LifeMD, Inc.

Good afternoon. Thank you for joining us today to discuss the results for LifeMD's fourth quarter and full year ended December 31, 2022. Joining the call today are Justin Schreiber, Chairman and Chief Executive Officer, and Mark Benetton, Chief Financial Officer of LifeMD. Following management's prepared remarks, we'll open the call for a question and answer session. I'd like to remind everyone that today's call is being hosted via webcast, and the recording will be made available via the link in today's press release, which is available in the investor relations section of the company's website. Before we begin, I would like to remind everyone that during this call, the company will make a number of forward-looking statements. which are subject to numerous risks and uncertainties that may cause the company's actual results to differ materially from those projected. These risks and uncertainties are described in the company's 10-K and 10-Q filings and within other filings that LifeMD may make with the SEC from time to time. Forward-looking statements made during this call are based on current information available to the company as of today, March 22, 2023. The company assumes no obligation to update or revise any forward-looking statements after today's call, except as required by law. Also, please note that the management will be discussing certain non-GAAP financial measures that the company believes are important in evaluating LifeMD's performance. Details on the relationship between these non-GAAP measures to the most comparable GAAP measures and reconciliations thereof can be found in the press release issued earlier today. Finally, I would like to remind everyone that today's call is being recorded and will be available for replay in the Investor Relations section of the company's website. Now, I'd like to turn the call over to LifeMD's CEO, Justin Schreiber. Please go ahead.

Thank you, and good afternoon, everyone. Today, after the market closed, we issued a press release detailing our fourth quarter and full-year results and uploaded an updated corporate presentation. The slides focused on our 2022 financial performance are also hyperlinked in our earnings release and on the investor relations page of our website. I'm pleased to announce that 2022 was a pivotal year for LifeMD, one in which we successfully pivoted from being a high-growth provider of telemedicine products into a diversified provider of differentiated telehealth services and products. I'd like to highlight several key initiatives we executed upon in 2022 that I believe best define our accomplishments and where LifeMD is heading. I'll start by saying We're pleased to report that LifeMD achieved consolidated, adjusted EBITDA profitability in the fourth quarter of 2022 in line with the guidance we provided over the past year. This achievement represents a crucial inflection point for our company and is demonstrative of the quality of our products and services, as well as our commitment to financial discipline. We are now well positioned to deliver strong, double-digit, top-line growth with meaningful profitability in 2023 and beyond. While we temporarily experienced a slowdown in telehealth growth in the second half of 2022, consistent with our guidance, we have successfully realigned our marketing, product, and technology investment to support ongoing growth in the most profitable areas of our company. As reflected in the 2023 guidance we released earlier today, we expect this effort to produce top-line growth of 20 to 25% in 2023, along with meaningful adjusted EBITDA profitability and the elimination of our cash burn by mid-2023. Second, last year we launched our namesake brand, LifeMD, which provides virtual primary care services. Our early results have been outstanding. Despite launching in mid-2022 with minimal early investment, we ended 2022 with approximately 7,000 VPC patients ahead of our previous guidance. We attribute this success to our proprietary telehealth platform and affiliated medical group, which I believe are our two most valuable assets. Our technology platform has robust capabilities that span virtual care, pharmacy, and marketing thanks to the integration of features like a clinician-centric electronic medical record system, proprietary algorithms for caseload balancing and scheduling, CRM functionality, lab testing, digital prescription capabilities, patient-provider audio-video interfacing, cloud pharmacy fulfillment, and more. Our platform allows us to provide nuanced treatment offerings and complex care journeys to deliver the highest level of care to our patients, as is demonstrated by the consistently high reviews and feedback we receive from our patients. The launch of our virtual primary care business has expanded our treatment options to cover hundreds of conditions, providing an invaluable gateway for us to engage with our patients and support their daily and long-term healthcare needs. Moving forward, we plan to continue to invest in and diversify treatment offerings on our virtual primary care platform. and expand patient access by participating in Medicare and contracting with private payers. For 2023, we project that LifeMD's primary care revenue, or revenue from our virtual primary care business, will exceed $5 million, compared to just over $500,000 in 2022. Third, in 2022, LifeMD launched its enterprise telehealth offerings, which support pharmaceutical, medical device, and diagnostic companies seeking to enhance the commercialization of their products. According to IQVIA, the U.S. life sciences industry spends approximately $10 billion per year on digital solutions in this area. LifeMD offers an attractive, affordable, and differentiated solution. By leveraging our proprietary technology platform, deleted medical group, established brands, pharmacy partnerships, and patient support infrastructure, LifeMD offers a comprehensive and flexible infrastructure, making us an ideal telehealth partner for these companies. This infrastructure reaches a broader audience while helping with patient adherence and outcomes, all while enhancing the long-term revenue streams of our partners. So far, during the past two quarters, new partnerships have formed and begun to grow leaving us quite optimistic about future prospects for expanding these new offerings with existing and new partners in 2023 and beyond. We are also in active dialogue with a variety of other national organizations that are seeking to partner with a leading telehealth platform like LifeMD. We are excited about the immediate and long-term value creation and growth opportunity presented by these prospective partnerships. Fourth, We continue to scale our Work Simply subsidiary while enhancing and diversifying its workplace services platform. Under the leadership of its co-founder and CEO, Sean Fitzpatrick, Work Simply exceeded our expectations and generated approximately $36 million in revenue and $5 million in EBITDA in 2022. We anticipate that these numbers will increase significantly in 2023 with projected revenue of $50 to $55 million and EBITDA of 15 to 20 million, with the potential for continued growth. In 2022, WorkSimply made several important strides towards diversifying its business from a single product PDF platform into a multifaceted workplace and document services platform, offering PDF, resume, proprietary forms, and digital signature solutions. Looking ahead to 2023, the business plans to further differentiate and expand its consumer and small business offerings. Despite receiving numerous offers to buy the business, LifeMD voluntarily decided to retain its majority ownership position in WorkSimply. We believe that WorkSimply is at an important inflection point and that this decision will be materially accretive to future shareholder value. Finally, during the latter half of 2022, LifeMD executed several important initiatives to further strengthen the company's long-term liquidity and capital position. These initiatives include significantly reducing our cash burn and successfully closing a credit facility with Avenue Capital that provided us with an additional capacity up to $40 million. LifeMD is on a pathway to eliminate its cash burn by the middle of 2023. And I believe our actions have positioned the company for long-term success and enable us to invest in the continued profitable growth of our business. With that, I will now turn the call over to our CFO, Mark Benison, who will provide a summary of the financial results. Mark.

Thank you, Justin, and good afternoon, everyone. Consistent with our guidance for the past year, LifeMD delivered adjusted EBITDA profitability of $631,000 in the fourth quarter of 2022, marking the first quarterly adjusted EBITDA profit for LifeMD. This was a particularly remarkable achievement in the evolution of our company when you consider that in the same year-ago period, our adjusted EBITDA loss was a loss of $8.2 million. Additionally, as was released in full year 2023 guidance earlier today, We expect revenue growth for approximately 20 to 25% with adjusted EBITDA growing to between 12 and 18 million for the year. We believe this reflects the remarkable financial progress we have made and will continue to make when you consider we had adjusted EBITDA losses of 15 million and 38 million in 2022 and 2021 respectively. At the same time, we recently executed upon a significant debt financing with Avenue Capital to provide what we believe to be more than ample long-term capital to LifeMD and significantly bolster our current balance sheet. As we illustrated in our updated corporate presentation made available earlier today on ir.lifemd.com, We believe this enhanced liquidity coupled with a minimal near-term cash burn, which we expect to be eliminated by mid-23, puts LifeMD in a very strong financial position to execute our long-term growth plans while also allowing us to voluntarily retain the Work Simply asset, which we believe will continue to be accretive to future shareholder value. Now turning to results for the fourth quarter of 2022. Revenue in the fourth quarter totaled $28.1 million, up 3% as compared to the same year ago quarter. Fourth quarter revenue was impacted by the non-cash impact of $2.9 million related to the deferral of telehealth order shipments. 94% of total revenues in the fourth quarter were generated by recurring subscriptions. Telehealth net revenues declined by 20% to $16.4 million However, excluding the impact of deferred order shipment revenue recognition, net revenues declined by 6%, mostly reflecting the company's refocus on advertising investment, targeting our most profitable segments with growth returning in 2023 off a more meaningful profitable base. WorkSimply continued to execute extremely strongly against the plan we put in place early last year and delivered net revenues of $11.7 million, an increase of 71% versus prior year, while generating an EBITDA margin exceeding 15% for the quarter. On the telehealth side of the business, we increased our active subscriber base by 22% versus prior year to end the quarter with over 169,000 active subscribers, and so our blended CACs declined by 18% versus the same year-ago period. Work Simply subscriber count increased by 64% first prior year to 168,000. Gross margins for the fourth quarter reached 86%, up 600 basis points first prior year. Gross profit for the quarter totaled $24.1 million, an increase of 10% from the same year-ago period. Operating expenses for the fourth quarter totaled $34.4 million, a decrease of $1.1 million versus a year-ago period. Operating expenses included $6.7 million of non-cash expenses associated with stock-based compensation, intangibles write-downs, depreciation, and amortization expenses. The intangible write-down was related to LifeMD truing up the valuation of the cleared acquisition assets, which were originally valued assuming most earnouts were achieved in the timeframe allotted. Importantly, the earn-out liability has now been removed from the purchase consideration. In the fourth quarter of 2022, we also reduced our marketing expenses, a percentage of revenue, to 62% versus 77% of revenue in the same year-ago period. Our gap net loss attributable to common stockholders for the fourth quarter totaled $12.7 million, or $0.40 per share. This compares to a net loss attributable to common stockholders of $19 million, or $0.62 per share, in the fourth quarter of 2021. Adjusted EPS, a non-GAAP financial measure that excludes non-cash expenses, preferred stock dividends, litigation expense, and foreign currency translation, totaled the gain of $0.02 per share as compared to a loss of $0.27 per share in the same year-ago period. Adjusted EBITDA non-GAAP financial measure excluding the same account categories as noted in adjusted EPS totaled the gain of $631,000 in the fourth quarter of 2022. This compares to an adjusted EBITDA loss of $8.2 million in the same year-ago quarter. Now turning to results for the full year of 2022. Revenue for the full year of 2022 totaled $119 million, up 28% as compared to 2021. Telehealth net revenues grew by 21%, $82.6 million. WorkSimply net revenues grew 47% to $36.4 million. Gross margins for the full year reached 84%, up 300 basis points versus prior year. Gross profit for the year totaled $100.3 million, an increase of 34% from the prior year. Our GAAP net loss attributable to common stockholders for the full year totaled $46.8 million, or $1.57 per share. This compares to a net loss attributable to common stockholders of $61.8 million, or $229 per share in 2021. Adjusted EPS, a non-GAAP financial measure that excludes non-cash expenses, preferred stock dividends, litigation expense, and foreign currency translation totaled the loss of 47 cents per share as compared to a loss of $1.42 per share in the same year-ago period. Adjusted EBITDA, a non-GAAP financial measure excluding the same account categories as noted in adjusted EPS, totaled the loss of $14.7 million in 2022. This compares to an adjusted EBITDA loss of $38.3 million in 2021. now turning to our balance sheet cash total 4 million as of december 31st 2022 subsequent to quarter end we closed on credit facilities from avenue capital providing up to 40 million of total capital with 15 million funded at closing as provided in our release earlier today we have continued to reduce our cash burn and expect to eliminate it by the middle of 2023 This wraps up our financial results. I'd now like to turn the call back over to Justin.