Earnings Call Transcript - LFMD Q3 2021

Operator, Operator

Good afternoon. Thank you for joining us today to discuss the results for LifeMD's Third Quarter Ended September 30, 2021. Joining the call today are Justin Schreiber, Chairman and Chief Executive Officer; and Marc Benathen, Chief Financial Officer of LifeMD. Following management's prepared remarks, we will open the call for our question-and-answer session. 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 begin, I would like to remind everyone that during this call, the Company will make a number of forward-looking statements, which are subject to numerous risks and uncertainties that may cause the Company's actual results to differ materially from those projected. These risks and uncertainties are described in the Company's 10-K and 10-Q filings and within other filings that LifeMD makes with the SEC from time to time. Forward-looking statements made during this call are based on current information available to the Company as of today, November 10, 2021. The Company assumes no obligation to update or revise any forward-looking statements after today's call, except as required by law. Also, please note that management will be discussing certain non-GAAP financial measures that the Company believes are important to evaluating LifeMD's performance. Details on the relationship between these non-GAAP measures to the most comparable GAAP measures and reconciliations thereof can be found in the press release issued earlier today. Finally, I would like to remind everyone that today's call is being recorded and will be available for replay in the Investor Relations section of the Company's website. Now, I'd like to turn the call over to LifeMD CEO, Justin Schreiber. Please go ahead.

Justin Schreiber, CEO

Thank you, Simon, and good afternoon, everyone. Thank you for joining us today to discuss our third quarter 2021 results. I want to start this call by giving a huge congratulations to the LifeMD team for launching earlier this week our virtual care platform. I believe this launch is a transformational turning point for the Company, for our patients, and for our shareholders. Furthermore, I believe that the business model supporting our primary care platform will help to change and disrupt the U.S. healthcare system and will serve as a model for how exceptional healthcare can be delivered in a virtual environment that is affordable, convenient, and, most importantly, results in better outcomes for patients. For those of you who haven't seen our platform yet, I would encourage you to visit our new website we just launched at lifemd.com. Aside from virtual primary care and telehealth, there are two big and important takeaways I think are crucial for everyone on this call to understand. First, our new platform will enable us to develop deeper, broader, and longer-term relationships with our current patient population and have a bigger impact on their overall health and wellbeing. As most of you know, we have an extensive and expanding business treating specific conditions like erectile dysfunction, hair loss, and dermatological issues. We are very proud of these businesses; they have standalone unit economics and a strong growth trajectory. They are likely going to be around for an extremely long time. Nevertheless, I believe the incorporation of our virtual primary care platform will create a tectonic change in our business that will dramatically improve the satisfaction levels and overall experience of all of these patients. It goes without saying, but I'll say it: happier patients who are invested in a long-term relationship with an outstanding doctor provided by LifeMD are going to be very loyal and will help to generate unit economics and overall profit levels that are best-in-class in the industry. On a side note, over the past several months, I spent time with our founding team of primary care physicians, and I realized that our doctors, with their expertise and compassion, and the relationships they're going to build with patients, are undoubtedly one of our strongest assets—our intellectual property that any company can own. I believe this intellectual property and the deeper relationships we will begin to foster with our patients will be transformative, not only for our new LifeMD primary care offering but also for all of our existing brands. Americans crave access to great doctors, and LifeMD is going to be the Company that meets this need. The second important takeaway is that our new virtual care platform dramatically expands the scope of our business and the clinical areas in which we can offer telehealth products and services. From urgent medical issues like sinus infections, cold and flu, UTIs, and STDs to chronic conditions like diabetes, weight management, asthma, allergies, and anxiety, LifeMD now has a platform supported by licensed providers who can treat a wide range of conditions. And perhaps most importantly, we don't just offer telehealth services. In addition to same-day guaranteed virtual treatment, we provide discounted prescriptions conveniently delivered to the patient's home and discounted diagnostics that can be collected in the patient's home in most major metropolitan areas. As most of you also know, we have a great relationship with Quest Diagnostics that patients can conveniently visit throughout the country. Additionally, we're working on incorporating other in-home tools and continuous monitoring devices like wearables that will truly revolutionize the relationships our patients have with their doctors. As you can probably tell, I'm very excited about this platform and what it can do for our patients. Launching it was the vision we always had for LifeMD, and I'm extremely excited to watch a proven team of clinicians, technologists, and marketing gurus grow this into a substantial business. All of this has been made possible by the accomplishments we achieved this quarter. We continue to see strong order growth with telehealth products and services up 153%, driven by both strong acquisition and, more significantly, strong retention of our existing patients. Currently, 93% of our revenue comes from recurring subscriptions. I think this demonstrates the high level of satisfaction our patients have with the telehealth services and the products that we provide. Thanks to the closing of our capital raise with net proceeds of $55 million, LifeMD is now in the strongest capital position it's ever been since our founding. Not only was this offering oversubscribed, but we believe that the funds raised from it have sufficiently capitalized our business to reach profitability while continuing our aggressive growth strategy. Marc and I view it as permanent capital for the Company. In an earlier call, I mentioned our commitment to preserving and growing shareholder value. I believe this recent raise reflects those commitments; we looked for a minimally dilutive transaction to finance the Company, and that's exactly what we achieved. The raise allowed us to eliminate all of our debts, which was approximately $15 million. By paying off the debt prior to maturity, we avoided a million shares of additional dilution. We sold 3.8 million shares in the common offering alongside our non-dilutive preferred offering. So, the total dilution to shareholders to permanently capitalize the Company was around 2.8 million shares or approximately 8% of the Company on a fully diluted basis for $55 million—more than enough capital to propel us through the next stage of growth. Also, during the quarter, we made a key appointment to our Board, adding Naveen Bhatia. Naveen is a highly accomplished investor and private equity professional who has an extensive career in the investing world, most notably with 10 years of experience as a senior member of Blackstone's tactical opportunities team, along with extensive board experience. We are thrilled to have him on board as he provides helpful guidance heading into what is sure to be our most exciting year yet as a company and as a provider of exceptional health care through telehealth. With that, I will now turn the call over to our CFO, Marc Benathen, who will provide a summary of this quarter's financial results.

Marc Benathen, CFO

Thank you, Justin, and good afternoon, everyone. We're extremely proud of our third quarter performance. Not only did we achieve record revenue, but we began to successfully achieve operating and marketing expense leverage ahead of our expectations, resulting in a 24% sequential improvement in adjusted EBITDA versus the prior quarter. We also successfully closed the largest financing in company history, raising $55 million of net proceeds led by a preferred stock offering supplemented by an institutionally led common stock offering. Following this financing, we believe LifeMD is sufficiently capitalized to support both our investments and aggressive growth objectives and attain adjusted EBITDA profitability. This financing also allowed us to eliminate our previously existing senior secured debt, providing a permanent source of flexible capital that minimized dilution to common shareholders. Now turning to the results for the third quarter. Revenue in the third quarter of 2021 totaled a record $24.9 million, up 127% compared to the same quarter a year ago. 93% of the total revenues in the third quarter were generated from recurring subscriptions, compared to 61% in the same year ago period. Telehealth net revenues grew over 97% to $18.5 million, with a 17% sequential increase versus the prior quarter. Our WorkSimpli subsidiary contributed net revenue of $6.4 million, up 309% from the year-ago quarter, with sequential revenue essentially flat. WorkSimpli revenue was temporarily impacted by approximately $700,000 related to the one-time test of new trial offers, which WorkSimpli has since continued. Following this, WorkSimpli is back on track with sequential revenue growth in the fourth quarter. Telehealth order volume grew 153% compared to the year-ago period to 232,293 orders. Following our continued robust performance, we are reiterating our full year 2021 revenue guidance of $90 million to $100 million, reflecting annual growth in 2021 of between 141% and 168% compared to the prior year. Gross profit in the third quarter increased 113% to $19.9 million compared to $9.3 million in the same year ago quarter. The gross profit as a percentage of revenue in the third quarter of 2021 was 80%, compared to 85% in the same year ago period, with the decrease primarily due to a change in the product sales mix coupled with the one-time non-cash write-off of legacy products deposits. Our platform contribution—and a non-GAAP financial measure defined as GAAP operating loss before general and administrative expenses, excluding payment processing fees, selling and marketing expenses, and other expenses—is an important non-GAAP financial measure that monitors our performance based on the direct costs of delivering the products and services we saw across our brands. We believe it is useful to measure how we are controlling direct variable costs and how effectively we've retained our providers, patients, and customers. Platform contribution in the third quarter totaled $17.5 million, compared to $8.1 million in the same year-ago quarter, an increase of 115%. Now turning to operating expenses. Operating expenses in the third quarter of 2021 totaled $32.4 million, up from $29.9 million in the same year-ago quarter. The increase was predominantly due to increases in discretionary growth, selling and marketing expenses of $9.8 million, other operating expenses of $272,000, customer services expenses of $275,000, and development costs of approximately $13,000. General and administrative expenses decreased $7.7 million during the quarter, including non-cash expenses for stock-based compensation and amortization of $4.8 million. The decrease was primarily due to a $13.3 million decrease in share-based compensation expense. Additionally, operating expenses decreased by $1.8 million sequentially compared to the prior quarter, driven primarily by increased efficiency realized in selling and marketing spend, resulting in a $2.1 million sequential decrease in that category, and a 1900 basis points sequential improvement in selling and marketing expenses as a percentage of total net revenues. Our GAAP net loss attributable to common stockholders for the second quarter totaled $14.4 million or negative $0.54 per share. This compares to a net loss attributable to common stockholders of $24.2 million or $1.65 per share in the third quarter of 2020. Adjusted EPS, a non-GAAP measure that excludes $3.1 million in non-cash stock-based compensation expense, $118,000 of non-cash depreciation and amortization expense, $187,000 of non-recurring financing transaction expenses, and $1.6 million of non-cash debt discounts amortization, totaled a loss of $0.36 per share for the third quarter, compared to a loss of $0.52 in the same year-ago period. Additionally, adjusted EPS improved 25% sequentially versus the prior quarter. Adjusted EBITDA, a non-GAAP financial measure that factors in non-cash stock-based compensation, depreciation and amortization, financing transaction expenses, litigation costs, and interest expenses, totaled a loss of $9 million in the third quarter of 2021, compared to a loss of $3.8 million in the same year-ago period. Adjusted EBITDA improved 24% sequentially versus the prior quarter. Now turning to our balance sheet, cash totaled $9.4 million as of September 30, 2021. As discussed earlier, in October 2021, we completed a preferred equity offering supplemented with a complementary common equity offering, raising approximately $55 million in net proceeds, which we believe will sufficiently capitalize us to reach our stated goal of achieving the adjusted EBITDA breakeven by the fourth quarter of 2022. This wraps up our financial results. I'd now like to turn the call back over to Justin.

Justin Schreiber, CEO

Overall, we had a tremendous third quarter of 2021, both operationally with record revenues and fundamentally with the launch of our virtual care platform and minimally dilutive financing. Something else I'd like to point out is that a big focus of the Company this year has been institutionalizing our shareholder base, and as of today, 40% of the float is institutionally held. I believe that number, by the end of this quarter, could be closer to 50%, given the number of institutions that participated in our last financing. I think that's an awesome metric, and it speaks to the quality of the business, that we can attract the caliber of institutions that now make up 40% to 50% of our float. That's something that we're going to continue to focus on as a company. I remain extremely confident that we'll be able to continue growing aggressively while achieving our goal of adjusted EBITDA breakeven by the fourth quarter of 2022. Before I open the call for Q&A, I want to leave everybody with the following: We now have an outstanding world-class virtual care technology platform powered by our premier doctor network and the best direct-to-consumer marketing team in the industry. When you reflect on all of this, it seems clear we are well positioned to benefit from the changes sweeping through the U.S. healthcare system. Everybody knows our healthcare system is broken. Change is inevitable. With our proprietary technology and our network of physicians who truly care about their patients, we stand poised to disrupt healthcare for the better. We are combining diagnostics, prescription medications, medical records, and eventually wearables to deliver totally integrated healthcare. We're building something that has the potential to become the biggest medical practice in America. We can honestly and surely say what patients want to hear: 'The doctor will see you now,' not four days from now or three weeks from now, but now—that's healthcare where and when you need it. But what's most exciting is the thought of the millions, if not tens of millions of Americans, who will be happier and healthier because of LifeMD. To me, that's the most thrilling thing about my job. Going forward, we will have to wage a battle for the mindshare of our customers. Till now, we've focused on lifestyle concerns such as ED, hair loss, and skincare, which are all great businesses with strong unit economics. They should be seen as a case study for what we can do in direct-to-consumer healthcare. We've already crushed it in an incredibly competitive market, with much less capital than our competitors, but LifeMD is changing. Now we have a platform that allows us to go after the entire U.S. healthcare system. And we're just getting started. It's been a very busy fall, and there's more exciting news on the way. We've been working on some significant new partnerships in the pharma and technology sectors. We plan to hold an Investor Day in the new year to showcase our technology platform, introduce the leaders of our physician team, our partner companies, and much more. So stay tuned; we're just getting started, and 2022 is looking to be our greatest year yet. We recently posted our shareholder letter in the investor relations section of lifemd.com, so please give it a read. We're also going to send it out this evening via Twitter. With a big thank you to our providers, our patients, our team, and our shareholders for their support. I would like to open the call for Q&A. Operator?

Operator, Operator

Thank you. We will now begin the question-and-answer session. Our first question comes from David Larsen with BTIG. Please proceed with your question.

David Larsen, Analyst

Hey, Justin and Marc and team, congratulations on your success so far. Just a couple of quick ones for me. Can you talk about revenue growth revenue trends? It seems a little bit lighter than what we were modeling. The growth rate in telehealth orders was up 153% year-over-year. That compares to the year-over-year growth in product revenue, which I think was around 96%. So the number of orders are up, but the product revenue isn't up as high in terms of the growth rate. And then, it looks like the revenue per order was good. I mean, it was flat sequentially to down 20% year-over-year. Just any color there on what's going on with revenue per order? And why the growth rate in product revenue isn't as high as the growth rate in actual orders?

Marc Benathen, CFO

Yes, it's Marc. The primary reasons that I would identify are that if you look at Q2 last year, the business was far less subscription-based, and some outlier average order values took place in that particular quarter. As we've transitioned to having a business that we believe is much stronger on a long-term basis, being more focused on retention and subscription-driven versus having about half of the business subscription-driven, some of the average order values will be lower than what they were about a year ago. Nonetheless, we still remain very competitive for the industry and ahead of many of our competitors on a subscription basis. But that's the main reason you see that delta between the growth in the number of orders and the growth in revenue. With that being said, we believe that the growth we have this particular year, while it may differ slightly from the BTIG model, was very much in line with our expectations for the quarter—17% sequential revenue growth, and obviously about 100% year-on-year growth, which has also been very consistent with sequential growth we have been seeing in prior quarters.

David Larsen, Analyst

Okay. And then with the slight decline in average order value, is part of that being driven by the derm product Nava? How is that progressing, and is part of that being driven by the primary care solution? How is that progressing?

Marc Benathen, CFO

Yes. So, the primary care solution has just been launched a couple of days ago, primarily as a trial offer in conjunction with Nava. The concern regarding average order values has mainly to do with a strategy of rather than go and try to scoop up an initial sale—if you look at the year-ago quarter, our Shapiro hair loss brand had multiple OTC products bundled for a fairly high average order value that also didn't drive a lot of retention. So from a long-term perspective, that model wasn't as strong. The current model obviously has bundled products but is filling the average order value out in a more competitive way that drives long-term retention. It's really a lot of it has to do with the subscription model versus a more one-off transaction at a much, much higher average order value.

David Larsen, Analyst

Okay. I don't want to hog all the Q&A time here. I'm sure there are other folks that have questions. But can you maybe just talk a little bit about the sales and marketing spend per order? That is a metric that I think actually looks pretty good. Congratulations on the EBITDA improvement. Can you just talk about the source of the 22% sequential improvement in sales and marketing per order spend? Is it—I've heard from other areas that the online advertising costs, it's not a slight increase that has occurred over the past six months; in some cases, it's been a tenfold increase. So just any color on what drove the improvement in sales and marketing spend would be very helpful.

Marc Benathen, CFO

Yes, twofold. One, we've continued to optimize our media. I mean, I'm not going to get into the specifics by channel because that's somewhat of a trade secret for us. But we're laser-focused on that, really digging into the data and making sure that we optimize across online and offline media. We saw that happening over the last few quarters as well; we've continued that trend. The second piece is retention. At the end of the day, we continued, particularly in the prescription side of the business, to have strong retention, which has enabled us to drive more and more revenue associated with our existing patients, so they don't actually have to go out and pay money in marketing to acquire those people. In fact, if you look at the sequential growth of our revenue that comes from the rebillings of existing patients, every quarter that number tends to be very much in line for sometimes better than our sequential revenue growth overall for the Company. It's really the optimization of those channels and the retention that's serving the business for a very long time.

David Larsen, Analyst

Okay. And then just without getting ahead of ourselves, can you just talk about your expectations for EBITDA as we progress into 2022? Just any sort of high-level color, like since you just launched the primary care platform, would you expect EBITDA margin pressure in Q4? Is that going to be an earnings headwind? And then, just any thoughts on how sustainable the 130% year-over-year revenue growth rate is? Thanks.

Marc Benathen, CFO

Yes. From an EBITDA standpoint, we continue to expect, even with some of those launches, that we will have some mild improvement heading into the fourth quarter compared to the third quarter. I don't think it will be substantial, but we expect improvement. Heading into next year, we're still very much on track to achieve our stated goal of getting to EBITDA breakeven or slight profitability by the fourth quarter of next year. We expect to see sequential improvement throughout the year next year. I would say that sequential improvement is probably most pronounced between the second and fourth quarter of next year versus the first quarter. But we do expect to continue to see that. From the top-line growth standpoint, we're in the process of finalizing our budgeting and planning for next year as we speak, but we still continue to remain very optimistic about growth in the business. Do I expect to see consistent triple-digit growth year-over-year? I'm not 100% sure; I think from an estimate standpoint, it might be safer to assume more substantial double-digit top-line growth.

Operator, Operator

Our next question comes from Marc Wiesenberger with B. Riley Securities. Please go ahead with your question.

Marc Wiesenberger, Analyst

Good afternoon, and congrats on a very good quarter and the progress on the primary care offerings. I'm wondering if you could start off by updating us on the percentage of telehealth orders that are currently under multi-month subscriptions and your expectations for that going forward.

Marc Benathen, CFO

Yes. So, we're at approximately 50% of our telehealth orders as multi-month subscriptions. Our expectation is that number rolls slowly and chops over the next 12 months, though I think it's going to get to 70% to 80%. But right now, we believe that we have a greater percentage, at least from what I've seen publicly, of multi-month subscriptions versus smaller players in the industry.

Marc Wiesenberger, Analyst

Great. Are you seeing any changes in patient behavior or ordering patterns across cohorts as the duration on the platform extends?

Marc Benathen, CFO

No, not really. At the end of the day, even as the restrictions are eased and we transition into a post-COVID world, we really haven't seen any changes in ordering patterns. What I do think can happen—and we're not going to know this until we probably get close to mid-2022—with the launch of virtual primary care, is the potential that we may drive even greater economic retention and potentially some additional cross-sell opportunities and changes in ordering behavior as that platform continues to gain traction. But like I said, it's too early for us to determine the full picture.

Marc Wiesenberger, Analyst

Sure, understood. And I think you alluded to it a little before, but if you could talk about the advertising environment across your different channels, that'd be helpful. And then there was some discussion regarding the Apple iOS update and associated privacy changes. I was wondering if you were impacted at all in your ability to target new patients.

Justin Schreiber, CEO

Yes, look. Hi, Marc, this is Justin. We're continuing—as a company, we're continuing to diversify our advertising mix, which is really helping us out on the acquisition side. We're seeing some—we have at least three to five new channels where we’ve started to see significant traction in the last quarter. We actually believe that those channels and others are more scalable. So, that's a very positive development for the business and reinforces our narrative about these massive markets. There's still enormous opportunities, and we believe there will be for quite some time. Everybody in the B2C world is going to be impacted by these changes to user tracking across devices. I actually believe that LifeMD, with our expertise, is in a better position than anybody to respond to this and actually, in a way, benefit from it. I've been really clear in this call that aside from providing amazing healthcare—which is obviously our first priority—we're very good at marketing and acquisition. We've got a lot of tools in our toolbox that I don't think other companies have. And that's what's going to drive the growth. So as you take away some of those calls for the low-hanging fruit that we've all benefited from being able to track and better target customers, if you want to bet on someone who's going to benefit from these changes, in my opinion, that's LifeMD. So, I hope that's helpful; that's our perspective. We actually think this could be a positive for our business.

Marc Wiesenberger, Analyst

Got it, very helpful. And then I'd like to hear about how the expansion of the customer support center has gone, and how that's improved conversion and up-sells?

Justin Schreiber, CEO

Sure. I mean, we've continued—this is obviously a big and crucial part of our business. We have an awesome team in South Carolina that runs our call center. Our patients love it. I would prefer not to give like specific numbers, but I'll just say that this business and operation continues to shine. It could easily double in size over the next 6 to 12 months. And it is certainly very helpful on the acquisition side. Additionally, it's providing—there's a significant portion of that operation that’s patient- and customer-focused, and I'm really proud of our wait times, response times, and so on. We now have a significant medical assistant operation that we've started to build, along with credentialing and potentially also looking at nurses. All of these elements will support our primary care business across 50 states. So, it's a really great asset that we are proud to showcase to investors. We always bring people down here to see it.

Marc Wiesenberger, Analyst

Great. And two more from me. Turning to the primary care offering, you've talked a lot about how important longitudinal care is. I'm wondering if you could discuss the technology infrastructure that you've built to facilitate that, and more broadly, how it helps patients with more complex conditions get the care they need through both LifeMD and your partners?

Justin Schreiber, CEO

Sure. On the technology side, we've been working on this build for probably at least a year. It's our first native mobile application, and there is also a desktop version. We've already integrated real-time labs, and we're also working on finalizing an in-home collection component for labs before the end of the year. So, that's all integrated. It also combines the prescription intelligence piece. If someone needs a prescription filled or refilled, it can go to a local pharmacy or through one of our regional pharmacies—whether that be a traditional pharmacy or a compounding pharmacy—and patients will receive significant discounts on all of those prescriptions in addition to diagnostics. I want to emphasize that the price points on common diagnostics we will be able to offer through LifeMD are just unheard of, right? People probably won't believe them. We've integrated with Particle Health, allowing most people's medical records to be pulled immediately into the platform. We're looking to integrate and potentially partner with one of the largest manufacturers in the wearable space. That's something very exciting and could be done quickly, where we are giving patients access to an excellent doctor who cares, has time for them, provides feedback on blood work, and, importantly, can see metrics like respiratory rates, blood oxygen levels, and other important metrics. The technology is complex, will evolve, and we're going to continue to make significant investments. By the way, Marc, that's one of the reasons we're hosting this Industry Day; I pushed it to January intentionally because I want all these features to be live, and everyone has to play with all this stuff. We'll spend half a day to a full day covering all the technology and capabilities, bringing in our clinical directors, our Chief Medical Officer, and allowing them to explain how they built this out. It'll be a great day! Additionally, I want to invite CEOs from our technology partners to speak to our investors about why they think LifeMD is one of their most important partnerships. That's something to look forward to. As for the complex condition treatment aspect, we will have some limitations; we can't do everything virtually. Some prominent academic medical centers have conducted a lot of work recently, and the number indicates that platform like ours can treat virtually approximately 60% to 70% of conditions, while being able to treat 100% of healthy individuals. We expect this will greatly expand the number of conditions we can treat. Still, there will be some limitations, as certain conditions will need to be managed by specialists. This will be made clear to patients during platform onboarding. Most urgent conditions can be treated by the excellent team of ER docs we have supporting the 50-state launch, and our Chief Medical Officer has significant experience in urgent care. So, a lot of those chronic conditions are manageable through our platform. Additionally, many team members have training in integrative medicine, which gives us a broader focus. The opportunities are endless, and we will determine how best to concentrate our efforts. We currently have a large medical group, have hundreds of thousands of prior patients who have opportunities to build a big business relatively quickly from that existing population.

Marc Wiesenberger, Analyst

Sure, that's very helpful—lots of good information there. Lastly, can you discuss the experiences thus far in onboarding doctors and how we should expect that to ramp in the coming quarters? Also, what about resource allocation between the established telehealth brands and the new primary care offering going forward? Thank you.

Justin Schreiber, CEO

Yes, we've been able to leverage a lot of our existing relationships. We've brought on a few full-time medical professionals who are licensed across all 50 states to support the launch and build protocols for our new primary care offering. We also have a number of other doctors through our network who have committed to a certain number of hours per week; many of them are also treating patients in our condition-specific businesses. They’re already satisfied with the relationship they have with LifeMD. As we progress, we aim to hire more full-time doctors who will be affiliated with our medical group. They find our virtual practice format appealing, and we can offer them competitive compensation. We're able to manage the initial launch efficiently due to our existing infrastructure and small investments in medical personnel. As the business scales, we will onboard more doctors, and we have several exceptionally qualified physicians eager to transition from traditional practices to LifeMD. I think you mentioned potential criticisms of the Company for trying to do too much. I strongly believe we can execute on both aspects of the business. We expanded our team and infrastructure significantly over the past year, and our lifestyle and dermatology businesses are very complementary to LifeMD. As I pointed out, they act as lead generation for our broader primary care model. I don't foresee issues executing effectively on both sides.

Operator, Operator

And we have reached the end of the question-and-answer session. I'll now turn the call over to Justin Schreiber for closing remarks.

Justin Schreiber, CEO

Thank you, operator. Thanks, everyone, for taking the time to listen to our call. We really appreciate everyone's support. Please reach out to Marc or me if you have specific questions—we always do our best to respond to anyone who contacts us through our investor relations email address. Thank you again for your support, and we are very excited about the future of LifeMD. Have a great evening.

Operator, Operator

And this concludes today's conference, and you may disconnect your line at this time. Thank you for your participation.