LifeMD, Inc. (LFMD) Earnings

Management highlights

### Strategic Business Model Transition - Management deliberately shifted away from the traditional D2C healthcare playbook of low-price single-transaction volume and over-reliance on paid media, focusing instead on long-term patient relationships, recurring quality revenue, and diversified demand channels. - Restructured the customer acquisition model, transformed the senior leadership team, and advanced the transition to branded GLP-1 therapies and longer-duration memberships. - Lowered the introductory price of branded GLP-1 weight management programs from $79 to $39 to match competitor pricing; this reduced near-term upfront revenue but increased the share of new patients selecting multi-month packages from 25% to 85%, improving long-term retention and lifetime value. ### Core Segment Progress - **Weight management**: Remains a core high-potential business; the company is building around branded FDA-approved therapies, clinical care, insurance access, and manufacturer partnerships, anticipating long-term market structure evolution away from low-cost unregulated compounded alternatives. Management expects the GLP-1 category to remain in early stages and expand into new oral and next-generation therapies. - **Women's health**: Designed around longitudinal evidence-based care with 80%+ on-therapy retention; recent operating trends have improved sharply, with higher new patient acquisition and lower customer acquisition costs, and management expects 300% to 400% total growth by year end. - **Men's health**: Launched an exclusive co-marketing collaboration with Halazyme subsidiary Anteros Pharma for Ziosted, the only FDA-approved once-weekly subcutaneous testosterone autoinjector, across 37 states in July 2026, with insurance access expected to expand over time. - **Affiliated Medical Group**: A key durable competitive advantage, with providers licensed across all 50 states and cross-trained across multiple care segments; 47 new providers were hired in Q2 to support second-half demand growth. - **In-house Pharmacy**: A strategically important asset delivering 90% gross margins, better patient experience, and retained economics; the company is on track to scale to full-scale nationwide fulfillment of branded, generic, and compounded therapies by year end. - **Insurance and Medicare**: Benefits infrastructure currently covers 175 million lives, with insurance penetration reaching 10% of new patients on the primary care platform; early demand for the new Medicare Bridge GLP-1 access program is encouraging, opening access to a large underserved chronic disease population. ### Operational Improvements - Recurring revenue now represents 84% of total revenue, forming a high-margin recurring base that funds future investment. - Sequential advertising and marketing expense declined $1.8 million quarter-over-quarter, and G&A expense declined $1.5 million, with additional cost reductions expected to drive improved profitability in the second half. - AI is embedded across the platform to reduce clinician administrative burden, improve workflow efficiency, lower per-patient costs, and enable personalized longitudinal care without replacing clinical providers. - Amended the credit agreement on favorable terms in Q2, strengthening overall financial flexibility.

Guidance

Management downward revised full-year 2026 guidance to account for the Q2 EBITDA shortfall, lower upfront revenue from the GLP-1 pricing change, and required launch investments for the Ziosted partnership: - Full-year 2026 revenue guidance is set to $205.5 million to $212.5 million, with adjusted EBITDA projected to range from a loss of $6 million to break-even. - Q3 2026 guidance: Revenue of $48 million to $51 million, adjusted EBITDA of -$1 million to +$2 million, with a return to adjusted EBITDA profitability expected in Q3. - Q4 2026 guidance: Revenue of $60 million to $64 million, adjusted EBITDA of $3 million to $6 million. Excluding Ziosted launch costs, the midpoint of Q4 guidance implies an annualized revenue run rate of ~$250 million and an annualized adjusted EBITDA run rate of ~$22 million, representing a high-single-digit to ~10% adjusted EBITDA margin exiting 2026. - Ziosted launch investment is projected at $2 million to $$3 million in 2026, with costs split evenly between LifeMD and Halazyme; the partnership is expected to become EBITDA accretive for LifeMD by mid-2027. No major changes to the long-term operating model targets are made, with management still expecting sustained margin expansion as new initiatives scale.

Segment performance

LifeMD reports consolidated total revenue of $47.3 million for Q2 2026, down 4% year-over-year and 6% sequentially. Gross margin expanded 60 basis points sequentially to 89%, driven by lower shipping/fulfillment costs, improved provider efficiency, and scaling of in-house pharmacy. Adjusted EBITDA was a loss of $3.5 million, and GAAP net loss from continuing operations was $7.9 million ($0.16 per share). Total active subscribers were 356,000 at quarter end; the nominal sequential decline reflects a deliberate shift to higher-retention multi-month subscriptions. Weight management had 108,000 total patients at quarter end, with ~95% of new patients selecting branded GLP-1 therapies, and compounded GLP-1 now contributes an insignificant share of revenue. Women's health patient base grew 134% quarter-over-quarter, and is on track to reach a $3 million to $5 million quarterly revenue run rate by Q4 2026. Men's health brand RexMD maintains strong, improved unit economics and serves as a key entry point to the broader LifeMD platform, with the new Ziosted collaboration launched in July 2026. In-house 50-state pharmacy operations carry ~90% gross margins, and was a core driver of overall gross margin expansion in the quarter. Revenue contribution percentages for individual segments were not disclosed in the call.

Risks & headwinds

- Over-reliance on paid media for customer acquisition exposes the business to volatile auction pricing that is outside the company's control; management has accelerated a shift to alternative non-bid demand channels to mitigate this risk. - Intense pricing competition in the branded GLP-1 weight management market pressured conversion and profitability in Q2, requiring a disruptive pricing adjustment that reduced near-term earnings. - The compounded GLP-1 market declined faster than management expected, leading to a larger-than-anticipated near-term revenue headwind during the transition to branded therapies. - New strategic initiatives including pharmaceutical partnerships, pharmacy scaling, insurance/Medicare expansion, and enterprise partnerships require upfront investment before contributing to profitability, creating near-term earnings pressure. - New product launches and partnership ramp-up timing is partially outside the company's control, which can lead to deviations from projected financial performance. - Regulatory changes around compounded peptides and GLP-1 therapies create uncertainty around future market structure and product offerings.

Analyst Q&A

• Q: If compounded peptides receive FDA approval for production in compounding pharmacies, what demand opportunity would this create for LifeMD, and is the company prepared to meet this demand? /

  A: LifeMD expects considerable existing patient demand for compounded peptides across its weight management, hormone, and sexual health patient populations, in addition to significant new demand from outside the platform. The company is currently working to convert or acquire a sterile compounding pharmacy to support safe peptide production, and has secured vendor partnerships for manufacturing through 503B facilities that can be fulfilled via LifeMD's 503A pharmacy. Management plans to take a conservative approach, prioritizing patient safety and clear disclosure of available clinical data for any peptide offerings.

• Q: What share of LifeMD's weight management patients use branded vs. compounded GLP-1, what are the unit economics for branded GLP-1, and does LifeMD receive economics from Lilly and Novo Nordisk? /

  A: 95% of new weight management patients now select branded GLP-1, and the legacy compounded GLP-1 business has shrunk much faster than expected, becoming insignificant to current and projected earnings. Currently, LifeMD only has integration relationships with Lilly and Novo Nordisk, and receives no economic payments from either, though management expects these relationships to evolve over time. Branded GLP-1 has attractive long-term unit economics, with strong returns on acquisition investment over 2-3 years, and the shift to multi-month subscriptions has dramatically improved cash flow and unit economics relative to the legacy month-to-month model.

• Q: 10% of new patients currently use insurance, how has insurance penetration grown, and what is the long-term outlook for this channel? /

  A: Insurance penetration has grown meaningfully from much lower levels 3-6 months ago, with far more patient demand to use insurance for medication costs than for consult cost coverage. Management continues to see stronger overall growth on the cash pay side currently, but views insurance coverage as a key long-term differentiator that reduces customer acquisition costs and improves patient retention, and will continue investing to grow this channel. No explicit long-term penetration target was provided.

• Q: Can you update on the current growth trajectory and expected scale of the women's health segment? /

  A: Management does not disclose granular current patient or revenue numbers for the segment, but reaffirms prior guidance that women's health will reach a $3 million to $5 million quarterly revenue run rate by Q4 2026. Recent new patient growth has been very strong, with 50-100 new patients per day in recent weeks, and management expects the business to scale to several hundred new patients per day with strong unit economics. All operational components, including pharmacy products, provider capacity, and care quality, are scaling as expected to support this growth.