• Telehealth Revenue Growth: 67% year-over-year increase.

• Weight Management Revenue Growth: 82% sequential increase from Q1 2024.

• Consolidated Gross Margin: 90.1%, up 273 basis points from the prior year.

• Gross Profit: $45.6 million, a 45% increase from the previous year.

• GAAP Net Loss: $7.7 million or $0.19 per share.

• Adjusted EPS: $0.06, compared to $0.05 in the prior year.

• Adjusted EBITDA: $2.5 million, up from $1.7 million in the previous year.

• Telehealth Adjusted EBITDA: $820,000 gain, compared to a $2.8 million loss in the prior year.

• Cash Flow from Operations: $4.5 million, with $3 million from telehealth.

• Cash Balance: $35.7 million as of June 30, 2024.

• Telehealth Subscribers: 32% increase to approximately 254,000.

• WorkSimpli Subscribers: 8% decrease to over 159,000.

• Full-Year Revenue Guidance: At least $205 million, with telehealth revenue guidance raised to $150 million.

• Revised Full-Year Adjusted EBITDA Guidance: $13 million to $15 million, down from $18 million to $22 million.

• Warning! GuruFocus has detected 4 Warning Signs with LFMD.

Release Date: August 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• LifeMD Inc (NASDAQ:LFMD) reported a 67% year-over-year revenue growth in its core telehealth business, surpassing expectations.

• The company achieved positive adjusted EBITDA one quarter earlier than guidance, driven by strong telehealth performance.

• LifeMD Inc (NASDAQ:LFMD) generated positive net cash flow for the third consecutive quarter, reflecting the strength of its telehealth operations.

• The company successfully expanded its weight management offerings, with revenue up 82% sequentially and a significant increase in patient sign-ups.

• LifeMD Inc (NASDAQ:LFMD) is integrating AI technology to improve efficiency, achieving a 200% improvement in response times for patient inquiries.

Negative Points

• The WorkSimpli business faced challenges due to a tougher advertising environment and executional missteps, impacting overall performance.

• Consolidated adjusted EBITDA guidance was revised downward due to the first half softness in the WorkSimpli subsidiary.

• The number of WorkSimpli active subscribers contracted by 8%, indicating a decline in this segment.

• LifeMD Inc (NASDAQ:LFMD) reported a GAAP net loss attributable to common stockholders of $7.7 million for the second quarter.

• The company is still in the process of divesting WorkSimpli, with no definitive timeline provided for the completion of this goal.

Q & A Highlights

Q: Can you talk about the WorkSimpli business, the increase in ad costs, and what caused the decline in earnings? What gives you confidence that youll get back to peak profitability by the end of 2024? A: Marc Benathen, CFO: The decline was due to a more competitive advertising environment and some strategic missteps. Key personnel changes have been made, leading to improved sign-up rates and advertising efficiency over the last eight weeks, giving us confidence in returning to peak profitability by year-end.

Q: What has enabled the healthcare business to reach profitability ahead of expectations? A: Marc Benathen, CFO: The main driver was outperforming in weight management revenue, with strong retention and higher acquisition rates than expected. This led to more rebuild dollars from existing patients, allowing us to achieve profitability one quarter earlier than anticipated.

Q: Can you elaborate on the holistic approach to weight management and your relationship with Withings? A: Justin Schreiber, CEO: We aim to offer a comprehensive platform for weight management, including prescription products, education, diet, and lifestyle components. Our partnership with Withings integrates smart devices to support this holistic approach, and we are committed to creating an engaging and intelligent program for our patients.

Q: How do you see the trajectory of weight management subscribers for the rest of the year and into 2025? A: Marc Benathen, CFO: We expect consistent subscriber growth throughout the year, with potential acceleration in 2025 due to the rollout of commercial insurance and Medicare. The Medifast partnership and new offerings could also contribute to growth.

Q: Can you discuss the recently launched RexMD GLP-1 offering and its uptake compared to LifeMD's offering? A: Justin Schreiber, CEO: The RexMD GLP-1 launch has been slower than expected, with the majority of growth coming from the LifeMD side. RexMD's GLP-1 offering currently represents a small percentage of the overall weight loss business.

Q: What is the demographic mix of your telehealth customers, and how might it be impacted by economic conditions? A: Justin Schreiber, CEO: The RexMD side skews male with an average age in the low-50s, while LifeMD skews female with an average age around 40. We believe healthcare and weight loss are priorities that will remain resilient even in a challenging economic environment.

Q: How do you plan to retain weight management users once they reach their weight loss goals? A: Justin Schreiber, CEO: We offer programs like the 6s wellness program and GLP-1 maintenance programs for patients who reach their goal weight. We also plan to introduce health optimization programs, such as hormone therapy, to retain users.

Q: What is the current progress of the Medifast partnership, and how much is it expected to contribute to subscriber growth? A: Justin Schreiber, CEO: We cannot disclose specific numbers due to Medifast being a public company, but they have spoken about their bundled offerings in their recent earnings report.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.