LifeMD, Inc.'s (NASDAQ:LFMD) Path To Profitability

We feel now is a pretty good time to analyse LifeMD, Inc.'s (NASDAQ:LFMD) business as it appears the company may be on the cusp of a considerable accomplishment. LifeMD, Inc. operates as a direct-to-patient telehealth company that connects consumers to healthcare professionals for medical care in the United States. The US$310m market-cap company posted a loss in its most recent financial year of US$22m and a latest trailing-twelve-month loss of US$9.0m shrinking the gap between loss and breakeven. The most pressing concern for investors is LifeMD's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

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LifeMD is bordering on breakeven, according to the 8 American Healthcare Services analysts. They anticipate the company to incur a final loss in 2025, before generating positive profits of US$12m in 2026. The company is therefore projected to breakeven just over a year from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 111%, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of LifeMD's upcoming projects, but, bear in mind that typically a healthcare tech company has lumpy cash flows which are contingent on the product and stage of development the company is in. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

See our latest analysis for LifeMD

Before we wrap up, there’s one issue worth mentioning. LifeMD currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on LifeMD, so if you are interested in understanding the company at a deeper level, take a look at LifeMD's company page on Simply Wall St. We've also put together a list of relevant aspects you should further research:

1. Valuation: What is LifeMD worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether LifeMD is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on LifeMD’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.