LifeMD, Inc.

please stand by. Your program is about to begin. If you need audio assistance during today's program, please press star zero. Good afternoon. Thank you for joining us today to discuss LifeMed's results for the second quarter ended June 30th, 2024. Joining the call today are Justin Schreber, Chairman and Chief Executive Officer, and Mark Benathan, Chief Financial Officer. Following management's prepared remarks, we will open the call for question and answer session Before we begin, I'd 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. These risks and uncertainties are described in the company's 10-K and 10-Q filings and within other filings that LifeMed 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 7, 2024. 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 management will be discussing certain non-GAAP financial measures that the company believes are important in evaluating LifeMed's 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 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 LifeMed CEO, Justin Schreber. Please go ahead.

Thank you, and good afternoon, everyone. After the market closed, we issued a press release announcing our second quarter financial results and posted an updated corporate presentation on our website at ir.lifemd.com. During the quarter, the performance of LifeMD's core telehealth business was very strong, led by our GLP-1 weight management offering. This business achieved 67% year-over-year revenue growth, well surpassing our expectations. This business also achieved positive adjusted EBITDA one quarter earlier than guidance. We are pleased with the results from our core healthcare business during the quarter, and for the year, we expect continued outperformance on both top and bottom line metrics. WorkSimply's performance was pressured in the second quarter due to a tougher than expected advertising environment, coupled with some executional missteps from the business. These have since been addressed, and we've begun to see improvements in the signup rates and advertising efficiency, which will translate to improved bottom line performance in the back half of 2024, with WorkSimply expected to return to peak monthly run rate EBITDA by the end of 2024. On a consolidated basis, we exceeded our expectations for revenue and met our expectations for adjusted EBITDA, both driven by telehealth performance. However, the impact on adjusted EBITDA from WorkSimply's first half results drove our decision to revise consolidated EBITDA guidance. We don't expect WorkSimply to have a material impact on our consolidated revenue performance for the year, nor our long-term financial performance. Additionally, even with WorkSimply's performance in the first half of the year, LifeMD still generated positive net cash flow on a consolidated basis. This reflects the strength of our core tell-out business, which will be the driving force for the company's future revenue and profit growth. Our long-term objective continues to be to divest WorkSimply in a way that benefits shareholders, and we continue to regularly distribute WorkSimply's excess cash to its shareholders of which LifeMD is the majority holder. As we continue to capitalize on the tremendous market potential for our core telehealth operation, we remain focused on the following key areas. One, continued expansion of our comprehensive weight management offering. Two, development of new and enhanced infrastructure capabilities, including the initial acceptance of commercial insurance. And three, expansion of our RexMD brand. Our weight management offering continued to perform above expectations, with revenue up 82% sequentially versus the first quarter of 2024. During Q2, we added nearly 20,000 new weight management patients, finishing the quarter at just over 60,000 patient subscribers. We continued to average over 400 new signups per day with robust unit economics that largely broke even on a day one cash basis. Retention continued to improve with our most recent cohort showing a 400 to 500 basis point improvement in six-month retention rates for patients going on therapy. We continue to see growing success in getting patients approved for branded therapies with approximately 50% approval rates for Zepound and Wegovy prior authorizations. This figure is up nearly 700 basis points over the last month. We expect this metric, as well as overall prior auth approval rates, to continue to improve over time and are actively implementing workstreams and investing in third-party resources to drive this. Importantly, the bulk of our weight management revenue continues to come from clinical services, and we continue to offer our patients access to both branded therapies and, if branded therapies are not accessible, high-quality trusted compounded options. I continue to believe that this business model and the holistic care services we provide with it not only provides a differentiated patient experience, but also ensures a model that is durable and adaptable to the evolving needs of the GLP-1 and medically supported weight loss markets. During the second quarter, we rolled out a collaboration with Withings to integrate their smart devices, including scales and blood pressure monitors, into our weight management offering. further supporting our affiliated medical group in providing patients with the highest level of fully integrated virtual care. This quarter, we expect to provide additional updates on new offerings and capabilities we are rolling out as part of our weight management program. We are also committing significant resources to improving the comprehensiveness of our weight management offering. We don't want to be a platform that patients use solely to access prescription medications. We want to be a platform that helps people access transformational and long-term healthcare services. In the case of our weight management program, this means teaching our patients what it means to be metabolically healthy, how to eat nutritiously, the dangers of refined sugar and ultra-processed foods, and the importance of exercise, sleep, and mental health. We are using our personalized treatment plans, AI capabilities, in-home tools, and our mobile applications to intelligently educate and provide timely reminders and support to our patient population on all of these lifestyle and diet components of a metabolically healthy person. We also have a strong partnership with Optivea, one of the leading coaching and diet companies in the country that we believe will be appropriate for a segment of our population. While much of what I just mentioned is still in development, we are committed to having the most comprehensive platform in America for weight management by the end of this calendar year. I'm personally very passionate about this, and I'm excited to keep you updated on our progress in the coming quarters in this area. During the second quarter, we also made significant progress in expanding our capabilities, notably launching the first steps of our commercial insurance program, and integrating AI within our patient support and clinical operations. In June, we began accepting commercial insurance following an extensive build out of technology, compliance, and revenue cycle management capabilities to support this offering effectively and compliantly. While patient volumes are still small, we plan to continue our phased expansion in additional states with the goal of having broad nationwide coverage. Additionally, we are enrolled in Medicare and expect to launch this offering after gaining more scale with private payers. As discussed on prior calls, AI is a large initiative for us. We've already begun to leverage this technology across our data and most recently rolled it out to support our care and provider communications for routine tasks. I'm excited to share some significant progress in this area. In the month of July alone, we utilized over 1 billion tokens in our AI systems to assist providers and support staff service messages ranging from care, coverage, order fulfillment, and more. We've implemented an advanced AI-powered system for message classification and routing. This system efficiently categorizes incoming communications and directs them to the appropriate departments or individuals. which has significantly improved our response efficiency. We've also developed specialized AI assistance for our providers, medical assistance, and support staff. Thanks to these initiatives, we've seen a dramatic improvement in our average response time. In fact, we've achieved a 200% improvement, which means we're now able to address patient inquiries and concerns three times faster than before. These AI-driven improvements are not just about efficiency, they're also about enhancing the quality of care we provide. By freeing up our medical professionals from routine tasks, we're allowing them to focus more on their number one priority of delivering incredible care and creating an amazing experience for patients that choose to use our platform for their healthcare. Additionally, I am pleased to announce we are making significant progress in the build-out of our in-house 50-state pharmacy. This past quarter, we recruited an exceptional team of pharmacists and support personnel that have deep experience managing large commercial and compounding pharmacies. We expect our pharmacy to be licensed this month and to be fully operational in the fourth quarter of this year. Once online, we will have the capabilities to handle both mail order and non-sterile compounding, as well as integrating our existing distribution center operations within the pharmacy. We expect to realize some gross margin benefit from this initiative in 2025, as well as more efficient distribution, shorter fulfillment times, and enhanced nimbleness as we expand into new product and service areas. Lastly, RexMD continues to be a source of steady growth and high margin revenue for LifeMD. For the first time in several years, we launched new indications under the RexMD umbrella. These include weight management and hormone replacement therapy, or HRT treatments. I'm pleased to say that we expect to soft launch our HRT program later this month. In summary, despite WorkSimply's temporary challenges, we remain very bullish about the potential of our business, anchored by the strong performance from our core telehealth business and a very optimistic outlook. And with that, I'll turn the call over to our CFO, Mark Benethin, who will provide a summary of our financial results. Mark.

Thank you, Justin, and good afternoon, everyone. LifeMD had a very strong second quarter performance from our telehealth business, with revenue growing 67% versus the prior year and standalone telehealth adjusted EBITDA profitability one quarter ahead of guidance. The tremendous strength of our telehealth business supported not only outsized growth, but also strong cash flow with LifeMG generating positive net cash flow for a third consecutive quarter on a consolidated basis. Based on current and recent trends in signup rates, following strategic actions by the leadership at WorkSimply, we expect this business to return to peak profitability on a monthly run rate basis by the end of 2024. Telehealth subscriber growth remained strong, with the number of active subscribers increasing 32% year-over-year to approximately 254,000. The number of work simply active subscribers contracted 8% to more than 159,000. Consolidated gross margin for the second quarter was a record 90.1%, up 273 basis points versus the prior year period. Gross profit for the quarter totaled $45.6 million, an increase of 45% from the year-ago period. Our gap net loss attributable to common stockholders for the second quarter was $7.7 million, or a loss of $0.19 per share. This compares with the gap net loss attributable to common stockholders for the second quarter of 2023 of $7.5 million, or a loss of $0.23 per share. Adjusted EPS is a non-GAAP financial measure that excludes interest, taxes, non-cash expenses, dividends, stocks and insurance acceptance readiness, severance, litigation expense, non-controlling interests, transaction costs, and foreign currency translation. Reflecting those adjustments, adjusted diluted EPS for the second quarter of 2024 was $0.06 compared with $0.05 in the year-ago period. Adjusted EBITDA, which is a non-GAAP financial measure that excludes the same items I noted for adjusted EPS, totaled 2.5 million in the second quarter of 2024. This compares with adjusted EBITDA of 1.7 million in the year-ago period. Beginning this quarter, we will also be reporting standalone telehealth adjusted EBITDA for our core telehealth business, which is a non-GAAP measure defined as adjusted EBITDA excluding our Work Simply business. This is an important measure for investors to understand the profitability of our core telehealth business, which represents the long-term driver of the company's growth and profitability. This measure totaled the gain of $820,000 for the quarter as compared to a loss of $2.8 million in the year-ago quarter. LifeMG generated $4.5 million of cash flow from operations during the second quarter of 2024. of which approximately 3 million came from our core telehealth business, and generated positive net cash flow after CapEx, debt service, and preferred stock dividends for the third consecutive quarter. Cash balances totaled 35.7 million as of June 30th, 2024, an increase of $600,000 over the end of the first quarter, driven by the strong performance of our telehealth business. Today, we are reiterating our guidance for 4 year, consolidated revenue of at least 205M while raising our life and detail health revenue guidance from 140 to 150M and work simply revenue guidance, decreasing to 55M from 65M previously. We are also introducing standalone telehealth adjusted EBITDA guidance in the range of 3 to 4 million for the full year of 2024, a level which is above prior expectations. For historical context, on a standalone basis, telehealth adjusted EBITDA on the full year of 2021 was a loss of over 35 million. We not only continue to rapidly grow our core business, but we continue to do so with immense gains in profitability on a consistent and sustainable basis. Despite the increases in our actual and implied guidance for our telehealth business versus prior expectations, we are revising full year 2024 consolidated adjusted EBITDA guidance to 13 to 15 million from 18 to 22 million, solely driven by the first half softness and our non-core subsidiary work simply. As indicated earlier, we expect this softness to be behind us and believe that work simply is on a path to achieving peak monthly run rate EBITDA by the end of the year. This wraps up our financial results. I'd now like to turn the call back over to Justin. Thanks, Mark.