LifeMD Can Surge on Its GLP-1 Offerings

Key Points

• LifeMD is a leading telehealth provider offering primary care services, GLP-1 weight management, and men's sexual health services through its ReLifeMD's.
• LifeMD's GLP-1 weight management segment saw 66% sequential revenue growth as members exceeded 50,000.
• LifeMD expects another $25 million investment from Medifast toward consumer marketing for its weight management program.

LifeMD Inc. NASDAQ: LFMD is a leading telehealth provider operating an end-to-end virtual healthcare platform. LifeMD operates a direct-to-consumer (DTC) model focused on offering on-demand primary care services to consumers. The company continues to see growth but hasn't been able to get profitable. However, its GLP-1 weight management program may be the catalyst to tip the company into the green.

LifeMD competes with telehealth providers in the medical sector, including Teladoc Health Inc. NYSE: TDOC and Hims & Hers Inc. NYSE: HIMS.

GLP-1 Weight Loss Offerings

LifeMD offers a GLP-1 weight management program for $129 to $199 a month. This provides "access" to GLP-1 medications, including Ozempic, Wegovy and Rybelsus from Novo Nordisk A/S NYSE: NVO and Zepbound from Eli Lilly and Co. NYSE: LLY. Rybelsus is an oral GLP-1 medication first approved in 2019 for type 2 diabetes. LifeMD offers "access" to these medications, meaning prescriptions if customers meet the requirements and qualify for the drugs. LifeMD will also attempt to work with customer health insurers for reimbursement, but that relies on individual coverage benefits.

LifeMD is also partnered with Withings to offer in-home health monitoring devices that provide real-time blood pressure and body composition readings. These devices include the Body Pro 2 scale and the BPM Connect Pro blood pressure monitor.

Access To, Not Actual Fulfillment of Drugs

LifeMD does not actually mail out the drugs to customers. They will only provide consults, labs and prescriptions, which they consider "access." This can appear misleading to consumers when their advertisements proclaim, "All-Inclusive for $199/mo." In addition to the brand name GLP-1 drugs, they also provide access to the compounded versions of Semaglutide and Tirzepatide. The compounds are significantly cheaper, ranging from $99 to $559 a month, compared to over $1,000. LifeMD will send prescriptions to the patient's preferred pharmacies; they don't actually ship the medications.

Daily Rounding Bottom Pattern

LFMD is attempting to form a daily rounding bottom pattern. LFMD gapped down to $10.70 on its Q1 2024 earnings report, forming the first gap-fill levels. Shares proceeded to sell off to a swing low of $7.53 on May 20, 2024. Shares have been holding support there, absorbing sellers as they try to curl back up. The daily relative strength index (RSI) is also trying to curl back up off the oversold 30-band level. Pullback support levels are at $7.53, $6.97, $6.26 and $5.68.  

Strong Q1 2024 Revenues Growth

LifeMD reported a Q1 2024 EPS loss of 19 cents, missing consensus estimates by 2 cents. GAAP net loss was 19 cents or $7.5 million. Revenues rose 33.2% to $44.14 million, beating estimates by $1.56 million. All business segments experienced growth. Cash-adjusted EBITDA rose 108% YoY to $4.8 million, including the increase in deferred revenue from prepaid weight subscriptions. The company generated $5.2 million of cash flow from operations, including a $2 million net increase in cash. Gross margins expanded to a record 90%. The company closed the quarter with $35.1 million in cash.

Segment Performance

Weight management subscribers add 42,000 members, bringing total subscribers to over 50,000. Retention for its weight management program remained strong, as 80% of its GLP-1 treatment subscribers remained after 90 days. Prior authorization approval rates for branded GLP-1 prescriptions have risen between 40% and 50%. With the FDA approval of Wegovy for cardiac health, LifeMD estimates an additional 4 million Medicare patients could receive coverage for the GLP-1 drug. Weight management revenues surged by 66% sequentially.

Its lifestyle healthcare business, led by RexMD, generated double-digit growth with contributions margins exceeding 30%. RexMD has grown its members to over 500,000. WorkSimpli revenues rose 3% as subscribers rose by 8,000 sequentially. Telehealth revenues rose 53% YoY. The company added 200,000 new patients in Q1 2024.

Raised Guidance

LifeMD expected Q2 2024 revenue between $48 and $50 million. Adjusted EBITDA is expected to be between $2 and $3 million, and cash-adjusted EBITDA is expected to be between $6 and $7 million.

The strength of its telehealth business drove LifeMD to raise its full-year 2024 revenue guidance to at least $205 million. Adjusted EBITDA guidance was reaffirmed to be between $18 million to $22 million.

CEO Insights

LifeMD CEO Justin Schreiber noted that new patient sign-ups more than doubled from less than 200 per day to over 400. The biggest limiting factor to growth has been scaling its ratio of patients to providers and creating additional appointment capacity. To address this, the company continues to invest in its clinical staff, automation and technical capabilities to grow efficiencies. GLP-1 coverage is also seeing significant upticks, with average co-pays between $35 and $70.

Medifast Partnership's Additional $25 Million Investment

Its partnership with Medifast Inc. NYSE: MED will involve an additional $25 million investment in consumer marketing to support the growth of its weight management program. Medifast OPTAVIA Coaches can work with LifeMD-affiliated providers to provide integrated and holistic solutions to weight management. The company plans to launch hormone replacement therapy led by testosterone for its RexMD unit, which it considers highly synergistic to its GLP-1 business. LifeMD plans to launch an asynchronous offering with weight management under RexMD soon.

LifeMD analyst ratings and price targets are on MarketBeat.