LifeMD, Inc.

Thank you for joining us today to discuss the results for LIFE-MD's second quarter ended June 30th, 2023. Joining the call today are Justin Schreiber, Chairman and Chief Executive Officer, and Mark Benison, Chief Financial Officer of LIFE-MD. Following management's prepared remarks, we will open the call for a question and answer session. 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 actual results to differ materially from those projected. Those risks and uncertainties are described in the company's 10-K and 10-Q filings and within other filings that LIFE-MD 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, August 9, 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 life in this performance. Details on the relationship between those 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. After the market closed, we issued a press release announcing our second quarter results and posted an updated corporate presentation on our website at ir.lifemd.com. Our second quarter performance was strong, continuing the momentum established in the first quarter. Our core telehealth business demonstrated double-digit sequential revenue growth once again, and we achieved positive free cash flow ahead of schedule. Additionally, we successfully rolled out our weight management program, which helps patients access GLP-1 medications, such as Wigobi, Ozempic, and Manjaro. The early results have far surpassed our expectations. I'll speak more about this in a moment. Given the tremendous opportunity ahead of us in weight management and the continued strong performance of our existing telehealth business, we are raising our full year 2023 revenue guidance to 146 to 152 million, up from the previous 140 to 150 million. At the same time, we are modestly reducing our adjusted EBITDA guidance to account for the near-term investments in marketing and our clinical team, which are vital to rapidly scaling this business. We expect these investments to pay off quickly and foresee our weight management program being substantially accretive to both our top and bottom lines beginning in 2024. For the remainder of the year, LifeMD remains focused on four key initiatives that we believe will continue to drive meaningful value for our shareholders. First is the launch of our direct-to-consumer weight management program which we officially rolled out this past April. As I mentioned, and while still early, the weight management business is off to an incredible start with the strongest unit economics of any of our telehealth offerings to date. In a very short period, we've amassed over 5,000 active patient subscribers, translating to an annual run rate of over $7 million in recurring revenue. We're aiming to scale this offering rapidly. with the goal of increasing our Q2 average of approximately 100 new patients per day to 400 to 500 patients per day by year end. We believe our offering is truly differentiated from the competition. Our weight management program stands apart as it's not just a vehicle for selling GLP-1 therapeutics. Instead, it's a comprehensive package that is fully integrated with our primary care services offering a holistic blend of diagnostics, physician visits, lab work, lifestyle support, and access to GLP-1s for eligible patients. For these services, LifeMD patients subscribe quarterly at approximately $129 per month. Additionally, by requiring synchronous virtual visits with our physicians, we can provide comprehensive care to our patients and gain valuable data on coexisting conditions. Our preliminary forecast suggests that this program could significantly enhance our 2024 revenues and EBITDA. Second, during the quarter, we continued to make significant progress in securing high-value partnerships. Building off the unique telemedicine-driven capabilities LifeMD offers in weight management, we launched two exciting partnerships with national companies in the health wellness and weight management segments. We are very excited to be aligned with these premier partners to combine our tremendous telehealth capabilities with their unique nutritional and coaching core competencies to maximize patient outcomes. We believe these initial pilot partnerships can serve as an extremely valuable jumping off point for future B2B partnerships in this area. Looking ahead, we see ample opportunity to expand upon these and other new partnerships, leveraging the unique capabilities of LifeMD's telehealth platform and our affiliated medical group. For the third key initiative, we're making substantial progress towards accepting private insurance within our virtual primary care platform. Initially, we aim to accept insurance from private insurance providers within our top 10 states by the end of the year. Alongside a team of regulatory and compliance experts, we've also begun preliminary work on Medicare acceptance. We believe these efforts represent significant and valuable expansion opportunities for our primary care platform. Finally, our existing lifestyle healthcare businesses anchored by our men's health brand RexMD and our Work Simply subsidiary continue to outperform. As we guided to last year, we spent considerable time in 2022 refining the unit economics and ad spend investment in RexMD to focus not only on high growth areas, but also on highly profitable patient cohorts. While this required us to take a small step back in 2022 in terms of sequential revenue growth, we returned to such growth in the first quarter of 2023. and continue to deliver against that momentum. Second quarter revenue for RexMD was up 10% sequentially and represents the second consecutive quarter of double-digit sequential growth. We expect to deliver high single-digit sequential revenue growth on a go-forward basis with year-over-year growth for the balance of 2023 exceeding 20% for our existing lifestyle businesses. Our WorkSimply subsidiary continues to deliver strong results, with revenue growing 66% and subscribers growing 35% versus the prior year. These businesses remain incredibly profitable, with both achieving net contribution margins in excess of 30% during the second quarter, including corporate costs. With that, I'll turn the call over to our CFO, Mark Benethen, who will provide a summary of our financial results. Mark?

Thank you, Justin, and good afternoon, everyone. LifeMD's momentum continued with our strong financial performance in the second quarter. We not only grew consolidated net revenues to a record $35.9 million, exceeding guidance, but we also achieved positive free and net cash flow for the first time in the company's history and ahead of our expectations. At the same time, we launched our weight management program with significant success right out of the gate. Our early estimates suggest this offering will be substantially accretive to our top and bottom lines beginning in 2024. Now turning to results for the second quarter of 2023. As I mentioned, revenue in the second quarter totaled $35.9 million, an increase of 18% compared with the same quarter a year ago, and up 9% versus the first quarter. Total telehealth net revenues grew 11% sequentially. Net revenues from LifeMD branded primary care products and services, including weight management, increased 122% sequentially versus the first quarter and accounted for nearly 8% of total telehealth revenues in the second quarter, up from 4% of revenues in the first quarter. Subscriber growth remained very strong with the number of telehealth active subscribers increasing 15% to more than 192,000, and Work Simply active subscribers increasing 35% to over 171,000, both versus the year-ago period. As Justin mentioned, Work Simply revenue was $13.6 million in the second quarter, an increase of 66% from the year-ago period. The percentage of total revenue that came from recurring subscriptions increased to a record 95% of total net revenues. Gross margin for the second quarter was 87%, up 200 basis points versus the prior year period. Gross profit for the quarter totaled $31.4 million, an increase of 22% from the year-ago period. Operating expenses for the second quarter totaled $36.3 million, a decrease of $2.4 million versus the year-ago period, reflecting reductions in both selling and marketing expenses and in G&A expenses driven by the slight rationalization of headcount executed in 2022 and a $1.2 million decrease in stock-based compensation. Operating expenses in the second quarter included $5.2 million of non-cash expenses associated with stock-based compensation, write-offs, non-cash interest, depreciation, and amortization expenses. Our gap net loss attributable to common stockholders for the second quarter totaled $7.5 million, or a loss of $0.23 per share. This compares to a gap net loss attributable to common stockholders of $13.8 million, or a loss of $0.45 per share in the second quarter of 2022. Adjusted EPS is a non-GAAP financial measure that excludes non-cash expenses, dividends, insurance acceptance readiness, litigation expense, non-controlling interest, M&A expenses, financing transaction costs, and foreign currency translation. Reflecting those adjustments, non-GAAP diluted EPS for the second quarter of 2023 was $0.05 per share compared with a loss of $0.22 per share in the same year-ago period. Adjusted EBITDA, a non-GAAP financial measure that excludes the same items I just noted for adjusted EPS, totaled a gain of $1.7 million in the second quarter of 2023. This compares with an adjusted EBITDA loss of $6.9 million in the same year-ago quarter. Adjusted EBITDA was lower than our quarterly guidance, primarily due to the investments we made to support the growth of our weight management program. and our performance in new patient acquisition for this business and our core lifestyle businesses. Cash and cash equivalents totaled $11.9 million as of June 30th, 2023, and reflected positive free cash flow of $2.3 million during the second quarter. As a result of the very strong early results from the weight management program launch and continued strength in our existing businesses, we are raising our full-year revenue guidance to $146 to $152 million, up from our previous guidance of $140 to $150 million. We also are slightly lowering our adjusted EBITDA guidance to $10 to $13 million versus $12 to $18 million previously, reflecting near-term investments required to scale patient acquisition and the clinical team for our weight management programs. For the third quarter, we are guiding revenue to be between $37.5 and $38.5 million, with adjusted EBITDA between $2.5 and $3.5 million. We believe the strength of our balance sheet and profitability of our current operations will more than adequately allow us to fund the growth in our business. This wraps up our financial results. I'd now like to turn the call back over to Justin.