On Friday, BTIG reaffirmed its positive stance on LifeMD Inc (NASDAQ:LFMD), maintaining a Buy rating and a $12.00 price target for the company's stock. This follows the recent announcement by the U.S. Food and Drug Administration (FDA) on October 2, 2024, that the shortage of tirzepatide injection, a medication for diabetes, has been resolved. The FDA's statement also clarified that compounded drugs are not FDA-approved and that once a drug shortage is addressed, the agency considers the drug to be commercially available.
LifeMD's management has conveyed that the resolution of the tirzepatide shortage will not significantly impact the company's operations. According to BTIG's assessment, a relatively small fraction of LifeMD's members, approximately 10%, are prescribed compounded tirzepatide. The company prioritizes obtaining coverage for its members to use branded medications as a first option, and does not manufacture compounded products itself.
The analyst noted that as LifeMD continues to enhance its revenue cycle capabilities, the expectation is that fewer members will need to rely on compounded medications. Currently, it is estimated that around 22% of LifeMD's members are taking branded medication.
LifeMD is perceived to be in a strong position for future growth despite the FDA's update on tirzepatide. The company's strategy to focus on branded medications and improve its revenue management processes is expected to reduce the need for compounded drug alternatives among its members. This approach aligns with the FDA's stance on drug availability and ensures compliance with regulatory standards.
In other recent news, LifeMD, Inc. showcased strong second-quarter earnings, particularly within its telehealth and weight management segments, demonstrating a 67% year-over-year revenue growth. Despite facing challenges with its subsidiary WorkSimpli, the company's telehealth business, including the GLP-1 weight management offering, achieved positive adjusted EBITDA. LifeMD also announced plans to divest WorkSimpli in the future, focusing on expanding its weight management services, developing new infrastructure, and growing its RexMD brand.
Despite a GAAP net loss, LifeMD reported a record consolidated gross margin and an increase in active subscribers for its core telehealth services. The company reiterated its full-year revenue guidance of at least $205 million, expecting continued growth in the telehealth segment.
On the horizon, LifeMD aims to redefine telehealth through integrating AI technology, expanding insurance coverage, and launching an in-house pharmacy. However, the company also reported challenges with WorkSimpli, including a decrease in active subscribers and advertising difficulties. These developments are part of the company's ongoing efforts to adapt and grow in the evolving telehealth landscape.
InvestingPro Insights
LifeMD Inc (NASDAQ:LFMD) presents a mixed financial picture that adds context to BTIG's bullish outlook. Despite the company's challenges with profitability, as indicated by its negative P/E ratio of -7.58 over the last twelve months, LifeMD has shown impressive revenue growth. The company's revenue increased by 38.63% over the same period, reaching $178.28 million, with an even stronger quarterly growth of 40.94% in Q2 2024. This growth trajectory aligns with BTIG's positive stance on the company's future prospects.
An InvestingPro Tip highlights LifeMD's "impressive gross profit margins," which is corroborated by the data showing a gross profit margin of 88.92% for the last twelve months. This strong margin suggests that LifeMD has significant pricing power and efficient cost management in its core operations, which could be crucial as it navigates the transition from compounded to branded medications.
Another relevant InvestingPro Tip notes that the stock is "trading near its 52-week low," with data showing it's currently at just 36.34% of its 52-week high. This could indicate a potential buying opportunity if the company's growth strategy and focus on branded medications pay off as BTIG anticipates.
For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips that could provide further insights into LifeMD's financial health and market position.
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