B.Riley has maintained a Buy rating and an $11.00 price target for LifeMD Inc (NASDAQ: LFMD), following news from WeightWatchers about their new compounded semaglutide offering, which is similar to LifeMD's services.
WeightWatchers' addition of semaglutide, a medication on the FDA shortage list, is intended to support patients with behavioral and lifestyle changes. The company has partnered with an FDA-registered facility to ensure quick delivery within 1-3 business days, despite the drug's low in-stock rate of 4.5% over the past year.
The current lawsuit filed by the Outsourcing Facilities Association against the FDA could impact the availability of semaglutide. The Association claims the FDA improperly removed another drug, tirzepatide, from the shortage list without proper notice. This legal action might affect when semaglutide could be taken off the shortage list, potentially extending the period compounded options are available.
LifeMD, which had prepared for the removal of tirzepatide from the shortage list, continues to offer both compounded and branded GLP-1 therapies, including clinical services. Unlike some competitors, LifeMD does not profit from drug mark-ups and accepts insurance for branded GLP-1 options.
In other recent news, LifeMD showcased strong second-quarter earnings, particularly within its telehealth and weight management segments, demonstrating a 67% year-over-year revenue growth.
The company's telehealth business, including the GLP-1 weight management offering, achieved positive adjusted EBITDA. 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.
Additionally, LifeMD announced plans to divest its subsidiary WorkSimpli, focusing on expanding its weight management services, developing new infrastructure, and growing its RexMD brand. This is part of the company's ongoing efforts to adapt and grow in the evolving telehealth landscape. BTIG maintains a positive stance on LifeMD, reaffirming a Buy rating, following the recent resolution of the tirzepatide shortage by the FDA, which is not expected to significantly impact LifeMD's operations.
InvestingPro Insights
LifeMD Inc (NASDAQ:LFMD) presents an intriguing investment case in light of recent developments in the weight management market. According to InvestingPro data, the company has shown impressive revenue growth of 38.63% over the last twelve months as of Q2 2024, with quarterly revenue growth reaching 40.94% in Q2 2024. This aligns well with the analyst's positive outlook on LifeMD's potential for expansion in the weight management subscription services.
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's business model, which doesn't rely on drug mark-ups, is financially efficient.
However, investors should note that the stock is currently trading near its 52-week low, with a significant 54.53% price decline over the past six months. This could present a potential entry point for investors who share the analyst's optimistic view on the company's prospects.
For those seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for LFMD, providing a deeper understanding of the company's financial health and market position.
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