Good afternoon. Thank you for joining us today to discuss LifeMD's First Quarter Fiscal 2021 Results for the 3 months ended March 31, 2021. Joining us today is the Chairman and Chief Executive Officer of LifeMD, Justin Schubert and the company's Chief Financial Officer, Mark Benaffin. I'd like to remind everyone that today's call is being hosted via webcast and the recording will be made available via the link in today's press release, which is available in the Investor Relations section of the company's website. Before we conclude today's call, I'll provide some important cautions regarding the forward looking statements made by management during the call.
I'd like to remind everyone that today's call is being recorded and will be made available for webcast replay via instructions in today's press release, which is available in the Investor Relations section of the company's website. Now I'd like to turn the call over to LifeMD's CEO, Justin Schubert, please go ahead.
Thank you, operator, and good afternoon, everyone. Thanks for joining us today for our first earnings call of 2021. And I hope that everyone in the call and their loved ones are safe and hopeful in the new year now that COVID vaccinations have started. As we enter a new phase of the pandemic curve, The management team would like to give thanks to all the frontline workers who have helped us get to this point and who continue to selflessly assist others before themselves. We are now well into the new fiscal year and LifeMD is off to a strong start both operationally and financially.
Having served over 300,000 customers and patients since our inception, we continue to pioneer the future of healthcare, Providing greater access to high quality, convenient and affordable care in 49 states, while converting more and more people to the possibilities of telehealth as evidenced by our growing patient roles. While the country continues to emerge from the COVID pandemic, which frankly helped accelerate our industry and our I am very pleased to report that LifeMD's growth and acceleration showed no signs of slowing down. Indeed demand continues to build to record levels. We sense that a broader tectonic shift is happening that will radically change the way health care is delivered to and experienced by millions of Americans. We are excited to be a part of it and we are committed to our mission of increasing access to healthcare through direct to patient telemedicine.
LifeMD stands at the vanguard of a healthcare revolution. I can say without hesitation Our explosive growth and strong patient conversion rates to our subscription based models have done nothing but trend positively in 2021. And our fantastic results stand as evidence of the trend. In the Q1 of 2021, we grew revenue by over 300% as compared to the same year ago period and up 41% sequentially from the prior quarter. In addition to this phenomenal growth, we've also begun See the early results are beginning to optimize and scale aggressively by better leveraging our cost structure while planting the seeds for building a leading telehealth business with profitability in mind.
In the Q1 of 2021, we saw an approximate 15% to 20% improvement acquisition costs versus the prior quarter and record level gross margins exceeding 80%. This coupled with the fact that 92% of our revenue currently comes from recurring subscriptions is laying a very strong foundation for predictable growth over the long term, while also paving our pathway to profitability. At LifeMD, our core domain is in technology and marketing, more specifically our direct response marketing expertise and in our ability to scale businesses on our holistic digital health platform quickly and efficiently. That said, we have a bigger mission in mind and our primary goal has been to support the new permanence of patient centric care through telehealth. The global pandemic surely accelerated the mass adoption of telehealth in 2020 and we use that as an opportunity to really entrench our customer base in products and services that have made a positive difference in the lives of our patients.
To propel our narrative as pioneers in digital health, we also want to remind investors who are new to our story that LifeMD predates COVID and will endure long past the pandemic's retreat. We have built a platform that has the ability to support tens, if not 100 of direct to patient telemedicine offerings. In seeing the value of our offerings, Our patients are overwhelmingly choosing subscription based products and services, which have been fueling our significant sequential growth. In fact, for the first time in company history, more than 50% of our telehealth revenue came from the rebillings of already existing patient subscribers. As an industry leader in telehealth customer acquisition, our growth potential remains massive.
We are operating in open white space of a nascent industry with a total addressable market of nearly $1,000,000,000,000 To get to where we are now, we placed a strong emphasis on a few strategic imperatives that have really transformed LifeMD's potential. First, we have built a robust patient care process via our digital health platform with unlimited expandability across other indications. In the last week of the quarter, we launched NavaMD, a direct to patient clinical teledermatology services brand for women, which added further diversification to our growing portfolio of companies. NavaMD is our 3rd launch in 4 years and we look forward to further developing the brand. In addition, as I have spoken about before, we continue to anticipate launching our namesake LifeMD primary care platform later this summer.
We believe this launch coupled with our very successful current and future condition specific telemedicine brands will provide LifeMD with a powerful and differentiated end to end direct to patient telehealth platform. 2nd, in order to support our rapid revenue growth and brand expansion, we have strengthened our management team with leadership set play pivotal roles in managing our growth. This includes rounding out our executive team with the hires of a Chief Digital Officer, a Chief Medical Officer and Chief Financial Officer. These hires coupled with the previous hires to our executive team have given LifeMD a formidable leadership team with significant direct to consumer healthcare and regulatory experience in scaling high growth businesses. In summary, our Q1 of 2021 was not only marked by record top line performance, it also saw us make significant strides And solidifying the infrastructure, which will enable LifeMD to scale efficiently towards longer term profitability.
And with that, I would like to turn the call over to our CFO, Mark Benethon, who will discuss the period's financials. Mark? Thank you, Justin, and good afternoon, everyone. As Justin mentioned, we've had a fantastic start to fiscal 2021 thus far. Our products and services have been well received, while our patients have overwhelmingly made the active choice of converting their accounts to subscription based plans, Given the high level of service we provide and the recurring maintenance indications we treat, we continue to see strong unit economics With our LTV to CAC ratios on recurring subscriptions at or approaching 2x on a 12 month basis and the potential to well exceed 3x on a 3 year basis.
As of the Q1 of 2021, 92% of our revenue is now recurring subscription based. To get into the quarter's results, revenue in the Q1 of 2021 totaled a record $18,200,000 up 323% as compared to the same comparable year ago period and up 41% from the Q4 of 2020. The growth was driven largely by a 3 49% increase in telehealthmeV revenues to $13,300,000 Our Legal Simply subsidiary contributed net revenue of $4,900,000 up 2 64% from the year ago quarter. Including $1,300,000 in deferred revenue associated with recurring subscriptions, Total adjusted revenue on a non GAAP basis would have been $19,500,000 for the Q1 of 2021. Telehealth order volume grew 3 73% versus the year ago period or 41% sequentially to 164,452 orders.
This increase was driven by a 252% increase in new patients plus strong retention of existing patients. As a result of the significant performance we had in Q1 and our continued momentum, we are raising our full year 2021 revenue guidance to $90,000,000 to 100,000,000 from the previously given guidance of $85,000,000 to $95,000,000 reflecting annual growth in 2021 of between 141% and 168% versus 2020. As of the current reporting quarter, We are running on an annualized revenue run rate of $72,800,000 calculated by the current reporting period revenues times 4. Gross profit in the Q1 increased 403 percent to $14,900,000 compared to $3,000,000 in the same year ago quarter. Gross profit as a percentage of revenue in the Q1 of 2020 increased to 82% from 69% in the same year ago quarter.
The increase of 13% in gross profit was principally attributable to lower product costs, growth of our prescription business and more stringent inventory management. Operating expense in the Q1 of 2021 was $26,800,000 up from $4,700,000 in the same year ago quarter. The increase was primarily due to increases of discretionary Growth selling and marketing expenses of $15,900,000 general and admin expenses of 5,300,000 Other operating expenses of $737,000 customer service expenses of $127,000 and development cost of $114,000 The increase in general and admin costs was primarily due to $2,300,000 in non cash stock based Compensation expense. The majority of the stock based compensation was related to the appointment of several executive team and Board members. The increase in operating expense as compared to the year ago period was associated with investments made to solidify The long term rapid and scalable growth of LifeMD's infrastructure, which we expect to leverage these costs as the company continues to grow.
Our GAAP net loss attributable to common stockholders for the Q1 totaled $11,600,000 or $0.47 per share. This compares to a net loss attributable to common stockholders of $2,400,000 or $0.23 per share in the Q1 of 2020. Adjusted EPS is a non GAAP measure, which excludes the $2,300,000 in non cash stock based compensation expense. This figure totaled a loss of $0.38 per share for the Q1 as compared to a loss of $0.22 per share in the same year ago period. In addition to stock based compensation expense, our net loss for the Q1 of 2021 included other non cash or financing related charges such as interest expense of $139,000 combined amortization expenses of $152,000 and financing transaction expense of 120 Adjusted EBITDA, a non GAAP term which factors out these terms totaled a loss of $8,900,000 in the Q1 of 2021.
This compares to an adjusted EBITDA loss of $556,000 in the same year ago quarter. Now turning to our balance sheet. Cash totaled $13,400,000 at March 31, 2021 as compared to $9,200,000 at December 31, 2020. The increase was primarily due to a private placement with net proceeds of $13,500,000 in the period completed in February 2021. As mentioned in our press release earlier today, we have started to do significant work to own in on our economics and KPIs and as a result on a go forward basis Have reduced our cash burn by approximately 30% at current revenue levels.
We believe our current cash position and available funds provide the company with ample to meet our current needs and plans for growth. We also continue to make progress in securing additional financing to further augment our balance sheet position. This wraps up our financial results. I'd now like to turn the call back over to Justin. Thanks, Mark.
So we're off to a really strong start in 2021, but the best is yet to come. We elevated our infrastructure with key executive appointments, Continued to optimize and improve our patient acquisition and patient care teams transitioned over 90% of our patients to recurring subscriptions Launched NavaMD and laid the infrastructure to support a business poised for multiples of growth. All of this led to, as Mark mentioned earlier LifeMD raising our current fiscal year 2021 revenue guidance to 90,000,000 to 100,000,000 reflecting upwards of 168% growth versus 2020. We believe that the platform we've built supported by more than 150 full time and contract employees and over 5 years of technological development, will facilitate aggressive growth and even stronger unit economics in the years to come. Our focus remains on building Innovative and differentiated telemedicine brands that improve access to medical treatment, brands that are condition specific and allow for equal focus And most importantly, the delivery of amazing healthcare.
In doing so, we will continue to transform the way affordable and accessible healthcare is delivered to patients. With that, I would like to open the call for Q and A.
Thank you. From BTIG. Please go ahead.
Hey, guys. Congratulations on a very good quarter and the increase in the guidance. I was hoping you could just comment on what you're seeing in terms of demand from the overall market. Obviously, there's been a lot of activity in Walmart acquired a telehealth vendor. Amazon has entered into the space.
I mean, what are you seeing from your own customers in terms of appetite for the cash pay telehealth business? Thanks.
Thanks, David. This is Justin. Look, we've seen we've had we're having a very strong second quarter. Amazon's entrants or supposed entrants or plans to enter condition specific DTC telemedicine have had no impact on our business. And as we've discussed before, we don't believe that they'll have a significant impact long term.
We believe that Amazon entering the Base further raises the awareness for telemedicine and we believe we have a differentiated offering that can compete with Amazon or anybody else in the B2C telemedicine world. With regards to Walmart's acquisition of MeMD, that business is very B2B. It does not compete with us at all. I'm sure that Walmart will do everything they can to aggressively grow that business, but we think it will be For the most part focused on a small percentage of people that actually visit a Walmart store and it's Given the size of given the kind of opportunity ahead of us in B2C telemedicine, We think that this type of M and A activity just further demonstrates the incredible opportunity for the company and the amount of white space that exists in the space. And We're happy to see big companies entering the space and again raising the overall awareness of this transformation of how healthcare is delivered.
Okay. That's great. And then can you maybe give a little more color on like the sales and marketing spend, Your customer acquisition costs and I like to see that very significant pop in gross margin. Just any more color around that would be very helpful like longer term expectations for gross margin and expected trends in the sales and marketing in CAC? Thanks.
Yes. This is Mark. Regarding the gross margin, we expect longer term See gross margins very similar to the gross margins that we produced this quarter. A lot of it was driven by 1, we've seen our prescription business grow Pretty significantly, which I'll say slightly higher gross margin versus the OTC business. 2, we've been managing in our OTC business our inventory a lot tighter.
So both of those have certainly laddered up to very strong gross margins, which we expect to be able to maintain in Regarding sales and marketing and CAC as was mentioned by Justin, we saw a reduction while we don't release our actual Physical cat costs, the absolute number. We did see about a 15% to 20% reduction in this quarter over We've continued to tighten up since then and since that time have been able to reduce that cost by about another 15% to 20% In the Q2 and on a go forward basis. So we're going to continue to see on an absolute dollar basis Figures that are very similar to what you're seeing in Q1 for the remainder of the year, potentially a little bit higher, but only because you would The acquiring substantially more new patients per day. But on a cost per acquisition basis, we expect to get another 15% to 20% tighter, which Where we are today and have that continue to flow through the remainder of the year. And longer term, we think as our brands get bigger and bigger, there's naturally And we'll continue to see further reductions in subsequent years to our CACs and obviously improving LTV CAC ratios.
That's very helpful, Mark. Thanks so much. Can you talk a little bit more about the nature of the sales and marketing spend? Like What is it actually going into? Is it going into television or more sort of online advertisements?
Yes. And
We have a mix of channels. There's a significant amount of digital spend, social, SEO, SEM. Obviously, there's Television and radio, but it's pretty broadly spread across those different channels. We've tested a few other more traditional Media channels as well, but a lot of it tends to be either media enabled or digitally enabled marketing channels with 100% of it really geared towards Discretionary patient acquisition growth to accelerate our growth in the future.
And then with regards to like say a 20% improvement in CAC, How do you actually get to that? Are the advertising costs improving given your scale? Or are you shifting more dollars
to more across channels? Yes.
It's less about Yes. As we've kind of built our brands, I mean, 1, digitally there's more recognition of your pages. Your position is obviously improving. 2, In our earlier days and as you know many of our brands have only so much history. So we've done a lot Testing of our various marketing channels and we've been able to refine those tests and really hone in on what works And what doesn't.
So those are really the biggest ways that we're getting there. And look as we get more scale, we'll be able to have more buying scale as well in the future, which hasn't necessarily fully materialized yet, which is why I mentioned that we do expect to see further improvements in subsequent years.
Okay. That's great. And just one more for me and I'll hop into the queue. How is NavaMD tracking? I know you recently launched Any early signs or any feedback from the market?
I'll take that one, David. Yes, so we did recently launch it. We did a kind of soft launch. We were Working a little bit more on just bringing on some other opinion leading dermatologists and fine tuning some of the protocols. So The answer to your question is, we've done a lot of different testing and optimization.
We're actually Seeing patients arrive at the site less expensively than what we're seeing with Rex or some of our other brands. So we're very optimistic it's a great opportunity there, but we're still we're not Seeing a lot of revenue right now from that brand. We expect to start to see like some more meaningful revenue this quarter.
Great. And then just one more. What is your retention rate right now? So for all of the customers that you're bringing on board where you're selling them products through telehealth orders. What is your overall retention rate?
That's not a figure that we necessarily put out publicly For competitive reasons, but as I mentioned, we put out what our directional LTV tax are. So we're seeing on average about a 2 to 1 return In the 1st year, we are retaining a substantial amount of those patients within the 1st year as you move through. There's a little bit of fall off in the 1st month. So Typically, your first rebuild, you'll retain somewhere around 75% to 80% of patients. And then after that, you're looking at single digit fall off
in any subsequent billing period.
And once you get to around the 4th or 5th Sequential billing period. And once you get to around the 4th or 5th billing period, you're looking at really pretty minimal fall off if that. Okay.
And I think 92% of the revenue is subscription based. Is that correct?
Yes. Pretty much essentially most If not all the business outside of the 3rd party marketplace sales are subscription based at this point.
Okay. Thanks very much. I'll hop in to the queue now. Thank you.
Thank you. We will now go to our next question from Andrew D'Silva from B. Riley Securities. Please go ahead.
Hey, good afternoon. Congrats on the quarter and thanks for taking my questions. So I'm just a little bit curious if you could provide a little bit more granularity on the Breakout of expenses as it relates to Legal Simply and the telehealth business. I'm just trying to get a better understanding of how to model LTDs to CACs as it relates to telehealth side.
Yes. Without going into the specific line items, when you look at the sales and marketing expense line, which is actually the largest line in there and what really fuels the growth of the business. Roughly about $13,500,000 $14,000,000 of that marketing expense was associated with the telehealth business and the remainder of that expense roughly was Associated with the Legal Simply business. When you look at a lot of the other expense categories, Legal Simply is a pretty inexpensive business as is our telehealth Business to run from an infrastructure standpoint. A lot of it has to do around the sales and marketing.
I mean, the other lines, there's some payroll and a few other categories, but It's not too significant. Sales and marketing would be the most material area to look at the breakout.
Okay. And that business did very well both year over year and quarter over quarter. I'm just curious If that was a one I understand highly subscription based model, but was there anything one off that took place that resulted in that growth? Or is that Fairly strong similar cadence that we should expect as the year goes on.
Yes. I mean, obviously, you're not going to see a doubling every single quarter as the business gets But you should expect to continue to see very significant growth in that business. A lot of it has to do with they're starting to Hey, critical mass. There were some early technical issues and marketing optimizations that had to take place. And those are all behind us at this point.
So The business has a lot of very predictable and tremendous growth and you should continue to expect to see that materialize throughout the year.
Okay. Good, good. And moving back over to telehealth side of the business. Obviously, we're getting close to critical mass in both hair and Men's Health. I was curious if there were any sort of tuck ins Bolt ons that you're seeing out there that makes sense for either of those brands or any of the upcoming brands, things like Patient monitoring initiatives and stuff like that seem to be very relevant, particularly given the differentiated platform in developing?
Yes. Andy, I'll take that one. We're looking at a lot of different inorganic opportunities and We haven't looked at anything. We're pretty familiar with the patient monitoring space. We haven't done a lot of work in that space and that's not somewhere where I see us Doing something in the near term.
But I mean we're seeing new opportunities Probably wouldn't be accurate to say on a daily basis, but certainly we're seeing at least on a weekly basis interesting opportunities In the traditional healthcare product world, even in the Yes, proprietary over the counter world as well, right? Just stuff that could be very synergistic with our current offerings. And Look, we're as we've said previously, we're going to be very aggressive and pursue those that make sense And continue to drive unit economics and revenue growth across the business.
Okay. Last question for me is just related to the Subscription prescription style model that you're building, how much of the benefit that you saw in the Q1 would you attribute to Things like the compounding proprietary products that you've been introducing recently. And If those have been fruitful, are you having any other new launches related to proprietary either Compounded OTT products coming out with any of the brands in?
We're seeing Some progress with the compounded hair loss products, not as much as we would have liked to. And there's a Simple reason for that. It's we've just been aggressively expanding our infrastructure and bandwidth across the business. And our telemedicine business has been growing and especially our men's health REXMD line has been growing so aggressively That unfortunately we're still the company that has to decide where we're going to kind of focus bandwidth. And We've hired a lot of people from creative people to developers, project managers, brand managers.
And so we have a lot of energy right now focused on both nava and on the Telemedicine business and compounded topical drug business within the SpuraMD brand. And as I said earlier to Dave like We believe that we're going to start to really see very strong traction with both of those.
Okay, great. Thank you very much. Best of luck going forward.
Thanks, Andy.
Thank you. That will conclude today's question and answer session. I would now like to turn the conference back over to Justin Schubert for any additional or closing remarks.
I'd just like to say thank you to all of our shareholders And all of our employees who have been supportive, especially over the rather tumultuous 30 days we've been through. Like I said in the beginning of the call, this company has an extremely bright future and Really look forward to continuing to keep everybody updated, future calls like this. Appreciate all your support and have a great evening.
Thank you. Before we conclude today's call, I would like to provide the company's Safe Harbor statements that include important cautions regarding forward looking statements made during today's call. The information that the company has provided in this conference call includes forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 as amended regarding, among other things, the company's plans, strategies and prospects, both business and financial. While the company believes that its plans, intentions and expectations that are reflected in or as suggested by these forward looking statements are reasonable. The company cannot assure you that it will achieve or realize these plans, intentions or expectations.
Forward looking statements are inherently subject to risks, uncertainties and assumptions. Many of the forward looking statements made during this conference call may be identified by the use of forward looking words such as believe, expect, anticipate, should, planned, will, may, intend, estimated and potential among others. Important factors that could cause actual results to differ materially from the forward looking statements made during this conference call include market conditions and those set forth in reports or documents that the company files from time to time with the United States Securities and Exchange Commission. All forward looking statements attributable to LifeMD Incorporated or a person acting on behalf are expressly qualified in their entirety by this cautionary language. Before we end today's conference call, I would like to remind everyone but this call will be available for replay starting later this evening.
Please refer to today's earnings release for the replay instructions available via the company's website at www.lifemd.com. Thank you for joining us today and this concludes the conference call. You may now disconnect.