LifeMD, Inc. Reports First Quarter 2023 Results; Record Revenues and Adjusted EBITDA

  • Record first quarter 2023 consolidated revenue of $33.1 million, up 14% from the same year-ago period.
  • Record Adjusted EPS of $0.06 per share, up 126% versus the prior year.
  • Record Adjusted EBITDA of $2.0 million, up 126% versus the prior year.
  • Executed debt financing transaction with Avenue Capital, providing up to $40 million of total capital and strengthening LifeMD’s long-term capital position.
  • Re-affirm Full Year 2023 revenue guidance of $140 to $150 million and consolidated Adjusted EBITDA guidance of $12 to $18 million.

NEW YORK, May 12, 2023 (GLOBE NEWSWIRE) —  LifeMD, Inc. (NASDAQ: LFMD), a leading direct-to-patient telehealth company, reported results for the first quarter ended March 31, 2023. All figure comparisons are to the same year-ago quarter unless otherwise noted. Management will host a conference call today, May 12, 2023, at 8:30 a.m. Eastern Time to discuss the results. An updated corporate presentation was posted to https://ir.lifemd.com/#/ prior to market open.

First Quarter Financial Highlights

  • First quarter revenue of $33.1 million, up 14%. Revenue increased 18% sequentially versus fourth quarter 2022 driven by a 23% sequential increase in telehealth revenue.
  • First quarter consolidated Gross Margin of 87%, up from 82% in the same year-ago period.
  • Net loss attributable to common stockholders was $4.8 million or $(0.15) per share, as compared to a net loss attributable to common stockholders of $14.1 million or $(0.46) per share in the prior year.
  • Consolidated Adjusted EBITDA profit of $2.0 million as compared to a loss of $7.6 million in the same year-ago period (see definition of this non-GAAP financial measure and reconciliation to GAAP, below).
  • First quarter Adjusted EPS of $0.06, up 126% versus same year-ago period (see definition of this non-GAAP financial measure and reconciliation to GAAP, below).
  • Gross revenue attributable to LifeMD’s Virtual Primary Care business grew 97% versus fourth quarter 2022.
  • Free Cash Flow (Operating Cash Flow less Cash Flow from Investing Activities), net of discretionary timing related Accounts Payable paydowns and Accrued Expenses, reduced to a $678K loss, an 84% sequential improvement versus the comparable cash burn of $4.2 million in the fourth quarter of 2022. LifeMD remains on track to achieve Free Cash Flow positivity by the middle of 2023.

Q1 and Recent Operational Highlights

  • Improved leverage of Selling and Marketing expenses, with first quarter expenses as a percentage of revenue reducing to 50% versus 75% in the year-ago period.
  • Executed institutional credit facility with Avenue Capital, providing up to $40 million of financing. $15 million drawn at closing.
  • Telehealth active subscribers increased 14% to approximately 180,000 and at the same time LifeMD experienced a 40% improvement in Average Order Value and First-Year Lifetime Value (LTV) driving significant improvements in return on advertising investment.
  • WorkSimpli active subscribers increased 65% to approximately 173,000.

Subsequent Events

  • Launched GLP-1 weight management offering through LifeMD’s Virtual Primary Care platform.

Key Performance Metrics

($ in 000s)   Three Months Ended March 31,   Y-o-Y
Key Performance Metrics     2023     2022     % Growth
Revenue          
Telehealth   $ 20,203   $ 22,598     -11%  
WorkSimpli   $ 12,923   $ 6,445     101%  
Total Revenue   $ 33,126   $ 29,043     14%  
           
Subscription Revenue as % of Total     94%     92%     2%  
           
Active Subscribers          
Telehealth Active Subscribers     179,933     157,483     14%  
WorkSimpli Active Subscribers     173,333     105,050     65%  
Total Active Subscribers     353,266     262,533     35%  
           

Management Commentary 
“LifeMD started the year with tremendous performance in the first quarter of 2023. We exceeded our previous guidance for both Revenue and Consolidated Adjusted EBITDA, with record performance in both metrics. Importantly, and consistent with guidance we gave throughout 2022, our telehealth business returned to meaningful double digit revenue growth with sequential revenue in the first quarter of 2023 increasing 23% versus the fourth quarter of 2022. WorkSimpli continued to outperform, achieving EBITDA margins in the first quarter exceeding 20%, while executing numerous impactful launches, including expansion of its products to numerous new languages, launching digital signature capabilities, and executing several product enhancements to its product and forms suite.” said Justin Schreiber, Chairman & CEO of LifeMD. “Looking ahead, we remain extremely well positioned to accelerate our performance in 2023 anchored by strong lifestyle healthcare brands, a rapidly growing Virtual Primary Care (VPC) platform, recent successful launches of new product offerings, a healthy B2B pipeline, a strengthened balance sheet, and a highly profitable subsidiary producing significant cash flow that can help us further accelerate the core telehealth business.”

LifeMD CFO Marc Benathen, commented: “Our first quarter performance was extremely strong, exceeding guidance on both the top- and bottom-line, while producing substantial sequential revenue growth across both our telehealth and WorkSimpli businesses. Operationally, we also achieved several record performance levels, including consolidated Gross Margins of 87%, continued reductions in our G&A, Selling & Marketing spend as a percentage of Revenue. and a 40% improvement in First Year Lifetime Patient Value (LTV). We are particularly proud to report tat net of Accounts Payable timing, LifeMD’s cash burn reduced to just $678K and we are well on our way to achieving our guidance of Free Cash Flow positivity by mid-2023. Additionally, during the quarter we completed a significant institutional debt financing arrangement with Avenue Capital, providing up to $40 million of total funding capacity, which we believe puts us a in a very strong long-term capital position when combined with our growing profits.”

Financial Guidance
For the Second Quarter 2023, the Company expects:

  • Consolidated Revenue to total between $35.0 million and $36.0 million
  • Consolidated Adjusted EBITDA between $2.5 and $3.5 million

For the Full Year 2023, the Company re-affirms guidance of:

  • Consolidated Revenue to total between $140.0 million and $150.0 million
  • Consolidated Adjusted EBITDA between $12.0 and $18.0 million

Conference Call
LifeMD’s management will host a conference call today, May 12, 2023 at 8:30 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: 13738585
Webcast: https://viavid.webcasts.com/starthere.jsp?ei=1613338&tp_key=c0937faa82

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 ir.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

Tables to Follow

LIFEMD, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
           
  March 31, 2023   December 31, 2022
  (Unaudited)      
ASSETS
           
Current Assets          
Cash $ 11,524,846     $ 3,958,957  
Accounts receivable, net   2,936,999       2,834,750  
Product deposit   246,279       127,265  
Inventory, net   3,382,582       3,703,363  
Other current assets   1,074,063       687,022  
Total Current Assets   19,164,769       11,311,357  
           
Non-current Assets          
Equipment, net   462,446       476,441  
Right of use asset   1,114,791       1,206,009  
Capitalized software, net   9,529,525       8,840,187  
Intangible assets, net   3,598,299       3,831,859  
Total Non-current Assets   14,705,061       14,354,496  
           
Total Assets $ 33,869,830     $ 25,665,853  
           
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT          
           
Current Liabilities          
Accounts payable $ 6,903,034     $ 10,106,793  
Accrued expenses   11,575,597       12,166,509  
Notes payable, net   1,822,489       2,797,250  
Current operating lease liabilities   821,941       756,093  
Deferred revenue   5,895,545       5,547,506  
Total Current Liabilities   27,018,606       31,374,151  
           
Long-term Liabilities          
Convertible long-term debt, net   13,423,121        
Noncurrent operating lease liabilities   407,857       574,136  
Contingent consideration   381,250       443,750  
Purchase price payable         579,319  
Total Liabilities   41,230,834       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, $1,337 and $1,305 per share as of March 31, 2023 and December 31, 2022, respectively   4,678,014       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 $28.39 and $27.84 per share as of March 31, 2023 and December 31, 2022, respectively   140       140  
Common Stock, $0.01 par value; 100,000,000 shares authorized, 32,040,045 and 31,552,775 shares issued, 31,937,005 and 31,449,735 outstanding as of March 31, 2023 and December 31, 2022, respectively   320,401       315,528  
Additional paid-in capital   183,183,652       179,015,250  
Accumulated deficit   (195,348,013 )     (190,562,994 )
Treasury stock, 103,040 and 103,040 shares, at cost, as of March 31, 2023 and December 31, 2022, respectively   (163,701 )     (163,701 )
Total LifeMD, Inc. Stockholders’ Deficit   (12,007,521 )     (11,395,777 )
Non-controlling interest   (31,497 )     (475,548 )
Total Stockholders’ Deficit   (12,039,018 )     (11,871,325 )
Total Liabilities, Mezzanine Equity and Stockholders’ Deficit $ 33,869,830     $ 25,665,853  
           

LIFEMD, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
             
    Three Months Ended March 31,
    2023     2022  
Revenues            
Telehealth revenue, net   $ 20,202,803     $ 22,598,061  
WorkSimpli revenue, net     12,923,532       6,444,776  
Total revenues, net     33,126,335       29,042,837  
Cost of revenues              
Cost of telehealth revenue     3,920,182       5,086,068  
Cost of WorkSimpli revenue     294,787       162,107  
Total cost of revenues     4,214,969       5,248,175  
             
Gross profit     28,911,366       23,794,662  
             
Expenses            
Selling and marketing expenses     16,717,645       21,909,825  
General and administrative expenses     10,602,763       12,212,743  
Other operating expenses     1,704,765       1,417,469  
Customer service expenses     1,555,404       933,307  
Development costs     1,183,599       428,333  
Total expenses     31,764,176       36,901,677  
             
Operating loss     (2,852,810 )     (13,107,015 )
             
Other expenses            
Interest expense, net     (264,465 )     (167,934 )
Loss on debt extinguishment     (325,198 )      
             
Net loss     (3,442,473 )     (13,274,949 )
             
Net income attributable to noncontrolling interests     565,983       24,726  
             
Net loss attributable to LifeMD, Inc.     (4,008,456 )     (13,299,675 )
             
Preferred stock dividends     (776,563 )     (776,563 )
             
Net loss attributable to LifeMD, Inc. common stockholders   $ (4,785,019 )   $ (14,076,238 )
             
Basic loss per share attributable to LifeMD, Inc. common stockholders   $ (0.15 )   $ (0.46 )
Diluted loss per share attributable to LifeMD, Inc. common stockholders   $ (0.15 )   $ (0.46 )
             
Weighted average number of common shares outstanding:            
Basic     31,680,776       30,853,118  
Diluted     31,680,776       30,853,118  
             

LIFEMD, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
             
    Three Months Ended March 31,
    2023     2022  
         
CASH FLOWS FROM OPERATING ACTIVITIES            
Net loss   $ (3,442,473 )   $ (13,274,949 )
Adjustments to reconcile net loss to net cash used in operating activities:            
Amortization of debt discount     38,461        
Amortization of capitalized software     1,088,645       383,812  
Amortization of intangibles     233,560       114,394  
Accretion of consideration payable     65,478        
Depreciation of fixed assets     47,651       32,477  
Loss on debt extinguishment     325,198        
Operating lease payments     184,333       118,524  
Stock compensation expense     2,663,514       4,472,781  
             
Changes in Assets and Liabilities            
Accounts receivable     (102,249 )     (816,447 )
Product deposit     (119,014 )     (411,737 )
Inventory     320,781       383,734  
Other current assets     (387,041 )     (49,799 )
Change in operating lease liability     (193,546 )     (45,501 )
Deferred revenue     348,039       288,675  
Accounts payable     (3,203,759 )     2,477,466  
Accrued expenses     97,803       (1,764,573 )
Other operating activity     (579,319 )      
Net cash used in operating activities     (2,613,938 )     (8,091,143 )
             
CASH FLOWS FROM INVESTING ACTIVITIES            
Cash paid for capitalized software costs     (1,777,983 )     (2,098,143 )
Purchase of equipment     (33,656 )     (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     (1,811,639 )     (7,378,189 )
             
CASH FLOWS FROM FINANCING ACTIVITIES            
Proceeds from convertible long-term debt, net     14,473,002        
Proceeds from notes payable     2,000,000        
Repayment of notes payable, net of prepayment penalty     (3,299,959 )      
Cash proceeds from exercise of warrants           38,500  
Preferred stock dividends     (776,563 )     (776,563 )
Contingent consideration payment for ResumeBuild     (62,500 )      
Adjustment of membership interest of WorkSimpli     (306,514 )      
Distributions to non-controlling interest     (36,000 )     (36,000 )
Net cash provided by (used in) financing activities     11,991,466       (774,063 )
             
Net increase (decrease) in cash     7,565,889       (16,243,395 )
             
Cash at beginning of period     3,958,957       41,328,039  
             
Cash at end of period   $ 11,524,846     $ 25,084,644  
             
Cash paid for interest            
Cash paid during the period for interest   $ 273,000     $  
             
Non-cash investing and financing activities:            
Warrants issued for debt instruments   $ 1,088,343     $  
Cashless exercise of options   $     $ 255  
Consideration payable for Cleared acquisition   $     $ 8,079,367  
Consideration payable for ResumeBuild acquisition   $     $ 500,000  
Stock issued for nontcontingent consideration payment   $ 642,000     $  
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, 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, accretion, financing transaction expense, non-controlling interests, foreign currency translation, inventory valuation, sales return reserves, litigation costs, loss on debt extinguishment, 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, 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 March 31,
        2023       2022  
Net loss attributable to common shareholders     $ (4,785,019 )   $ (14,076,238 )
           
Interest expense (excluding amortization of debt discount)       113,812       55,742  
Depreciation, amortization and accretion expense       1,435,334       530,683  
Amortization of debt discount       38,461        
Loss on debt extinguishment       325,198        
Financing transactions expense       144,451       152,015  
Litigation costs       72,800       48,865  
Inventory and reserve adjustment       99,639       216,953  
Severance costs             101,849  
Acquisitions expenses       25,126       25,000  
Accrued interest on Series B Convertible Preferred Stock       112,192       112,192  
Foreign exchange (gain) loss       355,622        
Dividends       812,563       776,563  
Stock-based compensation expense       2,663,514       4,472,781  
Net income attributable to noncontrolling interests       565,983       24,726  
           
Adjusted EBITDA     $ 1,979,676     $ (7,558,869 )
           

Reconciliation of GAAP Diluted Loss per Share Attributable to Common Shareholders to Adjusted EPS        
(unaudited)     Three Months Ended March 31,
        2023       2022  
Diluted loss per share attributable to LifeMD, Inc. common shareholders     $ (0.15 )   $ (0.46 )
           
Adjustments to Reconcile GAAP Diluted Loss Per Share to Adjusted EPS          
Interest expense (excluding amortization of debt discount)              
Depreciation, amortization and accretion expense       0.05       0.02  
Amortization of debt discount              
Loss on debt extinguishment       0.01        
Financing transactions expense             0.01  
Litigation costs              
Inventory and reserve adjustment             0.01  
Severance costs              
Acquisitions expenses              
Accrued interest on Series B Convertible Preferred Stock              
Foreign exchange (gain) loss       0.02        
Dividends       0.03       0.03  
Stock-based compensation expense       0.08       0.14  
Net income attributable to noncontrolling interests       0.02        
           
Adjusted EPS     $ 0.06     $ (0.25 )
           

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