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

LifeMD

• 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	)