Q3 2020 Teladoc Health Inc Earnings Call
[music].
Hello and welcome.
To the Teladoc third quarter 20 earnings conference call all lines have placed on mute.
We ended the conference.
The speakers remarks at the end of the conference and speaks Mercer completed you will not have a question and answer session at that time, we'll ask you to start one of your telephone keypad it or to ask question. If your question was the Ethirty electrochromic yourself on the queue. Please Uh huh.
At this time I'd like to turn the call over to Patrick.
For opening remarks, thank you very much.
[music].
Thank you and good afternoon today after the market closed we issued a press release announcing our third quarter 2020 financial results. This press releases are available on the Investor Relations section of the Teladoc health Dot Com website on this call to discuss the results are Jason Gorevic, Our Chief Executive Officer, and Molla Murphy, our Chief Financial Officer. During this call we will also.
We'll provide our fourth quarter 2020 outlook in 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 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 web site. Also please note that certain statements made during this call will be fine.
Forward looking statements as defined by the private Securities Litigation Reform Act of 1995 so.
Such forward looking statements are subject to risks uncertainties and other factors that could cause the actual results were 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 FCC 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 another quarter of significant outperformance across all key financial and operational metrics driven by broad based momentum across the entire business.
The ongoing pandemic has highlighted the critical role or virtual care within the overall health care system, and we continue to see increasing adoption by consumers clients and providers.
It's broad based strength drove record revenue of $289 million in the third quarter, an increase of 109% from the prior year period, including organic revenue growth of approximately 90%.
The strength demonstrated across our diverse channels products and geographies combined with a robust pipeline of new opportunities continues to give us tremendous confidence in the forward outlook for the business.
As a result of our third quarter performance and the continued momentum across the business.
We are increasing our full year revenue guidance to $1.005 billion to $1.015 billion.
During the third quarter, we also announced a combination with four bango health.
We could not be more excited for this deal to close later in the fourth quarter and we've already made significant progress towards integrating our two teams as I'll discuss in more detail later on the call.
Turning to visit volumes, our network of providers delivered over 2.8 million virtual visits in the third quarter more than triple the number of visits provided in the same period last year.
We were pleased to see visit volumes increased sequentially. Despite the cobot driven volume we experienced in the second quarter as well as the seasonally lower volumes typically experienced during the third quarter.
We continue to see strong evidence of sustained utilization increases for virtual care.
Well CDC figures and our own internal data point to overall declines in infectious disease transmission in the United States due to social distancing and the use of personal protective equipment. Our overall volume growth remained strong as evidenced by both our third quarter results and our fourth call.
Order outlook.
One clear driver of this strength has been a steady and broad based acceleration in our non infectious disease related visits visits.
Visits for conditions, such as hypertension back pain anxiety and depression represent over half of our general medical visit volume up from approximately one third a year ago.
As our comprehensive portfolio of services enables us to meet the increasing consumer demand for virtual care.
New registrations also continue to grow at a rapid pace, increasing more than 80% compared to the third quarter of 2019 well.
Well visit growth from newly registered individuals continues to outpace existing user visit growth.
These new registrations will continue to benefit us in the future as they create new opportunities to engage with members.
Taking a closer look at the volume trends in specialty care demand for dermatology and behavioral health services continues to significantly outpace overall volume growth.
In the B to B channel for example visits in these specialties grew over 500% compared to the prior year.
Demand for mental health care in particular continues to build both through our B to B channel as well as through our direct to consumer brand to better help.
Utilization of mental health services has continued to grow in each successive month of the year, which is very encouraging given the high repeat usage profile of the service.
On the heels of World Mental Health day, we're also reminded of the critical role our providers are playing for individuals around the world.
At a time when the global pandemic and economic hardship are driving increased need for mental health services. We continued to provide much needed access for those in need.
In fact, 40% of the individuals note that they would not have otherwise sought care if not for access to Teladoc health.
Together this momentum in specialty visit growth combined with a broadening diversity of diagnoses and robust overall registration growth continues to give us a high degree of confidence in the sustainability of our volume growth.
It also reinforces our strategy of consistently expanding the clinical scope of our services, which will take a quantum leap forward. When we incorporate the longo capabilities focused on helping people who live with chronic conditions.
Turning to the international channel, we continue to see new and innovative opportunities for growth outside the U.S.
Just last week, we launched an exciting new partnership with Telefonica, one of the largest telecom providers in Europe, and Latin America, including over 14 million customers in Spain.
As part of this partnership Telefonica will distribute our virtual care offering on a D to C and b to b basis to individuals and employers across Spain.
We're optimistic that the results of this partnership will pave the way for similar initiatives in other geographies around the world.
Last quarter, we also spoke about new geographic expansion into the Nordic region with a significant new client partnership with a large financial institution in this area.
We've already leveraged that foothold with multiple new sales during the quarter demonstrating the strong demand for a comprehensive virtual solution around the world.
Our hospital and health system Channel, which now includes Intouch also continued to experience tremendous growth as health systems and physician practices adopt our technology as a secure effective and efficient way to provide care.
In addition to the 7.6 million member visits provided by the Teladoc network of clinicians year to date, the combined Teladoc and in touch technology platform has enabled our clients own clinicians to provide nearly 3 million consultations for their patients.
The pipeline of new opportunities in this channel also continues to expand.
It's only four months since we closed the Intouch acquisition, but we've already completed over a dozen cross sells as health systems are increasingly looking for enterprise wide integrated solutions, and we're well on our way to achieving both our revenue and our cost synergy targets.
Staying with the hospital channel, we're pleased to announce a new partnership with Johns Hopkins one of the most prestigious academic medical centers in the world.
As a fully integrated health systems Hopkins will be implementing the Teladoc health platform to provide their patients health plan members and their own employees with access to on demand 24, seven virtual care.
Johns Hopkins selected the Teladoc platform based on our steadfast commitment to quality our position as the most comprehensive end to end solution in the industry and our innovative approach to advancing virtual care.
Finally, before I turn the call over to Molla I want to provide an update on the Lovano transaction.
With each passing day I become more and more excited by the combination of these two leaders in health care and technology.
The opportunities in front of us are boundless and together, we will be uniquely positioned to improve the health of millions of people around the world.
Our integration teams have made tremendous progress meeting regularly to map out the integration process and demonstrating impressive collaboration.
From a commercial standpoint, we will be working to integrate both teams. So that we have one go to market strategy and one unified interface to the client.
Clients are increasingly looking for a single integrated solution that brings all of the assets of the two companies together for episodic chronic and complex care.
We've seen tremendous interest from our clients around the world and we've already successfully closed our first major cross sale to guide well health the parent of Florida Blue.
Florida Blue has been a long time client of Teladoc health and we're extremely excited to expand that relationship and bring Lavalin goes platform to 50000 of Florida Blue's members living with diabetes.
To ensure and easily accessible pathway for the consumer we will create a seamless user experience where all of the services are integrated into one experience.
Creating a single access point for all of the consumers care needs.
As we've gone through the planning process, we're encouraged to find that the high level of technological sophistication on both sides will make the integration even smoother than many of our prior acquisitions from a technology perspective.
And the teams are actively working to map, the p. eyes and create that unified consumer experience.
Our teams have also begun to plan the integration of the unmatched data sets and capabilities of our two organizations.
Combining the 750 million elements from the Lovano dataset with the data generated by the 10 million plus virtual visits we will provide this year.
By applying the law Bango data science to this combined dataset, we will be able to deliver a level of patient insight that has been previously unavailable.
Combining meaningful data driven insights with clinical expertise will enable better care delivery better outcomes and lower costs.
As part of the new leadership structure announced earlier. This month. We are also in the process of creating a new integrated research and development organization.
We're incredibly excited to bring together the product innovation data science technological expertise and clinical excellence from across both companies under one roof.
There's a tremendous talent pool in both organizations.
And were eager to continue investing in the development of innovative solutions to improve the lives of consumers and extend our leadership role in the virtual care marketplace.
The similar mission driven cultures and shared vision of the two organizations has become apparent through this process.
And the more time, our team spend together the clearer this has become.
I was fortunate to spend some time with several of the Lavaca go commercial leaders last week and although it was an outdoor socially distance setting I can say that the level of enthusiasm for what we are building together was palpable.
In combining these two organizations, we are truly creating something entirely new while extending our position as the global leader in virtual care.
With that I will turn the call over to Molla for a review of third quarter financials as well as detailed 2020 guidance.
Thank you, Jason and good afternoon, everyone.
During the third quarter total revenue increased 109% to $289 million or approximately 90% on an organic basis.
Global access fee revenue for the quarter of $227 million.
90% versus the prior year demonstrating continued momentum.
Total international revenue of $32.9 million grew 20% versus the prior year.
Visit fee revenue for the quarter increased to $51 million representing growth of 171% over the prior year.
Visit fee revenue comprised 18% of consolidated revenue as compared to 14% of revenue.
In the prior year's quarter.
The increase in visit fee revenue as a percent of revenue is a result off the considerable increase in utilization realized year to date offset in part by the inclusion of Intouch health in our consolidated results.
Turning to membership in access.
U.S. paid membership increased to 51.5 million members during the third quarter, an increase of 47% versus the third quarter of last year.
Individuals that visit the only access was 21.8 million at the end of the third quarter, an increase of 2.8 million versus the prior year.
As previously discussed does it feel only access includes approximately 2.5 million individuals on a temporary basis that we anticipate will roll off at the end of the year.
Hello visit volume provided by Teladoc own network of providers exceeded 2.8 million visits in the quarter, representing 206% growth versus the prior year.
You will see a new operating metrics in our press release platform enable session.
Which represents encounters facilitated by our license off that platform.
And to love, our bike line own care providers.
Total sessions enabled were 986000 in the quarter.
Which is more than triple the number of consultations provided in the same period last year pro forma for the acquisition of Intouch health.
[noise] visit volume from paid members in the U.S. grew 242% to over 2.1 million visits.
Each represent and analyze utilization rate of 16.5% more than double the utilization rate of last years third quarter.
And a 50 basis point increase sequentially.
He MPN was $1.18 in the third quarter up from 98 cents in the prior year's quarter.
Adjusted gross profit adjusted to exclude amortization of intangible increased by $89 million.
To $194 million, an increase of 93% as compared to the prior years third quarter.
Adjusted gross margin was 63.7% compared to 69% in the third quarter of 2019 and 62.3% in the second quarter of 2020.
The year over year decline in gross margin is attributable to the robust visit growth and increase in visit fee revenue mix versus the prior year.
Operating expense for the quarter totaled $203.8 million or 70.6% of revenue compared to 83.4% in the third quarter of 2019.
Excluding non cash charges, such as depreciation and amortization stock based compensation and one time acquisition and integration related expenses.
Quarterly adjusted operating expenses were $145 million or 50.1% of revenue compared to 62.4% in the third quarter of last year.
[noise] contributing to the operating expense outperformance in this quarter was lower than anticipated advertising and marketing expense as some engagement campaign spending began later in the quarter than previously planned.
As discussed in the past we.
We seek to optimize advertising and marketing channel spending to maximize the value of our investment in membership engagement.
As a result, I'm engagements spending that is expected to take place at the end of the third quarter was actually deployed early in the fourth quarter contributing to lower in expense in Q3.
As a result, we expect to see a sequential increase in reported in and then in the fourth quarter.
We have consistently said in the past week stepped in and expense growth you approximate revenue growth and we continue to expect that to be the capex for the full year 2020.
Adjusted EBITDA increased to $39.5 million in the quarter compared to $9 million in the third quarter of 2090.
Third quarter, adjusted EBITDA margin of 13.7% increase.
<unk> over 700 basis points year over year.
As noted above the significant adjusted EBITDA outperformance in the quarter was in part driven by the timing of advertising and marketing activities between the third and fourth quarters.
Net loss in the quarter was $35.9 million compared to a net loss of $20.3 million in the third quarter of 29 team.
Excluding $16 million of transaction costs related to the pending longer larger net loss was $19.9 million for the third quarter on.
On a per share basis net loss was 43 cents for the third quarter compared to a loss of 28 cents in the third quarter of last year.
Excluding transaction costs or 19 cents per share related to the pending longer merger net loss per share was 24 cents.
We ended the quarter with $1.2 billion in cash and short term investments, while our total debt outstanding as of September Thirtyth was $1.3 billion.
Now turning to forward guidance.
Note that until the Lavalin transaction closes later this quarter all guidance represents expected Standalone Teladoc health results.
For the fourth quarter of 2020 weeks.
We expect total revenue of $294 million to $304 million representing growth.
Oh, 80, aged 94% over the prior year's quarter.
We expect total paid membership of 50 to 51 million.
Which is net of the approximately 1.5 million temporary members we have discussed in prior quarters.
We anticipate total visits during the fourth quarter of between 2.8 million and 3 million visits.
We expect fourth quarter adjusted EBITDA to be in the range of $21 million to $24 million.
Net loss per share, excluding lovano transaction related costs to be between 36 cents and 33 cents based on 84.4 million shares outstanding.
For the full year 2020.
We now expect revenue to be in the range of 1.005 billion to $1.015 billion up from our prior 980 $995 million, representing 82% to 83% growth over the prior year.
We expect total visits to be between 10.4 million and 10.6 million visits representing total visit growth of approximately 151% to 156% over the prior year.
We expect adjusted EBITDA to be in the range of $97 million to $100 million up from our prior 85 to 92 million dollar range representing growth of over 200% as compared to 2019.
Net loss per share excluding transaction costs related to the pending lovano merger is expected to range from a loss or $1.36 cents to $1.32 cents per share based on 79.4 million weighted shares outstanding.
We expect cash flow from operation to grow consistent with our adjusted EBITDA.
With that I will turn the call back to Jason for closing remarks.
Thanks, Marla I'm incredibly excited about the opportunities that lie ahead of us.
The pipeline for new opportunities has never been more robust and as we continue to differentiate our offering with innovative products and services the value proposition, we provide to the marketplace is only getting stronger.
Together with live Bongo, we will create an unmatched combination of scale and insights driving improved outcomes lower costs and a better consumer experience to meet the growing needs of clients and consumers all around the world.
As always thank you for your continued interest in the Teladoc health story and with that we'll open the call for questions operator.
And at this time, we'd like to ask a question simply press Star then the number one on your telephone keypad well pause for just a month, although compiled acuity roster.
Our first question comes in line and Lisa Gill of JP Morgan Your line is open.
Oh. Please go ahead Ms. Gil.
Please go ahead Mr. Bill your line is open.
Okay.
Hi, Good afternoon, Jason can you hear me okay.
Yep, Hi, Lisa Okay.
Hi.
Congratulations on another great quarter, I guess, you know why focus on just a couple of things I know, it's early to give us any numbers around 2021, but as we think about a few things one unemployment trends as we go into the back half of the year too that the selling season for 2021.
Just curious as to how you're seeing things do we need to wait our people signing up for a start date of one 121 are you continuing to see it kind of flow throughout the quarter Earthlink would be my first question and then secondly, you said several times that there is a robust pipeline of new opportunities is there any way to get to maybe quite.
On a file that in any way I know you've talked in the past have only got 25% overlap between your customer and know the bango customer base, but any kind of number that you could put around that and in that time line up those opportunities.
Sure. Thanks, Lisa I appreciate your comments and a question and before I started apologies to everyone for the technical difficulties at the beginning of the call we weren't trying to keep you in suspense.
And you know and we're happy to get into it.
So I first of all with respect to 2021 as you've heard US say you know, we we feel comfortable organically in the 30% to 40% range.
Okay, and you know we've been I think we've we've been disclosing a lot through the process relative to the live on go transaction and so I think together, we feel very strongly about the growth prospects in front of us and just as we were getting on the call.
I actually got to know about another successful Avago cross sell to a large teladoc employer client.
And you know I think the market demand and the traction that we're getting incredibly strongly and early is very encouraging to me when we look at our pipeline I. You know, we we we would actually say we expect at this point for our bookings in the fourth quarter.
Her to be a at least two times what they were in the third quarter based on what Weve already closed and what's in the late stages of the pipeline.
So again that gives us tremendous confidence in our 21 outlook there.
The selling season continues to be robust, we see both first quarter starts as well as starts that we're already talking about over the course of the year for expansion opportunities.
With clients and then and then lastly, I would say that that is true across all of the channels that we have both domestically.
Among employers and health plans as well as among hospitals and health systems.
And internationally.
And and that's true sort of across all of our various various channels.
You asked about unemployment.
We really you know we had modeled in.
Some conservatism in the beginning of the year for unemployment in the back half and we haven't seen that impact our numbers.
In any large degree and so you know we continue to monitor that closely.
And you know and we also benefit from the fact that many people who end up rolling off the employed ranks get Cobra coverage in along with their Cobra coverage.
They got Teladoc as a benefit so yeah, I would say that the impact of that on us is pretty dampened relative to others.
Yeah.
Our next question comes the line of sight, Sean Wieland Piper Sandler Your line is open.
Hi, Thanks, very much [noise], Jason you called out that your B to B during the behavioral business was up 500% and I was just hoping you could unpack that a little bit was that organic within in touch or where their revenue synergies there and what is a typical work flow look like there in particular.
They would be to be derm.
Yes, Sean I appreciate the question when I was talking about B to B derm and behavioral health that means through our BTB channels, where we're selling into a health plan or.
Or an employer and Joel that's entirely through the health plan and employer channel.
Not really through the Intouch or hospital and health systems channel and I think it really points to what we're seeing across the board, which is multi channel multi product sales. So you know at this 0.2 thirds of our sales.
Our multi product and that frequently includes both.
Behavioral health and dermatology alongside our general medical services.
And you know that's a that's an exciting opportunity for us because it takes us that much further toward whole person care, which is really augmented by the addition of Villa bango portfolio. So you know it bodes very well for us as we start to do that cross selling that I just talked about I.
And you know we now have a large health plan and a large employer who have already adopted the the love ongoing product line.
And thank you. Your next question comes line of Richard close of Canaccord Genuity. Your line is open.
Great. Congratulations Mike I was wondering if you could just help us with the respect to the fourth quarter adjusted EBITDA margins implied margins there.
Is the sequential step down from the third quarter, just a function of that marketing spend that you highlighted in your comments.
Yeah. Thank you Richard Here's how I would think about the adjusted EBITDA and adjusted EBITDA margin and think of it as the third quarter and the fourth quarter combined so think of it as second half and as you saw relative to the earlier guidance. We had given in July at the end of July we have taken up our adjusted EBITDA.
I expected adjusted EBITDA outlook by roughly about $10 million right.
And the way I would unpack. It is as follows you know we are as we've talked about in our prepared remarks, there is a timing shift versus what we had earlier thought about from an advertising and marketing perspective, you know it was the right thing to do based on the returns people are seeing so we were very judicious about.
Good how we spend and then the other thing I would also say is we are looking to lean into our investments in the fourth quarter, our on things such as R&D in in touch you know there are investments that we have wanted to make and we are making in the fourth quarter.
So it's really about leaning into our investments in the fourth quarter, such that we execute on the momentum that we see in the business and get a quick start for next year. So that's really how I would think about sort of our adjusted EBITDA.
The third and the fourth quarter combined and the N.N. shift from the third to the fourth quarter think about just in the four to 5 million dollar range.
And our next question comes from line of Stephanie Davis Uh Huh.
VP Leerink your line is open.
Hi, guys I'm going to go away.
Thanks, Stephanie so.
Utilization surprised us the most this quarter and that moderated a touch sequentially, despite a pretty sharp mix shift and the broader environment in person versus virtual care could you walk us through the puts and takes that are driving this such as maturation of new members in the prior year or anything else that's keeping it.
Uh huh.
Yeah, I think there are a few things there and I appreciate that observation you know we did see in many parts of the company in the country.
<unk> office visits return to near normal levels and at the same time, you're seeing people access teladoc for a broader array of clinical services. So you know as we mentioned a about 55% of our general medical visits were for non infectious diseases. So.
There's there's a moderating of overall infectious disease in the market by about 25%. According to the CDC and yet our volume was up substantially.
And so what we're seeing there is that our multiproduct in broad clinical array of services strategy is paying dividends, it's providing more services and more capabilities for consumers. The awareness increase a virtual care overall is bringing more people to our.
Our front door and I think thats evident by the increase in new registrations of roughly 80%.
And then you know the the last part I would say is that we are seeing are just tremendous increase in ER visit volume for other specialties. So both non infectious diseases the role of virtual care by other specialties and the fact that we're seeing new p.
People come to our front door, all that work to offset the overall market decline in infectious disease. So just sort of all the last punctuation Mark up but there is if you then play it forward a year to where we have a more normal infectious disease cycle I think.
We'll continue to see those overall utilization rates increase.
And your next question comes from Ryan Daniels of William Blair. Your line is open.
Yeah. Thanks for taking the question Jason a twofold strategic question for you I'm curious the integrated offering that you're going to go to market with with love ongoing that give us your payer partners an opportunity to effectively launch an entirely new type of insurance offering to consumers may be at a lower cost you know for tool.
Digital front door and if so second question is do you think that will eventually opened up the opportunity for expansions within the pay your client base to offer that or maybe even market share gains with some of the bigger peers, you're not working with thanks.
Yeah. Thanks, Ryan it's a really good question and the short answer is yes.
We're already talking with our large payer clients and large employers about what we talk about as virtual a primary care, which is the full credit whole person to answer that is a a virtual solution that brings the entire breadth of our products and services to bear.
And we're talking about doing that and wrapping a new benefit design, the new insurance product around that that really changes the benefits in sense. The usage of that virtual first and sort of holistic virtual capabilities.
Capability set and I think that gives the health plans, who embrace it a competitive advantage to deliver better care and a better consumer experience at a lower price and it gives us the opportunity.
To share in the upside that we create the savings that we create the better outcomes that we create a better star ratings and he just metrics that.
That we can drive and we're seeing those results are ready and our virtual a primary care pilots, where we are seeing a very broad array of clinical diagnoses over 70 clinical diagnoses and a lot of those are for things that we have solutions for things like okay.
The city and hypertension.
Diabetes, I know anxiety depression and.
And a shocking for me number of initial first diagnoses of some of those chronic conditions like hypertension.
And diabetes or pre diabetes, so the opportunity for us to take.
Take care of the whole person with our <unk> complete set of services does open up those those new opportunities.
And thank you. Your next question comes from the line of Charles Rhyee of Cowen. Your line is open.
Yeah, Hi, Thanks for taking question and congrats on the quarter, Jason a mall or a you know obviously, a strong quarter and I think you touched on it earlier about sort of the dynamics that propel still a very strong quarter in the third quarter. When we saw some of the metrics externally look.
Like there was some pull back from the peak when we look at the fourth quarter Guard mall or maybe you can help us on talk a little bit on the assumption going into the fourth quarter. When you look at it look sequentially flat.
Flat to slightly up when seasonally you would think fourth quarter is a strong quarter for.
Health care services in general.
Can you maybe help us understand a little bit on the underlying assumptions I know previously you guys did not assume a second wave in terms of coal did maybe give us a little thoughts on sort of what goes into that and then you know you've given us. This affiliated platform visits kinda number going forward or could we expect maybe a as you integrate.
Didn't touch more.
Given that's more of a provider focus business that you'll break that out separately on the <unk>.
On the subscription line as well or how can we think about modeling that going forward. Thanks.
Yeah. So Wade question Charles Let me address a then my follow so on your second question around in touch and HHS.
You know as we talked about in our prepared remarks, we have talked about the platform enables sessions you know one of the reasons. We provided that metric is that it is a great proxy for the engagements that our clients have with the platform and.
And we believe that that is the engagement that drives value for our clients.
So that is definitely something that we think will as this business continues with a strong momentum that is showing it.
It will outpace revenue growth, but it is something that we think will be the fuel the continued expansion of the business.
In all candor, we have looked at other metrics you talked about provider.
We have looked internally at other metrics remember we are still in the process of integrating our ERP systems. Our CRM system. So what I would say is look for us as we continue onto next year or two to provide transparency on other metrics.
In the hospital and health systems business that we think will give clarity on the true underlying momentum of the business you know the a platform that enables sessions is a is a great start.
At this point in time, we don't plan to break out the revenue for the H.S. business beyond what is already been provided you know as you saw in the results. We put forth we have broken out one piece of business in our revenue the other.
New which actually shows the hardware revenue both purchase and lease that is separate broken out separately, but at this point in time and we don't plan to do any further breakouts will just provide more transparency on the operating metrics of the business.
On your other question in terms of the assumptions.
Here's what I would say first of all you saw in our results a continuation of the very broad momentum that we're seeing across our business right. So it is across all channels, whether it be on the commercial side, whether it be on our DTC side or whether it be.
On our aegis side, we are seeing broad momentum across the business and that is translating into the strength you're seeing in year over year growth on access revenue as well as visits revenue.
In terms of the fourth quarter guide the way, we have modeled it and thought about it as you.
You know we are looking at the robustness of the pipeline. We have we are looking at from a visit perspective, we are expecting a relatively weak flu season, the shelf in place and the use of P. P. E has been factored into our forecast.
I would not expect to see an incremental upside versus what we have guided on from a second cobot Serge you factored in all of those into our guide.
And I would also say in terms of the adjusted EBITDA margin as I've said in my prior remarks, you know we have reflected the fact that we do want to invest and leaning into our investment ahead of the strong momentum we expect in our outlook for next year as we have already shared.
In terms of the 30% to 40% on an organic basis.
Thank you and your next question comes in line of Jill Andrew <unk> of Credit Suisse. Your line is open.
Hi, Thank you so yes, a bit in late September or pointed out that over 94% of Medicare advantage plans it off with Tele health benefit next year, what's it like 58%. This year, Jason you have talked about kind of how going out to buy Medicare advantage plans being like most create a phenomenal phenomenal.
So this seems to be trending better than those expectations do you agree with that and the second if you can provide any update on on Teladoc successes I mean long fought like anyone for kind of how benefit.
Yeah, what I can tell you drill Andrew is that we're seeing quite a bit of interest from all of the government programs. At this point, both managed Medicaid as well as Medicare advantage were up over two and a half million.
Medicare advantage members at this point, which is about a million more than Ah I think the last time, we gave you a number I'm not going to give an outlook for 2021 at this point I think the way the adoption continues to be strong.
And I think with the whole avago set of capabilities and the prevalence of hypertension diabetes.
Pre diabetes among the M. A population that is going to make our products and services that much more attractive and we're working on a set of additional capabilities that I think will increase the value of our overall portfolio to M. A plan so.
I feel good about the progress, we're making there and I think that that will continue through 21 and beyond.
And your next question comes line of Daniel Cross Light of Citibank. Your line is open.
Hi, guys. Thanks for taking the question and congrats on the continued momentum here.
I've seen some payers still leaving cost shares root for telehealth, others have reverted to the pre endemic benefit design for what it's worth I still checking every week with my my insurer to make sure they're still waiting cost sharing and they are but was just curious of your commercial book both for those who are getting.
Teladoc through there there, whereas a carve out or through their insurer do you have a number of what percent of your clients are still leaving the cost share.
<unk>.
Well Daniel I appreciate your checking in with your I was just pair and I would suggest you continue to do that and encourage them to to continue their zero copay.
We I, we haven't disclosed what percentage of our payers what I can tell you is it's a mix.
Among our payers, who make the decisions for themselves or there are some who have returned to a you know charging a co pay for virtual care services. There are others, who have extended through the end of the year.
And then among the employers we're seeing the employers the large self insured employers who are making those benefit decisions for themselves really stick with that zero copay.
And we expect them to stay with that at least through the end of the year if not beyond.
And your next question, Mike George Hill of Deutsche Bank. Your line is open.
Evening, guys and thanks for taking the question Jason I've got a question for you on how you think about market share. If we look at the almost 52 million members, where you guys ended the quarter and we kind of put your 30% growth number on it for 20 to 21 that'll put you call. It 62 to 67 million members, which is like 40% of people with employers.
Answered coverage, a little close to 30% of people. If we include everybody with risk based coverage probably in the low twentys. If we include Medicare advantage. So I guess, how do you guys think about your market share and kind of what is the right way to think about teladoc. Some market share in how you guys approach what share of the market you guys want to have on a normalized basis.
Yeah, So George first or just I guess I want to just start by saying.
We I don't we've given some outlooks relative to revenue growth.
Hey, we've given outlooks relative to sort of margin expansion, but we havent given at least to my knowledge.
It looks in terms of annual membership growth. So I I went and not jump to what our 21 membership will be until we give guidance, which will probably be in.
In February ish.
With respect to our market share you know, we think about market share I among in sort of a few different dimensions first of all.
We're looking at multiple different channels right, whether its employers or health plans, whether it's a it's hospitals and health systems domestically and internationally and of course, we're selling direct to consumer. It's also for different product. So we have such a diverse product line.
Right and you know we still have as we look at our our Greenfield opportunity just among our existing clients.
There's a north of 70 million people.
Who are still you know, what we would call white space among our existing clients. So so tremendous opportunity for continued growth domestically among those populations and every year, we sell more products and services into those populations you know as I mentioned.
And with our multi product bookings with now the opportunity to bring the long ago product set.
To bear so it's a it's a bit of a complicated question. Because you know of course the last dimension is what share of visits are we getting.
And of course, we generate additional revenue from both new members as well as additional incremental visits.
And your next question has lot of Matthew Gilmore of Baird. Your line is open.
Hey, Thanks, I was hoping you could take a moment to update us on where things stand from a physician supply standpoint within your network. Obviously offices are opening back up and this is a time of year, where utilization is normally higher but I was curious if you're seeing any pressure with respect to recruit manner or compensation or.
You know maybe what's in place today versus wasn't there at the beginning of the year.
Yes, Thanks, Matt I. Appreciate the question you know the innovation that we put in place.
Okay and in the March timeframe as we were experience. They are experiencing the incredible increase in volume has really paid tremendous dividends for us over the course of the year.
And that's helped us to expand our population of physicians, it's helped us to onboard physicians more quickly.
And then a streamlined fashion I. It it's helped us to make the physicians work more efficient so that for each physicians our that their spending with us they can be more productive.
And so the combination of all of those things has.
Has really result in just tremendous efficiency gains and greater productivity and as a result, you know we are operating at significantly higher levels of utilization as Weve reported and yet our <unk> response times are down in the low single digits minute.
It's a good to speak to a physician or really are all across the country. So I'm really proud of the teams work on those areas and it was both work flow changes it was technology changes.
It was process innovation and all of that has come together in a really meaningful way.
And our next question comes line of Rob Mr that apparently your.
Your line is open.
Hi, Thanks for taking the question. So just a little question on the competitive environment now that you have another public company in your space just curious.
How are you kind of accounting for churn or any kind of competition in the selling season are you seeing any you know any commentary there would be helpful. And then just on the bango deal how should we think about that long term in terms of the value extraction that that you've spoken about can that cannot be converted to.
A P NPM uplifting and is that factored into the synergy guidance that you know that we've got thanks.
Sure I'll take the first on competition, and ER and client retention and I'll hand, it tamala for the Lavanya goes synergies discussion you.
With respect to the competitive landscape. The Oh, we were already by far the leader, which I think has been that that become that much more clear.
As you know other data has become public.
Okay and and now.
With the combination with Bongo, we're really creating an entirely new category.
And distancing ourselves from you know any of the legacy Tele health players and with respect to how that shows up in our pipeline.
Our client retention rates continue to be very very strongly in the ninetys I.
Our our takeaways are actually increasing and velocity, our competitive takeaways and that's happening across multiple channels you know in in the health plan and employer segment, a as well as in the a in the hospital and health system channel.
And as a result, you know I.
I think I have never felt better about the competitive landscape and our competitive position.
Molly you want to talk about Avago and the the synergy does yeah.
So you know we have been very clear in terms of how we are getting at and thinking about our revenue synergies. We've talked about you know the buckets that we have seen a quantified line of sight to being cross sell cross referral and international as you know we've also talked about.
Other buckets of synergies that we have not quantified whether it be you know how this will facilitate and even bolster <unk> primary care offering et cetera. The thing I would say is you know we are just in the beginning stages of really doing deep deep integration planning you know the two sets.
So teams came together a couple of days ago. We spent all day I'm looking at integration from every possible function then within every function every possible sub function. You know we are starting to think through from a pricing architecture standpoint, you question. How this is going to work together.
Other you know how are the bundles going to work together so stay tuned in terms of how we will go sell this in the marketplace I don't want to get ahead of our skis and talk about you did that is thinking and planning that via latrine literally doing as we speak.
Thank you. Your next question comes Wanna, Jonathan Young of Barclays. Your line is open.
Thanks, I just had a question on religion. So the bango I think with the guide well deal Oh Bango is already in discussions with them with the Teladoc Oh local bunker merger that really accelerate I was wondering if that was the same case with the margin or that you side well this a key.
Factor for you were kind of revenue synergies moving forward or where you're able to expedite some of the deals because of these relationships and are those are are those revenue synergies already in my bongos pipeline and you just did.
Yeah, I think there I think that there there's definitely a an acceleration that happens in the acceleration.
It is for a number of reasons, one because it's easier to contract with a company you already have a contract with.
Right. So you don't have to go through the entire procurement process.
Two people appreciate having a single relationship manager a single team and three and maybe most importantly, the value proposition of an integrated suite of products for the consumer is show much stronger right and so the ability to.
To do that to to bring a single solution not only accelerates the process, but also very importantly.
You know increases the value proposition and specifically to your question about whether the the large employer I mentioned earlier was already in discussions with Bongo they weren't even talking to them. So those are the answer is no that was a de novo sale and so.
So you can appreciate how quickly that has progressed and therefore, how strong the value proposition of the combined offering as.
The one other thing I would add is you know as we thought about the revenue synergies and quantifying the revenue synergies to be very clear on what we had already factored into the calculus was the fact that of course longer has a momentum off its own and it was going to have its own strong pipeline that they had their own organic growth. So.
We've been very careful about not double counting and you know factoring those we've kept them to your indistinct as we modeled out the synergies.
Thank you very much everyone and with that this concludes today's Q and a session as well as today's conference call. Thank you for your participation you may now disconnect.
[music].