LifeMD, Inc. Q3 FY2024 earnings call

• Telehealth business has tremendous momentum with top and bottom line growth; telehealth revenue grew 65% vs prior quarter, adjusted EBITDA for telehealth was $2.5 million (up 200% sequentially).
• Officially opened LifeMD's affiliated National Pharmacy in Pennsylvania, a 22,500 square foot facility with state-of-the-art automation, expected to be accretive in 2025 and improve patient experience.
• Progress on contracting with private and government payer programs, with affiliated medical group enrolled in multiple commercial payers in seven states, aiming to be contracted with one or several dominant private payers across at least 25 states by end of 2025 and launch Medicare in first half of 2025.
• Enhancements to weight management model including rollout of in-home lab capabilities, launch of non-GLP-1 treatment option, and implementation of AI-driven technology.
• Progress on RexMD men's telehealth business, including launch of weight management offering under RexMD, new hormone replacement therapy offering, and plans for personalized compounded ED therapies and concierge men's health program.
• WorkSimpli returned to growth and is on track to reach peak EBITDA run rate by end of 2024.

LifeMD's core telehealth business showed strong momentum. Telehealth revenue grew by 65% versus the prior quarter. Telehealth standalone adjusted EBITDA increased by 200% sequentially to $2.5 million, which was well ahead of guidance. Core telehealth represented more than 75% of Q3 total revenue, up from 63% a year ago. WorkSimpli's performance leveled out in the third quarter but then returned to growth and is on track to achieve the previously guided peak EBITDA run rate in the range of $1 million to $1.3 million per month by the end of 2024.

• Reiterated 2024 total revenues guidance of at least $205 million.
• Raised telehealth revenue guidance to between $151 million and $152 million, up from $150 million previously.
• Raised standalone telehealth adjusted EBITDA guidance for 2024 to be in the range of $6 million to $7 million, up from $3 million to $4 million previously.
• Adjusted total adjusted EBITDA guidance, including impact of WorkSimpli consolidation, to be in the narrowed range of $13 million to $14 million from the previous range of $13 million to $15 million.

• Uncertainty around future of compounding GLP-1 medications and potential changes in market dynamics.
• Potential impact of payers' coverage decisions on weight management and other offerings.
• Market noise affecting weight management subscriber growth.

Q: David Larsen asked about FDA's comments on semaglutide and tirzepatide, whether they'll be on shortage list and resolution time.

A: Justin Schreiber said LifeMD is agnostic to treatment modality, compounded GLP-1s likely to have role but will be replaced by branded therapies as payers, employers, and drug manufacturers agree on cost structure.

Q: David Larsen followed up on impact of more branded GLP-1 products or generic versions launching.

A: Justin Schreiber said more coverage is inevitable and good for LifeMD.

Q: David Larsen asked about precautions/safety measures with pharmacy and QA processes.

A: Justin Schreiber said they connect patients to trusted third-party pharmacies with heavy regulation, pharmacies are licensed drug manufacturers, and LifeMD conducts third-party testing.

Q: Sarah James asked about telehealth margins moving pieces and trend going forward.

A: Marc Benathen said drivers include strong retention, upselling to longer subscription lengths, and bigger percentage of revenue from service care-based model.

Q: Sarah James asked about clinical staff recruitment strategy.

A: Justin Schreiber said they feel good about current staffing levels and are strategically adding FTEs to affiliate medical group.

Q: Kyle Bauser asked about number of weight management subscribers added and color on new adds.

A: Marc Benathen said 15,000 net new added, net growth varies but business has growth, CACs up slightly but weighted AOV increasing.

Q: Kyle Bauser asked about thoughts on divesting WorkSimpli.

A: Marc Benathen said plan is to divest, still interest from parties, business turned corner and Q4 off to strong start.

Q: Steve Dechert asked about key differentiators for LifeMD's weight management offering.

A: Justin Schreiber said quality of care with real provider consult, comprehensiveness of platform including nutrition consults and other wellness programs.

Q: Eduardo Martinez-Montes asked about if GLP-1 therapies are main growth driver and other offerings.

A: Justin Schreiber said GLP-1s are a big driver, also excited about RexMD men's health business, insomnia business, behavioral health, Type 2 diabetes, and cardiovascular health offerings.