LifeMD, Inc. Q2 FY2024 earnings call

• Core telehealth business strong, GLP-1 weight management exceeded expectations with 67% YOY revenue growth and earlier adjusted EBITDA profitability.
• WorkSimpli faced Q2 challenges but improvements in sign-up rates and advertising efficiency underway.
• Weight management offering: Revenue up 82% sequentially, added nearly 20,000 new patients, 50% approval rate for Zepbound and Wegovy prior authorizations, improved retention.
• Collaboration with Withings to integrate smart devices into weight management.
• Launched commercial insurance program, enrolled in Medicare, with plans for nationwide coverage.
• AI initiatives: Over 1 billion tokens used in July, 200% improvement in average response time, advanced AI-powered message classification and routing.
• In-house 50-state pharmacy expected to be licensed in July and fully operational in Q4 2024.
• RexMD launched new indications, HRT program soft launch upcoming.

Telehealth Segment: The core telehealth business, led by the GLP-1 weight management offering, achieved 67% year-over-year revenue growth. In Q2 2024, standalone telehealth adjusted EBITDA was a gain of $820,000 compared to a loss of $2.8 million in Q2 2023. The weight management offering saw revenue up 82% sequentially, with nearly 20,000 new patients added in Q2, finishing the quarter with over 60,000 patient subscribers. Average daily sign-ups were over 400, and retention improved with a 400-500 basis point increase in six-month retention rates for patients on therapy. WorkSimpli Segment: Performance was pressured in Q2 due to a tough advertising environment and execution missteps, but improvements in sign-up rates and advertising efficiency were noted, with expectations to return to peak monthly run rate EBITDA by end of 2024.

• Reiterated consolidated revenue guidance of at least $205M.
• Raised telehealth revenue guidance to $150M from $140M, lowered WorkSimpli revenue guidance to $55M from $65M.
• Introduced stand-alone telehealth adjusted EBITDA guidance $3M-$4M for full year 2024.
• Revised consolidated adjusted EBITDA guidance to $13M-$15M from $18M-$22M due to WorkSimpli's first half softness, but expect WorkSimpli to return to peak EBITDA by end of 2024.

• WorkSimpli faced challenges in Q2 due to a tough advertising environment and execution missteps.
• Dependence on telehealth performance for overall company growth and profitability.
• Potential challenges in fully rolling out commercial insurance and integrating AI across all operations.

Q: Talk about WorkSimpli's challenges and confidence in returning to peak profitability by end of 2024?

A: Major cause was competitive advertising environment and execution missteps. Key personnel changes and improved sign-up rates over last 8 weeks give confidence; expect sustained improvement to return to peak EBITDA.

Q: Profitability in health care business, what enabled it ahead of expectations?

A: Strong weight management revenue from retention of existing patients and higher-than-expected new acquisitions led to quicker profitability.

Q: Trajectory of subscribers for rest of 2024 and 2025, impact of insurance rollout?

A: Consistent subscriber growth expected, with upside from Medifast partnership and insurance rollout (commercial and Medicare) expected to accelerate growth in 2025.

Q: RexMD GLP-1 offering launch, uptake compared to LifeMD?

A: RexMD GLP-1 launch slower than expected, currently a very small percentage of overall weight loss business (sub-5%).

Q: Telehealth retention, comparison to expectations?

A: Six-month retention rates improved by 400-500 basis points, exceeding initial expectations, leading to upside in top and bottom line.