LifeMD, Inc. Reports First Quarter 2022 Results

Rhea-AI Summary

LifeMD, Inc. (NASDAQ: LFMD) reported a 60% increase in first quarter 2022 revenue, reaching $29.0 million, driven by a 70% surge in telehealth services. Adjusted EPS improved by 14% sequentially to $(0.25). The company maintains its goal of achieving Adjusted EBITDA profitability by Q4 2022, with a cash balance of $25.1 million and no debt. Significant acquisitions were completed, and operational efficiencies were noted, despite advertising market challenges. The Q1 results illustrate LifeMD's strategic growth plans and operational scaling.

Positive

• Revenue of $29.0 million, up 60% year-over-year.
• Telehealth orders increased by 59%, reaching approximately 257,000.
• Achieved a 14% sequential improvement in Adjusted EPS.
• Continued growth in subscription revenue, now 91% of total revenue.
• Cash balance of $25.1 million with no debt.

Negative

• Loss of $14.1 million for Q1 2022, up from $11.6 million in the prior year.
• Operating expenses increased to $36.9 million, up from $26.9 million year-over-year.
• Adjusted EBITDA loss of $7.6 million, though improved from $9.0 million loss a year ago.

• First quarter 2022 consolidated revenue of $29.0 million up 60% from the same year ago period.
  
• Adjusted EPS of $(0.25), 14% sequential improvement versus the prior quarter.
• Re-affirm Full Year Adjusted EBITDA guidance and remain on track to reach Consolidated Adjusted EBITDA profitability by fourth quarter 2022.
• Cash balance of $25.1 million as of March 31, 2022 with no debt. Cash Flow during the quarter included $7 million of one-time cash outflows related to two acquisitions and related working capital investments.

NEW YORK, May 13, 2022 (GLOBE NEWSWIRE) -- LifeMD, Inc. (NASDAQ: LFMD), a leading direct-to-patient telehealth company, reported results for the first quarter ended March 31, 2022. All figure comparisons are to the same year-ago quarter unless otherwise noted. Management will host a conference call today, May 13, 2022, at 8:00 a.m. Eastern time to discuss the results.

Q1 2022 Financial Highlights

• Record first quarter revenue of $29.0 million, up 60%
• Gross profit totaled $23.8 million, up 59% with gross margins of 82%, flat to the same year-ago period
• 91% of revenue generated by subscriptions, up from 88%
• $25.1 million of cash as of March 31, 2022 and no debt
• Adjusted EPS $(0.25) for the first quarter, a 14% sequential improvement versus the prior quarter (see definition of this non-GAAP financial measure and reconciliation to GAAP, below)
  

Q1 and Recent Operational Highlights

• Continued leverage of Selling and Marketing expenses despite market headwinds, with first quarter expenses as a percentage of revenue reducing to 75%, a 200-basis point improvement versus the prior quarter and a 2,700-basis point improvement versus the same year-ago period.
• Telehealth orders increased 59% to approximately 257,000.
• Closed the acquisition of Cleared Technologies, a leading allergy, asthma and immunology telehealth platform. The Cleared platform offerings include prescription drug, FDA approved over-the-counter (OTC) treatments, diagnostics and a growing pipeline of pharmaceutical and biotech customer partners.
• Announced full-scale national launch of the Company’s virtual primary care platform following a successful beta launch last November. The Company expects to launch cross-sale functionality with its indication-specific offerings in the second quarter.

Key Performance Metrics

($ in 000s)		Three Months Ended March 31							Y-o-Y
Key Performance Metrics			2022			2021			% Growth
Revenue
Telehealth		$	22,598		$	13,283			70	%
WorkSimpli		$	6,445		$	4,915			31	%
Total Revenue		$	29,043		$	18,198			60	%
Subscription Revenue as % of Total			91	%		88	%		3	%
Telehealth Volume
Total Telehealth Orders			256,651			161,109			59	%
Total Active Subscribers			164,605			91,685			80	%
WorkSimpli
Active Subscribers			105,050			81,387			29	%

Management Commentary
“In the first quarter 2022, LifeMD recorded its 13^th consecutive quarter of sequential revenue growth and a 14% sequential improvement in Adjusted EPS despite challenging macro conditions including significant advertising market headwinds. We successfully completed two acquisitions, including Cleared Technologies for our core telehealth business and ResumeBuild for our non-core subsidiary, WorkSimpli, as well as executed the national launch of our Virtual Primary Care platform,” said Justin Schreiber, CEO of LifeMD. “Despite these achievements, the first quarter of 2022 was very much a transitional quarter for the company in which we made important capital investments to scale our pharmacy infrastructure and related technology to proactively position us for expected rapid growth in the coming quarters and years. Looking ahead we remain focused on continuing to scale our existing telehealth offerings, integrating and scaling our new telehealth businesses and delivering upon our commitment to reach Adjusted EBITDA profitability by the fourth quarter of 2022.”

LifeMD CFO Marc Benathen commented: “During the first quarter, we continued to demonstrate our ability to consistently grow our top-line, while also achieving operating leverage to drive further improvements in sequential profitability. Our results had short-term impacts related to market headwinds in the advertising industry which we’ve since adapted to and the one-time deferral of approximately $1 million in re-billing revenue from the first to second quarter following a system upgrade. LifeMD remains on track to deliver our previously released Full Year Adjusted EBITDA guidance range and Adjusted EBITDA profitability by the fourth quarter of 2022. Additionally, we have hired a highly experienced M&A advisor to help us lead the WorkSimpli sale process which we believe to be a meaningful step forward in this process.”

Q1 2022 Financial Summary

• Revenue for the quarter ended March 31, 2022 increased 60% to $29.0 million from $18.2 million in 2021. The increase in revenues was attributable to a 70% increase in telehealth revenue and a 31% increase in WorkSimpli revenue versus the year-ago period. While our non-core subsidiary, WorkSimpli, revenues did decline sequentially following the integration of a new acquisition, the business achieved its strongest performance month ever in March 2022 recording over 13,000 net new subscribers in the month of March alone. WorkSimpli GAAP results were also impacted by $1.4 million of March 2022 deferred revenue related to new sign-ups and an increase in annual sign-ups.

• Gross profit increased by 59% to $23.8 million, compared to $15.0 million in the prior year. Gross margin was 82% for both the quarter ended March 31, 2022 and 2021.

• Operating expenses in 2022 were $36.9 million, up from $26.9 million in the prior year. The increase was primarily due to increases in selling and marketing expenses of $3.3 million, general and administrative expenses of $5.3 million, other operating expenses of $691,000, customer service expenses of $638,000 and development costs of $117,000. General and administrative expenses included $4.5 million of non-cash stock-based compensation expense.

• Net loss attributable to common stockholders for 2022 was $14.1 million or $(0.46) per share, as compared to a net loss attributable to common stockholders of $11.6 million or $(0.47) per share in the prior year.
  
• Excluding $4.5 million related to stock-based compensation expense, $531,000 of depreciation and amortization expense, $168,000 of interest expense, $776,000 of preferred stock dividends and $545,000 of non-recurring expenses, adjusted EPS, a non-GAAP measure, totaled a loss of $(0.25) per share as compared to a loss of $(0.37) per share in the same year-ago period (see definition of this non-GAAP financial measure and reconciliation to GAAP, below).
  
• Adjusted EBITDA, a non-GAAP financial measure, totaled a loss of $7.6 million, compared to an adjusted EBITDA loss of $9.0 million in the same year-ago period (see definition of this non-GAAP financial measure and reconciliation to GAAP, below).
  
• Cash totaled $25.1 million as of March 31, 2022.
  

Financial Guidance
For the Second Quarter 2022, the Company expects:

• Revenue to total between $31 million and $33 million
• Adjusted EBITDA between $(5.5) million and $(6.5) million

For the Full Year 2022, the Company expects:

• Revenue to total between $132 million and $138 million
• Adjusted EBITDA between $(14) million and $(20) million

The Company remains on track to achieve Adjusted EBITDA profitability by the fourth quarter of 2022.

Conference Call
LifeMD’s management will host a conference call today, May 13, 2022 at 8:00 am Eastern Time to discuss the company’s financial results and outlook, followed by a question-and-answer period. Details for the call are as follows:

Toll-free dial-in number:		1-877-704-4453
International dial-in number:		1-201-389-0920
Conference ID:		13729668
Webcast:		Click here

The conference call will be webcast live and available for replay via a link provided in the Investors section of the company’s website at lifemd.com. Please call the conference telephone number five minutes prior to the start time. An operator will register your name and organization.

Listeners are encouraged to review the company's periodic reports filed with the U.S. Securities and Exchange Commission, including the discussion of risk factors, historical results of operations and financial condition as provided in these reports.

About LifeMD
LifeMD is a 50-state direct-to-patient telehealth company with a portfolio of brands that offer virtual primary care, diagnostics, and specialized treatment for men’s and women’s health, allergy & asthma, and dermatological conditions. By leveraging its proprietary technology platform, 50-state affiliated medical group, and nationwide mail-order pharmacy network, LifeMD is increasing access to top-notch healthcare that is affordable to anyone. To learn more, go to LifeMD.com.

Cautionary Note Regarding Forward Looking Statements
This news release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended; Section 21E of the Securities Exchange Act of 1934, as amended; and the safe harbor provision of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements contained in this news release may be identified by the use of words such as: “believe,” “expect,” “anticipate,” “project,” “should,” “plan,” “will,” “may,” “intend,” “estimate,” predict,” “continue,” and “potential,” or, in each case, their negative or other variations or comparable terminology referencing future periods. Examples of forward-looking statements include, but are not limited to, statements regarding our financial outlook and guidance, short and long-term business performance and operations, future revenues and earnings, regulatory developments, legal events or outcomes, ability to comply with complex and evolving regulations, market conditions and trends, new or expanded products and offerings, growth strategies, underlying assumptions, and the effects of any of the foregoing on our future results of operations or financial condition.

Forward-looking statements are not historical facts and are not assurances of future performance. Rather, these statements are based on our current expectations, beliefs, and assumptions regarding future plans and strategies, projections, anticipated and unanticipated events and trends, the economy, and other future conditions, including the impact of any of the aforementioned on our future business. As forward-looking statements relate to the future, they are subject to inherent risk, uncertainties, and changes in circumstances and assumptions that are difficult to predict, including some of which are out of our control. Consequently, our actual results, performance, and financial condition may differ materially from those indicated in the forward-looking statements. These risks and uncertainties include, but are not limited to, “Risk Factors” identified in our filings with the Securities and Exchange Commission, including, but not limited to, our most recently filed Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and any amendments thereto. Even if our actual results, performance, or financial condition are consistent with forward-looking statements contained in such filings, they may not be indicative of our actual results, performance, or financial condition in subsequent periods.

Any forward-looking statement made in the news release is based on information currently available to us as of the date on which this release is made. We undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as may be required under applicable law or regulation.

Company Contact
LifeMD, Inc.
Marc Benathen, CFO
marc@lifemd.com

Investor Relations Contact
Ashley Robinson
LifeSci Advisors, LLC
arr@lifesciadvisors.com

Tables to Follow

LIFEMD, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
	March 31, 2022				December 31, 2021
ASSETS
Current Assets
Cash	$	25,084,644			$	41,328,039
Accounts receivable, net		1,796,502				980,055
Product deposit		615,293				203,556
Inventory, net		1,240,034				1,616,600
Other current assets		842,989				793,190
Total Current Assets		29,579,462				44,921,440
Non-current Assets
Equipment, net		506,367				233,805
Right of use asset, net		1,633,924				1,752,448
Capitalized software, net		4,710,120				2,995,789
Goodwill and intangible assets, net		13,860,603				19,761
Total Non-current Assets		20,711,014				5,001,803
Total Assets	$	50,290,476			$	49,923,243
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable	$	11,676,030			$	9,059,214
Accrued expenses		11,550,232				11,595,605
Notes payable, net		63,400				63,400
Current operating lease liabilities		534,451				607,490
Deferred revenue		1,788,555				1,499,880
Total Current Liabilities		25,612,668				22,825,589
Long-term Liabilities
Noncurrent operating lease liabilities		1,206,082				1,178,544
Contingent consideration		5,701,000				100,000
Purchase price payable		1,415,655				-
Total Liabilities		33,935,405				24,104,133
Commitments and Contingencies
Mezzanine Equity
Preferred Stock, $0.0001 par value; 5,000,000 shares authorized
Series B Preferred Stock, $0.0001 par value; 5,000 shares authorized, 3,500 and 3,500 shares issued and outstanding, liquidation value approximately, $1,207 and $1,175 per share as of March 31, 2022 and December 31, 2021, respectively		4,223,014				4,110,822
Stockholders’ Equity
Series A Preferred Stock, $0.0001 par value; 1,610,000 shares authorized, 1,400,000 shares issued and outstanding, liquidation value approximately $26.17 and $25.62 per share as of March 31, 2022 and December 31, 2021, respectively		140				140
Common Stock, $0.01 par value; 100,000,000 shares authorized,  30,899,469 and 30,704,434 shares issued, 30,796,429 and 30,601,394 outstanding as of March 31, 2022 and December 31, 2021, respectively		308,995				307,045
Additional paid-in capital		169,026,965				164,517,634
Accumulated deficit		(155,997,323	)			(141,921,085	)
Treasury stock, 103,040 and 103,040 shares, at cost		(163,701	)			(163,701	)
Total LifeMD, Inc. Stockholders’ Equity		13,175,076				22,740,033
Non-controlling interest		(1,043,019	)			(1,031,745	)
Total Stockholders’ Equity		12,132,057				21,708,288
Total Liabilities, Mezzanine Equity and Stockholders’ Equity	$	50,290,476			$	49,923,243

LIFEMD, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
	Three Months Ended March 31,
	2022				2021
Revenues
Telehealth revenue, net	$	22,598,061			$	13,283,315
WorkSimpli revenue, net		6,444,776				4,914,797
Total revenues, net		29,042,837				18,198,112
Cost of revenues
Cost of telehealth revenue		5,086,068				3,123,025
Cost of WorkSimpli revenue		162,107				88,032
Total cost of revenues		5,248,175				3,211,057
Gross profit		23,794,662				14,987,055
Expenses
Selling and marketing expenses		21,909,825				18,640,731
General and administrative expenses		12,302,478				7,021,541
Other operating expenses		1,327,734				636,787
Customer service expenses		933,307				295,277
Development costs		428,333				311,056
Total expenses		36,901,677				26,905,392
Operating loss		(13,107,015	)			(11,918,337	)
Interest expense, net		(167,934	)			(139,463	)
Gain on debt forgiveness		-				184,914
Net loss		(13,274,949	)			(11,872,886	)
Net income (loss) attributable to noncontrolling interests		24,726				(270,503	)
Net loss attributable to LifeMD, Inc.		(13,299,675	)			(11,602,383	)
Preferred stock dividends		(776,563	)			-
Net loss attributable to LifeMD, Inc. common stockholders	$	(14,076,238	)		$	(11,602,383	)
Basic loss per share attributable to LifeMD, Inc. common stockholders	$	(0.46	)		$	(0.47	)
Diluted loss per share attributable to LifeMD, Inc. common stockholders	$	(0.46	)		$	(0.47	)
Weighted average number of common shares outstanding:
Basic		30,853,118				24,467,788
Diluted		30,853,118				24,467,788

LIFEMD, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
	Three Months Ended March 31,
	2022				2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(13,274,949	)		$	(11,872,886	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt discount		-				80,051
Amortization of capitalized software		383,812				24,451
Amortization of intangibles		114,394				83,903
Depreciation of fixed assets		32,477				-
Gain on forgiveness of dent		-				(184,914	)
Operating lease payments		118,524				24,588
Stock compensation expense		4,472,781				2,325,775
Changes in Assets and Liabilities
Accounts receivable		(816,447	)			(703,022	)
Product deposit		(411,737	)			(483,478	)
Inventory		383,734				(410,123	)
Other current assets		(49,799	)			50,075
Change in operating lease liability		(45,501	)			(21,922	)
Deferred revenue		288,675				422,429
Accounts payable		2,477,466				124,633
Accrued expenses		(1,764,573	)			1,433,611
Net cash used in operating activities		(8,091,143	)			(9,106,829	)
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for capitalized software costs		(2,098,143	)			(48,860	)
Purchase of equipment		(267,151	)			-
Purchase of intangible assets		(4,000,500	)			-
Acquisition of business, net of cash acquired		(1,012,395	)			-
Net cash used in investing activities		(7,378,189	)			(48,860	)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash proceeds from private placement offering, net		-				13,495,270
Cash proceeds from exercise of options		-				24,000
Cash proceeds from exercise of warrants		38,500				-
Preferred stock dividends		(776,563	)			-
Purchase of membership interest of WorkSimpli		-				(100,000	)
Distributions to non-controlling interest		(36,000	)			(36,000	)
Net cash (used in) provided by financing activities		(774,063	)			13,383,270
Net (decrease) increase in cash		(16,243,395	)			4,227,581
Cash at beginning of period		41,328,039				9,179,075
Cash at end of period	$	25,084,644			$	13,406,656
Cash paid for interest
Cash paid during the period for interest	$	-			$	17,271
Non-cash investing and financing activities:
Cashless exercise of warrants	$	-			$	300
Cashless exercise of options	$	255			$	-
Consideration payable for Cleared acquisition	$	8,079,367			$	-
Consideration payable for ResumeBuild acquisition	$	500,000			$	-
Principal of Paycheck Protection Program loans forgiven	$	-			$	184,914
Additional purchase of membership interest in WorkSimpli issued in performance options	$	-			$	144,002

About the Use of Non-GAAP Financial Measures:
To supplement our financial information presented in accordance with GAAP, we use Adjusted EBITDA and Adjusted EPS as non-GAAP financial measures to clarify and enhance an understanding of past performance. We believe that the presentation of these financial measures enhances an investor’s understanding of our financial performance. We further believe that these financial measures are useful financial metrics to assess our operating performance from period-to-period by excluding certain items that we believe are not representative of our core business. We use certain financial measures for business planning purposes and in measuring our performance relative to that of our competitors.

Adjusted EBITDA is defined as income (loss) attributable to common shareholders before interest, taxes, depreciation, amortization, financing transaction expense, inventory valuation, litigation costs, preferred stock dividends, acquisition costs, severance expenses and stock-based compensation expense. We have provided below a reconciliation of Adjusted EBITDA to Net loss attributable to common shareholders, its most directly comparable GAAP financial measure.

Adjusted EPS is defined as the diluted net loss attributable to LifeMD, Inc common shareholders before interest, taxes, depreciation, amortization, financing transaction expense, inventory valuation, litigation costs, preferred stock dividends, acquisition costs, severance expenses and stock-based compensation expense. We have provided below a reconciliation of Adjusted EPS to Diluted loss per share attributable to LifeMD, Inc common shareholders.

We believe the above financial measures are commonly used by investors to evaluate our performance and that of our competitors. However, our use of the terms Adjusted EBITDA and Adjusted EPS may vary from that of others in our industry. Adjusted EBITDA and Adjusted EPS should not be considered as an alternative to net loss before taxes, net loss per share, operating loss or any other performance measures derived in accordance with GAAP as measures of performance.

Reconciliation of GAAP Net Loss to Adjusted EBITDA
(in whole numbers, unaudited)
	Three Months Ended March 31,
		2022				2021
Net loss attributable to common shareholders	$	(14,076,238	)		$	(11,602,383	)
Interest expense (excluding debt discount and acceleration of debt)		55,742				17,271
Depreciation & amortization expense		530,683				152,743
Amortization of debt discount		-				80,051
Gain on debt forgiveness		-				(184,914	)
Financing transactions expense		152,015				125,979
Litigation costs		48,865				-
Inventory valuation adjustment		216,953				-
Severance costs		101,849				-
Acquisitions expenses		25,000				-
Accrued interest on Series B Convertible Preferred Stock		112,192				122,192
Preferred dividends		776,563				-
Stock-based compensation expense		4,472,781				2,325,775
Adjusted EBITDA	$	(7,583,595	)		$	(8,963,286	)

 

Reconciliation of GAAP Diluted Loss per Share Attributable to Common Shareholders to Adjusted EPS
	Three Months Ended March 31,
		2022				2021
Diluted loss per share attributable to LifeMD, Inc. common shareholders	$	(0.46	)		$	(0.47	)
Adjustments to Reconcile GAAP Diluted Loss Per Share to Adjusted EPS
Interest expense (excluding debt discount and acceleration of debt)		-				-
Depreciation & amortization expense		0.02				-
Amortization of debt discount		-				-
Gain on debt forgiveness		-				(0.01	)
Financing transactions expense		0.01				0.01
Litigation costs		-				-
Inventory valuation adjustment		0.01				-
Severance costs		-				-
Acquisitions expenses		-				-
Accrued interest on Series B Convertible Preferred Stock		-				-
Preferred dividends		0.03				-
Stock-based compensation expense		0.14				0.10
Adjusted EPS	$	(0.25	)		$	(0.37	)

 

FAQ

What were LifeMD's first quarter 2022 revenue figures?

LifeMD reported first quarter 2022 revenue of $29.0 million, marking a 60% increase from the prior year.

How much did LifeMD improve its adjusted EPS in Q1 2022?

LifeMD achieved a sequential improvement in adjusted EPS of 14%, resulting in $(0.25) for Q1 2022.

What was the cash position of LifeMD at the end of Q1 2022?

As of March 31, 2022, LifeMD had a cash balance of $25.1 million and no debt.

What is LifeMD's guidance for revenue in the second quarter of 2022?

LifeMD expects second quarter 2022 revenue to be between $31 million and $33 million.

What are LifeMD's full-year revenue expectations for 2022?

The company anticipates full-year 2022 revenue to be between $132 million and $138 million.

When does LifeMD expect to achieve Adjusted EBITDA profitability?

LifeMD remains on track to achieve Adjusted EBITDA profitability by the fourth quarter of 2022.