Item 2.05. Costs Associated with Exit or Disposal Activities.
On January 18, 2023, Teladoc Health, Inc. (the
“Company”) announced a restructuring plan intended to reduce operating costs. In addition, the Company underwent certain other
cost-saving actions taken during the latter part of the fourth quarter of 2022. The combination of these actions results in a reduction
of the Company’s workforce of approximately 6 percent, and office space reductions within certain markets. The fourth quarter actions
did not have a material impact on 2022 financial operating results. Decisions regarding the elimination of positions are subject to local
law and consultation requirements in certain countries, as well as the Company’s business needs.
In conjunction with earlier cost-saving actions,
the Company incurred approximately $4.4 million in pre-tax charges in the fourth quarter of 2022, consisting of approximately $2 million
in costs related to employee transition, severance payments, employee benefits, and related costs, and approximately $2.4 million in exit
costs associated with the office space reductions. In connection with the restructuring plan, the Company expects to incur approximately
$17 million in pre-tax charges in 2023, consisting of approximately $9 million substantially related to employee transition, severance
payments, employee benefits, and related costs expected to be realized in the first quarter of 2023, and approximately $8 million of exit
costs associated with office space reductions expected to occur by the second quarter of 2023. Of the aggregate amount of pre-tax charges
that the Company estimates it will incur in 2023, approximately $10 million are expected to result in future cash expenditures related
to the workforce reductions. In addition to these charges, the Company expects a reduction in stock-based compensation of approximately
$6 million in the first quarter of 2023 associated with forfeited stock awards.
The estimates of the charges and expenditures that
the Company expects to incur in connection with the restructuring plan, and the timing thereof, are subject to a number of assumptions,
including local law requirements in various jurisdictions, and actual amounts may differ materially from estimates.
In addition, the Company may incur other charges
or cash expenditures not currently contemplated due to unanticipated events that may occur, including in connection with the implementation
of the restructuring plan.
A letter to the Company’s employees from
Jason Gorevic, the Company’s chief executive officer, regarding these actions is attached to this Current Report on Form 8-K as
Exhibit 99.1 and is incorporated by reference.
Cautionary Note Regarding Forward-Looking Statements
This report contains “forward-looking statements”
within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements
can be identified by words such as: “anticipate,” “intend,” “plan,” “believe,” “project,”
“estimate,” “expect,” “may,” “should,” “will” and similar references to future
periods. Examples of forward-looking statements include, among others, statements we make regarding the Company’s expectations regarding
the costs, benefits, timing and financial impacts from the restructuring plan.
Forward-looking
statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations
and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy
and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks
and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial
condition may differ materially from those indicated in the forward-looking statements. Important factors that could cause our actual
results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the
following: (i) changes in laws and regulations applicable to our business model; (ii) changes in market conditions and receptivity to
our services and offerings; (iii) results of litigation or regulatory actions; (iv) the loss of one or more key clients; (v) changes
in valuations or useful lives of our assets; (vi) changes to our abilities to recruit and retain qualified providers into our network;
(vii) the impact of and risk related to impairment losses with respect to goodwill, intangibles or other assets; and (viii) the impact
of the COVID-19 pandemic on our operations, demand for our services and general economic conditions, as well as orders, directives and
legislative action by local, state, federal and foreign governments in response to the spread of COVID-19. For a detailed discussion of
the risk factors that could affect our actual results, please refer to the risk factors identified in our SEC reports, including, but
not limited to, our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, as filed with the SEC.
Any forward-looking statement made by us in this
report is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation
to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of
new information, future developments or otherwise.