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)