LifeMD, Inc. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Fourth Quarter Results: Telehealth revenue grew 60%, adjusted EBITDA nearly fivefold. WorkSimpli rebounded to over $1 million monthly adjusted EBITDA. Key product launches include male hormone replacement therapy, nationwide pharmacy (licensed in 47 states), and expanded medical/pharmacy benefits infrastructure.
• 2025 Priorities: Solidify/grow market-leading weight loss/metabolic care, build on hormone replacement therapy success, launch LifeMD plus membership and new care offerings, grow government/private payer programs.
• Weight Management Program: Over 75,000 active patients as of year-end on virtual primary care platform, focus on affordable access to GLP-1 medications. Encouraging trends in private insurance coverage for branded GLP-1, price reductions by manufacturers, and integration with Gifthealth for cash pay Zepbound.
• Rex MD: Expanded from sexual health to multiple areas, over 175,000 active subscribers, expected 15%-20% growth in 2025 driven by HRT and other clinical areas.
• Pharmacy and Insurance: 50-state commercial pharmacy licensed in 47 states, shipping ~20,000 orders/month, working on non-sterile compounding, enrolled with private payers in 20 states, Medicare program launching in April.
• New Offerings: Behavioral health launch in Q2, enhanced LifeMD plus membership program launching in Q2, women's health offering in second half of 2025.

Segment Performance

• Telehealth: Fourth quarter telehealth revenue grew 60%, with adjusted EBITDA nearly fivefold. Core telehealth revenue for full-year 2024 grew 61%. Fourth quarter core telehealth standalone adjusted EBITDA was $5.9 million, up from $1.2 million in 2023. Full-year 2024 telehealth adjusted EBITDA was $7.4 million, compared to a loss of $5.2 million in 2023.
• WorkSimpli: Fourth quarter WorkSimpli active subscribers grew 3% to 164,000, with average monthly adjusted EBITDA over $1 million. Full-year 2024 consolidated revenue was $212.5 million, up 39% from 2023.
• Rex MD: Annualized revenue over $80 million, expected 15%-20% growth in 2025. Over 175,000 active patient subscribers.
• Weight Management: Over 75,000 active patients as of year-end on virtual primary care platform.

Guidance

• 2025 Consolidated Revenue: $265 million to $275 million, with telehealth revenue $205 million to $213 million.
• Consolidated Adjusted EBITDA: $30 million to $32 million, with telehealth adjusted EBITDA approximately $20 million.

Risks

• Market Fragmentation: Hundreds of smaller players in GLP-1 supported weight loss market, potential for reduced acquisition costs and market expansion for LifeMD.
• FDA Actions: Uncertainty around FDA decisions on compounding pharmacies and outsourcing facilities, potential impact on access to affordable medications.
• Reimbursement and Coverage: Dependence on private payer and Medicare coverage for GLP-1 medications, which could impact revenue and patient access.

Question and Answer

Q: Talk about relationship with LillyDirect and Novo's program A: LifeMD integrates with a third-party pharmacy for LillyDirect's cash pay Zepbound. Encouraged by manufacturers lowering prices, but Novo relationship not current yet.

Q: Expansion of commercial insurance acceptance and non-GLP weight loss traction A: Focus on infrastructure to reach critical mass, non-GLP offering small but growing emphasis if GLP-1 access is limited.

Q: Gross margin decline and WorkSimpli outlook A: Gross margin decline due to new pharmacy onboarding, WorkSimpli back on track with consistent EBITDA, expected growth.

Q: Medicare reimbursement for telehealth and behavioral health program A: Optimistic on Medicare coverage extension, behavioral health launch with Julian Cohen, async-first anxiety/depression treatment.

Q: Hormone therapy offering and revenue guidance A: Rex MD HRT business growing, expecting scalable growth, conservative guidance with potential upside.

Q: Insurance lives and new segments' revenue contribution A: Insured lives contribution small in 2025, new segments like behavioral health and LifeMD plus to drive future growth.

Q: Weight management insurance approvals and compounded therapies A: ~10% of patients get coverage without prior auth, ~60% need prior auth, 60% Zepbound prior auth approvals for obese patients. Rerun benefits for compounded therapy patients.

Q: FDA crackdown on compounding pharmacies A: Will follow legal advice, committed to patient access, will continue connecting patients if feasible.

Q: Remote monitoring and at-home diagnostics A: Working on integrating wearables, evaluating in-home diagnostics, focusing on convenient blood collection for HRT patients.