LifeMD(LFMD) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides the unaudited condensed consolidated financial statements and related notes for the company ITEM 1. Financial Statements (unaudited) This section presents the unaudited condensed consolidated financial statements for LifeMD, Inc., including the balance sheets, statements of operations, stockholders' equity (deficit), and cash flows, along with detailed notes explaining the company's accounting policies, acquisitions, debt, equity, and other financial details for the periods ended June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets This statement presents the company's financial position, including assets, liabilities, and equity, at specific points in time Condensed Consolidated Balance Sheets (June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :-------------------------------- | :------------------------ | :-------------------- | | ASSETS | | | | Total Current Assets | $49,025,763 | $48,733,089 | | Total Non-current Assets | $24,538,939 | $23,726,937 | | Total Assets | $73,564,702 | $72,460,026 | | LIABILITIES & EQUITY | | | | Total Current Liabilities | $63,532,158 | $60,255,145 | | Total Long-term Liabilities | $9,650,164 | $16,250,249 | | Total Liabilities | $73,182,322 | $76,505,394 | | Total Stockholders' Equity (Deficit) | $382,380 | $(4,045,368) | - Total Assets increased by approximately $1.1 million from December 31, 2024, to June 30, 2025, driven by increases in cash, product deposit, and inventory, partially offset by decreases in accounts receivable and other current assets[9] - Total Liabilities decreased by approximately $3.3 million, primarily due to a reduction in long-term debt and deferred revenue, despite increases in accounts payable and current portion of long-term debt[9] - Stockholders' Equity (Deficit) improved significantly from a deficit of $(4,045,368) at December 31, 2024, to a positive $382,380 at June 30, 2025[9] Condensed Consolidated Statements of Operations This statement details the company's revenues, expenses, and net income or loss over specific reporting periods Condensed Consolidated Statements of Operations (Three Months Ended June 30, 2025 vs. 2024) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) | | :------------------------------------------ | :--------------------------- | :--------------------------- | :----------- | | Total revenues, net | $62,218,185 | $50,661,845 | +22.8% | | Total cost of revenues | $7,430,904 | $5,024,915 | +47.9% | | Gross profit | $54,787,281 | $45,636,930 | +20.1% | | Total expenses | $55,694,053 | $51,942,496 | +7.2% | | Operating income (loss) | $(906,772) | $(6,305,566) | +85.6% | | Net (loss) income | $(1,569,799) | $(6,837,034) | +77.0% | | Net loss attributable to LifeMD, Inc. common stockholders | $(2,851,436) | $(7,652,202) | +62.8% | | Basic loss per share | $(0.06) | $(0.19) | +68.4% | | Diluted loss per share | $(0.06) | $(0.19) | +68.4% | Condensed Consolidated Statements of Operations (Six Months Ended June 30, 2025 vs. 2024) | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | | :------------------------------------------ | :--------------------------- | :--------------------------- | :----------- | | Total revenues, net | $127,915,941 | $94,806,109 | +34.9% | | Total cost of revenues | $16,074,620 | $9,625,092 | +67.0% | | Gross profit | $111,841,321 | $85,181,017 | +31.3% | | Total expenses | $110,205,169 | $97,657,828 | +12.8% | | Operating income (loss) | $1,636,152 | $(12,476,811) | N/A (swing to profit) | | Net (loss) income | $346,850 | $(13,485,957) | N/A (swing to profit) | | Net loss attributable to LifeMD, Inc. common stockholders | $(2,243,195) | $(15,197,120) | +85.2% | | Basic loss per share | $(0.05) | $(0.38) | +86.8% | | Diluted loss per share | $(0.05) | $(0.38) | +86.8% | - Telehealth revenue, net, increased by 30% for the three months ended June 30, 2025, and 48% for the six months ended June 30, 2025, primarily driven by LifeMD primary care subscription revenue[11][156][162] - The company achieved positive operating income and net income for the six months ended June 30, 2025, a significant improvement from losses in the prior year period[11] Condensed Consolidated Statements of Stockholders' Equity (Deficit) This statement outlines changes in the company's equity or deficit from various transactions over specific periods Changes in Stockholders' Equity (Deficit) for Six Months Ended June 30, 2025 | Metric | January 1, 2025 Balance | June 30, 2025 Balance | | :-------------------------------- | :---------------------- | :-------------------- | | Series A Preferred Stock Amount | $140 | $140 | | Common Stock Amount | $422,939 | $451,412 | | Additional Paid-in Capital | $230,508,339 | $236,426,008 | | Accumulated Deficit | $(236,253,218) | $(238,496,413) | | Treasury Stock | $(163,701) | $(163,701) | | Total LifeMD, Inc. Stockholders' Deficit | $(5,485,501) | $(1,782,554) | | Non-controlling Interest | $1,440,133 | $2,164,934 | | Total Stockholders' Equity (Deficit) | $(4,045,368) | $382,380 | - Total Stockholders' Equity (Deficit) improved from a deficit of $4.0 million at January 1, 2025, to a positive $0.4 million at June 30, 2025, primarily due to stock compensation expense, stock issued for debt conversion and asset acquisition, and net income, partially offset by preferred stock dividends and distributions to non-controlling interest[14] - Common stock shares issued increased from 42,293,907 at December 31, 2024, to 45,141,226 at June 30, 2025, reflecting stock compensation, debt conversion, and asset acquisition[9][14] Condensed Consolidated Statements of Cash Flows This statement summarizes the cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30, 2025 vs. 2024) | Cash Flow Activity | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net cash provided by operating activities | $11,707,834 | $9,741,922 | | Net cash used in investing activities | $(6,566,921) | $(5,322,293) | | Net cash used in financing activities | $(3,917,532) | $(1,863,139) | | Net increase in cash | $1,223,381 | $2,556,490 | | Cash at end of period | $36,228,305 | $35,703,215 | - Net cash provided by operating activities increased by approximately $2.0 million, from $9.7 million in 2024 to $11.7 million in 2025, primarily due to the company's net income and non-cash adjustments[16][168] - Net cash used in investing activities increased by approximately $1.2 million, mainly due to higher cash paid for capitalized software costs and equipment purchases[16][169] - Net cash used in financing activities increased significantly by approximately $2.1 million, driven by debt repayments, preferred stock dividends, and distributions to non-controlling interests[16][170] Notes to Condensed Consolidated Financial Statements These notes provide essential additional information and explanations for the figures presented in the financial statements NOTE 1 – NATURE OF THE ORGANIZATION AND BUSINESS This note details LifeMD, Inc.'s corporate history, its evolution into a direct-to-patient telehealth company, its business model focused on virtual healthcare and subscription-based offerings, and an assessment of its liquidity and capital resources Corporate History This section outlines the company's foundational history and significant corporate name changes and ownership developments - LifeMD, Inc. was formed in Delaware on May 24, 1994, as Immudyne, Inc., later changing its name to Conversion Labs, Inc. on June 22, 2018, and finally to LifeMD, Inc. on February 22, 2021[17] - The company increased its ownership in Immudyne PR (later LifeMD PR, LLC) to 100% by April 25, 2019[18] - In June 2018, LifeMD acquired 51% of LegalSimpli Software, LLC (now WorkSimpli Software LLC), increasing its ownership to 73.3% through restructuring[19] Nature of Business This section describes the company's core operations, direct-to-patient telehealth model, and key service offerings - LifeMD is a direct-to-patient telehealth company offering high-quality, cost-effective, and convenient virtual and in-home healthcare, aiming to improve the traditional healthcare model[21] - The company's platform connects consumers to licensed healthcare professionals for various indications, including weight loss, sexual health, hormone replacement therapy, and hair loss, with offerings primarily on a subscription or membership basis[21][22] - Key brands include ShapiroMD (hair loss), RexMD (men's health), and LifeMD Primary Care, which launched a GLP-1 Weight Management Program in April 2023 and expanded it in September 2024[23][24][25] Liquidity Evaluation This section assesses the company's ability to meet its short-term financial obligations and manage its cash resources - As of June 30, 2025, the Company had an accumulated deficit of approximately $238.5 million and a working capital deficit of approximately $14.5 million[26] - The Company expects to maintain positive operating cash flows for the next 12 months, supported by strengthening revenues, improved operational efficiencies, and a cash balance of $36.2 million as of June 30, 2025[26][29] - The Company repaid the remaining $14.0 million outstanding principal on the Avenue Facility on August 5, 2025, and has $44.6 million available under the ATM Sales Agreement as of August 4, 2025[27][29] NOTE 2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note outlines the accounting principles used in preparing the unaudited condensed consolidated financial statements, including the basis of presentation, principles of consolidation, revenue recognition policies for telehealth and WorkSimpli segments, and details on deferred revenues, leases, accounts receivable, inventory, intangible assets, income taxes, stock-based compensation, segment data, fair value measurements, and concentrations of risk Basis of Presentation This section explains the accounting principles and standards used in preparing the interim financial statements - The unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP for interim financial information and Form 10-Q instructions, reflecting all necessary adjustments[31] Principles of Consolidation This section describes the entities included in the consolidated financial statements and the basis for their consolidation - The consolidated financial statements include LifeMD, Inc., LifeMD Pharmacy, WorkSimpli (majority-owned subsidiary), and LifeMD PC (affiliated variable interest entity)[32] Cash This section details the company's cash balances and related financial institution deposit risks - The Company maintains deposits in financial institutions that may exceed FDIC-guaranteed amounts but has not experienced related losses[34] Variable Interest Entities This section explains the consolidation of entities where the company holds a controlling financial interest despite not having majority ownership - LifeMD PC is identified as a Variable Interest Entity (VIE) and is consolidated because LifeMD, Inc. holds a controlling financial interest, directing its activities and absorbing its losses[35][36] LifeMD PC Net Loss, Assets, and Liabilities | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Net Loss | $(3.4) million | $(3.6) million | $(6.7) million | $(6.0) million | | Metric | June 30, 2025 | December 31, 2024 | | :-------------------- | :-------------- | :---------------- | | Total Assets | $7 thousand | $8 thousand | | Total Liabilities | $259 thousand | $380 thousand | Use of Estimates This section highlights that financial statements rely on management's judgments and assumptions, which may differ from actual results - Financial statements require management to make estimates and assumptions that affect reported amounts, and actual results may differ[38] Revenue Recognition This section outlines the company's policies for recognizing revenue from product sales and subscription services - Revenue is recognized using a five-step analysis under ASC 606. For product-based contracts, revenue is recognized upon shipment, while for telehealth subscriptions, it's recognized over time[39][41][43] - The Company acts as an agent for prescription product revenue with its largest third-party pharmacy provider[42] Disaggregated Revenue (Three Months Ended June 30, 2025 vs. 2024) | Revenue Type | 2025 (3 Months) | % of Total | 2024 (3 Months) | % of Total | | :-------------------------- | :-------------- | :--------- | :-------------- | :--------- | | Telehealth subscription revenue | $29,170,821 | 47% | $13,881,894 | 27% | | Telehealth product revenue | $19,392,851 | 31% | $20,519,165 | 41% | | WorkSimpli revenue | $13,654,513 | 22% | $13,229,536 | 26% | | Medifast collaboration revenue | $- | 0% | $3,031,250 | 6% | | Total revenues, net | $62,218,185 | 100% | $50,661,845 | 100% | Disaggregated Revenue (Six Months Ended June 30, 2025 vs. 2024) | Revenue Type | 2025 (6 Months) | % of Total | 2024 (6 Months) | % of Total | | :-------------------------- | :-------------- | :--------- | :-------------- | :--------- | | Telehealth subscription revenue | $59,260,785 | 46% | $21,489,682 | 23% | | Telehealth product revenue | $41,759,368 | 33% | $41,784,029 | 44% | | WorkSimpli revenue | $26,895,788 | 21% | $26,532,398 | 28% | | Medifast collaboration revenue | $- | 0% | $5,000,000 | 5% | | Total revenues, net | $127,915,941 | 100% | $94,806,109 | 100% | Deferred Revenues This section details the company's unearned revenue from future performance obligations and its expected recognition timeline Deferred Revenue Balances | Metric | June 30, 2025 | December 31, 2024 | | :------------- | :-------------- | :---------------- | | Deferred revenue | $11.8 million | $14.5 million | - The Company expects to recognize all deferred revenue related to future performance obligations as revenue by June 30, 2026[50] Leases This section describes the company's accounting for operating leases, including right-of-use assets and lease liabilities - Operating lease ROU assets and liabilities are recognized based on the present value of future minimum lease payments, using an incremental borrowing rate when an implicit rate is unavailable[52][53] Accounts Receivable, net This section details the composition of accounts receivable and the company's policies for managing and reserving for potential returns - Accounts receivable primarily consist of amounts due from third-party merchant processors for subscription revenues, with collections typically within the first week of the following month[54] Accounts Receivable Balances | Metric | June 30, 2025 | December 31, 2024 | | :----------------- | :-------------- | :---------------- | | Accounts receivable | $7,330,129 | $8,217,813 | | Reserve for sales returns and allowances | $832 thousand | $894 thousand | Inventory This section describes the valuation and composition of the company's inventory, including finished goods and raw materials - Inventory, primarily finished goods, raw materials, and packaging for OTC products, is valued at the lower of cost or net realizable value[56][57] Inventory Composition | Inventory Component | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Finished goods | $2,527,875 | $1,554,600 | | Raw materials and packaging | $876,944 | $1,506,078 | | Inventory reserve | $(153,464) | $(263,320) | | Total inventory, net | $3,251,355 | $2,797,358 | Product Deposit This section outlines the company's deposits with vendors and associated implicit purchase commitments - Product deposits with vendors totaled approximately $251 thousand as of June 30, 2025, up from $41 thousand at December 31, 2024, with implicit purchase commitments of $616 thousand[59] Capitalized Software Costs This section explains the company's policy for capitalizing and amortizing costs related to internally developed software - The Company capitalizes internal and third-party costs for internally developed software, amortizing them over an estimated three-year useful life, with a net capitalized amount of $14.8 million as of June 30, 2025[60] Intangible Assets This section provides an overview of the company's intangible assets, their useful lives, and amortization policies - Intangible assets include brands (ResumeBuild, Cleared, OHHMD), customer relationships, developed technology, purchased licenses, and domain names, amortized over 1 to 10 years[61] Impairment of Long-Lived Assets This section discusses the company's assessment for impairment of long-lived assets and the conclusions reached - No impairment of long-lived assets (equipment and capitalized software) was identified as of June 30, 2025, or December 31, 2024[62] Income Taxes This section details the company's accounting for income taxes, including deferred tax assets and valuation allowances - The Company records current and deferred taxes under ASC 740, establishing a valuation allowance for deferred tax assets, primarily from net operating losses, which are fully reserved[64] - The Company is evaluating the income tax implications of the 'One Big Beautiful Bill' signed on July 4, 2025[65] Stock-Based Compensation This section describes the accounting treatment for stock-based awards, including valuation and expense recognition - Compensation cost for stock-based awards is recognized at fair value on the grant date and amortized over the vesting or service period, with fair value estimated using the Black-Scholes model[66] Segment Data This section provides financial information for the company's distinct operating segments, Telehealth and WorkSimpli - The Company operates in two segments: Telehealth and WorkSimpli, with the CEO acting as the chief operating decision maker[67] Fair Value of Financial Instruments This section explains how the company measures the fair value of its financial instruments and categorizes inputs - The carrying value of financial instruments like cash, accounts receivable, accounts payable, accrued expenses, and debt approximates fair value[69] - Fair value measurements are categorized into Level 1 (quoted prices), Level 2 (observable inputs), or Level 3 (unobservable inputs) based on input subjectivity[68][71] Concentrations of Risk This section identifies key dependencies on third-party suppliers and pharmacies that pose operational risks - The Company is dependent on third-party manufacturers and pharmacies; as of June 30, 2025, two third-party pharmacies supplied 70% of fulfillment services, and one vendor supplied 14% of prescription medications[70] Recent Accounting Pronouncements This section discusses the potential impact of newly issued accounting standards on the company's financial reporting - The Company is evaluating the impact of ASU 2023-09 (Income Taxes) effective for annual periods after December 15, 2024, and ASU 2024-03 (Expense Disaggregation Disclosures) effective for annual periods after December 15, 2026[72][73] NOTE 3 – ACQUISITIONS This note details the acquisition of OHHMD, PLLC's intangible assets in April 2025, marking LifeMD's entry into the women's health market. The purchase involved common stock issuance and contingent share-based compensation tied to operational milestones - On April 24, 2025, LifeMD acquired certain intangible assets of OHHMD, PLLC, a virtual care provider focused on women's health and hormone replacement therapies, for 50,000 shares of common stock (fair value $303 thousand)[75][76] - The acquisition includes contingent payments of up to 250,000 additional common shares to Dr. Doug Lucas, tied to achieving active patient and quarterly revenue milestones for the OHHMD brand over two years[77] - Dr. Doug Lucas, sole member of OHHMD, entered a three-year employment agreement with LifeMD PC as Vice President, Female Health & Clinical Operations[77] NOTE 4 – INTANGIBLE ASSETS This note provides a breakdown of the Company's amortizable intangible assets, including brands, customer relationships, and technology, along with their useful lives and amortization expenses for the reported periods Amortizable Intangible Assets (June 30, 2025 vs. December 31, 2024) | Intangible Asset | June 30, 2025 | December 31, 2024 | Amortizable Life | | :-------------------------- | :-------------- | :---------------- | :--------------- | | ResumeBuild brand | $4,500,000 | $4,500,000 | 5 years | | Customer relationship asset | $1,006,840 | $1,006,840 | 3 years | | Cleared trade name | $133,339 | $133,339 | 5 years | | Cleared developed technology | $12,920 | $12,920 | 1 year | | Purchased licenses | $200,000 | $200,000 | 10 years | | Website domain names | $175,397 | $175,397 | 3 years | | OHHMD brand | $303,000 | $- | 3 years | | Less: accumulated amortization | $(4,503,728) | $(3,997,840) | | | Total intangible assets, net | $1,827,768 | $2,030,656 | | - Aggregate amortization expense for intangible assets was $261 thousand for Q2 2025 (vs. $246 thousand in Q2 2024) and $506 thousand for H1 2025 (vs. $492 thousand in H1 2024)[80] - Total amortization expense for the remainder of 2025 is approximately $539 thousand, $1.0 million for 2026, $214 thousand for 2027, and $34 thousand for 2028[80] NOTE 5 – ACCRUED EXPENSES This note details the composition of accrued expenses, which decreased from $20.8 million at December 31, 2024, to $14.9 million at June 30, 2025, primarily due to reductions in accrued selling and marketing expenses and compensation Accrued Expenses (June 30, 2025 vs. December 31, 2024) | Accrued Expense Type | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Accrued selling and marketing expenses | $5,511,596 | $9,149,967 | | Accrued compensation | $2,350,632 | $5,469,482 | | Sales tax payable | $2,267,447 | $2,267,447 | | Accrued dividends payable | $776,562 | $776,563 | | Accrued legal and professional fees | $2,195,647 | $825,233 | | Other accrued expenses | $1,844,615 | $2,323,071 | | Total accrued expenses | $14,946,499 | $20,811,763 | - Accrued selling and marketing expenses decreased by approximately $3.6 million, and accrued compensation decreased by approximately $3.1 million[81] - Accrued legal and professional fees increased by approximately $1.4 million[81] NOTE 6 – LONG-TERM DEBT This note details the Avenue Credit Facility, a convertible senior secured credit facility, including its terms, outstanding principal, and subsequent repayment. It also covers interest expenses and compliance with covenants - The Avenue Credit Agreement provides a convertible senior secured credit facility of up to $40 million, maturing on October 1, 2026, with an interest rate of 12.5% as of June 30, 2025[82][83] - As of June 30, 2025, $15.9 million in principal was outstanding under the Avenue Facility. On August 5, 2025, the Company paid the remaining $14.0 million principal and prepayment penalty, fully extinguishing the debt[84][134] - Avenue converted $1 million of term loans into 672,042 shares of common stock on May 29, 2025, and exercised 435,484 warrants on a cashless basis, resulting in 388,650 common shares[87] NOTE 7 – STOCKHOLDERS' EQUITY (DEFICIT) This note provides a comprehensive overview of the Company's stockholders' equity, including authorized shares, common stock transactions, preferred stock dividends, non-controlling interest, and detailed activity for stock options, restricted stock units (RSUs), restricted stock awards (RSAs), and warrants Options and Warrants This section details the company's stock option and warrant activity, including shares issued from cashless exercises - During the six months ended June 30, 2025, the Company issued 106,258 shares of common stock from cashless exercise of options and 390,115 shares from cashless exercise of warrants[91] Common Stock This section outlines the company's common stock transactions, including issuances for service, debt conversion, and asset acquisition - During the six months ended June 30, 2025, the Company issued 1,628,904 shares of common stock for service, 672,042 shares for debt conversion, and 50,000 shares for the OHHMD asset acquisition[92][93] Non-controlling Interest This section details the net income and distributions attributable to the non-controlling interest in consolidated entities Net Income Attributable to Non-controlling Interest | Period | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income attributable to non-controlling interest | $505,075 | $38,606 | $1,036,920 | $158,038 | | Distributions to non-controlling interest | $276,119 | $36,000 | $312,119 | $72,000 | Dividends This section describes the company's dividend policy for its Series A Preferred Stock - The Company pays cumulative dividends of $2.21875 per share annually on its Series A Preferred Stock, payable quarterly[95] Stock Options This section details the company's stock option plan, including authorized shares, activity, and compensation expense - The Amended 2020 Plan authorized up to 8,250,000 shares of Common Stock as of June 30, 2025, with 1,075,844 shares remaining for issuance[98] Stock Options Activity (Amended 2020 Plan) for Six Months Ended June 30, 2025 | Metric | Number of Shares | Weighted Average Exercise Price per Share | | :-------------------------- | :--------------- | :-------------------------------------- | | Balance, December 31, 2024 | 515,667 | $8.28 | | Exercised | (10,500) | $4.97 | | Cancelled/Forfeited/Expired | (220,000) | $9.18 | | Balance at June 30, 2025 | 285,167 | $7.70 | | Exercisable at June 30, 2025 | 284,634 | $7.71 | - Total compensation expense for Amended 2020 Plan options was $29 thousand for H1 2025 (vs. $1.1 million for H1 2024), with $1 thousand unamortized expense remaining[100] RSUs and RSAs (under our Amended 2020 Plan) This section details the activity and compensation expense for restricted stock units and awards granted under the Amended 2020 Plan RSUs and RSAs Activity (Amended 2020 Plan) for Six Months Ended June 30, 2025 | Metric | Number of Shares | | :-------------------------- | :--------------- | | Balance at December 31, 2024 | 3,049,944 | | Granted | 1,240,000 | | Vested | (1,468,610) | | Cancelled/Forfeited | (5,000) | | Balance at June 30, 2025 | 2,816,334 | - Total compensation expense for RSUs and RSAs under the Amended 2020 Plan was $4.4 million for H1 2025 (vs. $4.9 million for H1 2024), with approximately $10.0 million unamortized expense remaining[103] RSUs and RSAs (outside of our Amended 2020 Plan) This section details the activity and compensation expense for restricted stock units and awards granted outside the Amended 2020 Plan RSUs and RSAs Activity (Outside Amended 2020 Plan) for Six Months Ended June 30, 2025 | Metric | Number of Shares | | :-------------------------- | :--------------- | | Balance at December 31, 2024 | 300,000 | | Vested | (100,000) | | Balance at June 30, 2025 | 200,000 | - No compensation expense was recognized for these RSUs and RSAs for H1 2025 (vs. $510 thousand for H1 2024), with no unamortized expense remaining[104] Warrants This section details the company's warrant activity, including outstanding balances and exercise prices Warrants Activity for Three Months Ended June 30, 2025 | Metric | Number of Shares | Weighted Average Exercise Price per Share | | :-------------------------- | :--------------- | :-------------------------------------- | | Balance at December 31, 2024 | 1,743,730 | $4.65 | | Exercised | (437,984) | $1.26 | | Balance at June 30, 2025 | 1,305,745 | $5.76 | | Exercisable June 30, 2025 | 1,305,745 | $5.76 | - No compensation expense was recognized for warrants for H1 2025 or H1 2024[105] Stock-based Compensation This section summarizes the total stock-based compensation expense recognized and the remaining unamortized expense Total Stock-based Compensation Expense | Period | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total stock-based compensation expense | $2.1 million | $4.2 million | $4.6 million | $6.7 million | - Unamortized stock-based compensation expense was approximately $10.0 million as of June 30, 2025, expected to be recognized through 2028[107] NOTE 8 – EARNINGS (LOSS) PER SHARE This note details the computation of basic and diluted earnings (loss) per share, noting that potential common stock equivalents were anti-dilutive for all periods presented, resulting in basic and diluted EPS being the same Basic and Diluted Loss Per Share | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net loss attributable to LifeMD, Inc. common stockholders | $(2,851,436) | $(7,652,202) | $(2,243,195) | $(15,197,120) | | Weighted average common shares outstanding | 44,401,531 | 41,296,042 | 43,772,151 | 40,269,139 | | Basic loss per share | $(0.06) | $(0.19) | $(0.05) | $(0.38) | | Diluted loss per share | $(0.06) | $(0.19) | $(0.05) | $(0.38) | - Basic and diluted loss per share were identical for all periods because the inclusion of potential common shares would have been anti-dilutive[110] Anti-Dilutive Securities Excluded from EPS Calculation | Security Type | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | RSUs and RSAs | 1,933,014 | 2,279,750 | 1,582,467 | 2,296,125 | | Stock options | 437,544 | 1,527,000 | 424,941 | 1,843,375 | | Warrants | 1,024,809 | 1,743,730 | 971,327 | 2,068,419 | | Convertible long-term debt | 671,141 | 671,141 | 671,141 | 671,141 | | Total | 4,066,508 | 6,221,621 | 3,649,876 | 6,879,060 | NOTE 9 – LEASES This note provides details on the Company's operating leases for office and operational spaces, including right-of-use assets, lease liabilities, and related expenses. It also reconciles future minimum lease payments to total operating lease liabilities - The Company leases office and operational spaces in New York, California, South Carolina, Pennsylvania, and Puerto Rico, with lease terms extending up to 2032[112] Operating Lease Balances (June 30, 2025) | Metric | Amount | | :-------------------------- | :------- | | Right-of-use assets | $5,822,907 | | Current operating lease liabilities | $541,981 | | Noncurrent operating lease liabilities | $6,032,847 | Operating Lease Expenses and Cash Flows | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Operating lease expenses | $411 thousand | $232 thousand | $821 thousand | $458 thousand | | Cash paid for operating lease liabilities | $434,762 | $399,463 | $434,762 | $399,463 | NOTE 10 - COMMITMENTS AND CONTINGENCIES This note outlines the Company's purchase commitments related to inventory and provides updates on significant legal matters, including a class action lawsuit and a resolved IRS tax deficiency Purchase Commitments This section details the company's contractual obligations for future inventory purchases from vendors - As of June 30, 2025, the Company's implicit purchase commitments with inventory vendors totaled approximately $616 thousand, primarily with two vendors for the RexMD product line[115] Legal Matters This section provides updates on ongoing legal proceedings and the resolution of past disputes affecting the company - A class action lawsuit (W.M.F. & Matthew Marden v. LifeMD, Inc.) alleging unauthorized disclosure of information for the RexMD brand received preliminary settlement approval on June 4, 2025, with a final approval hearing scheduled for September 30, 2025[117] - An IRS income tax deficiency of $1.9 million for the 2019 tax year was resolved in the Company's favor, with the U.S. Tax Court issuing a decision of no deficiency on April 1, 2025[118] NOTE 11 – RELATED PARTY TRANSACTIONS This note details transactions with related parties, including software development services from a company owned by WorkSimpli's Chief Software Engineer, legal services from a firm with a former director's family member, and consulting agreements with Board members WorkSimpli Software This section details payments and amounts owed to a related party for software development services Payments to CloudBoson Technologies Pvt. Ltd. for Software Development Services | Period | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Payments to CloudBoson | $903 thousand | $803 thousand | $1.8 million | $1.9 million | | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Amount owed to CloudBoson | $61 thousand | $56 thousand | Legal Services This section outlines payments and amounts owed to a related law firm for legal services Payments to King & Spalding LLP for Legal Services | Period | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Payments to King & Spalding | $0 | $135 thousand | $0 | $452 thousand | | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Amount owed to King & Spalding | $10 thousand | $0 | Consulting Agreements This section details compensation, including restricted shares, provided to board members and advisors for consulting services - Will Febbo received 62,500 restricted shares (fair value $131 thousand) for investor relations and business development services during H1 2025[121] - Naveen Bhatia received 56,250 restricted shares (fair value $168 thousand) and an additional 50,000 restricted shares (fair value $257 thousand) for strategic business development services during H1 2025[122][123] - Brian Schreiber, Logistics & Fulfillment Advisor and relative of the CEO, received $120 thousand in compensation during H1 2025 (vs. $108 thousand in H1 2024) due to an amended employment agreement[124] NOTE 12 – SEGMENT DATA This note provides detailed financial data for the Company's two operating segments: Telehealth and WorkSimpli, including revenue, cost of revenue, gross profit, significant expenses, and operating income/loss for the three and six months ended June 30, 2025 and 2024 Segment Performance (Three Months Ended June 30, 2025 vs. 2024) | Metric | Telehealth 2025 | Telehealth 2024 | WorkSimpli 2025 | WorkSimpli 2024 | | :-------------------------- | :-------------- | :-------------- | :-------------- | :-------------- | | Revenue, net | $48,563,672 | $37,432,309 | $13,654,513 | $13,229,536 | | Cost of revenue | $6,838,703 | $4,553,843 | $592,201 | $471,072 | | Gross profit | $41,724,969 | $32,878,466 | $13,062,312 | $12,758,464 | | Segment operating income (loss) | $(2,802,097) | $(6,450,682) | $1,895,325 | $145,116 | Segment Performance (Six Months Ended June 30, 2025 vs. 2024) | Metric | Telehealth 2025 | Telehealth 2024 | WorkSimpli 2025 | WorkSimpli 2024 | | :-------------------------- | :-------------- | :-------------- | :-------------- | :-------------- | | Revenue, net | $101,020,153 | $68,273,711 | $26,895,788 | $26,532,398 | | Cost of revenue | $14,975,164 | $8,748,438 | $1,099,456 | $876,654 | | Gross profit | $86,044,989 | $59,525,273 | $25,796,332 | $25,655,744 | | Segment operating income (loss) | $(2,415,231) | $(13,070,446) | $4,051,383 | $593,635 | - Telehealth revenue increased by 30% for the three months and 48% for the six months ended June 30, 2025, while WorkSimpli revenue increased by 3% and 1% respectively[126] - Telehealth segment operating loss significantly improved, while WorkSimpli segment operating income saw substantial growth[126] NOTE 13 – SUBSEQUENT EVENTS This note discloses events occurring after June 30, 2025, including common stock issuances for vested restricted stock and option exercises, sales under the ATM Sales Agreement, an amendment to a bonus agreement, and the full extinguishment of the Avenue Facility - In July 2025, the Company issued 163,444 shares of common stock for vested restricted stock (fair value $805 thousand) and 26,523 shares from stock option exercises[130][131] - In July 2025, the Company sold 762,990 shares of common stock under the ATM Sales Agreement, generating $8.7 million in net proceeds[132] - On August 5, 2025, the Company paid the remaining $14.0 million principal and prepayment penalty on the Avenue Facility, fully extinguishing the debt[134] ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial condition and results of operations, highlighting key performance drivers, business strategy, and a detailed comparison of financial results for the three and six months ended June 30, 2025, versus 2024. It also discusses liquidity, capital resources, critical accounting estimates, and recent accounting pronouncements Note Regarding Forward-Looking Statements This section cautions readers about the inherent uncertainties and risks associated with forward-looking statements in the report - The discussion contains forward-looking statements based on management's beliefs and assumptions, subject to risks and uncertainties[136] - Readers are cautioned not to place undue reliance on these statements, and the Company does not intend to update them except as required by law[136][137][140] - Risk factors include market acceptance, competition, commercialization ability, customer/supplier relationships, technological developments (including AI), cybersecurity, intellectual property, acquisitions, supply chain, internal control weaknesses, funding needs, personnel, industry regulation, economic conditions, and business interruptions[139] Business Overview This section provides a high-level summary of the company's direct-to-patient telehealth model, services, and customer base - LifeMD is a direct-to-patient telehealth company providing virtual and in-home healthcare, aiming to simplify and reduce the cost of traditional medical care[141] - The platform serves approximately 297,000 active patient subscribers across various medical needs, including primary care, weight management, and men's health, and has served over 1.2 million customers since inception[142] - Telehealth revenue increased 48% for the six months ended June 30, 2025, with approximately 94% of total revenue from recurring subscriptions[145] - The Company expanded acceptance of private health insurance in June 2024 and Medicare beneficiaries in April 2025 for virtual primary care services[144] Our Platform and Business Strategy This section details the company's integrated telehealth platform, subscription-based offerings, and key brand strategies - LifeMD's patient-centric telehealth platform integrates a national provider network, EMR, pharmacy, lab capabilities, and a patient care center to deliver seamless virtual healthcare[146] - Offerings are primarily subscription-based, covering urgent, chronic, and lifestyle healthcare needs, with prescription medications and OTC products fulfilled by in-house or third-party pharmacies[147] - Key direct-to-patient brands include LifeMD (virtual primary care, GLP-1 Weight Management Program with ~84,000 subscribers), Rex MD (men's health), and ShapiroMD (hair loss)[149][153] - The Company opened a wholly-owned affiliated commercial pharmacy in Lancaster, PA, in November 2024, designed to fill up to 5,000 daily prescriptions[151] - WorkSimpli, a majority-owned subsidiary, provides workplace and document services through brands like PDFSimpli and ResumeBuild, with approximately 149,500 active subscriptions as of June 30, 2025[155] Results of Operations This section analyzes the company's financial performance, including revenue, gross profit, and operating income, for the reported periods Comparison of the Three Months Ended June 30, 2025 to the Three Months Ended June 30, 2024 For the three months ended June 30, 2025, total revenue increased by 23% to $62.2 million, driven by a 30% increase in telehealth revenue, primarily from LifeMD primary care subscriptions. Gross profit rose 20% to $54.8 million, though gross margin slightly decreased due to higher cost of revenue. Operating loss significantly narrowed by 85.6% to $(0.9) million, and net loss improved by 77% to $(1.6) million Key Financial Highlights (Three Months Ended June 30, 2025 vs. 2024) | Metric | June 30, 2025 | June 30, 2024 | Change (YoY) | | :------------------------------------------ | :------------ | :------------ | :----------- | | Total revenue, net | $62.2 million | $50.7 million | +23% | | Telehealth revenue, net | $48.6 million | $37.4 million | +30% | | WorkSimpli revenue, net | $13.7 million | $13.2 million | +3% | | Gross profit | $54.8 million | $45.6 million | +20% | | Gross profit as % of revenues | 88.06% | 90.08% | -2.02 pp | | Operating loss | $(0.9) million | $(6.3) million | +85.6% | | Net loss attributable to common stockholders | $(2.9) million | $(7.7) million | +62.8% | - Selling and marketing expenses increased by $2.7 million (10%) due to initiatives for LifeMD virtual primary care sales growth[159][161] - General and administrative expenses decreased by $956 thousand, primarily from a $2.1 million decrease in stock-based compensation, partially offset by a $965 thousand increase in legal and professional fees[159] Comparison of the Six Months Ended June 30, 2025 to the Six Months Ended June 30, 2024 For the six months ended June 30, 2025, total revenue surged by 35% to $127.9 million, driven by a 48% increase in telehealth revenue. Gross profit grew 31% to $111.8 million, with a slight decrease in gross margin. The Company achieved positive operating income of $1.6 million (compared to a $12.5 million loss) and net income of $0.3 million (compared to a $13.5 million loss), reflecting significant operational improvements Key Financial Highlights (Six Months Ended June 30, 2025 vs. 2024) | Metric | June 30, 2025 | June 30, 2024 | Change (YoY) | | :------------------------------------------ | :------------ | :------------ | :----------- | | Total revenue, net | $127.9 million | $94.8 million | +35% | | Telehealth revenue, net | $101.0 million | $68.3 million | +48% | | WorkSimpli revenue, net | $26.9 million | $26.5 million | +1% | | Gross profit | $111.8 million | $85.2 million | +31% | | Gross profit as % of revenues | 87.43% | 89.85% | -2.42 pp | | Operating income (loss) | $1.6 million | $(12.5) million | N/A (swing to profit) | | Net income (loss) | $0.3 million | $(13.5) million | N/A (swing to profit) | | Net loss attributable to common stockholders | $(2.2) million | $(15.2) million | +85.2% | - Selling and marketing expenses increased by $7.8 million (15%) due to increased initiatives for LifeMD virtual primary care[165][167] - General and administrative expenses increased by $794 thousand, driven by higher compensation, merchant processing fees, and legal fees, partially offset by a $2.1 million decrease in stock-based compensation[165][167] Working Capital This section analyzes the company's current assets and liabilities to assess its short-term liquidity position Working Capital (June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 | December 31, 2024 | | :---------------- | :-------------- | :---------------- | | Current assets | $49,025,763 | $48,733,089 | | Current liabilities | $63,532,158 | $60,255,145 | | Working capital | $(14,506,395) | $(11,522,056) | - Working capital decreased by approximately $3.0 million during the six months ended June 30, 2025, primarily due to a $3.3 million increase in current liabilities, partially offset by a $0.3 million increase in current assets[166] Liquidity and Capital Resources This section discusses the company's cash flow activities and its ability to fund operations and investments Cash Flow Summary (Six Months Ended June 30, 2025 vs. 2024) | Cash Flow Activity | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net cash provided by operating activities | $11,707,834 | $9,741,922 | | Net cash used in investing activities | $(6,566,921) | $(5,322,293) | | Net cash used in financing activities | $(3,917,532) | $(1,863,139) | | Net increase in cash | $1,223,381 | $2,556,490 | - Net cash provided by operating activities increased by $2.0 million, driven by net income and non-cash adjustments like depreciation, amortization, and stock-based compensation[168] - Net cash used in investing activities increased by $1.2 million, primarily due to higher capitalized software costs and equipment purchases[169] - Net cash used in financing activities increased by $2.1 million, mainly due to debt repayments and preferred stock dividends[170] Liquidity and Capital Resources Outlook This section provides management's assessment of the company's future cash needs and funding strategies - The Company funds operations through product sales, equity issuance, and loans, with continued operations dependent on increased sales volumes and external funding[171] - As of August 4, 2025, the Company had a cash balance of approximately $36.5 million and $44.6 million available under the ATM Sales Agreement[176] - Positive indicators for sufficient cash over the next 12 months include strengthening revenues, improved operational efficiencies, positive operating cash flows, available financing, and management's ability to curtail expenses[176] Critical Accounting Estimates This section highlights accounting estimates that require significant judgment and could materially affect financial results - Critical accounting estimates involve assumptions about highly uncertain matters, where changes could materially impact financial condition or results of operations[178] - The Company's significant accounting policies are detailed in Note 2[179] Recent Accounting Pronouncements This section outlines new accounting standards under evaluation for their potential impact on the company's financial statements - The Company is evaluating ASU 2023-09 (Income Taxes) and ASU 2024-03 (Expense Disaggregation Disclosures) for their impact on financial statements and disclosures[180][181] ITEM 3. Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, LifeMD, Inc. is not required to provide quantitative and qualitative disclosures about market risk in this report - The Company is exempt from providing quantitative and qualitative disclosures about market risk as a smaller reporting company[183] ITEM 4. Controls and Procedures This section addresses the effectiveness of the Company's disclosure controls and procedures and internal control over financial reporting. Management concluded that disclosure controls were not effective due to identified material weaknesses, for which remediation efforts are ongoing Evaluation of Disclosure Controls and Procedures This section reports on the effectiveness of controls designed to ensure timely and accurate financial disclosures - Management, including the CEO and CFO, concluded that disclosure controls and procedures were not effective as of June 30, 2025, due to material weaknesses in internal control over financial reporting[185] Management's Report on Internal Control Over Financial Reporting This section states management's responsibility for and assessment of the company's internal control over financial reporting - Management is responsible for establishing and maintaining adequate internal control over financial reporting, designed to provide reasonable assurance regarding financial reporting reliability[186] Material Weakness in Internal Control over Financial Reporting This section identifies specific deficiencies in internal controls that could lead to material financial misstatements - As of June 30, 2025, management determined that the Company's internal control over financial reporting was not effective, based on the COSO framework[188] - Identified material weaknesses relate to information technology general controls (ITGCs) and business process controls concerning Information Produced by the Entity (IPE) and system-generated IPE[190] - These weaknesses did not result in misstatements but could lead to material misstatements not being prevented or detected[194] Management's Plan to Remediate the Material Weakness This section outlines the steps the company is taking to address and correct identified internal control deficiencies - Remediation steps include formalizing accounting policies, documenting completeness and accuracy of IPE, enhancing control review evidence, and formalizing user access and change management reviews[193] - While enhancements have been implemented, their effectiveness has not yet been tested to conclude remediation[192] Changes in Internal Control over Financial Reporting This section reports on any material changes in the company's internal control over financial reporting during the period - Other than the ongoing remediation measures for identified material weaknesses, there were no material changes in internal control over financial reporting during the three months ended June 30, 2025[195] PART II. OTHER INFORMATION This section includes additional non-financial disclosures and legal, risk, and equity-related information ITEM 1. Legal Proceedings This section refers to Note 10 for details on legal proceedings, indicating that material proceedings are described there - Material legal proceedings are detailed in Note 10, 'Commitments and Contingencies,' of the unaudited condensed consolidated financial statements[198] ITEM 1A. Risk Factors This section advises investors to consider the significant risks associated with an investment in the Company's common stock, referencing the comprehensive list of risk factors in the Annual Report on Form 10-K, with no material changes noted - Investors should carefully consider risk factors from the Annual Report on Form 10-K for the year ended December 31, 2024[199] - No material changes to the previously disclosed risk factors have occurred[199] ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds This section discloses unregistered sales of equity securities during the three months ended June 30, 2025, including common stock issued for services, debt conversion, and asset acquisition, all exempt from registration under Section 4(a)(2) and/or Regulation D - During Q2 2025, the Company issued 311,250 shares of common stock for services, including vested restricted stock[200] - On May 29, 2025, 672,042 shares of common stock were issued for debt conversion from the Avenue Facility, and 388,650 shares were issued from cashless exercise of Avenue Warrants[201] - On April 25, 2025, 50,000 shares of common stock were issued related to the OHHMD asset acquisition[202] ITEM 3. Defaults Upon Senior Securities This section states that there were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities[203] ITEM 4. Mine Safety Disclosures This section indicates that mine safety disclosures are not applicable to the Company - Mine safety disclosures are not applicable to the Company[204] ITEM 5. Other Information This section reports that Nicholas Alvarez, Chief Acquisition Officer, terminated a Rule 10b5-1 trading arrangement on June 12, 2025 - Nicholas Alvarez, Chief Acquisition Officer, terminated a Rule 10b5-1 trading arrangement on June 12, 2025, which was adopted on March 13, 2025, for the sale of up to 300,000 shares[205] ITEM 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including employment agreements, certifications, and XBRL-related documents - The exhibits include various employment agreements (e.g., with Shayna Webb Dray), Rule 13a-14(a)/15d-14(a) Certifications of the CEO and CFO, Section 1350 Certifications, and Inline XBRL documents[206] SIGNATURES This section contains the required signatures of the Company's principal executive officer, principal financial officer, and principal accounting officer, certifying the filing of the report - The report is signed by Justin Schreiber (CEO), Marc Benathen (CFO), and Maria Stan (Chief Accounting Officer) on August 5, 2025[211]