LifeMD, Inc. Reports First Quarter 2022 Results

  • 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 13th 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
[email protected]

Investor Relations Contact
Ashley Robinson
LifeSci Advisors, LLC
[email protected]

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 )

 

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