LifeMD (LFMD) 16 Nov 202020 Q3 Earnings call transcript

Good afternoon. Thank you for joining us today to discuss Conversion Labs Third Quarter Results Ended September 30, 2020.

Joining us today is the Chief Executive Officer of Conversion Labs, Justin Schreiber; and company’s Chief Financial Officer, Juan Piñeiro.

Following their remarks, we will open the call to your question.

Before we conclude today’s call, I will provide some important cautions regarding the forward-looking statements made by management during the call. which remind be today’s replay the made in press to recorded is via company’s like the today’s will in and available release, website. would everyone section call that being instructions Investor I Relations available of is for telecom

CEO, Now would Labs’ turn Please go over to the I Schreiber. call ahead, to Conversion like Justin sir.

key is for telemedicine afternoon, we to Conversion financial subscription Labs. performance us today. portfolio Most of outperformance market the closed, reported and and organic launch Thank the continues of quarter direct-to-consumer a our growth joining across operational an to you, After our strong entire transformational and in for brand our Judy, due metrics. XXXX generating year revenue. of everyone. Thanks and overall our the platform continued growth another good of be the increase

telehealth paradigm our third towards across healthcare for This product has entire in shift XXX% year the quarter. fourth the tremendous ongoing by telemedicine all clearly $XX world. on to from that the continued for of build the adoption compared the know, of you we and is carried the previous platform. up everything aggressive into direct-to-consumer million. optimization accelerated technology created strategy, of As and health potential in It tailwinds has by It’s emphasize This our loss. momentum especially our of success e-commerce, our Labs the men’s the in and pandemic the especially this patient quarter. has supported acquisition growth hair was just This COVID-XX helped telemedicine. brands, and quarter, The has greatly same demand as year resulting new has to important ago Conversion the a a XX% record word own platform. quarter, invalidated shareholder revenue up out is this in part What platform strengthen focused

revenue in October year. of seen, us of is generated we for with was an outstanding the have net you revenues last which QX million, than $X.X As may month greater

of million a achieved Looking nearly $X.X overall acceleration four-fold a of $XX.X rapid the is than couple revenue first at October for annualized rate showing and increase. in September, continued of rate This overall the year, This all run up an to of last the solid also November, business. by million growth run $XX compares weeks from of million. we’ve more

it up was of increased of $XX.X month to In our is to July. compared million about annual excited particularly year. in XXX% September $XX.X and versus million from we million by by October, to products services, In We’re the ARR, this of our last which report XXX% October third revenue, the quarter, $X.X subscriptions jumped XXXX. started to that to or recurring XX% last September, and

As third guidance. past is to seen This will a we a only provider brands, performance believe the the for in leading in following healthcare. revenue of the we’ve we’re track year result seeing few and our over on our our full quarter meet growth quarters, across the momentum strong still early Despite reputation inning I Conversion telehealth. as our in in why as virtual quarters status the telehealth, believe establishing it’s and first pivotal an Labs mover we’re be

and platform, in exponential personnel the business. make for to investments and lies our growth that infrastructure understand order We’ve provider telehealth we continue we scale the compliance Although our medical network, important support to growth believe significant on our to in ahead made business. we big the as the technology it’s in revenue are were seeing investments significant business, to we across continuing

have past call has and for assisting days. of and space sales already Carolina the a service team. first Recently XXX hired patients areas One focus seat and the our representatives work, and customers for great that our have doing XX released been in customer biggest been our investment of internal XX South center

We over continue more and million the faster these believe to even through before. the I’d market. to invaluable, our financial With the also institutional will build completed the a our that, to more seen the third $XX take in for be to the Juan? to later accomplished and set we call. in who enable quarter CFO, would financing capital platform uplift further telehealth of the than out quarter. turn robust, we’ve NASDAQ third having growth will led foundation milestones call I’ll like in us detail details investors the by Juan, for that discuss the in I us actions

Thank you, and Justin, good afternoon, everybody.

top QX mentioned, XXXX line organic quarter million same record Revenue quarter growth. $XX of the up another from quarter. Justin third year the was XXX% $X.X strong increased million, of ago in for in As

customer same XXXX was of the to been well in was $XX.X expenses, increase million up million, ago $X.X the $XX,XXX we’ve in It’s $XXX,XXX and ago net third quarter contributed quarter to insurance expenses general was sales Operating increases Gross the The The attainment majority of non-cash as to This resulting compensation year XXXX. quarter period. threshold also expecting. or of million in stock-based EBITDA, amortization to compared $XXX,XXX or a to or million expense and from subsidiary costs. expense $X.X share. from in $X.XX totaled operating negative common million in to in same in quarter of million exceeded third profit the the relating PDFSimpli third loss $X.X compared $XX.X level increase XXX% increased third important that combined of $XX.X expenses year Our $X.X net in note XXX% the in ago quarter. $XXX,XXX. $XX,XXX administrative interest quarter as of development decreased quarter. such million the third million mix, year the a factors million, in loss the in of product other $X.X year other per to attributable and liability due items, up but selling the to net stockholders quarter. performance for same at of in the in these still ago XX.X% largely share XX.X% common due of which of ago and third Adjusted $X.XX general of the quarter as charges, from primarily out to the as from same $XX.X XXXX revenue service negative expenses. high to $X.X Gross of and primarily in the expenses, marketing million year in term, of profit percentage GAAP the non-GAAP financing-related This quarter due to for $XXX,XXX to in restricted compared the same stockholders contributed loss negative with net included attributable share quarter XXXX to the the in $XXX,XXX quarter. negative third XXXX a per administrative

for nine our months $X.X but period. first the net the the increased to again, same period. costly been $XX.X our the to costs product level profit compared percentage from nine year to $XX.X the at mix, that which due Revenue a Gross related same summary. we’ve sales increased reflects million year XXXX in of increasing we from first year months in first year in nine in to higher to financial procuring XXX% million, XXX% XXX% nine to primarily Gross PDFSimpli $X.X of the XX.X% revenue months a profit to ago million ago involved product same in chain, expecting. changed contributed still of The distributions increased record COVID-XX ago first of ago million believe our months the in product-based due impact mix from same input. period; the as period. XXXX product supply high more turning are Now of XXXX million, up decreased costs the $X.X to XX.X% product

offset margins. nine of increase We of historically Operating return be same time in over in for General first $X.X and The expenses million expect the nine expenses, to also year aforementioned up the expenses, costs. in in included our million, compensation. and this stock-based primarily due of other XXXX to from an as with quarter. or million and an was selling administrative was expected development $XX,XXX expense $XX,XXX primarily administrative $XX.X in a $XX.X of expenses. marketing in general $XXX,XXX The months by the increase service customer well months as totaled the and ago expenses million operating resolved increase $XX.X decrease higher

loss $X.X million certain net also such The loss as months share non-cash months attributable a of EBITDA, $XXX,XXX, expenses Our nine debt to GAAP net $X.X loss per first term, to of XXXX Adjusted of net the months of $XX,XXX, nine $X.X the period. months stockholders of the loss acceleration of per first $XX.X nine $XX,XXX, to as expense amounting or $XX.X interest million $XXX,XXX million, transactions expense negative inventory nine valuation attributable included to charges of $X.XX in of a common of share XXXX in year non-GAAP common of amortization stockholders for financing XXXX. a and loss $XXX,XXX, first nine of same or months financing-related ago the of to compared negative million for first was or $X.XX of million. compared adjustment expense XXXX stock-based the in compensation discount totaled

institutional a end investors, to XXXX, we $XXX,XXX June September of private at Turning $XX.X $XXX,XXX the XX, our million. XX, XXXX. from cash which generated equity to quarter, net totaled offering of compared placement as sheet, completed with balance at Subsequent proceeds the

current So This current provide And call committing with to totals our and up as cash the over We $XX.X you. plans now of wraps for to back needs ample our Thank available turn believe growth. million. Justin. cash our the financial like today, and results. company position balance I’d approximately funds liquidity our

the be throughout with continued The track November strongest and continued on final the our quarter we’ve third year that Juan. momentum to into Thanks quarter into month the seen yet.

incredible. telehealth the truly Labs for is ahead, opportunity Looking Conversion

treatment access enabled of difference be will and like importantly of because while and helped who a to all access our Conversion that that Labs, delivering have the have to this creating and had all to increased customers products the of our team lives our to. very tremendous the make by investors services not Americans medical companies creating value such otherwise whole fulfilling millions can telehealth access for big important gain might happen. More for It’s they in healthcare make

investments scale medical, intelligent telehealth telehealth marketplace. growing our platform, and as This make and accelerating continue our the big are in in provider paramount growth we this in our compliance technology mover business. that networks we early an to rapidly investments operations critical in support As includes our financial to infrastructure that our it’s personnel

doing In of call seat and seen phenomenal prove we’ve I for XXX financing, work, investments our One center these in in customer milestones regarded in BTIG, sales growth goals been first we been customers has last institutional areas before. led hired be in leaders, our both plan We recent exclusive be tremendous. feedback over has more invaluable and investors been as Prior customer also our believe team. business accomplished financial XX to foundation raise, million $X.X a going a and hopefully offices, internal to a patients us the our October, private our South for our Riley, completed group continue business. and bank of bank days. Blackstone as will funding we in support we select awareness Wes the million we banks highly quarter we increase from NASDAQ Edens which third been stronger of investment million institutional very outlook. engaged will believe forward, investment a attracted service and the uplift a telehealth our positive group and the build the a Blitzer out assisting coverage Last to The B. faster $XX long-term analysts And our even David space investment agent. setting to $XX.X robust, placement focus Fortress. company. To representative. week, the we’ve market. our recently advisor biggest select research of XX leased thought They’ve the serves from Carolina the receiving by growth, story platform and included investors from prominent that among world-class a of another finance telemedicine we enables a believe the and of to of investors and continue strategic their valuable to family a our to and from the support capital as who build

serves provider is the funding and We two Directors, as and important as have currently this to to in services its served CFO As the Revlon, our we sales. FinTech Connie impressive IP team nearly overseeing attract. extremely appointed members Dr. CFO recently Global on Board X billion exchange. $X Roberto a quality the and incurred members Roberto continue Finance Mariano. of WEX, of Simon, previously nearly stock traded He the billion Operations has New of York annual as

credentials, House our Rear listing. Needless as some Dr. Given our Navy of another in his sitting been extra in country in White as our and pioneer NASDAQ three the know, Audit physician ordinary she’s Committee, which healthcare. say, appointed served presidents. Roberto a to is Admiral step U.S. of for financial Chair a our and and Connie incredible presence may also an you has Mariano, has as leader for breaking barriers preparation huge

we develop benefit and guidance We’re continue in telehealth. from her knowledge as presence to thrilled to our

eight has with five now Independent serving Directors. as members board our appointments, these With

conversations the NASDAQ qualifications. We all requirements for our capital the final few that We’ve X-to-Xreverse listing. for are NASDAQ one to our our to transformational and weeks Following can believe the meets of recent uplift meet within listing submitted we believe market. from application ago, We to listing days we now a be split based and two that all NASDAQ on shareholders. a

we’ll will especially financing retail, for I’d NASDAQ final and a for liquidity and Altogether, investors So for the wider can’t support individual to to following sell investors. as compelling very that investment like that significantly. I to story execution equity investor. to trade have shareholders and we future make institutional we expect a sense need improve our relatable make doors the our we dramatically growth point do if this strategy equity on raise to we again, were might to our open where We it will never as relates say financing. share for our believe not price growth. this to our appreciate

that return, to this of patient for which plan, about already our Our non-dilutive is Conversion company. our capital and sources to very relatively efforts. Everyone doable. execute economics acquisition on, believe exciting phase proven finance Labs is And customer we’ve cash-on-cash unit given begun use upcoming to and at is we this our quick

closely, revenue This million $XX own. that was $XX with zero in treat us than business because following dollar and basically million telemedicine in invested we like we been now to run you’ve Conversion you’ll capital. total our every rate our now If know less e-commerce is grew Labs from annual it invested

make not perfect therefore mistakes. and occasionally we’re Although can

deliver areas pretty We capital have at we our great shareholders. our that to good returns been investing in wisely believe will

for stronger campaigns, Our to It it’s offline quarter, traffic we streaming telemedicine we new for our many plan In traffic past scale are exploit a we Rex test than on the coming our balance is now sources, there been promising and to about results. to saw we online ever XX networks TV unit and This will us creative the over and and and attractive And extremely very also MD opportunity this before. quarters. is a optimistic the week, this where proven big sheet that enable national scale additional us Rex We launching of both this for offline. think launched economics. gives planned very and we MD us. are our ability brands, have

deliver also We expect will operations reducing will center a which experience within experience service but providers impact highest professionals. We We Labs have do, a with not the XX acquisition Carolina South best of leading build the company, our our costs. healthcare we growth our that only value. our dramatically days in order we believe customer telehealth the to that first on a quality for also driver dramatically major and company the of going patient patients, customer operation aspire call customer forward, which positive improve care, be is know to of just in lifetime have to to Conversion

the center an important will call tapping of will also new be of media be part Our effort, this key. social power

catalyst our leading in are agreement for late growth the Restorsea’s that dovetail platform. with attained with a major licensing technology discussions medical for in telemedicine grade will key nicely stage we certain we We offering. skincare This influencers MD be female Shapiro will believe

such for combination upcoming results $XX of of new in industry results patents medical and R&D journals, brand quickly prescription-grade million telehealth produced clinical Restorsea’s an market. their leverage online and peer-reviewed have We’re as Dermatology. extremely The the in published month. launch one segments Clinical The will positioned already to products Nava growing and to and announced XX be offers has Nava over IP that and of of our Teledermatology teledermatology investment chart that Journal teledermatology brand Drugs excited clinical XX last we Dermatology claims. a in MD platform the MD broad this with been as Journal of states. in is of fastest all skincare telehealth growing patients Aesthetic

Insights will Business annual at billion a Fortune be growth rate compounded XX% growing and XXXX. XX alone segment this thinks hit market by

also soon will We indications our brand. Rex under formally launch new MD

We as platform, proprietary enabled men’s expect which cement to MD’s be by MD, will a its presence telehealth. capabilities technology nearing this expanding official Veritas Rex also is telehealth leader our launch. our in

see and we remain lie come. that, and your questions, to ahead to continued thank telemedicine to again, I’d Conversion opportunities especially to healthcare you and experience. Conversion months your the and value the the drive ahead, platform continuing committed growth like we opportunities Looking Once interest upon develop open for years Julie? Labs. greater continue that over call improve customer We in our the and shareholder And to with to Labs,

B. from your With [Operator Riley you. with Thank Andrew DeSilva first Instructions] Securities.

visibility that it of that’s right new versus Good my all Conversion Could could progress you a for what give cross-pollinization Congrats subscriptions Labs stickiness afternoon. hoping subscription, you Thank is tied the you’d giving questions. just relates I’m brands discuss into make. to of kind on much quarter-over-quarter. noted the XX% very taking now? and all you you of subscribers? how insight much Also growth to as increased you

put numbers telemedicine Sure. business. out Thanks, Andy. our for formally Look, we haven’t retention

lifetime to first a it’s quarter, shareholders, we’ve sickness but is. our But say with customers, really we these XXXX. it’s seen of on – about bit so return. about, that’s number business, the a talking over data cash we’ve in in new a more what in quick I value start kind of cash the unit and talking to little a it’s a extremely Obviously, as plan be really economics tough long-term the on of limited all to strong that seen that communicated over So have we but quantifiable way – we’ll relatively we’ve think,

that Rex, that to center the more see to your that and don’t start second think how I between, really we lot Shapiro a we thing, to we’ll have see happening. and And and of see cross-pollination an for question, to regarding of we that’s think Andy more the already start little one thing. going we’re bit at infrastructure call a – moment is how of instance,

we products to We’re training really have investing – on about physicians – lot our will the physicians the another bring as Veritas, of ability an – that’s different across our launched as as a talk bring interesting our ability to As we we’ll onto patients. thing, portfolio. of we in our And more on the bring we help these Veritas, platform right? also to with launch more have reps

that can is on that little a Also demographics right of new the of is add total question Thank now? to success? how the age where offerings with curious, pool just quarters? the Useful go; as me finding as in coming the you And far just you’re others last expecting you’re most some sense you. And give for of color. the what

to about our Sure. do Galluppi a answer who’s want going Yes, demographics let to Marketing little Stefan, talk bit Chief the seeing? you I’m Stefan we’re Officer. that,

absolutely. Yes,

RexMD, ED age of our XX For customers average offer the for is the old. years

bit on the a was then what side. we’re And So high second the question?

Yes.

groups? this you you age younger demographic offerings? to to you move Is forward feel at you age more add do that as do point? on bodes far need the begin demographic as As down goes, to how going that ideal Or XX-year-old for

the think fits in additional into. We it that of with perfectly the line all categories entering we’re No. rollout

Okay. out of very Thank you Perfect. closing luck much. Best XXXX.

Andrew. Thanks,

Paradigm next hear We’ll Corey Opportunities, from with Deutsch LLC.

Hey, foremost, the Labs Conversion Justin, first to Juan, guys phenomenal wanted and you and I broader congratulate quarter. on truly team, a someone in

Corey. Thanks,

is Yes. in in the recent something And potential a and ongoing upticks not you of the obviously, the COVID, may company? conversation forecasting about opportunity modeling, in the the growth this then for shutdown cause the are do you second with that in but expedited the guys see our that U.S.; second, how sense there with

question. great a that’s Yes,

without I lot these a is telemedicine calls, to I here is we’ve anywhere, and with vaccine accelerated far – all, like phone the and there’s drive only of But, of yes, people as right, it’s not gotten going of people that couple the ago, a Pfizer it’s entirely, and But, telemedicine as far first are think right, are And stay lockdowns of team Moderna play has COVID – with negative this comfortable to that that as announcements. a months people grow. as COVID e-commerce. kind disagree and some doubt with the that, to tend think for next business. vaccines going

we Corey, no us. over-the-counter it’s that lockdown question is SaaS expecting it here, like saw both like – early winter happen big a – months for growth over we portfolio see about we’re like will telemedicine and a certainly our portfolio the it, if and the year our our in driver with we So

lockdown big, I’m it’s stimulus plus growth an bigger not how obviously, And even driver. sure. So

population those the sad economy overall and two Labs. growth but the are So, for big things our although for drivers Conversion for

and growth going congratulations Justin. of impressive. and the on happens is regardless how winning you Thanks what the very the in company quarter are Again, broader, guys positioning forward Yes. for

job great guys. So

you. Thank

Thank you.

from Next Securities. with John DeMaio Newbridge Instructions] [Operator

to mentioned the uplifting you Hey, about the NASDAQ.

be can or a little just specific bit two don’t or weeks, one you said You more you know?

NASDAQ great we’ve their know, had a We with the last satisfied – requests. week. don’t of call had we just We our but council all believe terrific a

given light given a green haven’t just to just day, formally, light green there’s haven’t any still the us that’s get the us couple – process but quick. So yet relatively of they we’re they hopeful

So we think it’s imminent.

you. Thank Okay.

closing time, turn this to remarks. I’d to any like Schreiber At for Justin things back

Thanks attending go for time ahead history up during wrap call the and in call. everyone joined stay have most who our well everybody today. the be and especially shareholders Thanks our to Julie, company’s our us exciting happy. and

ladies and you gentlemen. Thank

Now before statements to the that conclude would harbor that we statements during provided Securities of The company amended among of XXE in Section statements within XXXX. today’s forward-looking Exchange both I business today’s And important Securities meaning conference XXXX the the of call, XXA provide the like plans, company’s and the has of other Act this cautions regarding company’s financial. section and include safe call. information made regarding call includes forward-looking the of Act strategies as prospects things,

plans, that or statements these these cannot or or intentions assure forward-looking expectations are believes you suggested company and the reflected expectations. realize reasonable, intentions the Although it in company plans, will its by that achieve

maybe language. by risks, to from may, Important inherently forward-looking and uncertainties or made expressly that time-to-time forward-looking conditions its use potential, States company could includes Securities the entirely differ to assumptions. expect, during Conversion acting All and attributable by words statements on will, that those person as Commission. Exchange statements of identified conference documents of intend, such made conference this estimated the cautionary the Labs call cause a anticipate, qualified and actual believe, in from files results this factors should, plan, are statements statements set to reports are the Many during United the behalf this subject call or market and Forward-looking with among forth materially others. forward-looking forward-looking

like XX. Please for and replay available this be Thank joining November website today’s replay Before to for will release at via refer that us www.conversionlabs.com. available remind we call. later call, end today. today’s concludes dial-in this through evening starting This everyone company’s conference would conference you for to earnings call the running today’s instructions I

disconnect. You may now