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spk01: 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 7th, 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 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's CEO, Justin Schreiber, please go ahead.
spk10: 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 .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% -over-year revenue growth while 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. WorkSimpli'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 WorkSimpli 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 WorkSimpli's first half results drove our decision to revise consolidated EBITDA guidance. We don't expect WorkSimpli to have a material impact on our consolidated revenue performance for the year, nor our long-term financial performance. Additionally, even with WorkSimpli's performance in the first half of the year, LifeMD still generated positive net cashflow on a consolidated basis. This reflects the strength of our core telehealth 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 WorkSimpli in a way that benefits shareholders, and we continue to regularly distribute WorkSimpli'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 RECSMD 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 continue 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 months 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 ZetBound and Wigobi 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 work streams 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 Whidings to integrate their smart devices, including scales and blood pressure monitors, into our weight management offering, further supporting our affiliate 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 wanna be a platform that patients use solely to access prescription medications. We wanna 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 Optavia, 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 assistants, 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 that 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 a soft launch our HRT program later this month. In summary, despite work simply 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 Benethan, who will provide a summary of our financial results. Mark.
spk08: 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 outside growth, but also strong cash flow with LifeMD 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 remains strong, with the number of active subscribers increasing 32% year over year to approximately 254,000. The number of WorkSimply 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 19 cents per share. This compares with a gap net loss attributable to common stockholders for the second quarter of 2023 of 7.5 million, or a loss of 23 cents per share. Adjusted EPS is a non-gap financial measure that excludes interest, taxes, non-cash expenses, dividends, stocks and insurance acceptance readiness, severance, litigation expense, non-controlling interest, transaction costs and foreign currency translation. Reflecting those adjustments, adjusted diluted EPS for the second quarter of 2024 was six cents compared with five cents in the year ago period. Adjusted EBITDA, which is a non-gap 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-gap 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 a 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 cashflow from operations during the second quarter of 2024, of which approximately three million came from our core telehealth business, and generated positive net cashflow 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 portfolio for our consolidated revenue of at least 205 million, while raising our LifeMD telehealth revenue guidance from 140 to 150 million, and work simply revenue guidance decreasing to 55 million from 65 million previously. We are also introducing standalone telehealth adjusted EBITDA guidance in the range of three to four 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 of 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,
spk10: Mark. As we conclude our prepared remarks, I am truly excited about the momentum LifeMD is experiencing. Our performance this quarter shows the robust growth and potential of our core telehealth operations, particularly our weight management offerings, which have not only exceeded expectations, but also set a new benchmark in patient acquisition, retention, and satisfaction. Looking ahead, we are strategically positioned to redefine the telehealth landscape. We are actively integrating cutting edge AI capabilities and expanding our commercial insurance coverage, setting a new standard for patient interaction and care delivery. The imminent launch of our in-house pharmacy will further enhance our operational efficiency, aligning with our mission to build the most robust and technology advanced telehealth platform in America. With these initiatives, alongside the expansion of our RexMD brand and the rollout of new and innovative treatments, we are crafting a future where LifeMD not only leads in market performance, but also in setting benchmarks for comprehensive tech enabled healthcare solutions. With that, I'd like to thank everyone for joining us today and we'll now open the call to Q&A. Operator?
spk01: Thank you, sir. At this time, if you would like to ask a question, please press the star one on your telephone keypad. You may remove yourself from the queue at any time by pressing star two. Once again, that is star one to ask a question and we'll pause for just a moment. We will take our first question from David Larson from VTIG.
spk12: Hi, congratulations on the good quarter and the profitability in healthcare, it's fantastic. Can you talk a bit about the work simply business, I guess the increase in ad costs, what caused the decline in earnings and what gives you confidence that you'll get back up to peak profitability by the end of 2024? Thank you.
spk08: Yeah, this is Mark. So the major cause was one, there was certainly a more competitive advertising environment at first, after the year, and then two, work simply definitely made a couple of strategic and executional missteps. They've since made a couple of key personnel changes that have largely cost corrected the issue. We've actually seen significantly improved CACs as well as signup rates over the last eight weeks, which is what gives us a lot of confidence to be able to get back to peak monthly, even by the end of the year. Obviously there's a little bit of a building process because they did take a step backwards, but the fact is that following some of the personnel changes they made and a couple of strategic shifts, which I don't really wanna get into the details on for competitive reasons, they see nothing but sustained improved performance over the last about eight weeks of performance, which we expect to carry forward for the balance of the year, which will take them back to the peak EBITDA that they had achieved about a year ago.
spk12: That's great, thanks very much. And then can you talk a little bit more about the profitability within the healthcare business? Like what in your mind has enabled you to get it up to profitability ahead of expectations? For example, is there a new bundled solution? And if so, how does that work? Like for example, what is the pricing per month? What are your costs per month? Does it include part of MetaFAST? And then like how is that sort of partnership progressing in terms of patient flow back and forth? Thank you.
spk08: Yeah, so this is Mark. Well, the biggest driver of getting to profitability quicker than we had originally expected has been that we've obviously been outperforming in the weight management revenue. That was driven by twofold. One, strong retention of existing patients. We think we have a really good differentiated weight management model. Yes, we offer the bundled compounded offering like others offer. Obviously there's a percentage of the population that that makes sense for. But our more traditional care-based model has shown really strong retention. And the rate of new acquisitions that we had in the first half of the year also was ahead of where we had originally expected to be for the year. So you put the retention together with the slightly higher acquisition rate. It's basically translated to us being able to have more rebuild dollars of existing patients than we originally had anticipated in our original guidance, which has in turn led us to be able to get the profitability one quarter quicker than we thought. It also is a leading indicator for our ability to be able to sustain trajectory in that business going forward through the balance of the year and into next year.
spk10: Yes, Dave, this is Justin. I'll just add for clarity, and I think Mark did answer this fairly directly, but the bundled compounding business is a very small percentage of our business still. The core model is providing an amazing healthcare service to patients, helping them use their insurance to get coverage for these therapies. And quite frankly, like, look, we've done a great job at acquiring new patients in a very competitive environment. And as we mentioned in the script, the retention numbers are good and we think they're gonna be a lot better.
spk12: Great, and one last quick one for me, Justin, you sort of mentioned a holistic approach to weight management. You don't wanna simply be an access point for compounded medications. Can you maybe talk a little bit more about that, including your relationship with Withings and just sort of your longer-term vision of the mission of the organization? Thank you.
spk10: Sure, Dave, I love that question. And for the record, I wrote that section of the earnings script myself. And when I say I'm proud of it, I am really, really proud of not only what we're doing in this area, but what I think we will be doing by the end of the year. And I wanna be on record that I think LifeMD will have the best and most comprehensive platform for a weight management offering that encompasses not only prescription products, but also the educational and the diet and the lifestyle components that are essential to helping patients keep the weight off. And look, the vision is really simple. It's incredible doctors, an incredible coaching component, an incredible educational component, in-home tools, like we've shown we're committed to with our Withings partnership. Wearables will be a big part of this. And then all of it is connected and enabled also by technology and artificial intelligence. My viewpoint, Dave, is that everybody in this business, both in the D2C side and the enterprise side, everybody claims to have an incredible offering and everybody claims to offer everything I just said. But I think that most people, most market participants don't do a very good job at it. And this is what I've challenged our team with, to do a good job at it. Don't just upload a bunch of nutritional recipes and make them available to patients when you know that nobody's going to actually use those recipes. Don't just throw content into a mobile app that isn't intelligently delivered to patients. Make sure that whatever we do is delivered at the right time and is something that we can get them engaged with and enjoying using and create this really awesome and intelligent and thoughtful program. And it's not gonna work for everybody. But my thinking is always, if we could even really, really make a big difference for 10 to 20% of our patients and teach them what it means to be truly metabolically healthy, we're gonna really change a lot of lives. And that's my vision.
spk05: Great, I'll hop back into queue. Thanks a lot.
spk03: Thank you. And next we're gonna go to Steve Deschert with KeyBank.
spk09: Hey guys, thanks for the questions. Another quarter here of solid weight management subscriber growth. Just wanna get your thoughts on how you see the trajectory of subscribers for the rest of the year and then into 2025. And then also as you continue to roll out your commercial insurance and also Medicare, how do you see that impacting subscriber growth in 2025 as
spk05: well? Thank you. Yeah, so Steve, this is
spk08: Mark. Yeah, look, I think you can expect to see very consistent subscriber growth heading throughout the balance of the year. Obviously there's the potential for upside. The upside comes from a few potential places. One is the MetaFast partnership. Two is continuing to expand upon some of the offerings that Justin spoke about earlier in the script today. As far as the second part of your question, I do think in 2025 it will accelerate our subscriber growth by how much? I can't say exactly now. We're in the infancy of obviously growing out our insurance program, but there's definitely a large market there and there's a large market for the level of care and services that we're providing. And then once we do get into Medicare, that's an entirely new market for us. We can't treat those patients today and we know that we're turning away several patients within that market segment today. So it could have a potentially meaningful impact on subscriber growth in 2025. I think it's a little bit too early for me to say here's an exact number by which you would see that increase by, but it's definitely gonna accelerate it. Guys, hi,
spk05: Scott.
spk10: This is Justin.
spk08: I'll
spk10: just add a couple points to that as well. I think it's probably one of the most important questions right now for people listening to this call. One, like as we mentioned in the script, we're doing a great job with getting prior auths approved by our patients insurance companies. I think if you fast forward six to 12 months, you could easily see 40, 50% of our population on a branded therapy of new patients accessing a branded therapy. So that's something I'm really excited about. And we have a new partnership right now that it's a new technology company that we're working with that is seeing 40 to 50% approval rates for branded therapies with other large providers they're working with. So we're excited to get that implemented. I think that's a really important point. As Mark said, Medicare, we're already enrolled. We're going to be ready, whether it's late this year or early next year, but Medicare and Medicaid are gonna be big opportunities for GLP-1 therapies. And we're going to be a leader when it comes to helping patients with Medicare, especially access these therapies and our comprehensive program. There's also a lot of innovation in this GLP-1 space. There's a lot of new candidates in the development process right now. And I think there's, I think oftentimes people focus too much on the handful of therapies right now that are branded, that are being used by most patients. I think that there's, there is always going to be like unique therapies that can probably be compounded for people whose insurance doesn't cover branded therapies. So that's a really important point. And lastly, we're launching in the coming weeks another compounded prescription weight loss program that is not a GLP-1 that has a great safety and efficacy profile. And we're really excited about this. We think it will be appropriate for a lot of patients who either don't have coverage for GLP-1 or can't
spk05: tolerate a GLP-1. Great, thank you.
spk02: Perfect, then next we're gonna go to William Wood with Be Riley Securities.
spk11: Yeah, thanks for taking my questions and congratulations on a very nice quarter. So I was actually just curious if you could maybe talk about your recently launched REX-MD GLP-1 offering. That's, I know it's sort of early, but how have you seen that sort of launch building and has that been any appreciable comparison to what you've been seeing with your more life MD offering? I mean, essentially are people more going towards the life MD or the REX-MD having a appreciable uptake?
spk10: William, I'll take that one. This is Justin. So the REX-MD launch has been a little slower than the REX-MD GLP-1 launch has been a little slower than we expected. And I think a lot of that is just because we've been so, we've seen such great growth on the life MD side. And we're in the process of just continuing to like improve, not really improve the REX-MD business, but we're just continuing to invest some resources there into scaling that up. But right now the direct answer to your question is it's a very, very small percentage of the overall weight loss business, definitely sub 5%.
spk11: Got it, that's helpful. And then additionally on the life MD side, or actually just more on the telehealth side in general, in the past you've specifically highlighted sort of giving us some color on how the present quarter has been going overall, maybe quarter to date, as well as mentioning the deferred revenue, just to give us an idea of how the new prescribers are coming on if they're taking that six month the six month program. I was wondering if you could just give us any additional color on what you've been seeing on the life MD side or the telehealth side, weight management specifically post second quarter.
spk05: Yeah, look,
spk08: post second quarter, as our business has gotten more mature, obviously we're gonna start sticking mostly to reporting the end of the quarter for consistency purposes. There's been some confusion in the past around people quoting different subscriber amounts mid quarter, so we wanted to end that confusion. But look, the business has continued to perform very strongly. We've actually seen improvements in retention as we highlighted in the script. Acquisitions tend to be very consistent with what they've been before. You'll have some weeks where it might be a little lower, you'll have some weeks where it might be a little higher. But in general, gross signups have been very consistently around that 400 or so a day, but with improving levels of retention. So we expect that to create momentum. Deferred revenues continue to grow as you'll see or did see, it grew just under two million in the quarter. Obviously the rate of growth in deferred revenue as we get bigger will be slightly smaller just because you have more revenue being recognized. We're continuing to see more than half of people take the six month offering. There's really not a reason not to, you get a bigger initial discount. And when you think about retention, on the retention side, people are typically not getting discounts on the rebills and the retention. So the fact that we're seeing improvements in that area, I think really speaks to the quality of the offering.
spk11: Got it, and then one last quick one. I know in the past you discussed and I believe you actually mentioned it on the call earlier about divesting WorkSimply and just really focusing on the telehealth and the products that you offer through that. With sort of the slide in WorkSimply and some of the bumps you've been seeing, have those potentially divestment and partner or outsourcing WorkSimply, have those discussions picked up any or is that still more just something on the back burner that you may or may not pursue?
spk05: Yeah, I would say, go ahead.
spk10: Yeah, I'll take that one. I mean, look, as we said on prior calls, William, like we have regular interests from potential acquirers of WorkSimply. We're committed to doing what's right for that business and for our shareholders. I can tell you that presently, we have some very strong interests in WorkSimply, but we'd like to be conservative with shareholders. When we forecast what's gonna happen and when, right? But I think we do think we'll sell that business at the price point that we've guided in our investor presentation and at some point in the future, it could be in the back half of this year and it could be next year, but we think that that's something that will likely happen. What we're really focused on is working with Sean right now and just being supportive shareholders and seeing the business get back to peak EBITDA, which we're really confident about. We have a lot of clarity now on just kind of that business recovering to where it was at its peak. Sean's actually working on a few new products that will further diversify the business that are very exciting and are pretty large markets where there's a lot less competition. And so we think very highly of this business. We think it's a very valuable asset and we are working to sell it at the appropriate time.
spk11: Got it, that was helpful. Thank you for taking my questions. I'll jump back in queue and congratulations on a nice quarter, appreciate it.
spk02: Thank you. And next we're gonna go to Sarah James with Cantor.
spk06: Thank you. I wanna go back to telehealth reaching profitability a quarter ahead of your expectations, which is a huge accomplishment. Can you talk in a little bit more detail about where retention is now versus where you thought it would be when you thought break even would be a quarter later? And can you remind us what the margin or contribution ramp looks like when you initially bring a customer on there versus when they've been retained for either the six month period or whatever timeframe you feel is most relevant?
spk08: Yeah, Sarah, this is Mark. So essentially, as we mentioned earlier, we are seeing at the six month mark for patients to go on therapy. As we talked about before, there's that initial 20 to 25% fall off within the first 30 days related to patients who can't access therapy, which is heavily driven by denials from insurance companies and then not wanting to access a compounded therapy or not wanting to cash pay. Those rates are very consistent. Where we're seeing improvement is as you get out to about six months, and we would expect this to flow through the 12 months as well, we just have a limited number of people in the 12 month mark since we launched in April 23. We're seeing about a four to 500 basis point improvement in those people. So previously, we had expected that we would be somewhere around 40% at the six month mark. We're starting to see more like 45, 46%. And then when you get to the 12 month mark, seeing somewhere typically in that 30 to 35% range. And that includes the 25% of folks that fell off in the initial 30 days and did not go on therapy. So what we would expect to see though, is because the majority of what has driven our business has been getting people on therapy. We would expect to see that four to 500 basis point improvement at least a good portion of that flow through to the 12 month mark. And obviously it remains to be seen how that flows through after the first year. That in turn is creating a fair amount of upside on the top line. It's creating upside for a quarter of about a couple million dollars of which we saw roughly about 40% of that, 50% of that flow through to the bottom line, which obviously contributed to us getting to profitability one quarter the quicker that we had expected. As far as on a go forward basis, as we've said before, new patients obviously have the acquisition advertising costs with. Typically, you're spending the first call two to three months to break even on a new patient we layer in all returns and add costs. And then about a two to one return on investment on a net basis after 12 months. Rebuild patients and the rebuilds are obviously growing faster than we had originally modeled in the guidance because of increasing retention rates and slightly better acquisitions. That's where the vast majority of those dollars do flow to the bottom line. I mean, you have some cogs, you have merchant fees, but typically you're looking at some additional clinical costs to support that. But by and large, you're looking at about 60% of those incremental rebuild dollars flowing through to the bottom line.
spk06: That's very helpful. And then on a bigger picture basis, is there any way you can help us frame up what the demographic mix is of your telehealth customers and how it might be impacted by the consumer and job market
spk03: headlines that we see going on now?
spk05: Hi, Sarah, this is Justin. I can try to take a stab at that.
spk10: So if we have two very large businesses inside of LifeMD for the RexMD, on the RexMD side, it's a men's health business, average age of RexMD patient is in their kind of low 50s. The AOVs there are still significant. We have a lot of patients that spend $500 to $1,000 upfront on treatment for erectile dysfunction, for instance. So in the past, as we've seen some swings, since we've launched that business, we really haven't seen softness there. And then if you look at the LifeMD side of the business, I think that healthcare and even weight loss is something that if you look back historically, it's not an area that's going where you're gonna see a big effect from a more difficult economic environment. The average age, that patient population skews a little bit more female, it's about 70% women. It's a slightly younger demographic than on the RexMD side, the average age is around 40. And we really are not concerned about pressure on the consumer. We think that these are priorities in people's lives, the types of conditions that we treat. Healthcare is clearly a big priority for patients. We're also, we're not the most expensive offering out there. We take a lot of pride that our services are affordable to almost every American. And so, we were pretty confident that by, even if we see a slowdown in the economy, that there will be strong demand for our products
spk05: and services.
spk03: So, we're pretty confident that we're gonna see Great,
spk02: thank you. Thank you, and next we'll go to Yi Shen with HE Wainwright.
spk04: Thank you for taking my questions. Do you have a rough timeframe within which to achieve the goal of divesting work simply?
spk05: Yeah, Yi, this is
spk08: Mark. As we've said, we're not gonna commit to an exact timeline for that. We've actually received a fair amount of interest this year, continue to obviously pursue appropriate deals. And when we get to that point, we can update people. Obviously, our goal is to do a divestiture. There is always the potential of a divestiture this year or next year, but we're not gonna obviously pinpoint an exact month or quarter until we have a definitive agreement signed.
spk04: Okay, got it. And does the fact that drug shortage of triseptide is over a factor of business in weight management in any way?
spk05: This is Justin, I'll take that one.
spk10: First of all, triseptide is, according to the FDA's website, is still on the shortage list today. But even if triseptide or other GLP-1s are not available, if triseptide or other GLP-1s were to come off the shortage list in the near future, we feel really good about our weight management business, again, being able to help patients access branded medications through the prior off process. We're really optimistic about coverage continuing to improve there. We're excited, we expect that at some point in the future, Medicare will cover these drugs, we're prepared for that. Again, we do think there will always be a compounding avenue for patients that don't have coverage for branded therapies to access them through a compounding pharmacy, where we do believe that that's not going away anytime soon. And then, like I said, we also have alternative therapies that are prescription-strength and are very efficacious. We believe this is a very durable and long-term business, and there's not going to be anybody in the country that has a more comprehensive program for helping people lose weight with a GLP-1 medication. And there's not going to be anybody that's better than LifeMD at helping patients use their insurance, get a prior off approved, and access these therapies. But let's all be clear, there's still, even if we do those two things, which we will, and we are, there's going to be a percentage of the population that doesn't have insurance coverage for these therapies. And right now, until the price points, until there are more patient assistance programs put in place by pharma manufacturers to help Americans that don't have blue chip insurance or don't have insurance, period, we as a country and as healthcare providers are going to need to have another avenue for those people to access these medications. And so, because we always do what's right for patients, that's our first priority as a company, we're going to continue to help patients access compounded therapies until there are enough patient assistance programs to help Americans that don't have insurance or don't have insurance to cover these medications access them. And that's the right thing to do, it's the ethical thing to do, and it's what we're going to continue to do again until the environment changes.
spk04: Thank you, a quick follow up. Do majority of our patients on your platform today have access to branded drugs?
spk10: No, we've talked about this number before, it's in the 20% range of our patients that are on a branded therapy.
spk05: Thank
spk03: you. Thank you, and next we're going to go to Alex Furman with Grey Callum Capital
spk01: Group.
spk07: Hey guys, thanks for taking my question. Justin, great results on the weight management business, really impressive that you are inflecting the profitability sooner than expected there, and it sounds like you're seeing some really positive signs in terms of prior authorization for the branded therapies. It's certainly an area where there has been a lot of new entrants, everyone has a little bit of a different offering, it seems like some are really pushing compounded medications only, and certainly some other companies that offer branded medications seem to be talking about insurance coverage continuing to be very challenging, maybe even getting a little bit more challenging. What is it about your program that you're starting to see these big wins in terms of prior authorizations, in terms of profitably growing your business, not just in terms of growth ads, because it's not like LifeMD is a household brand name, and you certainly don't have the cheapest offering out there. Can you talk about what it is that you're doing differently than the competition that's really enabling you to profitably scale the business?
spk10: Thanks, Alex, you gave me a lot of questions there, and let me try to do my best to answer them. I mean, look, first of all, we're not surprised about the profitability and us getting the business to profitability a little bit ahead of schedule. We expected to do that. The retention numbers are good, they're really right where we expected them to be. I think an important thing to point out is that we can do a lot better. I think there's so many other opportunities when you think about the long-term wellness programs that we're launching inside of LifeMD. When you think about all of the other optimization programs that we're launching that help, kind of really help patients long-term, and not just to get to whatever their weight loss goal is. I mean, look, do we have a household, is LifeMD a brand that everybody knows? No, but I think the key, I think what we're doing right is we're providing incredible healthcare. I think that our strategy around making almost every one of our patients talk to one of our providers that are also really bought into this mission and providing, I think, really unique and great care for a virtual model. I think that's really special. There are one or two other companies out there that I found out recently are doing this, but most are not. And so that's something that we're super proud of. And look, we are seeing a lot of patients that are on therapy and are referring friends of theirs. And I think that we are really starting to build an incredible brand and a lot of equity in the LifeMD brand. So as far as your first question on the prior auth process, yeah, there are a lot of these companies out there. We diligence at least 10 of them. We found one that we think is really exceptional. The numbers that they've shared with us on prior auth approval rates would more than double the number of patients that we have on a brand of therapy. So as you can imagine, I'm really, really, really happy about that and excited for that. It's gonna be a lot. We're gonna have this live in the next couple of weeks. And I'm generally really optimistic as well about coverage improving. And I think that as these drugs, everybody likes to talk about these drugs coming off the shortage list. That's great. It's really great that we can now make these incredible drugs that are helping so many people. But the other part of the conversation that no one's talking about is once these things are able to be made and supplied to the US population, concurrent with that, we need pharma companies to start talking about patient assistance programs. And let's start talking about what we're gonna do as a society to help patients that don't have coverage for these drugs, access them. And by the way, as those patient assistance programs come online, guess who's gonna be really, really well positioned to help people access drugs through those assistance programs. It's gonna be LifeMD. And so look, I really think that no matter what happens here, what we know is that these drugs are likely a major, major breakthrough and are doing so many incredible things for people. This is a very long-term thing. It's not going away. Most people are going to access these drugs through a virtual environment. A comprehensive offering is essential. We all agree on that. Even if there's long-term use, you still want a comprehensive program that helps people make other diet and lifestyle changes to maximize the outcomes of these therapies. Everything I just said, we're perfectly positioned for. So that's why I feel really confident about this being a very, very long-term business for us and certainly for a lot of other virtual care companies out there.
spk05: That's really helpful, Justin. Really
spk07: appreciate that thorough
spk05: answer. Thank you.
spk02: Thank you. And we'll next go to Ila Subkov from Freedom Broker.
spk13: Good afternoon. Thank you for taking the question and congrats with another Record Quarter. I have a question on new members' retention in healthcare business. So the share of weight management members in the total active users count is growing and I'm curious to get your perspective on how you plan to retain these users once they reach their weight loss goals. Probably you already have some users who have met their desired weight level taking GLPs and could you give us a color on the options these users have to stay with letting these products for longer?
spk05: Yeah, I actually, I think I understood
spk10: your question. Let me take a stab at it. You know, we have two programs for patients that reach their goal weight with LifeMD. You know, one is our 6S Wellness Program, which is really just like a complete program that helps people focus on, you know, their lifestyle, their mental health, lots of things like sleep and, you know, other aspects of wellness. And we, you know, this program is really delivered by people inside of LifeMD and supported by a LifeMD provider. And alongside of that program, you know, patients have access to, you know, urgent primary care and using their in-home tools in their app and everything else that our platform offers. We also have a second program, which is designed for patients that want to use a GLP-1 longer term, which is, you know, which is designed for patients that reach their goal, their goal weight and maybe don't want to use a full dose or want to use a GLP-1 less regularly than they have in the past. And so we've built some other, you know, unique, what we call GLP-1 maintenance programs to, you know, to help, you know, patients that are in that situation as well. And then I'll also mention that there are a number of other, you know, more or less like,
spk04: you
spk10: know, health optimization programs, you know, that we're building, you know, that I think are really appropriate next step for some patients that, you know, have this transformational weight loss experience with LifeMD. And some of those, I mean, I think hormone therapy is a, you know, really interesting, you know, program that, you know, if you have women on the platform who lose weight and, you know, we have a lot of those patients that just naturally ask us to do hormone testing for them and want to talk to their doctor about that. I think that there are a number of, you know, more lifestyle like telehealth offerings that, you know, would be of interest to a large number of patients that successfully use our platform to improve their metabolic health
spk05: and lose weight.
spk13: Okay, thank you. That is very helpful. And one brief on the Medifast partnership. I'm wondering what is the current progress in the launch of the bundle of products and how much this partnership is anticipated to contribute to the subscriber growth this year?
spk05: That's a question for Medifast. We've,
spk10: I think we've, we're not going to discuss any of Medifast's results or patient numbers, especially given that they're also a public company. And I would suggest, if you look at their recent guidance, their recent earnings report, they spoke fairly extensively about where they're at with
spk05: the launch of their bundle of products. And I think that's a very good example of how they've done their bundled offering. Okay, okay, thank you.
spk02: Thank you. And I now like to turn the call back over to Justin Schreiber for any closing remarks.
spk05: Thanks everybody for your questions
spk10: and for your continued interest in LifeMD. We look forward to speaking with you once again when we report our third quarter results in November. Have a great evening.
spk02: That concludes today's program. Thank you for your participation. You may disconnect at any time.
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