

 

132,395

Sales

 

62,602

 

23,483

 

191,251

 

60,110

Technology and development

 

80,250

 

29,958

 

239,017

 

72,244

Acquisition, integration and transformation costs

4,340

 

25,395

22,084

 

30,686

General and administrative

 

103,016

 

59,742

 

319,404

 

162,699

Depreciation and amortization

 

51,907

 

12,932

 

151,907

 

32,535

Total expenses

582,234

308,537

1,702,674

758,556

Loss from operations

 

(60,576)

 

(19,725)

 

(224,202)

 

(47,915)

Loss on extinguishment of debt

850

 

1,227

43,728

 

8,978

Other expense (income), net

376

252

(5,493)

827

Interest expense, net

 

18,895

 

16,970

 

61,493

 

38,849

Net loss before taxes

 

(80,697)

 

(38,174)

 

(323,930)

 

(96,569)

Income tax expense (benefit)

 

3,643

 

(2,290)

 

93,878

 

(5,400)

Net loss

(84,340)

(35,884)

(417,808)

(91,169)

Other comprehensive (loss) gain, net of tax:

Cumulative translation adjustment

(13,423)

16,285

(19,650)

11,610

Comprehensive loss

$

(97,763)

$

(19,599)

$

(437,458)

$

(79,559)

Net loss per share, basic and diluted

$

(0.53)

$

(0.43)

$

(2.68)

$

(1.17)

 

 

 

 

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

159,435,165

83,607,902

155,926,680

77,821,073

See accompanying notes to unaudited consolidated financial statements.

3

TELADOC HEALTH, INC.

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, 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 conversion/exchange of 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, net

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

ESPP

82,088

0

10,539

0

0

10,539

Issuance of common stock for 2022 Convertible Notes

1,058,373

1

270,111

0

0

270,112

Issuance of common stock for 2025 Notes

5,182,656

5

920,514

0

0

920,519

Recovery of excess common stock issued for acquisition (see Note 4)

(205,279)

(0)

(40,329)

0

0

(40,329)

Equity portion of extinguishment of 2025 Notes

0

0

(668,507)

0

0

(668,507)

Equity portion of extinguishment of 2022 Notes

0

0

(224,081)

0

0

(224,081)

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

Balance as of June 30, 2020

79,099,433

$

79

$

1,879,573

$

(562,810)

$

(21,913)

$

1,294,929

Exercise of stock options

400,555

0

7,113

0

0

7,113

Issuance of common stock upon vesting of restricted stock units

49,396

0

(0)

0

0

0

Issuance of common stock for conversion/redemption of 2022 Notes

950

0

187

0

0

187

Equity portion of extinguishment of 2022 Notes

0

0

(44)

0

0

(44)

Issuance of common stock for conversion/exchange of 2025 Notes

187,346

0

37,780

0

0

37,780

Equity portion of extinguishment of 2025 Notes

0

0

(29,326)

0

0

(29,326)

Issuance of common stock in acquisition

4,620,665

5

918,813

0

0

918,818

Stock-based compensation

0

0

21,178

0

0

21,178

Other comprehensive gain, net of tax

0

0

0

0

16,285

16,285

Net loss

0

0

0

(35,884)

0

(35,884)

Balance as of September 30, 2020

84,358,345

$

84

$

2,835,274

$

(598,694)

$

(5,628)

$

2,231,036

Balance as of December 31, 2019

72,761,941

$

73

$

1,538,716

$

(507,525)

$

(17,239)

$

1,014,025

Exercise of stock options, net

1,999,518

1

40,625

0

0

40,626

Issuance of common stock upon vesting of restricted stock units

801,575

1

(1)

0

0

0

ESPP

35,901

0

2,473

0

0

2,473

Issuance of common stock for 2022 Convertible Notes

3,951,399

4

694,047

0

0

694,051

Issuance of common stock for 2025 Notes

187,346

0

37,780

0

0

37,780

Issuance of common stock in acquisition

4,620,665

5

918,813

0

0

918,818

Equity portion of extinguishment of 2022 Notes

0

0

(715,195)

0

0

(715,195)

Equity portion of extinguishment of 2025 Notes

0

0

(29,326)

0

0

(29,326)

Equity component of 2027 Notes, net of issuance costs

0

0

285,601

0

0

285,601

Stock-based compensation

0

0

61,741

0

0

61,741

Other comprehensive gain, net of tax

0

0

0

0

11,611

11,611

Net loss

0

0

0

(91,169)

0

(91,169)

Balance as of September 30, 2020

84,358,345

$

84

$

2,835,274

$

(598,694)

$

(5,628)

$

2,231,036

See accompanying notes to unaudited consolidated financial statements.

4

TELADOC HEALTH, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

Nine Months Ended September 30,

    

2021

2020

Cash flows provided by operating activities:

    

    

    

    

Net loss

$

(417,808)

$

(91,169)

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

Depreciation and amortization

 

151,907

 

32,535

Depreciation of rental equipment

2,500

851

Amortization of right-of-use assets

8,185

4,643

Allowance for doubtful accounts

 

11,353

 

2,320

Stock-based compensation

 

240,971

 

61,151

Deferred income taxes

 

91,414

 

(4,096)

Accretion of interest

46,843

29,459

Loss on extinguishment of debt

 

40,631

 

8,978

Gain on sale of investment

(5,901)

0

Other, net

38

216

Changes in operating assets and liabilities:

Accounts receivable

 

(19,407)

 

(16,450)

Prepaid expenses and other current assets

 

(34,566)

 

(5,906)

Inventory

(2,661)

(2,392)

Other assets

 

(3,432)

 

140

Accounts payable

 

(11,115)

 

6,584

Accrued expenses and other current liabilities

 

15,880

 

17,269

Accrued compensation

 

(17,352)

 

9,329

Deferred revenue

20,002

15,348

Operating lease liabilities

(8,202)

(4,360)

Other liabilities

 

1,502

 

(3,025)

Net cash provided by operating activities

 

110,782

 

61,425

Cash flows used in investing activities:

Capital expenditures

 

(5,611)

 

(2,872)

Capitalized software development costs

 

(35,402)

 

(14,515)

Proceeds from marketable securities

50,000

0

Proceeds from the sale of investment

10,901

0

Acquisitions of business, net of cash acquired

 

(75,944)

 

(159,663)

Other, net

3,150

0

Net cash used in investing activities

 

(52,906)

 

(177,050)

Cash flows provided by financing activities:

Net proceeds from the exercise of stock options

 

22,956

 

40,627

Proceeds from issuance of 2027 Notes

0

1,000,000

Payment of issuance costs of 2027 Notes

0

(24,070)

Repurchase of 2022 Notes

 

(139)

 

(228,153)

Proceeds from advances from financing companies

10,677

1,924

Payment against advances from financing companies

(12,053)

(4,427)

Proceeds from employee stock purchase plan

 

13,996

 

2,473

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

3,109

326

Other, net

(4,224)

0

Net cash provided by financing activities

 

34,322

 

788,700

Net increase in cash and cash equivalents

 

92,198

 

673,075

Foreign exchange difference

(1,694)

(129)

Cash and cash equivalents at beginning of the period

 

733,324

 

514,353

Cash and cash equivalents at end of the period

$

823,828

$

1,187,299

Income taxes paid

$

3,114

$

786

Interest paid

$

7,973

$

5,612

See accompanying notes to unaudited consolidated financial statements.

5

Note 1. Organization and Description of Business

Teladoc, Inc. 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. Unless the context otherwise requires, Teladoc Health, Inc., together with its subsidiaries, is referred to herein as “Teladoc Health” or the “Company”. The Company’s principal executive office is located in Purchase, New York. Teladoc Health is a global leader in providing virtual healthcare services with a focus on high quality, lower costs, and improved outcomes around the world.

On January 4, 2021, the Company completed the acquisition of the UK-based telemedicine provider Consultant Connect Limited (“Consultant Connect”). Consultant Connect provides a platform that specializes in facilitating healthcare professional-to-professional advice and guidance in the United Kingdom.

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 healthcare for consumers around the world. Livongo is pioneering a new category in healthcare, called Applied Health Signals, which is transforming the management of chronic conditions.

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 consolidated financial statements for the three and nine months ended September 30, 2021 and 2020, in the opinion of management, reflect all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the 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 in the United States (“U.S. GAAP”) 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, 2020, 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 thirteen professional corporations (collectively, the “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. is party to several Services Agreements by and among it and the professional associations and professional corporations pursuant to which each professional association and professional corporation provides services to Teladoc Health Medical Group, P.A. 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 Association which contracts with physicians and other health professionals in order to provide services to the Company. The 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 impacts 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 Association and funds and absorbs all losses of the VIE and appropriately consolidates the Association.

Total revenue and net income (loss) for the VIE were $56.2 million and $0.1 million, and $48.9 million and $(0.7) million, for the quarters ended September 30, 2021 and 2020, respectively. Total revenue and net income (loss)

6

for the VIE were $161.9 million and $(3.0) million, and $149.1 million and $0.1 million, for the nine months ended September 30, 2021 and 2020, respectively. The VIE’s total assets, all of which were current, were $31.0 million and $28.7 million at September 30, 2021 and December 31, 2020, respectively. Total liabilities, all of which were current for the VIE, were $71.0 million and $65.8 million at September 30, 2021 and December 31, 2020, respectively. The VIE’s total stockholders’ deficit was $40.1 million and $37.1 million at September 30, 2021 and December 31, 2020, 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 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 assumed obligations. 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 consolidated financial statements and accompanying notes. The Company bases its estimates on historical experience, current business 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 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 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 consolidated financial statements.

Significant estimates and assumptions by management affect areas including the allowance for doubtful accounts, the carrying value of long-lived assets (including goodwill and intangible assets), capitalization and amortization of software development costs, the finalization of purchase accounting adjustments, Client performance guarantees, the calculation of a contingent liability in connection with an acquisition earn-out, the provision for income taxes and related deferred tax accounts, revenue recognition, contingencies, and other items as described in the Summary of Significant Accounting policies in this Quarterly Report and in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 (the “2020 Form 10-K”).

7

Recently Issued Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board (“FASB”) issued 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. This standard becomes effective for the Company on January 1, 2022 and may be early adopted during an interim period of 2021. The Company will adopt the standard on January 1, 2022 and is currently evaluating the impact of ASU 2020-06 on its consolidated financial statements.

Summary of Significant Accounting Policies

The following sections reflect updates to the summary of significant accounting policies described in the 2020 Form 10-K. In addition, on an ongoing basis, the Company will continue to closely monitor for any significant impact to its estimates and assumptions as a result of the COVID-19 pandemic, especially on the allowance for doubtful accounts.

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. It also includes costs related to certain business transformation initiatives focused on integrating and optimizing various operations and systems, including enhancing our customer relationship management (CRM) and enterprise resource planning (ERP) systems, incurred in connection with our acquisition and integration activities.  

General and Administrative Costs

General and Administrative costs consist of all operating expenses not included in the other operating expense categories and now include legal and regulatory costs for all current and historical periods presented.

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.

Note 3. Revenue, Deferred Revenue, Deferred Costs and Other

The Company generates access fees from Clients 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 87% and 78% of our revenue for the quarters ended September 30, 2021 and 2020. Access revenue accounted for 86% and 77% of our revenue for the nine months ended September 30, 2021 and 2020, respectively.

8

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

Quarter Ended