LifeMD(LFMD) - 2023 Q1 - Quarterly Report

Customer Base and Revenue - The company has served approximately 715,000 customers, with total revenue from recurring subscriptions accounting for about 91%[161] - WorkSimpli, a majority-owned subsidiary, has achieved 101% year-over-year revenue growth, with recurring revenue at 98%[161] - Telehealth revenue decreased by 11% to $20.2 million, accounting for 61$12.9 million, representing 39% of total revenue[172] Telehealth Services - The company's telehealth platform integrates various functionalities, including EMR, CRM, and digital prescriptions, enhancing patient care management[159] - LifeMD's virtual primary care offering provides 24/7 access to high-quality providers across all 50 states, supported by partnerships for discounts on lab work and prescriptions[165] - LifeMD's telehealth offerings aim to connect patients with licensed providers for diagnoses and treatment, addressing various health conditions[159] - The telehealth brands, including RexMD and ShapiroMD, have served over 410,000 and 260,000 customers respectively, with high Trustpilot ratings of 4.7 and 4.9[167] - The company plans to expand its diverse portfolio of telehealth services to meet the needs of a growing patient base[160] Financial Performance - Total revenue for the three months ended March 31, 2023, was approximately $33.1 million, an increase of 14$29.0 million for the same period in 2022[172] - Gross profit increased by approximately 22% to $28.9 million, with a gross profit margin of 87$3.4 million for the three months ended March 31, 2023, a significant improvement from a net loss of approximately $13.3 million for the same period in 2022[172] Expenses and Cash Flow - Total expenses decreased by 14$31.8 million, primarily due to a reduction in selling and marketing expenses by approximately $5.2 million, or 24$2.6 million for the three months ended March 31, 2023, compared to $8.1 million for the same period in 2022[181] - Net cash used in investing activities for Q1 2023 was approximately$1.8 million, a decrease of 75.7% from $7.4 million in Q1 2022[182] - Net cash provided by financing activities for Q1 2023 was approximately$12.0 million, compared to a net cash used of approximately $774 thousand in Q1 2022[183] Assets and Liabilities - Working capital increased by approximately$12.2 million during the three months ended March 31, 2023, primarily due to an increase in cash of approximately $7.6 million from the Avenue Facility[178] - Current assets increased to$19.2 million as of March 31, 2023, from $11.3 million as of December 31, 2022[178] - As of March 31, 2023, the company has accrued contract liabilities of approximately$5.9 million, up from $5.5 million as of December 31, 2022[198] Debt and Financing - The Avenue Facility provides a convertible senior secured credit facility of up to$40 million, with $15 million funded at closing and additional amounts available later[171] - The company entered into a Credit Agreement with Avenue for a convertible senior secured credit facility of up to$40 million, maturing on October 1, 2026[185] - The company recorded a loss on debt extinguishment of $325 thousand related to the repayment of the CRG Financial loan during the three months ended March 31, 2023[177] Strategic Focus and Challenges - The company has a strategic focus on enhancing digital patient awareness and engagement for healthcare product companies, addressing unmet needs in the market[168] - The company has begun implementing strategies to strengthen revenues and improve operational efficiencies, although substantial doubt remains about its ability to continue as a going concern[192] Accounting Changes - The Company adopted ASU 2016-13 on January 1, 2023, which requires the use of the current expected credit loss model for estimating lifetime expected credit losses[203] - The adoption of ASU 2016-13 did not have a material impact on the Company's financial statements[203] - The Company adopted ASU 2021-08 on January 1, 2023, affecting the accounting for contract assets and liabilities in business combinations[204] - The adoption of ASU 2021-08 also did not have a material impact on the Company's financial statements[204] Miscellaneous - The company has$18.435 million available under the At Market Issuance Sales Agreement as of March 31, 2023[189] - Customer discounts and allowances on telehealth revenues were approximately $331 thousand in Q1 2023, down from$1.5 million in Q1 2022[196] - The company recorded an $8.0 million goodwill impairment charge related to the Cleared acquisition during the year ended December 31, 2022[200] - As of March 31, 2023, the company has an accumulated deficit of approximately$195.3 million and a current cash balance of approximately $12.8 million[184] - As a smaller reporting company, the Company is not required to provide quantitative and qualitative disclosures about market risk[205]