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Land Grab At LifeMD

Apr. 12, 2021 1:11 AM ETLifeMD, Inc. (LFMD)144 Comments


  • Revenue is accelerating and the company's platform is almost endlessly leverageable with new brands and products.
  • However, as the company is still in the land-grab phase, investments are accelerating even more steeply, and one could argue, worryingly.
  • So losses and dilution are set to continue for quite some time, but if you can see beyond that a pretty attractive picture emerges.
  • The shares trade at a modest EV/S multiple of 5.4.
  • Looking for a portfolio of ideas like this one? Members of SHU Growth Portfolio get exclusive access to our model portfolio. Learn More »

Young woman consulting with her doctor over a video call
Photo by Marko Geber/DigitalVision via Getty Images

We bought shares of LifeMD (NASDAQ:LFMD) at the end of September last year at $8 for our SHU Growth Portfolio which had started a few months earlier.

The shares have been very volatile

                                   If you are interested in similarly small, high-growth potential stocks you could join us at our marketplace service SHU Growth Portfolio, where we maintain a portfolio and a watchlist of similar stocks. 

We add real-time buy and sell signals on these, as well as other trading opportunities which we provide in our active chat community. We look at companies with a defensible competitive advantage and the opportunity and/or business models which have the potential to generate considerable operational leverage.

This article was written by

Shareholders Unite profile picture

I'm a retired academic with three decades of experience in the financial markets.

Providing a marketplace service Shareholdersunite Portfolio

Finding the next Roku while navigating the high-risk, high reward landscape.

Looking to find small companies with multi-bagger potential whilst mitigating the risks through a portfolio approach.

Analyst’s Disclosure: I am/we are long LFMD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (144)

Thelonius23 profile picture
LFMD preferred stock (ticker: LFMDP) pays a 15.3% annual dividend (paid quarterly) at the current stock price of ~$14.50. Next dividend will be paid July 15 for shareholders of record on July 5. The announcement of the ex-dividend date should come any day now, if they announce it as they did in prior quarters. Eventually I can see LifeMD calling in these preferreds to clean up their capital structure. The call price is $25, a 72% premium to the current price of $14.50. And you get paid a 15.3% annual dividend yield to wait for that to happen….
Patrick Irish profile picture
@Thelonius23 I think they will suspend the dividends on that preferred stock. They are burning $10M/qtr with $25M in cash as of last quarter. I see them being forced to raise money in the next quarter but at a $60M market cap they can't raise more than $5M without giving away the upside to some accredited investor with warrants.

If they are already going to make their investor base angry, might as well throw the preferred investor base in with it. I see them stopping payments on the preferred because it doesn't hurt them at all. If they go bankrupt it didn't hurt them and if they figure how to make money they can deal with that problem later.
Thelonius23 profile picture
@Patrick Irish they can’t suspend it. The legal terms of the preferred deal were that the preferred dividends had to be pre-funded in a separate escrow account for 8 quarters. Only 2 of those quarters have passed, so 6 more are pre-funded still.
Thelonius23 profile picture
@Patrick Irish also, don’t forget about the WorkSimpli sale process going on. That could raise a bunch of cash in a hurry.
Patrick Irish profile picture
Preferred bounced back 20% on "heavy" buying of 400 shares.

@FringDook I got long common at $4 with the insider buying and tax loss selling. Still risky as heck but I figure its worth a 50c bounce or so in the next few weeks.
FringDook profile picture
@Patrick Irish hey looks like the tables have turned. I only have a small position of shares that I'll hold for a while. I Saw that insider buying, the risk reward is there. I think today might be a tough day for markets but we will see. Best of luck
What is wrong with lfmd?
@runnachv They spend too much money and they give themselves too many free shares..Hence EV stay the same but Stock price is dropping..
theheckwithtech profile picture
@runnachv I actually like their game plan, and at the level it is at now, I finally went long on the common shares on Friday. I already own plenty of the preferred.
@Franfran omg.. thx
theheckwithtech profile picture
Why is the preferred down 5% today? Makes no sense. I'm buying heavy.
Patrick Irish profile picture
@theheckwithtech Buying heavy? It sold off on a few thousand shares. What is buying light?
theheckwithtech profile picture
@Patrick Irish it's all relative. Heavy can be 5 shares if you only own 1. Buying 1000 can be light if you own 20k.
theheckwithtech profile picture
@Patrick Irish you might want to check the latest insider filings. A lot more shares being bought on the open market here.
I have done well with this speculative stock and am still long though have taken some profits. It’s hard for me to be totally comfortable with hair loss and softies at 90% of revenue, but apparently a big market. Hair loss products don’t work as we all know. But I agree their spending will need to continue to get market recognition and one bad qtr report on growth will tank the stock. They need to be bought by someone like Alta or merge with hims. But if they don’t keep spending its over. Tough spot, but common for all startups. Thanks for article
FringDook profile picture
@Patrick Irish any words of wisdom for today??

Risky investment still???

:D :D
Patrick Irish profile picture
@FringDook Yeah extremely risky. It moves 30% up and down like its normal. If you are swing trading it, bought the dip, and flipping it today then you are doing well. If you are holding it long term, its going to be a crazy ride.
FringDook profile picture
@Patrick Irish yeah it's a bummer having a + 5 % day after a +13 % day

can't stand it when that happens.
Patrick Irish profile picture
@FringDook Doesn't sound like a bummer at all and I'm glad its working out for you.

Are you actually planning on holding this a few years or you trading the massive swings?
alexjefra profile picture
Look at what a 21 page of HONEST MISTAKES in a SHORT & DISTORT report can produce.

@Patrick Irish: Patently False Statements About Involvement With Redwood Scientific
46. For example, the Report distorts LifeMD executives’ involvement with Redwood Scientific Technologies, Inc. (“Redwood Scientific”) and explicitly states that Schreiber and Galluppi were engaged in fraud committed by Redwood Scientific.
47. This statement is demonstrably false.
48. No current or former member of LifeMD’s management team was involved in
decision-making or had significant equity ownership in Redwood Scientific at any time.
49. Schreiber held only a passive investment and non-controlling interest in the company.
50. Further, although Galluppi nominally held the title “CTO”, he held no equity in Redwood Scientific and resigned in October 2015, departing more than two and a half years prior to the FTC action against Redwood Scientific.
In addition to the foregoing, the Report contains a myriad of other errors,
Case 2:05-mc-02025 Document 633 Filed 05/13/21 Page 11 of 22
51. The fact that Schreiber and Galluppi had no involvement in any fraud by Redwood Scientific is confirmed by the filings in Federal Trade Commission v. Cardiff, et al., 5:18-cv- 02104 (C.D. Cal. 2018).
52. The FTC sued Redwood Scientific, other persons, and related entities, asserting unfair and deceptive trade practices.
53. Neither Schreiber nor Galluppi were sued, and their names do not even appear in the FTC’s Uncontroverted Statement of Facts and Conclusions of Law in Support of its Motion for Summary Judgement, the FTC’s response to Defendants’ Statement of Facts, or the Court’s Order Granting Plaintiff’s Motion for Summary Judgment, which adopted the facts relied upon by the FTC. See Federal Trade Commission v. Cardiff, et al., 5:18-cv-02104 (C.D. Cal. 2018) DE 423-3, 499-1 & 511. This information was public and readily available to Defendants when they published the Report.
Patently False Statements About LifeMD’s Licensing Practices
54. The Report outright lies about LifeMD’s licensing practices, using Dr. Badii and Dr. Kalter as purported examples of LifeMD’s use of unlicensed physicians.
55. LifeMD’s physician network consists of nearly 90 board-certified and monitored medical providers who legally dispense prescription medications.
56. LifeMD has never allowed an unlicensed medical provider to perform a telehealth consult for any of its brands.
57. The truth is that Dr. Badii was and still is a medical doctor licensed to treat patients and prescribe prescription medications in multiple states, which can be verified online through a simple web search.
Case 2:05-mc-02025 Document 633 Filed 05/13/21 Page 12 of 22
58. LifeMD, through its own quality assurance processes, discovered in March 2021 that Dr. Badii had been sanctioned by the DEA for issues related to prescribing controlled substances, and was barred from prescribing controlled substances.
59. LifeMD immediately removed him from their physician network.
60. LifeMD has never prescribed controlled substances, an elementary fact that could
easily be verified by anyone that reviewed the company’s website and filings with the SEC.
61. All treatments and medications prescribed by Dr. Badii for LifeMD were lawful and in compliance with all federal and state laws related to prescribing prescription medicine.
62. In the case of Dr. Kalter, a web design error inadvertently listed Dr. Kalter as licensed in California rather than Massachusetts, where Dr. Kalter is licensed.
63. As soon as LifeMD realized the error, it immediately fixed it.
64. Notably, Dr. Kalter never performed a consult or wrote a single prescription for LifeMD in California, even though he would be permitted to do so pursuant to an executive order signed by California’s Governor. This information was readily available to Defendants when they published the Report.
Patently False Statements About Veritas MD Telehealth Platform
65. In their Report, Defendants question LifeMD’s press release claims regarding the Veritas MD Telehealth Platform, stating they are “filled with hot air.”
66. Contrary to the Report’s misstatements, LifeMD’s disclosures about its digital health platform, formerly known as Veritas MDTM, are accurate.
67. Defendants falsely portray LifeMD as a consumer-facing application, when in fact LifeMD serves as the technological and operational backbone behind the REX MDTM, Shapiro
Case 2:05-mc-02025 Document 633 Filed 05/13/21 Page 13 of 22
MDTM, and Nava MDTM telehealth products. This information was readily available to Defendants when they published the Report.
Patently False Statements About LifeMD’s Relationship with BV Global Fulfillment
68. The Report also misrepresents LifeMD’s relationship with BV Global Fulfillment and JLS Ventures, indicating that insiders are improperly enriched by the transaction.
69. To the contrary, the rates LifeMD has paid and still pays to BV Global are in line with, if not lower than, what many third-party logistics providers charge for comparable services. 70. In addition, as is typical in contracting with a third-party logistics provider, LifeMD
pays the shipping costs in connection with delivery of its telehealth products to consumers.
71. Notably, LifeMD’s relationship with BV Global is prominently disclosed in all of LifeMD’s filings, and this relationship has never been flagged or mentioned as an issue in any audit or due diligence by institutions that have invested into LifeMD. This information was readily
available to Defendants when they published the Report.
Patently False Statements About Schreiber And JLS Ventures Compensation
72. In the Report, Defendants falsely state that LifeMD’s 2019 Form 10-K indicates that JLS Ventures earned an astounding 900,000 shares for providing credit card processing services to the company, yet these disclosures have been removed in the Company’s 2020 Form 10-K.
73. In fact, neither Schreiber nor JLS Ventures received any compensation for the credit card processing, a fact clearly stated in LifeMD’s 2019 Form 10-K; rather, the referenced shares were incentive based, for Schreiber’s work as CEO.
alexjefra profile picture
Christian M Lamarco and a few more are being sued by LFMD !
Patrick Irish profile picture
@alexjefra This is likely a waste of money. This short report likely had errors (like dozens of articles do every day on seeking alpha) but proving it was done on purpose in court is difficult. The short sellers can claim they made honest mistakes in their research if something is proven false.

On a side note, frauds and shady companies always go at the throat of short sellers to deter future ones. They are worried if their reputation is hurt in the slightest they can't access capital markets which they need to survive.
FringDook profile picture
@Patrick Irish You seem to be quite interested in a stock you don't have any money invested in. Are you bored?
pro8 profile picture
@FringDook Funny you say that ... I consider @Patrick Irish as being cautious and interested...
No mention of the raise they completed after quarter end. After all of the bad press you would think they would be more informative and transparent.
alexjefra profile picture
@Bylocellhi "Now turning to our balance sheet. Cash totaled $13.4 million at March 31, 2021, as compared to $9.2 million at December 31, 2020. The increase was primarily due to a private placement with net proceeds of $13.5 million in the period completed in February 2021."
Patrick Irish profile picture
Horrible technical break on chart breaking $7.4, bad luck for longs.
alexjefra profile picture
@Patrick Irish
Christian M Lamarco and a few more are being sued by LFMD !
I thought they said on the last two calls they weren’t going to do any dilutive raises. It looks like they are raising money every two months or so.
@Bylocellhi Hi, where did you see that?
alexjefra profile picture
@Batigol9 That’s inaccurate. Lot’s of good information here from people that really spend some time searching for the truth:
@alexjefra In last week's press release in the bullet where they commented on cash they reported they raised another $13 million subsequent to quarter end. But no details which I don't understand. The growth in the ED segment is there for sure but they are burning cash to get it and if they turn off the advertising the growth will decline significantly. Those subscriptions are not as sticky as you think. You can just call and cancel or simply transfer your prescription to another more affordable pharmacy. Hard to fairly value if we don't know the terms of the last raise.
alexjefra profile picture
Things are starting to happen that will clear LFMD management form all the trash that some here seem to support. Poor judgement and ill intended. Shame on you so called contributor. Contributor to what???
@alexjefra Who are you referring to?
pro8 profile picture
Remember, Let he who is without greed cast the first $.....
alexjefra profile picture
@Batigol9 It's very easy to find, just scroll down. The one who found many red flags but never posted anything, not a single red flag.
I posted a negative comment under his many unfounded bearish comments and it got ERASED. There is no credibility here. Pretty soon more investment funds will follow Millenium into LFMD with a lot more cash. So just follow the real money. The real investors.

One of Millennium funds just bought 1.2m shares
Why are some people calling LFMD a fraud?
Shareholders Unite profile picture
We got out at $10.80 pre-market and told our members. Plenty of other opportunities out there, no stomach for controversial companies and we're not able to assess a short report in a minute.
@Shareholders Unite You out for good or you plan to revisit?
Shareholders Unite profile picture
@cashpoorcapitall We can always revisit, but this is likely to remain controversial for some time to come
Patrick Irish profile picture
@Shareholders Unite Not a bad out and glad you guys still made money on it. I guess my post below AH was timely (I didn't see the short report until now). Looks like someone dug deeper into management than I did back in the day.

Although they had an incentive to trash management with a short position and I have no clue if the short report is accurate. Personally, I read enough in the filings that I didn't trust their ethics so I moved on.
Patrick Irish profile picture
I remember being negative on this when it jumped from $0.3 to $2 before the RS. Then it ripped another $4. While being completely wrong on the stock price, I never liked the disclosures with management nor trusted them with the capital. This market has pushed so many unprofitable growth companies stock prices to the moon and the companies reward their shareholders with more dilution (combined with growth). Whether this is profitable growth...time will tell.

SG&A has gone from 100% of revenue to 300% of revenue since 2018. Hopefully for longs this management team is being good stewards with the cash they are raising.
$12? Seriously?
@Mighty Champion Hold that thought. Looks like we’re headed down to the 11s
Great article. What are your insights on the competitive landscape - Hims, Romans as well as several smaller players that sell the same hair loss and ED meds at a fraction of LFMD’s prices. Thanks.
FringDook profile picture
Good article. I have bought and sold covered calls on my shares. Some got called away before earnings at a substantially higher price than they sit now.
Good way to play the stocks volatility, I am going to see if it begins to settle out in the teens to add some more.

to me $LFMD seems like a stock that will be cheap until all of the sudden it trades in the 30s. This is why I use covered calls to hedge a bit and make some profit while shares languish.
"We bought shares of LifeMD (LFMD) at the end of September last year at $8"

That was pre-RS, so you must've bought at $40
@Shareholders Unite Sorry, yes you bought at $8 in September which is equal to $40 after 1:5 reverse split in October.
Shareholders Unite profile picture
@Fomagibo No we bought at $8 post split, that was $1.60 pre-split.
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