LifeMD Reports Second Quarter 2023 Results; Achieves Positive Free Cash Flow and Raises 2023 Revenue Guidance

Rhea-AI Summary

LifeMD reports record quarterly revenue of $35.9 million, up 18% YoY. Telehealth net revenues increased 11% from Q1 2023. Positive free cash flow achieved. Adjusted EBITDA increased to $1.7 million from a loss of $6.9 million in the year-ago period. Weight Management program expected to be accretive in 2024. Raised 2023 revenue guidance to $146 million to $152 million. Conference call at 4:30 p.m. Eastern time today.

Positive

• Record quarterly revenue and positive free cash flow
• Weight Management program expected to drive growth and profitability

Negative

• None.

• Revenue grew 18% year-over-year to a record $35.9 million; telehealth net revenues increased 11% versus the first quarter of 2023.
• Achieved positive free cash flow, ahead of guidance.
• Adjusted EBITDA increased to $1.7 million in the second quarter 2023 from an adjusted EBITDA loss of $6.9 million in the year-ago period.
• Launched a comprehensive Weight Management program offering and onboarded over 5,000 new patient subscribers to date; the Weight Management program is expected to be substantially accretive beginning in 2024.
• Raised 2023 revenue guidance to $146 million to $152 million, reflecting early success with the Weight Management program.
  

Conference call begins at 4:30 p.m. Eastern time today

NEW YORK, Aug. 09, 2023 (GLOBE NEWSWIRE) -- LifeMD, Inc. (Nasdaq: LFMD), a leading provider of virtual primary care services, today reported financial results for the three and six months ended June 30, 2023.   

Management Commentary

“The second quarter of 2023 was a breakout quarter for LifeMD. Record quarterly revenue was driven by increasing demand for our telehealth offering and we achieved positive free cash flow for the first time in our company’s history and ahead of guidance,” said Justin Schreiber, Chairman and Chief Executive Officer of LifeMD. “In addition, we launched our Weight Management telehealth service program, which is off to a tremendous start. We believe this comprehensive approach to weight management, including GLP-1 medications for medically qualified individuals, could be a catalyst for significant growth and enhanced profitability. It also is the primary reason for raising 2023 revenue guidance. In addition, I am extremely proud of the performance of our Lifestyle telehealth businesses anchored by our men’s health brand, RexMD. These businesses continued to exceed our expectations with a 16% increase in average daily new patient sign-ups in the quarter.”

“Our strong second quarter financial performance coupled with tremendous momentum in our telehealth businesses position LifeMD to gain share within these large markets. As such, we are raising our 2023 revenue guidance and slightly lowering adjusted EBITDA guidance given the near-term investment necessary to accelerate our growth in the Weight Management business, which we believe will be materially accretive beginning in 2024,” commented Marc Benathen, Chief Financial Officer of LifeMD. “WorkSimpli continues to perform well with active subscribers growing 35% over the prior-year period, and remains on track to generate over $15 million of cash flow this year that we are reinvesting in our core telehealth offerings.”

Second Quarter Financial Highlights

• Revenue increased 18% year-over-year to $35.9 million.
• Telehealth revenue increased 11% versus the first quarter of 2023.
• Telehealth active subscribers increased 15% over the year-ago period to approximately 193,000.
• Virtual Primary Care revenue increased 122% versus the first quarter of 2023.
• WorkSimpli active subscribers increased 35% over the year-ago period to approximately 171,000.
• Gross margin was 87%, up from 85% in the prior-year period.
• GAAP net loss was $7.5 million or $0.23 per share, compared with a GAAP net loss of $13.8 million or $0.45 per share in the prior-year period.
• Adjusted EBITDA was $1.7 million compared with an adjusted EBITDA loss of $6.9 million in the year-ago period (see definition below of this non-GAAP financial measure and reconciliation to GAAP).
• Adjusted diluted EPS was $0.05, up 123% versus the same period a year ago (see definition below of this non-GAAP financial measure and reconciliation to GAAP).
• Free cash flow, defined as operating cash flow less cash flow from investing activities, was $2.3 million, reaching the milestone of positive free cash flow ahead of guidance. Net cash flow including debt service was also positive.

Second Quarter Key Performance Metrics

($ in 000s)		Three Months Ended June 30,							Y-o-Y
Key Performance Metrics			2023			2022			% Growth
Revenue
Telehealth		$	22,351		$	22,268			0	%
WorkSimpli		$	13,596		$	8,191			66	%
Total Revenue		$	35,947		$	30,459			18	%
Subscription Revenue as % of Total			95	%		93	%		2	%
Active Subscribers
Telehealth Active Subscribers			192,667			168,024			15	%
WorkSimpli Active Subscribers			171,429			127,304			35	%
Total Active Subscribers			364,096			295,328			23	%

Financial Guidance

For the third quarter of 2023, the Company expects:

• Revenue to be between $37.5 million and $38.5 million.
• Adjusted EBITDA to be between $2.5 million and $3.5 million.

For the full year 2023, the Company expects:

• Revenue to be between $146 million and $152 million.
• Adjusted EBITDA to be between $10 and $13 million.

Excluding the launch of the Weight Management program, revenue and adjusted EBITDA guidance for 2023 would be within the previously stated guidance ranges of $140 million to $150 million for revenue and $12 million to $18 million for adjusted EBITDA. The company’s preliminary estimates suggest its new Weight Management business could be substantially accretive to 2024 and beyond results.

Conference Call

LifeMD’s management will host a conference call today at 4:30 p.m. Eastern time to discuss the Company’s financial results and outlook, and answer questions. 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:		13739131
Webcast:		https://viavid.webcasts.com/starthere.jsp?ei=1618274&tp_key=9d49d282dd

A replay of the webcast will be available in the Investors section of the Company’s website at ir.lifemd.com.

About LifeMD

LifeMD is a 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 dermatologic conditions. By leveraging its proprietary technology platform, 50-state affiliated medical group and nationwide mail-order pharmacy network, LifeMD is making top-notch healthcare available and 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

LIFEMD, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
	June 30, 2023				December 31, 2022
	(Unaudited)
ASSETS
Current Assets
Cash	$	11,906,741			$	3,958,957
Accounts receivable, net		3,668,543				2,834,750
Product deposit		235,115				127,265
Inventory, net		3,698,302				3,703,363
Other current assets		672,195				687,022
Total Current Assets		20,180,896				11,311,357
Non-current Assets
Equipment, net		444,226				476,441
Right of use asset		928,696				1,206,009
Capitalized software, net		10,391,372				8,840,187
Intangible assets, net		3,501,199				3,831,859
Total Non-current Assets		15,265,493				14,354,496
Total Assets	$	35,446,389			$	25,665,853
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable	$	9,593,379			$	10,106,793
Accrued expenses		14,761,756				12,166,509
Notes payable, net		735,534				2,797,250
Current operating lease liabilities		758,927				756,093
Deferred revenue		5,668,210				5,547,506
Total Current Liabilities		31,517,806				31,374,151
Long-term Liabilities
Long-term debt, net		13,538,502				-
Noncurrent operating lease liabilities		276,340				574,136
Contingent consideration		318,750				443,750
Purchase price payable		-				579,319
Total Liabilities		45,651,398				32,971,356
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, $1,438 and $1,305 per share as of June 30, 2023 and December 31, 2022, respectively		5,032,929				4,565,822
Stockholders’ Deficit
Series A Preferred Stock, $0.0001 par value; 1,610,000 shares authorized, 1,400,000 shares issued and outstanding, liquidation value approximately $28.94 and $27.84 per share as of June 30, 2023 and December 31, 2022, respectively		140				140
Common Stock, $0.01 par value; 100,000,000 shares authorized, 32,564,835 and 31,552,775 shares issued, 32,461,795 and 31,449,735 outstanding as of June 30, 2023 and December 31, 2022, respectively		325,649				315,528
Additional paid-in capital		186,673,930				179,015,250
Accumulated deficit		(202,857,575	)			(190,562,994	)
Treasury stock, 103,040 and 103,040 shares, at cost, as of June 30, 2023 and December 31, 2022, respectively		(163,701	)			(163,701	)
Total LifeMD, Inc. Stockholders’ Deficit		(16,021,557	)			(11,395,777	)
Non-controlling interest		783,619				(475,548	)
Total Stockholders’ Deficit		(15,237,938	)			(11,871,325	)
Total Liabilities, Mezzanine Equity and Stockholders’ Deficit	$	35,446,389			$	25,665,853

LIFEMD, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
		Three Months Ended June 30,								Six Months Ended June 30,
		2023				2022				2023				2022
Revenues
Telehealth revenue, net		$	22,351,128			$	22,267,963			$	42,553,931			$	44,866,024
WorkSimpli revenue, net			13,595,785				8,190,535				26,519,317				14,635,311
Total revenues, net			35,946,913				30,458,498				69,073,248				59,501,335
Cost of revenues
Cost of telehealth revenue			4,125,945				4,453,126				8,046,126				9,539,194
Cost of WorkSimpli revenue			422,485				182,185				717,273				344,292
Total cost of revenues			4,548,430				4,635,311				8,763,399				9,883,486
Gross profit			31,398,483				25,823,187				60,309,849				49,617,849
Expenses
Selling and marketing expenses			19,567,903				21,817,966				36,285,548				43,727,791
General and administrative expenses			12,119,573				13,159,937				22,722,336				25,372,680
Other operating expenses			1,313,789				2,041,976				3,018,554				3,459,445
Customer service expenses			1,912,078				1,006,363				3,467,482				1,939,670
Development costs			1,380,686				701,070				2,564,285				1,129,403
Goodwill impairment charge			-				2,735,000				-				2,735,000
Change in fair value of contingent consideration			-				(2,735,000	)			-				(2,735,000	)
Total expenses			36,294,029				38,727,312				68,058,205				75,628,989
Operating loss			(4,895,546	)			(12,904,125	)			(7,748,356	)			(26,011,140	)
Other expenses
Interest expense, net			(995,670	)			(132,236	)			(1,260,135	)			(300,170	)
Gain (loss) on debt extinguishment			-				63,400				(325,198	)			63,400
Net loss			(5,891,216	)			(12,972,961	)			(9,333,689	)			(26,247,910	)
Net income attributable to noncontrolling interests			841,784				46,001				1,407,767				70,727
Net loss attributable to LifeMD, Inc.			(6,733,000	)			(13,018,962	)			(10,741,456	)			(26,318,637	)
Preferred stock dividends			(776,562	)			(776,562	)			(1,553,125	)			(1,553,125	)
Net loss attributable to LifeMD, Inc. common stockholders		$	(7,509,562	)		$	(13,795,524	)		$	(12,294,581	)		$	(27,871,762	)
Basic loss per share attributable to LifeMD, Inc. common stockholders		$	(0.23	)		$	(0.45	)		$	(0.38	)		$	(0.91	)
Diluted loss per share attributable to LifeMD, Inc. common stockholders		$	(0.23	)		$	(0.45	)		$	(0.38	)		$	(0.91	)
Weighted average number of common shares outstanding:
Basic			32,560,035				30,804,465				32,189,954				30,777,377
Diluted			32,560,035				30,804,465				32,189,954				30,777,377

 

LIFEMD, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
		Three Months Ended June 30,								Six Months Ended June 30,
		2023				2022				2023				2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(5,891,216	)		$	(12,972,961	)		$	(9,333,689	)		$	(26,247,910	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Amortization of debt discount			115,381				-				153,842				-
Amortization of capitalized software			1,260,022				592,214				2,348,667				976,026
Amortization of intangibles			245,968				226,893				479,528				341,287
Accretion of consideration payable			48,738				135,368				114,216				135,368
Depreciation of fixed assets			48,783				40,770				96,434				73,247
(Gain) loss on debt extinguishment			-				(63,400	)			325,198				(63,400	)
Change in fair value of contingent consideration			-				(2,735,000	)			-				(2,735,000	)
Goodwill impairment charge			-				2,735,000				-				2,735,000
Operating lease payments			186,095				171,838				370,428				290,362
Stock compensation expense			2,861,969				4,041,006				5,525,483				8,513,787
Changes in Assets and Liabilities
Accounts receivable			(731,544	)			(717,125	)			(833,793	)			(1,533,572	)
Product deposit			11,164				174,452				(107,850	)			(237,285	)
Inventory			(315,720	)			(1,725,208	)			5,061				(1,341,474	)
Other current assets			401,868				(30,216	)			14,827				(80,015	)
Change in operating lease liability			(194,531	)			(164,950	)			(388,077	)			(210,451	)
Deferred revenue			(227,335	)			203,947				120,704				492,622
Accounts payable			2,690,345				376,345				(513,414	)			2,853,811
Accrued expenses			4,134,337				(387,938	)			4,232,140				(2,152,511	)
Other operating activity			-				-				(579,319	)			-
Net cash provided by (used in) operating activities			4,644,324				(10,098,965	)			2,030,386				(18,190,108	)
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for capitalized software costs			(2,121,869	)			(2,424,785	)			(3,899,852	)			(4,522,928	)
Purchase of equipment			(30,563	)			(90,180	)			(64,219	)			(357,331	)
Purchase of intangible assets			(148,868	)			-				(148,868	)			(4,000,500	)
Acquisition of business, net of cash acquired			-				-				-				(1,012,395	)
Net cash used in investing activities			(2,301,300	)			(2,514,965	)			(4,112,939	)			(9,893,154	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt, net			-				-				14,473,002				-
Proceeds from notes payable			-				-				2,000,000				-
Repayment of notes payable, net of prepayment penalty			(1,086,956	)			-				(4,386,915	)			-
Cash proceeds from exercise of options			-				90,400				-				90,400
Cash proceeds from exercise of warrants			-				-				-				38,500
Preferred stock dividends			(776,562	)			(776,562	)			(1,553,125	)			(1,553,125	)
Contingent consideration payment for ResumeBuild			(62,500	)			(31,250	)			(125,000	)			(31,250	)
Net payments for membership interest of WorkSimpli			889				-				(305,625	)			-
Distributions to non-controlling interest			(36,000	)			(36,000	)			(72,000	)			(72,000	)
Net cash (used in) provided by financing activities			(1,961,129	)			(753,412	)			10,030,337				(1,527,475	)
Net increase (decrease) in cash			381,895				(13,367,342	)			7,947,784				(29,610,737	)
Cash at beginning of period			11,524,846				25,084,644				3,958,957				41,328,039
Cash at end of period		$	11,906,741			$	11,717,302			$	11,906,741			$	11,717,302
Cash paid for interest
Cash paid during the period for interest		$	495,188			$	-			$	768,188			$	-
Non-cash investing and financing activities:
Warrants issued for debt instruments		$	-			$	-			$	1,088,343			$	-
Cashless exercise of options		$	165			$	255			$	165			$	255
Consideration payable for Cleared acquisition		$	-			$	8,079,367			$	-			$	8,079,367
Consideration payable for ResumeBuild acquisition		$	-			$	500,000			$	-			$	500,000
Stock issued for nontcontingent consideration payment		$	642,000			$	-			$	1,284,000			$	-
Principal of Paycheck Protection Program loans forgiven		$	-			$	63,400			$	-			$	63,400
Right of use asset		$	-			$	-			$	93,115			$	-
Right of use lease liability		$	-			$	-			$	93,115			$	-

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, accretion, financing transaction expense, non-controlling interests, foreign currency translation, inventory valuation, sales return reserves, litigation costs, loss on debt extinguishment, dividends, insurance acceptance readiness, 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, accretion, financing transaction expense, non-controlling interests, foreign currency translation, inventory valuation, sales return reserves, litigation costs, loss on debt extinguishment, dividends, insurance acceptance readiness, 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, its most directly comparable GAAP financial measure.

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 June 30,								Six Months Ended June 30,
			2023				2022				2023				2022
Net loss attributable to common shareholders		$	(7,509,562	)		$	(13,795,524	)		$	(12,294,581	)		$	(27,871,762	)
Interest expense (excluding amortization of debt discount)			525,374				18,798				639,186				74,540
Depreciation, amortization and accretion expense			1,603,511				995,245				3,038,845				1,525,928
Amortization of debt discount			115,381				-				153,842				-
(Gain) loss on debt extinguishment			-				(63,400	)			325,198				(63,400	)
Financing transactions expense			285,626				-				430,077				152,015
Litigation costs			933,126				655,494				1,005,926				704,359
Inventory and reserve adjustment			132,991				13,708				232,630				230,661
Severance costs			-				77,241				-				179,090
Acquisitions expenses			15,070				240,153				40,196				265,153
Insurance acceptance readiness			58,540				-				58,540				-
Accrued interest on Series B Convertible Preferred Stock			354,915				113,438				467,107				225,630
Foreign exchange (gain) loss			168,098				-				523,720				-
Dividends			1,346,197				776,562				2,158,760				1,553,125
Stock-based compensation expense			2,861,969				4,041,006				5,525,483				8,513,787
Net income attributable to noncontrolling interests			841,784				46,001				1,407,767				70,727
Adjusted EBITDA		$	1,733,020			$	(6,881,278	)		$	3,712,696			$	(14,440,147	)

Reconciliation of GAAP Diluted Loss per Share Attributable to Common Shareholders to Adjusted EPS
(unaudited)			Three Months Ended June 30,								Six Months Ended June 30,
				2023				2022				2023				2022
Diluted loss per share attributable to LifeMD, Inc. common shareholders			$	(0.23	)		$	(0.45	)		$	(0.38	)		$	(0.91	)
Adjustments to Reconcile GAAP Diluted Loss Per Share to Adjusted EPS
Interest expense (excluding amortization of debt discount)				0.01				-				0.02				-
Depreciation, amortization and accretion expense				0.05				0.03				0.09				0.05
Amortization of debt discount				-				-				-				-
Loss on debt extinguishment				-				-				0.02				-
Financing transactions expense				0.01				-				0.02				-
Litigation costs				0.03				0.02				0.03				0.02
Inventory and reserve adjustment				-				-				0.01				0.01
Severance costs				-				-				-				0.01
Acquisitions expenses				-				0.01				-				0.01
Insurance acceptance readiness				-				-				-				-
Accrued interest on Series B Convertible Preferred Stock				0.01				0.01				0.01				0.01
Foreign exchange (gain) loss				0.01				-				0.02				-
Dividends				0.04				0.03				0.07				0.05
Stock-based compensation expense				0.09				0.13				0.17				0.28
Net income attributable to noncontrolling interests				0.03				-				0.04				-
Adjusted EPS			$	0.05			$	(0.22	)		$	0.12			$	(0.47	)