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 June 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)

(203) 635-2002

(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 July 28, 2021, the Registrant had 159,248,228 shares of Common Stock outstanding.

TELADOC HEALTH, INC.

QUARTERLY REPORT ON FORM 10-Q

For the period ended June 30, 2021

TABLE OF CONTENTS

		Page Number
PART I	Financial Information	2
Item 1.	Financial Statements	2
	Consolidated Balance Sheets as of June 30, 2021 (unaudited) and December 31, 2020	2
	Consolidated Statements of Operations and Comprehensive Loss (unaudited) for the quarters and six months ended June 30, 2021 and 2020	3
	Consolidated Statements of Stockholders’ Equity (unaudited) for the quarters and six months ended June 30, 2021 and 2020	4
	Consolidated Statements of Cash Flows (unaudited) for the six months ended June 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	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	35
PART II	Other Information	36
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 6.	Exhibits	37
Exhibit Index		37
Signatures		39

1

PART I

FINANCIAL INFORMATION

ITEM 1. Financial Statements

TELADOC HEALTH, INC.

CONSOLIDATED BALANCE SHEETS

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

	June 30,		December 31,
	2021		2020
Assets
Current assets:
Cash and cash equivalents	$	783,724	$	733,324
Short-term investments		2,538		53,245
Accounts receivable, net of allowance of $10,952 and $6,412, respectively		179,436		169,281
Inventories		56,990		56,498
Prepaid expenses and other current assets		82,149		47,259
Total current assets		1,104,837		1,059,607
Property and equipment, net		28,184		28,551
Goodwill		14,454,712		14,581,255
Intangible assets, net		1,963,172		2,020,864
Operating lease - right-of-use assets		41,880		46,647
Other assets		18,334		18,357
Total assets	$	17,611,119	$	17,755,281
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	42,077	$	46,030
Accrued expenses and other current liabilities		91,609		83,657
Accrued compensation		59,629		94,593
Deferred revenue-current		69,293		52,356
Advances from financing companies		13,619		13,453
Current portion of long-term debt		0		42,560
Total current liabilities		276,227		332,649
Other liabilities		1,346		1,616
Operating lease liabilities, net of current portion		36,493		43,142
Deferred revenue, net of current portion		3,501		2,449
Advances from financing companies, net of current portion		9,561		9,926
Deferred taxes		81,882		102,103
Convertible senior notes, net		1,201,039		1,379,592
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value; 300,000,000 shares authorized as of June 30, 2021 and December 31, 2020; 159,462,979 shares and 150,281,099 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively		159		150
Additional paid-in capital		17,314,749		16,857,797
Accumulated deficit		(1,326,129)		(992,661)
Accumulated other comprehensive gain		12,291		18,518
Total stockholders’ equity		16,001,070		15,883,804
Total liabilities and stockholders’ equity	$	17,611,119	$	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 June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Revenue	$	503,139	$	241,030	$	956,814	$	421,829
Expenses:
Cost of revenue (exclusive of depreciation and amortization, which is shown separately below)		160,273		90,780		306,232		163,162
Operating expenses:
Advertising and marketing		103,221		47,578		192,660		80,093
Sales		63,856		18,687		128,649		36,627
Technology and development		80,759		23,029		158,767		42,286
Acquisition, integration and transformation costs		11,421		1,627		17,744		5,291
General and administrative		111,216		56,615		216,388		102,957
Depreciation and amortization		51,341		9,893		100,000		19,603
Total expenses		582,087		248,209		1,120,440		450,019
Loss from operations		(78,948)		(7,179)		(163,626)		(28,190)
Loss on extinguishment of debt		31,419		7,751		42,878		7,751
Other (income) expense, net		(217)		(111)		(5,869)		574
Interest expense, net		20,473		13,262		42,598		21,880
Net loss before taxes		(130,623)		(28,081)		(243,233)		(58,395)
Income tax expense (benefit)		3,196		(2,399)		90,235		(3,110)
Net loss		(133,819)		(25,682)		(333,468)		(55,285)
Other comprehensive gain (loss), net of tax:
Cumulative translation adjustment		7,265		12,880		(6,227)		(4,674)
Comprehensive loss	$	(126,554)	$	(12,802)		(339,695)	$	(59,959)
Net loss per share, basic and diluted	$	(0.86)	$	(0.34)	$	(2.16)	$	(0.74)
Weighted-average shares used to compute basic and diluted net loss per share		156,055,090		76,512,870		154,187,739		74,919,194

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 December 31, 2020	150,281,099	$	150	$	16,857,797	$	(992,661)	$	18,518	$	15,883,804
Exercise of stock options	1,238,112		1		11,907		0		0		11,908
Issuance of common stock upon vesting of restricted stock units	976,999		1		(1)		0		0		(0)
Issuance of common stock for conversion/redemption of 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 conversion of 2025 Notes	1,056,861		1		288,485		0		0		288,486
Equity portion of extinguishment of 2025 Notes	0		0		(237,261)		0		0		(237,261)
Retirement of shares related to acquisition (see Note 4)	(205,280)		(0)		(40,329)		0		0		(40,329)
Stock-based compensation	0		0		90,000		0		0		90,000
Other comprehensive loss, net of tax	0		0		0		0		(13,492)		(13,492)
Net loss	0		0		0		(199,649)		0		(199,649)
Balance as of March 31, 2021	154,406,164	$	154	$	17,016,628	$	(1,192,310)	$	5,026	$	15,829,498
Exercise of stock options	668,942		1		5,872		0		0		5,873
Issuance of common stock upon vesting of restricted stock units	278,206		0		(0)		0		0		(0)
Issuance of common stock under employee stock purchase plan	82,088		0		10,539		0		0		10,539
Issuance of common stock for conversion/exchange of 2025 Notes	4,027,578		4		617,161		0		0		617,165
Equity portion of extinguishment of 2025 Notes	0		0		(421,167)		0		0		(421,167)
Stock-based compensation	0		0		85,716		0		0		85,716
Other comprehensive gain, net of tax	0		0		0		0		7,265		7,265
Net loss	0		0		0		(133,819)		0		(133,819)
Balance as of June 30, 2021	159,462,978	$	159	$	17,314,749	$	(1,326,129)	$	12,291	$	16,001,070
Balance of December 31, 2019	72,761,941	$	73	$	1,538,716	$	(507,525)	$	(17,239)	$	1,014,025
Exercise of stock options	671,279		0		14,830		0		0		14,830
Issuance of common stock upon vesting of restricted stock units	642,411		1		(1)		0		0		0
Issuance of common stock for 2022 Notes	655		0		58		0		0		58
Stock-based compensation	0		0		18,421		0		0		18,421
Other comprehensive loss, net of tax	0		0		0		0		(17,554)		(17,554)
Net loss	0		0		0		(29,603)		0		(29,603)
Balance as of March 31, 2020	74,076,286	$	74	$	1,572,024	$	(537,128)	$	(34,793)	$	1,000,177
Exercise of stock options	927,684		1		18,682		0		0		18,683
Issuance of common stock upon vesting of restricted stock units	109,768		0		(0)		0		0		0
Issuance of common stock under employee stock purchase plan	35,901		0		2,473		0		0		2,473
Issuance of common stock for 2022 Notes	3,949,794		4		693,802		0		0		693,806
Equity portion of extinguishment of 2022 Notes	0		0		(715,151)		0		0		(715,151)
Equity component of 2027 Notes, net of issuance costs	0		0		285,601		0		0		285,601
Stock-based compensation	0		0		22,142		0		0		22,142
Other comprehensive gain, net of tax	0		0		0		0		12,880		12,880
Net loss	0		0		0		(25,682)		0		(25,682)
Balance as of June 30, 2020	79,099,433		79		1,879,573		(562,810)		(21,913)		1,294,929

See accompanying notes to unaudited consolidated financial statements.

4

TELADOC HEALTH, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

	Six Months Ended June 30,
	2021		2020
Cash flows provided by operating activities:
Net loss	$	(333,468)	$	(55,285)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		100,000		19,603
Amortization of right-of-use assets and depreciation of rental equipment		7,521		3,052
Allowance for doubtful accounts		7,534		2,290
Stock-based compensation		169,270		40,243
Deferred income taxes		83,823		(3,457)
Accretion of interest		32,566		16,576
Loss on extinguishment of debt		39,782		7,751
Gain on sale of investment		(5,901)		0
Other, net		38		214
Changes in operating assets and liabilities:
Accounts receivable		(16,573)		(24,773)
Prepaid expenses and other current assets		(26,758)		1,595
Inventory		(2,234)		0
Other assets		1,919		36
Accounts payable		(4,741)		1,844
Accrued expenses and other current liabilities		5,380		37,555
Accrued compensation		(35,606)		(1,818)
Deferred revenue		17,205		(12,347)
Operating lease liabilities		(5,833)		(2,788)
Other liabilities		267		(1,061)
Net cash provided by operating activities		34,191		29,230
Cash flows used in investing activities:
Capital expenditures		(4,405)		(1,641)
Capitalized software development costs		(21,508)		(6,449)
Proceeds from marketable securities		50,000		0
Proceeds from the sale of investment		10,901		—
Acquisitions of business, net of cash acquired		(56,336)		(13,500)
Other, net		3,150		0
Net cash used in investing activities		(18,198)		(21,590)
Cash flows provided by financing activities:
Net proceeds from the exercise of stock options		17,781		33,513
Proceeds from issuance of 2027 Notes		0		1,000,000
Payment of issuance costs of 2027 Notes		0		(24,070)
Repurchase of 2022 Notes		(137)		(228,130)
Proceeds from advances from financing companies		7,924		0
Payment from customers against advances from financing companies		(8,122)		0
Proceeds from employee stock purchase plan		11,031		2,473
Cash received for withholding taxes on stock-based compensation, net		5,159		4,492
Other, net		(98)		0
Net cash provided by financing activities		33,538		788,278
Net increase in cash and cash equivalents		49,531		795,918
Foreign exchange difference		869		(1,428)
Cash and cash equivalents at beginning of the period		733,324		514,353
Cash and cash equivalents at end of the period	$	783,724	$	1,308,843
Income taxes paid	$	52	$	59
Interest paid	$	7,972	$	5,609

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 the 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 have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The consolidated financial statements include the results of Teladoc Health, as well as three professional associations, thirteen professional corporations and a service corporation (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 $53.9 million and $(1.0) million, and $57.7 million and $0.9 million, for the quarters ended June 30, 2021 and 2020, respectively. Total revenue and net income (loss) for the VIE were $105.7 million and $(3.1) million, and $100.2 million and $0.8 million, for the six months ended June 30, 2021 and 2020, respectively. The VIE’s total assets, all of which were current, were $21.7 million and $28.7 million at June 30, 2021 and December 31, 2020, respectively. Total liabilities, all of which were current for the VIE, were $61.8 million and $65.8 million at June 30, 2021 and December 31, 2020, respectively. The VIE’s total stockholders’ deficit was $40.2 million and $37.1 million at June 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

6

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 shareholders, 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”).

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

7

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 (Income) Expense, Net

Other (income) expense, 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 86% of our revenue for both the quarter and six months ended June 30, 2021 and 76% of our revenue for both the quarter and six months ended June 30, 2020, respectively.

8

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

	Quarter Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Access Fees Revenue
U.S.	$	396,622	$	152,021	$	747,490	$	259,960
International		37,422		30,150		74,710		59,264
Total		434,044		182,171		822,200		319,224
Visit Fee Revenue
U.S.		59,196		58,512		113,536		101,996
International		130		347		252		609
Total		59,326		58,859		113,788		102,605
Other
U.S.		9,363		0		20,034		0
International		406		0		792		0
Total		9,769		0		20,826		0
Total Revenues	$	503,139	$	241,030	$	956,814	$	421,829

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 $72.8 million at June 30, 2021 and $26.2 million at June 30, 2020. The net increase of $18.0 million and $11.3 million in the deferred revenue balance for the six months ended June 30, 2021 and 2020, respectively, is primarily driven by InTouch and Livongo as well as the direct-to-consumer behavioral health product 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 June 30, 2021 and 2020 that was included in deferred revenue at the beginning of the periods was $46.6 million and $12.4 million, respectively. Revenue recognized during the six months ended June 30, 2021 and 2020 that was included in deferred revenue at the beginning of the periods was $45.5 million and $11.2 million, respectively.

We expect to recognize $52.8 million and $8.5 million of revenue in 2021 and 2022, respectively, related to future performance obligations that are unsatisfied or partially unsatisfied as of June 30, 2021.

Deferred Costs and Other

Deferred costs and other, which are classified as a component of Prepaid expenses and other current assets or Other assets depending on term, consist of the following as of June 30, 2021 (in thousands):

	As of		As of
	June 30,		December 31,
	2021		2020
Deferred costs and other, current		16,658		3,468
Deferred costs and other, noncurrent		7,913		2,179
Total deferred costs and other	$	24,571	$	5,647

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Deferred costs and other activity are as follows (in thousands):

	Deferred Costs and Other
Beginning balance as of December 31, 2020	$	5,647
Additions		25,539
Cost of revenue recognized		(6,615)
Ending balance as of June 30, 2021	$	24,571

Note 4. Business Acquisitions

On January 4, 2021, the Company completed the acquisition of the UK-based telemedicine provider Consultant Connect for a cash consideration of $56.3 million, net of cash acquired. Consultant Connect provides a platform that specializes in facilitating healthcare professional-to-professional advice and guidance in the United Kingdom. As part of purchase accounting, the Company recognized intangibles related to customer relationships, technology and the brand of $9.8 million, $1.9 million, and $0.6 million, respectively; and goodwill of $47.3 million. The acquisition was considered a stock acquisition for tax purposes and accordingly, the goodwill resulting from this acquisition is not tax deductible.

On October 30, 2020, the Company completed the acquisition of Livongo through a merger in which Livongo became a wholly-owned subsidiary of the Company. Upon completion of the merger, each share of Livongo’s common stock converted into the right to receive 0.5920 shares of Teladoc Health’s common stock and $4.24 in cash, without interest. In addition, in connection with the closing of the merger, Livongo paid a special cash dividend equal to $7.09 per share of Livongo’s common stock to shareholders of Livongo as of a record date of October 29, 2020. The total initial consideration calculated on upon deal closing was $13,938.0 million consisting of $401.0 million of net cash, $555.4 million related to the conversion feature of the Livongo Notes guaranteed by the Company and 60.4 million shares of Teladoc Health’s common stock valued at approximately $12,981.6 million on October 30, 2020. The acquisition was considered a stock acquisition for tax purposes and accordingly, the goodwill resulting from this acquisition