LifeMD, Inc. Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Strategic Priorities:
  • Continue growing leading care-based weight management program, emphasizing patient access to branded/genericized GLP-1 and oral non-GLP-1 therapies.
  • Return RexMD brand to double-digit growth by scaling HRT peptide, prescription weight management, and personalized ED/hair loss treatments.
  • Scale behavioral health offering and upcoming women's health program, targeting underserved markets.
  • Expand and invest in LifeMD+ membership service to drive patient engagement and health outcomes.
  • Execute enterprise partnerships to introduce new patient volume.
• AI Integration: Integrating AI to free providers from administrative tasks, improve patient outcomes, and enhance productivity.
• LifeMD+ Membership: Nearly 50 new patient sign-ups per day, seen as central to deepening patient relationships and boosting retention.

Segment Performance

• Telehealth: Revenue increased 30% year-over-year to $48.6 million, with stand-alone adjusted EBITDA growing 560% to $3.4 million. Active subscribers increased 16% year-over-year to over 297,000 at quarter end.
• Weight management: Consistently attracted over 400 new patient sign-ups per day. Outperformed segment guidance but impacted by higher refund rates due to patients lacking insurance coverage or unable to afford branded therapies. Expected majority of new patients by year-end to be on insurance-covered GLP-1, affordable cash-based, or oral prescription therapies.
• WorkSimpli: Generated nearly $3.7 million in adjusted EBITDA on a stand-alone basis, maintaining strong bottom line performance.

Guidance

• Consolidated revenue guidance revised to $250 million to $255 million from $268 million to $275 million previously.
• Telehealth stand-alone revenue guidance now $195 million to $200 million compared with $208 million to $213 million previously.
• Consolidated adjusted EBITDA guidance revised to $27 million to $29 million from $31 million to $33 million previously.
• Telehealth stand-alone adjusted EBITDA guidance between $14 million and $16 million compared with $21 million previously.

Risks

• Weight management refund rates: Higher-than-anticipated refund rates driven by patients lacking insurance coverage or unable to afford branded therapies. Near-term headwind, but actively enhancing new patient intake process.
• RexMD competitive costs: Challenging second quarter due to temporarily elevated customer acquisition costs in the ED market, though adjustments made and early third quarter data shows improvement.

Question and Answer

• Q: Jenny Shen on insurance business: Asks about insurance opportunity, states contracted with over 100 insurance plans across 40 states, 80 million lives under coverage, expects to double by year-end. A: Justin Schreiber: Contracted with over 100 insurance plans in 40 states, 80 million lives under coverage, expects to double by year-end, unit economics strong for insurance-sponsored patients.
• Q: Sarah James on customer acquisition costs: Asks about rep customer acquisition costs, guide change relation. A: Marc Benathen: CACs bounced around, adjusted by diversifying business, improvements in acquisitions per day and CACs returning to historical levels.
• Q: Ryan Meyers on Q3/Q4 impact of RexMD dynamics: Asks about Q3/Q4 impact of RexMD guide down. A: Marc Benathen: Majority of guide down related to RexMD performance, small proportion from higher weight management refund rates, vast majority from RexMD Q2 performance and downstream effects.
• Q: Anderson Schock on insurance approval for GLP-1s: Asks about percentage of patients with insurance approved for GLP-1s. A: Justin Schreiber: No exact percentage, but confident majority of new patients by year-end on insurance covered, cash-based, or oral therapies.
• Q: Anderson Schock on behavioral health launch: Asks about initial subscribers and revenue contribution. A: Justin Schreiber: Behavioral health live across 50 states, onboarding patients daily, bullish on scaling over next 30-60 days.
• Q: Steven Dechert on refund rate and Novo/Lilly partnerships: Asks about refund policy and ties to Novo/Lilly. A: Justin Schreiber: Refund policy liberal, collaborations with Novo/Lilly not directly affecting refund rate, refund rate affected by high cost of branded drugs and competition.
• Q: Unidentified Analyst on subscriber fractions and attrition: Asks about weight management vs telehealth subscribers and attrition rates. A: Marc Benathen: Weight management subscribers ~30-35% of total active, retention rate ~1/3 of cohorts at 12 months, higher retention for those on therapy.
• Q: Unidentified Analyst on insurance as differentiator: Asks if insurance is most meaningful differentiator. A: Justin Schreiber: Infrastructure for medical and pharmacy benefits, ability to operate high-quality synchronous care platform across 50 states as unique differentiators.