By Gary Stern
The competition is fierce when it comes to companies that specialize in medical appointments or telemedicine online. Teledoc Health is the leader with $1.09 billion in revenue but is followed by a host of competitors include MD Live, Amwell, Doctor on Demand, Sesame, Doximity. The list goes on. But New York-based LifeMD, a microcap stock (NASDAQ-LFMD) with a capitalization of $232 million is striving to carve out a niche to outdo its larger rivals. Can it?
In the last earnings report in November 2023, LifeMD revenue increased 23% from the previous year to $38.6 million. Earnings increased to $2.8 million compared to the previous year’s quarter when it faced a loss of $800,000. So the company has turned the corner on profitability.
One area where Life MD shines is with RexMD or Weight Management revenue, which more than quadrupled compared to its 2023 second quarter.
Whether LifeMD can continue to boost revenue when it faces multiple and formidable rivals is the question that looms.
On its website LifeMD says it specializes in “virtual primary care, offering telemedicine, laboratory and pharmacy services, across more than 200 conditions, including primary care, men’s and women’s health, allergy, asthma and dermatology.” In sum, it offers general medical care to a wide range of patients online.
LifeMD’s forecast for 2024 announced Jan. 8 sounded promising. The company expects revenue will increase to between $195 and $205 million, which would be a 31% to 38% spike over its midpoint guidance. EBITA would be between $18 and $22 million, which would constitute a 71% to 110% rise over the midpoint guidance. And that would generate $30 million in free cash flow.
Its earnings forecast also highlighted the recent launch of private insurance-based programs, expanding its RexMD offerings, and its strategic alliance with Medifast (MED), which specializes in weight-loss programs.
The New York Times in May 2020 – when the pandemic was just taking off and use of telemedicine started to skyrocket — quoted a JAMA Neurology article that “remote monitoring options, by offering reliable insights into issues that matter most to patients, will empower clinicians in delivering tailor-made counseling to patients via videoconferencing.” Indeed studies of patients with hepatitis C virus revealed that treatment delivered via teleconference was as good, if not better, than in-person treatment.
Asked what’s driving the strong forecasted revenue growth for 2024, LifeMD CFO Marc Benathen said that there were three main factors: Significant growth in its GLP-1 weight management business; Sustained growth in its lifestyle healthcare business spearheaded by RexMD; and continued growth of their non-core subsidiary WorkSimpli, a leader in the workplace and document services markets for consumers and small-and-midsize businesses.
RexMD, he points out, has helped clients in several areas including men’s sexual health, sleep issues and general health. Since LifeMD patients pay on average about $500 a visit, it’s been a steady revenue generator. He also cited effective patient-acquisition marketing as a key to driving new visits to RexMD.
The Medifast deal, which was announced in December 2023 involved Medifast paying LifeMD $10 million in licensing fees, split between 50% paid to date and 50% paid in 2024, based on services delivered by LifeMD. In addition, LifeMD can now provide a large number of services to Medifast’s clients, with LifeMD’s medically-supported weight loss solution.
Though LifeMD provides a plethora of services and seems like a generic telemedicine platform, Benathen explains that it excels in several telecommunication areas, including primary care, weight loss management, men’s health, hormonal and metabolic health, sleep issues, and hair loss.
Still, LifeMD is dwarfed by much larger telemedicine competitors who have strong brand recognition, and in some cases, more specialized areas than it offers. Benathen says the company offers strengths that some of its better-known rivals don’t. For example, LifeMD relies on its own dedicated 50-state medical group staffed by full-time employees whereas several of its competitors employ outsourced physicians. Its proprietary, telehealth platform meets the needs of patients via electronic medical records, national pharmacy, lab and diagnostic work, patient communication covering lifestyle needs, primary care and chronic conditions. Additionally, it vertically integrates with a national pharmacy network of multiple third-party, national, mail-order pharmacies, and has partnerships with Quest and Labcorp.
LifeMD and its telemedicine platform can meet patient needs in a “cost-efficient, low-hassle and effective manner,” Benathen says. Its only limitations involve procedures that cannot be completed online such as any type of surgery, as well as certain cancer treatments and severe cardiac or neurological disorders.
Benathen said continued revenue growth will hinge on introducing new products offerings supporting patient’s in men’s health, primary care and new, related areas, continued growth in the company’s medical group and pharmacy capabilities, and accepting insurance within primary care services in 2024 not just depending on cash payments. Expansion of its GLP-1 weight management business is another opportunity to increase revenue, he said.
David Larsen, an industry analyst with BTIG, in a recent LifeMD report praised its partnership with Medifast. He said the Medifast deal covers several long-term health issues regarding weight-loss that makes the program effective, including nutrition, good eating habits, mental health, community support and ability to retain muscle mass, which enables patients to keep the weight off and not relapse.
Larsen also noted that LifeMD’s number of weight-loss patients has been increasing. It had 16,000 members on its platform, and that number was expected to rise to 22,000 or 23,000 by the end of 2023. His research estimated that it was “adding 300 weight-management lives every day.”
Larsen noted that LifeMD has “made significant investments into telehealth; the firm’s products are sold directly to consumers through social media and e-commerce platforms.” In many ways, he said, it offers a “one-stop shop for lifestyle and wellness solutions that includes physical consultations, prescriptions, and OTC products.”
DealFlow Events makes no recommendations on whether to buy, sell or hold shares of any particular stock. Investors are advised to conduct their own research and analysis before making an investment decision. Neither DealFlow Events nor any of its affiliates hold any position in the stocks mentioned in The Microcap Newsletter.
