- Fourth quarter revenue increased 60% year-over-year to $44.9 million with Telehealth revenues increasing 90% versus the year-ago period.
- Adjusted EPS of $0.15 per share compared with $0.02 in the year-ago period.
- Consolidated adjusted EBITDA of $5.5 million compared with $1.0 million in the year-ago period.
- Weight Management subscribers exceeded 22,000 as of year-end 2023, ahead of previous guidance.
- Telehealth subscribers grew 27% year-over-year to a record 215,000 patients at year-end 2023.
Conference call begins at 4:30 p.m. Eastern time today
NEW YORK, March 11, 2024 (GLOBE NEWSWIRE) -- LifeMD, Inc. (Nasdaq: LFMD), a leading provider of virtual primary care, today reported financial results for the three and twelve months ended December 31, 2023.
Management Commentary
"2023 was a record-setting year for LifeMD, characterized by sharp increases in revenue, telehealth subscribers and profitability. During the year, we launched our GLP-1 weight management program which has rapidly grown to become one of the leading providers of medically supported weight loss management services nationwide. In less than nine months, we scaled this business to over 22,000 subscribers and growing. Year to date in 2024, we continue to see record daily performance in the sale of new weight management subscriptions and at a rate in excess of our previous 2024 guidance. We demonstrated the tremendous value of our proprietary telehealth platform and dedicated 50-state, affiliated medical group through the execution of a substantial platform license and investment agreement with Medifast that provided LifeMD with a $10 million collaboration fee plus a $10 million equity investment," said Justin Schreiber, Chairman and CEO of LifeMD. "Our RexMD business, once again posted double-digit revenue growth with robust contribution margins that continued to exceed 30%. Looking ahead, we are exceptionally well-positioned to meet or exceed our 2024 financial guidance while continuing to expand our position as a market leading disruptor in telemedicine."
"We exited 2023 with the strongest financial position in our company's history and are well capitalized to execute upon our aggressive expansion goals. Last year, we produced record cash flow from operations of approximately $9 million compared with negative operating cash flow of almost $23 million in 2022. We achieved this growth in profitability while simultaneously increasing consolidated net revenues by 28% versus the prior year. As a result of the strong performance we've seen across our business, led by performance in our growing GLP-1 weight management program, we are raising our 2024 revenue guidance to at least $200 million, up from previous guidance of $195 to $205 million. As this guidance implies, we expect 2024 revenue growth of at least 31% and we re-affirm guidance for adjusted EBITDA growth of 67%," commented Marc Benathen, Chief Financial Officer of LifeMD.
Fourth Quarter Financial Highlights
- Revenue increased 60% year-over-year to $44.9 million.
- Telehealth revenue increased 90% versus the year-ago period and 28% sequentially versus the third quarter of 2023. WorkSimpli revenue increased 16% versus the year-ago period.
- The number of telehealth active subscribers increased 27% over the year-ago period to approximately 215,000.
- The number of weight management subscribers exceeded 22,000 as of year-end 2023, a net gain of approximately 12,000 subscribers sequentially versus the third quarter of 2023.
- Gross margin expanded to a record 88.1%, up from 85.5% in the year-ago period.
- GAAP net loss was $4.5 million or $0.12 per share, compared with a GAAP net loss of $12.7 million or $0.40 per share in the year-ago period.
- Adjusted EBITDA increased to $5.5 million compared with $1.0 million in the year-ago period (see definition below of this non-GAAP financial measure and reconciliation to GAAP).
- Adjusted diluted EPS was $0.15 compared with $0.02 in the year-ago period (see definition below of this non-GAAP financial measure and reconciliation to GAAP).
- Generated positive GAAP free cash flow of $3.5 million and exited the year with over $33 million of cash.
Full Year 2023 Financial Highlights
- Revenue increased 28% year-over-year to $152.5 million.
- Telehealth revenue increased 19% versus 2022. WorkSimpli revenue increased 50% versus 2022.
- Gross margin expanded to a record 87.6%, up from 84.3% in the year-ago period.
- GAAP net loss was $23.7 million or $0.70 per share, compared with GAAP net loss of $48.6 million or $1.57 per share in the year-ago period.
- Adjusted EBITDA increased to $12.0 million compared with a loss of $14.1 million in 2022 (see definition below of this non-GAAP financial measure and reconciliation to GAAP).
- Adjusted diluted EPS was $0.35 compared with a loss of $0.45 in the year-ago period (see definition below of this non-GAAP financial measure and reconciliation to GAAP).
- Generated full year positive GAAP cash flow from operations of $8.8 million, as compared with negative cash flow from operations in 2022 of $22.9 million.
Fourth Quarter Key Performance Metrics
| ($ in 000s) | Three Months Ended Dec 31, | Y-o-Y | ||||||||
| Key Performance Metrics | 2023 | 2022 | % Growth | |||||||
| Revenue | ||||||||||
| Telehealth | $ | 31,256 | $ | 16,419 | 90 | % | ||||
| WorkSimpli | $ | 13,604 | $ | 11,701 | 16 | % | ||||
| Total Revenue | $ | 44,860 | $ | 28,120 | 60 | % | ||||
| Subscription Revenue as % of Total | 96 | % | 94 | % | 2 | % | ||||
| Active Subscribers | ||||||||||
| Telehealth Active Subscribers | 215,203 | 169,065 | 27 | % | ||||||
| WorkSimpli Active Subscribers | 158,364 | 167,751 | -6 | % | ||||||
Financial Guidance
For the first quarter of 2024, the Company expects:
- Revenue to be between $42 million and $43 million.
- Adjusted EBITDA to be between $1 million and $2 million.
- Cash-basis adjusted EBITDA (adjusted EBITDA including the increase in Deferred Revenue from multi-month, prepaid subscriptions primarily from our weight management program) is expected to be between $5 million and $6 million.
For the full year 2024, the Company expects:
- Revenue to be at least $200 million reflecting performance to date in our GLP-1 weight management program exceeding previous guidance, raised from previous guidance of $195 million to $205 million.
- Adjusted EBITDA guidance of between $18 million and $22 million, consistent with previous guidance.
Conference Call
LifeMD's management will host a conference call today at 4:30 p.m. Eastern time to discuss the Company's financial results and outlook, and answer questions. Details for the call are as follows:
| Toll-free dial-in number: | 877-704-4453 |
| International dial-in number: | 201-389-0920 |
| Conference ID: | 13743864 |
A replay of the webcast will be available in the Investors section of the Company's website at ir.lifemd.com.
About LifeMD
LifeMD is a leading provider of virtual primary care. LifeMD offers telemedicine, laboratory and pharmacy services, and specialized treatment across more than 200 conditions, including primary care, men's and women's health, weight management, and hormone therapy. The Company leverages a vertically-integrated, proprietary digital care platform, a 50-state affiliated medical group, and a U.S.-based patient care center to increase access to high-quality and affordable care. For more information, please visit ir.lifemd.com
Cautionary Note Regarding Forward Looking Statements
This news release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended; Section 21E of the Securities Exchange Act of 1934, as amended; and the safe harbor provision of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements contained in this news release may be identified by the use of words such as: "believe," "expect," "anticipate," "project," "should," "plan," "will," "may," "intend," "estimate," predict," "continue," and "potential," or, in each case, their negative or other variations or comparable terminology referencing future periods. Examples of forward-looking statements include, but are not limited to, statements regarding our financial outlook and guidance, short and long-term business performance and operations, future revenues and earnings, regulatory developments, legal events or outcomes, ability to comply with complex and evolving regulations, market conditions and trends, new or expanded products and offerings, growth strategies, underlying assumptions, and the effects of any of the foregoing on our future results of operations or financial condition.
Forward-looking statements are not historical facts and are not assurances of future performance. Rather, these statements are based on our current expectations, beliefs, and assumptions regarding future plans and strategies, projections, anticipated and unanticipated events and trends, the economy, and other future conditions, including the impact of any of the aforementioned on our future business. As forward-looking statements relate to the future, they are subject to inherent risk, uncertainties, and changes in circumstances and assumptions that are difficult to predict, including some of which are out of our control. Consequently, our actual results, performance, and financial condition may differ materially from those indicated in the forward-looking statements. These risks and uncertainties include, but are not limited to, "Risk Factors" identified in our filings with the Securities and Exchange Commission, including, but not limited to, our most recently filed Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and any amendments thereto. Even if our actual results, performance, or financial condition are consistent with forward-looking statements contained in such filings, they may not be indicative of our actual results, performance, or financial condition in subsequent periods.
Any forward-looking statement made in the news release is based on information currently available to us as of the date on which this release is made. We undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as may be required under applicable law or regulation.
Investor Contact
LifeMD, Inc.
Marc Benathen, CFO
marc@lifemd.com
Media Contact
press@lifemd.com
Tables to Follow
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| LIFEMD, INC. | |||||||
| CONSOLIDATED BALANCE SHEETS | |||||||
| December 31, 2023 | December 31, 2022 | ||||||
| ASSETS | |||||||
| Current Assets | |||||||
| Cash | $ | 33,146,725 | $ | 3,958,957 | |||
| Accounts receivable, net | 5,277,250 | 2,834,750 | |||||
| Product deposit | 485,850 | 127,265 | |||||
| Inventory, net | 2,759,932 | 3,703,363 | |||||
| Other current assets | 934,510 | 687,022 | |||||
| Total Current Assets | 42,604,267 | 11,311,357 | |||||
| Non-current Assets | |||||||
| Equipment, net | 476,303 | 476,441 | |||||
| Right of use asset | 594,897 | 1,206,009 | |||||
| Capitalized software, net | 11,795,979 | 8,840,187 | |||||
| Intangible assets, net | 3,009,263 | 3,831,859 | |||||
| Total Non-current Assets | 15,876,442 | 14,354,496 | |||||
| Total Assets | $ | 58,480,709 | $ | 25,665,853 | |||
| LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY (DEFICIT) | |||||||
| Current Liabilities | |||||||
| Accounts payable | $ | 11,084,855 | $ | 10,106,793 | |||
| Accrued expenses | 13,937,494 | 12,166,509 | |||||
| Notes payable, net | 327,597 | 2,797,250 | |||||
| Current operating lease liabilities | 603,180 | 756,093 | |||||
| Deferred revenue | 8,828,598 | 5,547,506 | |||||
| Total Current Liabilities | 34,781,724 | 31,374,151 | |||||
| Long-term Liabilities | |||||||
| Long-term debt, net | 17,927,727 | - | |||||
| Noncurrent operating lease liabilities | 73,849 | 574,136 | |||||
| Contingent consideration | 131,250 | 443,750 | |||||
| Purchase price payable | - | 579,319 | |||||
| Total Liabilities | 52,914,550 | 32,971,356 | |||||
| Commitments and Contingencies | |||||||
| Mezzanine Equity | |||||||
| Preferred Stock, $0.0001 par value; 5,000,000 shares authorized | |||||||
| Series B Preferred Stock, $0.0001 par value; 5,000 shares authorized, zero and 3,500 shares issued and outstanding, as of December 31, 2023 and 2022, respectively. Liquidation value approximately $0 and $1,305 per share as of December 31, 2023 and 2022, respectively | - | 4,565,822 | |||||
| Stockholders' Equity (Deficit) | |||||||
| Series A Preferred Stock, $0.0001 par value; 1,610,000 shares authorized, 1,400,000 shares issued and outstanding, liquidation value approximately $29.99 and $27.84 per share as of December 31, 2023 and 2022, respectively | 140 | 140 | |||||
| Common Stock, $0.01 par value; 100,000,000 shares authorized, 38,358,641 and 31,552,775 shares issued, 38,255,601 and 31,449,735 outstanding as of December 31, 2023 and 2022, respectively | 383,586 | 315,528 | |||||
| Additional paid-in capital | 217,550,583 | 179,015,250 | |||||
| Accumulated deficit | (214,265,236 | ) | (190,562,994 | ) | |||
| Treasury stock, 103,040 and 103,040 shares, at cost, as of December 31, 2023 and 2022, respectively | (163,701 | ) | (163,701 | ) | |||
| Total LifeMD, Inc. Stockholders' Equity (Deficit) | 3,505,372 | (11,395,777 | ) | ||||
| Non-controlling interest | 2,060,787 | (475,548 | ) | ||||
| Total Stockholders' Equity (Deficit) | 5,566,159 | (11,871,325 | ) | ||||
| Total Liabilities, Mezzanine Equity and Stockholders' Equity (Deficit) | $ | 58,480,709 | $ | 25,665,853 | |||
| LIFEMD, INC. | ||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
| Fourth Quarter Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenues | ||||||||||||||||
| Telehealth revenue, net | $ | 31,256,199 | $ | 16,418,643 | $ | 98,152,919 | $ | 82,649,845 | ||||||||
| WorkSimpli revenue, net | 13,603,648 | 11,701,073 | 54,394,087 | 36,383,675 | ||||||||||||
| Total revenues, net | 44,859,847 | 28,119,716 | 152,547,006 | 119,033,520 | ||||||||||||
| Cost of revenues | ||||||||||||||||
| Cost of telehealth revenue | 4,954,646 | 3,801,642 | 17,480,533 | 17,843,754 | ||||||||||||
| Cost of WorkSimpli revenue | 400,913 | 266,058 | 1,419,931 | 824,274 | ||||||||||||
| Total cost of revenues | 5,355,559 | 4,067,700 | 18,900,464 | 18,668,028 | ||||||||||||
| Gross profit | 39,504,288 | 24,052,016 | 133,646,542 | 100,365,492 | ||||||||||||
| Expenses | ||||||||||||||||
| Selling and marketing expenses | 20,389,121 | 17,440,781 | 76,451,466 | 78,369,430 | ||||||||||||
| General and administrative expenses | 15,573,509 | 9,203,072 | 51,694,232 | 46,960,782 | ||||||||||||
| Other operating expenses | 1,656,631 | 1,640,975 | 6,297,321 | 6,717,795 | ||||||||||||
| Customer service expenses | 2,058,549 | 1,605,370 | 7,632,283 | 5,033,468 | ||||||||||||
| Development costs | 1,998,015 | 1,019,163 | 6,060,513 | 2,970,202 | ||||||||||||
| Goodwill and intangible asset impairment charges | - | 6,127,596 | - | 8,862,596 | ||||||||||||
| Change in fair value of contingent consideration | - | (2,614,000 | ) | - | (5,101,000 | ) | ||||||||||
| Total expenses | 41,675,825 | 34,422,957 | 148,135,815 | 143,813,273 | ||||||||||||
| Operating loss | (2,171,537 | ) | (10,370,941 | ) | (14,489,273 | ) | (43,447,781 | ) | ||||||||
| Other expenses | ||||||||||||||||
| Interest expense, net | (622,685 | ) | (843,541 | ) | (2,596,586 | ) | (1,275,946 | ) | ||||||||
| (Loss) gain on debt extinguishment | - | - | (325,198 | ) | 63,400 | |||||||||||
| Net loss before provision for income taxes | (2,794,222 | ) | (11,214,482 | ) | (17,411,057 | ) | (44,660,327 | ) | ||||||||
| Income tax provision | (428,000 | ) | (360,700 | ) | (428,000 | ) | (360,700 | ) | ||||||||
| Net loss | (3,222,222 | ) | (11,575,182 | ) | (17,839,057 | ) | (45,021,027 | ) | ||||||||
| Net income attributable to noncontrolling interests | 509,880 | 360,168 | 2,756,935 | 514,632 | ||||||||||||
| Net loss attributable to LifeMD, Inc. | (3,732,102 | ) | (11,935,350 | ) | (20,595,992 | ) | (45,535,659 | ) | ||||||||
| Preferred stock dividends | (776,562 | ) | (776,562 | ) | (3,106,250 | ) | (3,106,250 | ) | ||||||||
| Net loss attributable to LifeMD, Inc. common stockholders | $ | (4,508,664 | ) | $ | (12,711,912 | ) | $ | (23,702,242 | ) | $ | (48,641,909 | ) | ||||
| Basic loss per share attributable to LifeMD, Inc. common stockholders | $ | (0.12 | ) | $ | (0.40 | ) | $ | (0.70 | ) | $ | (1.57 | ) | ||||
| Diluted loss per share attributable to LifeMD, Inc. common stockholders | $ | (0.12 | ) | $ | (0.40 | ) | $ | (0.70 | ) | $ | (1.57 | ) | ||||
| Weighted average number of common shares outstanding: | ||||||||||||||||
| Basic | 36,710,746 | 31,410,065 | 33,905,155 | 30,976,455 | ||||||||||||
| Diluted | 36,710,746 | 31,410,065 | 33,905,155 | 30,976,455 | ||||||||||||
| LIFEMD, INC. | ||||||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||||
| Fourth Quarter Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||||||
| Net loss | $ | (3,222,222 | ) | $ | (11,575,182 | ) | $ | (17,839,057 | ) | $ | (45,021,027 | ) | ||||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||||||||||
| Amortization of debt discount | 100,444 | - | 333,939 | - | ||||||||||||
| Amortization of capitalized software | 1,637,094 | 934,908 | 5,424,810 | 2,681,807 | ||||||||||||
| Amortization of intangibles | 245,968 | 259,760 | 971,464 | 926,542 | ||||||||||||
| Accretion of consideration payable | 18,740 | 101,081 | 167,221 | 273,822 | ||||||||||||
| Depreciation of fixed assets | 57,666 | 44,877 | 203,952 | 161,885 | ||||||||||||
| Write-down of inventory | 537,685 | 103,417 | 537,685 | 103,417 | ||||||||||||
| Sales return reserve | - | 338,193 | - | 338,193 | ||||||||||||
| Loss (gain) on debt extinguishment | - | - | 325,198 | (63,400 | ) | |||||||||||
| Change in fair value of contingent consideration | - | (2,614,000 | ) | - | (5,101,000 | ) | ||||||||||
| Goodwill and intangible asset impairment charges | - | 6,127,596 | - | 8,862,596 | ||||||||||||
| Deferred income tax provision | - | 354,000 | - | 354,000 | ||||||||||||
| Operating lease payments | 204,207 | 83,241 | 766,280 | 546,439 | ||||||||||||
| Stock issued for legal settlement | - | - | 532,000 | 816,000 | ||||||||||||
| Stock compensation expense | 3,645,607 | 1,884,614 | 12,489,343 | 13,734,614 | ||||||||||||
| Changes in Assets and Liabilities | ||||||||||||||||
| Accounts receivable | (858,668 | ) | (634,825 | ) | (2,442,500 | ) | (2,192,888 | ) | ||||||||
| Product deposit | (401,082 | ) | (19,214 | ) | (358,585 | ) | 76,291 | |||||||||
| Inventory | 493,029 | (130,649 | ) | 405,746 | (2,183,012 | ) | ||||||||||
| Other current assets | 369,450 | 127,554 | (247,488 | ) | 106,168 | |||||||||||
| Change in operating lease liability | (218,624 | ) | (77,710 | ) | (808,368 | ) | (455,805 | ) | ||||||||
| Deferred revenue | 2,589,244 | 3,194,354 | 3,281,092 | 4,047,626 | ||||||||||||
| Accounts payable | 1,447,465 | (576,066 | ) | 978,062 | 1,251,037 | |||||||||||
| Accrued expenses | (932,373 | ) | 993,497 | 4,678,757 | (1,309,968 | ) | ||||||||||
| Other operating activity | - | (888,485 | ) | (579,319 | ) | (888,486 | ) | |||||||||
| Net cash provided by (used in) operating activities | 5,713,630 | (1,969,039 | ) | 8,820,232 | (22,935,149 | ) | ||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||||||
| Cash paid for capitalized software costs | (2,107,307 | ) | (1,783,259 | ) | (8,380,602 | ) | (8,526,205 | ) | ||||||||
| Purchase of equipment | (109,332 | ) | 12,244 | (203,814 | ) | (366,633 | ) | |||||||||
| Purchase of intangible assets | - | - | (148,868 | ) | (4,000,500 | ) | ||||||||||
| Acquisition of business, net of cash acquired | - | - | - | (1,012,395 | ) | |||||||||||
| Net cash used in investing activities | (2,216,639 | ) | (1,771,015 | ) | (8,733,284 | ) | (13,905,733 | ) | ||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||||||
| Proceeds from long-term debt, net | - | - | 19,466,887 | - | ||||||||||||
| Proceeds from common stock issued to Medifast | 10,000,000 | - | 10,000,000 | - | ||||||||||||
| Proceeds from notes payable | - | 2,906,000 | 2,347,691 | 2,906,000 | ||||||||||||
| Sale of common stock under ATM, net | 5,303,092 | - | 6,202,659 | - | ||||||||||||
| Cash proceeds from exercise of warrants | - | - | - | 38,500 | ||||||||||||
| Cash proceeds from exercise of options | 94,500 | - | 94,500 | 90,400 | ||||||||||||
| Preferred stock dividends | (776,562 | ) | (776,562 | ) | (3,106,250 | ) | (3,106,250 | ) | ||||||||
| Net payments for membership interest of WorkSimpli | - | - | (305,625 | ) | 12,150 | |||||||||||
| Contingent consideration payment for ResumeBuild | (125,000 | ) | (62,500 | ) | (312,500 | ) | (156,250 | ) | ||||||||
| Distributions to non-controlling interest | (36,000 | ) | (36,000 | ) | (144,000 | ) | (144,000 | ) | ||||||||
| Repayment of notes payable, net of prepayment penalty | (98,626 | ) | (168,750 | ) | (5,142,542 | ) | (168,750 | ) | ||||||||
| Net cash provided by (used in) financing activities | 14,361,404 | 1,862,188 | 29,100,820 | (528,200 | ) | |||||||||||
| Net increase (decrease) in cash | 17,858,395 | (1,877,866 | ) | 29,187,768 | (37,369,082 | ) | ||||||||||
| Cash at beginning of period | 15,288,330 | 5,836,823 | 3,958,957 | 41,328,039 | ||||||||||||
| Cash at end of period | $ | 33,146,725 | $ | 3,958,957 | $ | 33,146,725 | $ | 3,958,957 | ||||||||
| Cash paid for interest | ||||||||||||||||
| Cash paid during the period for interest | $ | 663,212 | $ | 189,000 | $ | 2,148,454 | $ | 189,000 | ||||||||
| Non-cash investing and financing activities: | ||||||||||||||||
| Cashless exercise of options | $ | - | $ | - | $ | 744 | $ | 297 | ||||||||
| Cashless exercise of warrants | $ | 793 | $ | - | $ | 793 | $ | - | ||||||||
| Consideration payable for Cleared acquisition | $ | - | $ | - | $ | - | $ | 8,079,367 | ||||||||
| Consideration payable for ResumeBuild acquisition | $ | - | $ | - | $ | - | $ | 500,000 | ||||||||
| Stock issued for noncontingent consideration payments | $ | 642,000 | $ | - | $ | 2,568,000 | $ | - | ||||||||
| Stock issued for debt conversion | $ | 1,000,000 | $ | - | $ | 1,000,000 | $ | - | ||||||||
| Series B Preferred Stock conversion | $ | - | $ | - | $ | 5,072,814 | $ | - | ||||||||
| Principal of Paycheck Protection Program loans forgiven | $ | - | $ | - | $ | - | $ | 63,400 | ||||||||
| Warrants issued for debt instruments | $ | - | $ | - | $ | 873,100 | $ | - | ||||||||
| Right of use asset | $ | - | $ | 89,595 | $ | 155,168 | $ | 89,595 | ||||||||
| Right of use lease liability | $ | - | $ | 94,168 | $ | 155,168 | $ | 94,168 | ||||||||
About the Use of Non-GAAP Financial Measures:
To supplement our financial information presented in accordance with GAAP, we use adjusted EBITDA and adjusted EPS as non-GAAP financial measures to clarify and enhance an understanding of past performance. We believe that the presentation of these financial measures enhances an investor's understanding of our financial performance. We further believe that these financial measures are useful financial metrics to assess our operating performance from period-to-period by excluding certain items that we believe are not representative of our core business. We use certain financial measures for business planning purposes and in measuring our performance relative to that of our competitors.
Adjusted EBITDA is defined as income (loss) attributable to common shareholders before interest, taxes, depreciation, amortization, accretion, financing transaction expense, non-controlling interests, foreign currency translation, inventory valuation, sales return reserves, litigation costs, loss on debt extinguishment, dividends, insurance acceptance and Sarbanes-Oxley readiness, acquisition costs, severance expenses and stock-based compensation expense. We have provided below a reconciliation of adjusted EBITDA to net loss attributable to common shareholders, its most directly comparable GAAP financial measure.
Adjusted EPS is defined as the diluted net loss attributable to LifeMD, Inc common shareholders before interest, taxes, depreciation, amortization, accretion, financing transaction expense, non-controlling interests, foreign currency translation, inventory valuation, sales return reserves, litigation costs, loss on debt extinguishment, dividends, insurance acceptance and Sarbanes-Oxley readiness, acquisition costs, severance expenses and stock-based compensation expense. We have provided below a reconciliation of adjusted EPS to Diluted loss per share attributable to LifeMD, Inc common shareholders, its most directly comparable GAAP financial measure.
We believe the above financial measures are commonly used by investors to evaluate our performance and that of our competitors. However, our use of the terms adjusted EBITDA and adjusted EPS may vary from that of others in our industry. Adjusted EBITDA and adjusted EPS should not be considered as an alternative to net loss before taxes, net loss per share, operating loss or any other performance measures derived in accordance with GAAP as measures of performance.
| Reconciliation of GAAP Net Loss to Adjusted EBITDA | |||||||||||||||
| (in whole numbers, unaudited) | |||||||||||||||
| Fourth Quarter Ended December 31, | Year Ended December 31, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Net loss attributable to common shareholders | $ | (4,508,664 | ) | $ | (12,711,912 | ) | $ | (23,702,242 | ) | $ | (48,641,909 | ) | |||
| Interest expense (excluding amortization of debt discount) | 522,241 | 728,856 | 1,755,656 | 820,946 | |||||||||||
| Depreciation, amortization and accretion expense | 1,959,468 | 1,340,626 | 6,767,447 | 4,044,056 | |||||||||||
| Amortization of debt discount | 100,444 | - | 333,939 | - | |||||||||||
| Loss (gain) on debt extinguishment | - | - | 325,198 | (63,400 | ) | ||||||||||
| Financing transactions expense | 38,431 | 98,333 | 773,932 | 250,348 | |||||||||||
| Litigation costs | 168,600 | 168,162 | 1,594,930 | 1,685,521 | |||||||||||
| Inventory and reserve adjustments | 404,694 | 699,057 | 637,324 | 929,718 | |||||||||||
| Deferred revenue adjustment | - | 2,918,942 | - | 2,918,942 | |||||||||||
| Severance costs | 17,400 | 181,824 | 25,092 | 360,914 | |||||||||||
| Acquisitions expenses | 30,909 | 127,539 | 158,047 | 392,692 | |||||||||||
| Change in fair value of contingent consideration | - | (2,614,000 | ) | - | (5,101,000 | ) | |||||||||
| Goodwill and intangible asset impairment charges | - | 6,127,596 | - | 8,862,596 | |||||||||||
| Insurance acceptance readiness | 252,250 | - | 318,884 | - | |||||||||||
| Sarbanes Oxley readiness | 151,248 | - | 199,824 | - | |||||||||||
| Accrued interest on Series B Convertible Preferred Stock | - | 114,685 | 506,991 | 455,000 | |||||||||||
| Foreign exchange (gain) loss | 368,793 | 393,147 | 1,165,412 | 1,078,389 | |||||||||||
| Taxes | 428,000 | 360,700 | 498,378 | 360,700 | |||||||||||
| Dividends | 1,399,560 | 812,562 | 5,371,450 | 3,250,250 | |||||||||||
| Stock-based compensation expense | 3,645,607 | 1,884,614 | 12,489,343 | 13,734,614 | |||||||||||
| Net income attributable to noncontrolling interests | 509,880 | 360,168 | 2,756,935 | 514,632 | |||||||||||
| Adjusted EBITDA | $ | 5,488,861 | $ | 990,899 | $ | 11,976,540 | $ | (14,146,991 | ) | ||||||
| Reconciliation of GAAP Diluted Loss per Share Attributable to Common Shareholders to Adjusted EPS | |||||||||||||||
| (unaudited) | Fourth Quarter Ended December 31, | Year Ended December 31, | |||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Diluted loss per share attributable to LifeMD, Inc. common shareholders | $ | (0.12 | ) | $ | (0.40 | ) | $ | (0.70 | ) | $ | (1.57 | ) | |||
| Adjustments to Reconcile GAAP Diluted Loss Per Share to Adjusted EPS | |||||||||||||||
| Interest expense (excluding amortization of debt discount) | 0.01 | 0.02 | 0.05 | 0.03 | |||||||||||
| Depreciation, amortization and accretion expense | 0.05 | 0.04 | 0.20 | 0.13 | |||||||||||
| Amortization of debt discount | - | - | 0.01 | - | |||||||||||
| Loss (gain) on debt extinguishment | - | - | 0.01 | - | |||||||||||
| Financing transactions expense | - | - | 0.02 | 0.01 | |||||||||||
| Litigation costs | 0.01 | 0.01 | 0.05 | 0.06 | |||||||||||
| Inventory and reserve adjustments | 0.01 | 0.02 | 0.02 | 0.03 | |||||||||||
| Deferred revenue adjustment | - | 0.09 | - | 0.10 | |||||||||||
| Severance costs | - | 0.01 | - | 0.01 | |||||||||||
| Acquisitions expenses | - | - | 0.01 | 0.01 | |||||||||||
| Change in fair value of contingent consideration | - | (0.08 | ) | - | (0.16 | ) | |||||||||
| Goodwill and intangible asset impairment charges | - | 0.20 | - | 0.29 | |||||||||||
| Insurance acceptance readiness | 0.01 | - | 0.01 | - | |||||||||||
| Sarbanes Oxley readiness | 0.01 | - | 0.01 | - | |||||||||||
| Accrued interest on Series B Convertible Preferred Stock | - | - | 0.01 | 0.01 | |||||||||||
| Foreign exchange (gain) loss | 0.01 | 0.01 | 0.03 | 0.03 | |||||||||||
| Taxes | 0.01 | 0.01 | 0.01 | 0.01 | |||||||||||
| Dividends | 0.04 | 0.02 | 0.16 | 0.10 | |||||||||||
| Stock-based compensation expense | 0.10 | 0.06 | 0.37 | 0.44 | |||||||||||
| Net income attributable to noncontrolling interests | 0.01 | 0.01 | 0.08 | 0.02 | |||||||||||
| Adjusted EPS | $ | 0.15 | $ | 0.02 | $ | 0.35 | $ | (0.45 | ) | ||||||
