Q1 2024 LifeMD Inc Earnings Call
Operator: Good afternoon. Thank you for joining us today to discuss LifeMD's results for the first quarter ended March 31st, 2024. Joining the call today are Justin Schreiber, Chairman and Chief Executive Officer, and Marc Benathen, Chief Financial Officer. Following management's prepared remarks, we will open the call for a question and answer session. 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 actual results to differ materially from those projected.
Good afternoon. Thank you for joining us today to discuss life.
Operator: Results for the first quarter ended March 31st 2024.
Operator: Joining the call today are just dead straight Schreiber.
Operator: And Chief Executive Officer and Mark.
Operator: <unk> Chief Financial Officer, following management's prepared remarks.
Operator: On the call for a question and answer session.
Operator: These risks and uncertainties are described in the company's 10-K and 10-Q filings and within other filings that LifeMD may make with the FEC from time to time. Forelooking statements made during this call are based on current information available to the company as of today, May 8, 2024. 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 in evaluating LifeMD's performance.
Operator: 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 actual results to differ materially from those projected.
Operator: These risks and uncertainties are described.
Operator: And the company's 10-K, and 10-Q filings and within other filings that life empty may make with the S. E T from time to time.
Operator: We're looking statements made during this call are based on current information available to the company as of today May eight 2024.
Operator: The company assumes no obligation to update or revise any forward looking statements after today's call except as required by law.
Operator: Please note that management will be discussing certain non-GAAP financial measures that the company believes are important in evaluating life Mt's performance.
Operator: 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's CEO, Justin Schreiber. Please go ahead.
Operator: Details on the relationship between these non-GAAP measures.
Justin Schreiber: Most comparable GAAP measures.
Justin Schreiber: Filiation thereof can be found in the press release issued earlier today.
Operator: 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 the life Mt's Seal Justin Schreiber. Please go ahead.
Justin Schreiber: Thank you and good afternoon, everyone.
Justin Schreiber: Thank you, and good afternoon, everyone. After the market closed, we issued a press release announcing our first quarter financial results and posted an updated corporate presentation on our website at ir.lifemd.com. Last year's robust business momentum continued into 2024, producing strong first quarter performance across both our weight management and fitness business. During the quarter, we added 20,000 total patient subscribers, ending the quarter with over 235,000. As of the end of the first quarter, we had over 42,000 weight management patient subscribers, with performance in this area continuing to be well ahead of our expectations.
Justin Schreiber: After the market close.
Justin Schreiber: We issued a press release announcing our first quarter financial results and posted an updated corporate presentation on our website.
Justin Schreiber: IR Dot life M D Dot com.
Justin Schreiber: Last year's robust business momentum continued into 2024, producing strong first quarter performance across both our weight management and Rex businesses.
Justin Schreiber: During the quarter, we added 20000 total patients subscribers ending the quarter with over 235000.
Justin Schreiber: As of the end of the first quarter, we had over 42000 weight management patient subscribers with performance in this area continuing to be well ahead of our expectations.
Justin Schreiber: As of today, I am pleased to report we have over 50,000 weight management subscribers. Importantly, more than 80% of patients who start GLP-1 treatment remain a patient after 90 days, and we are very pleased with these and subsequent first-year retention figures.
Justin Schreiber: As of today I am pleased to report we have over 50000 weight management subscribers.
Justin Schreiber: Importantly, more than 80% of patients who start G. L. P. One treatment remain a patient after 90 days and we are very pleased with these and subsequent first year retention figures.
Justin Schreiber: Our core <unk> business continues to outperform with revenue growing 53% versus the prior year.
Justin Schreiber: Our core telehealth business continues to outperform, with revenue growing 53% versus the prior year. Continued outperformance in our GLP one business is the key driver behind the increase in our 2024 revenue guidance we're announcing today. Our non-core subsidiary, WorkSimply, started the year off with softer than expected results in January and February before returning to growth in March and ending the quarter with a sequential increase of 8,000 subscribers. For the quarter, WorkSimply revenue grew 3% versus the prior year.
Justin Schreiber: Continued outperformance in our G. L. P. One business is the key driver behind the increase to 2020 for revenue guidance, we're announcing today.
Justin Schreiber: Our noncore subsidiary works simply started the year off with softer than expected results in January and February before returning to growth in March and ending the quarter with a sequential increase of 8000 subscribers.
Justin Schreiber: For the quarter work simply revenue grew 3% versus the prior year, but this business remains on track to achieve the full year revenue and EBITDA goals consistent with our guidance.
Justin Schreiber: But this business remains on track to achieve the full-year revenue and EBITDA goals consistent with our guidance. As we look ahead to the rest of 2024, we're focused on several key initiatives that we believe will catalyze significant growth in LifeMD's market share and our top and bottom lines in 2024 and beyond. I'll speak more about each of these initiatives today, which include, one, continued growth of our GLP-1 weight management program, two, new launches under RexMD, three, the launch of private and government insurance options, and four, implementation of AI initiatives across our telehealth business.
Justin Schreiber: As we look ahead to the rest of 2024, we're focused on several key initiatives that we believe will catalyze significant growth in life of these market share and our top and bottom lines in 2024 and beyond.
Justin Schreiber: I'll speak more about each of these initiatives today, which include one continued growth of our G. L. P. One weight management program to new launches on direct 73, the launch of private and government insurance options and for implementation of AI initiatives across our telehealth business.
Justin Schreiber: First our weight management business continues to enjoy tremendous growth with demand for our services and products still consistently exceeding the supply of available appointments.
Justin Schreiber: First, our weight management business continues to enjoy tremendous growth, with demand for our services and products still consistently exceeding the supply of available appointments. As I mentioned, we added a record 20,000 new patients in the first quarter with no signs of this trend slowing down. Unit economics remain tremendous, with our day one return on ad spend continuing to exceed 1x, and our expected month 12 return on ad spend expected to be at least 2.5x.
Justin Schreiber: As I mentioned, we added a record 20000, new patients in the first quarter with no signs of this trend slowing down.
Justin Schreiber: Unit Economics remained tremendous with our day, one return on AD spend continuing to exceed onex.
Justin Schreiber: Our expected month 12 return on AD spend expected to be at least two five X.
Justin Schreiber: During the quarter, we also accelerated our rate of growth in new patient sign ups from less than 200 per day to 400 plus of new patients per day.
Justin Schreiber: During the quarter, we also accelerated our rate of growth in new patient sign-ups from less than 200 per day to 400-plus new patients per day. Today, the single greatest limiting factor to our growth has been creating additional appointment capacity and our ability to scale our ratio of patients to providers.
Justin Schreiber: Today, the single greatest limiting factor to our growth has been creating additional appointment capacity and our ability to scale our ratio of patients to providers to.
Justin Schreiber: To accomplish this, we continue to invest in growing our clinical staff. But also, and equally as important, we continue to invest in developing our platform's automation and technical capabilities to create more efficiency for our affiliated providers and patient support teams, while enhancing the overall experience patients have on our platform. Additionally, we've recently begun to see significant upticks in the approval rates for GLP-1 payer coverage from the prior authorizations we filed. Currently, we see approval rates of 40% to 50% on Wgovi and ZepBound prior authorizations, with co-pays averaging between $35 and $70. These figures are a big improvement from our approval rates earlier this year, and they have contributed to our more recent refund rate declines from nearly 33% to approximately 15% to 20% today.
Justin Schreiber: To accomplish this we continued to invest in growing our clinical staff, but also and equally as important we continued to invest in developing our platforms automation and technical capabilities to create more efficiencies for our affiliated providers and patient support teams, while enhancing the overall experience patients have on our plan.
Justin Schreiber: Form.
Justin Schreiber: Additionally, we've recently begun to see significant upticks in the approval rates for <unk> payer coverage from the prior authorizations we file.
Justin Schreiber: Currently we see approval rates of 40% to 50% on <unk> prior authorizations with co pays averaging between 35% and $70.
Justin Schreiber: These figures are a big improvement from our approval rates earlier this year and they have contributed to our more recent refund rate declines from nearly 33% to approximately 15% to 20% today.
Justin Schreiber: As announced in December, we signed a collaboration agreement with Medifast, one of the largest coach-guided diet and nutrition companies in the US, which included a $10 million equity investment and $10 million in collaboration fees for LifeMD. Medifast's Optivia coaches are now able to work with LifeMD-affiliated providers to provide patients with an integrated solution and holistic approach to weight management. Medifast will also be investing at least $25 million in consumer marketing to support growth of this program for the balance of 2024, which we expect to have a meaningful increase in the volumes of new patients acquired from this program.
Justin Schreiber: As announced in December we signed a collaboration agreement with met a fast one of the largest coach guided diet and nutrition companies in the U S, which included a $10 million equity investment and $10 million and collaboration fees for life MD <unk>.
Justin Schreiber: <unk> opted via coaches are now able to work with license <unk> providers to provide patients with an integrated solution and holistic approach to weight management.
Justin Schreiber: Medifast will also be investing at least $25 million in consumer marketing to support growth of this program for the balance of 2024, which we expect to have a meaningful increase in the volumes of new patients acquired from this program.
Justin Schreiber: We are pleased with the collaboration to date and look forward to providing more updates on this integrated offering as it is fully rolled out in the coming months. Moving to our second key initiative, we remain as excited as ever about our Rex MD brand, which has consistently produced double-digit growth and strong profitability without the benefit of any new products. This quarter, I am pleased to announce we expect to launch two new offerings under this brand.
Justin Schreiber: We are pleased with the collaboration to date and look forward to providing more updates on this integrated offering as it is fully rolled out in the coming months.
Justin Schreiber: Moving to our second key initiative, we remain as excited as ever about our Orexin D brand, which has consistently produced double digit growth and strong profitability without the benefit of any new products.
Justin Schreiber: This quarter I am pleased to announce we expect to launch two new offerings into this brand.
Justin Schreiber: First, we plan to launch our Hormone Replacement Therapy offering, led by Testosterone Therapy. This offering not only presents a tremendous cross-sell opportunity for the existing RECS patient base but also addresses a tremendous and underserved telemedicine market for LifeMD to tap into within the men's health market that is highly synergistic to our existing RECS and GLP-1 weight management business. The current size of this market is estimated at $2 billion
Justin Schreiber: First we plan to launch our hormone replacement therapy offering led by testosterone therapy.
Justin Schreiber: This offering not only presents a tremendous cross sell opportunity for the existing <unk> patient base, but also addresses a tremendous and underserved telemedicine market for lifetime data tap into within the men's health market that is highly synergistic to our existing Rex and <unk> weight management businesses.
Justin Schreiber: Current size of this market is estimated at $2 billion annually and unlike many other categories license successfully entered we expect to be an early mover in this market from a <unk> standpoint, with a comprehensive and differentiated offering designed in conjunction with leading clinical experts in the field.
Justin Schreiber: And unlike many other categories LifeMD has successfully entered, we expect to be an early mover in this market from a telehealth standpoint, with a comprehensive and differentiated offering designed in conjunction with leading clinical experts in the field. We expect this offering to be a substantial contributor to the company in the years to come. Additionally, later this month, we will also be launching our weight management program under RexMD as an asynchronous offering.
Justin Schreiber: We expect this offering to be a substantial contributor to the company in the years to come.
Justin Schreiber: Additionally, later this month, we will also be launching our weight management program under <unk> as an asynchronous offering.
Justin Schreiber: Similar to HRT, we expect this offering not only to have substantial cross-sell potential but also to provide a valuable new avenue from which to market our industry-leading weight management program as a bundled offering with clinical care. The fact is that, in just four short years, Rex&D has grown to become one of the leading men's health brands in the U.S. and has been trusted by over 500,000 men to date. RECS MD patients typically have ample disposable income, are typically over the age of 40, and they know and trust RECS for the outstanding service and patient experience we provide. Our data suggests there is a substantial need for both HRT and weight management services among these patients.
Justin Schreiber: Similar to <unk>, we expect this offering not only to have substantial cross sell potential but also to provide a valuable new avenue from which to market our industry, leading weight management program as a bundled offering with clinical care.
Justin Schreiber: The fact is that in just four short years <unk> has grown to become one of the leading men's health brands in the U S and it's been trusted by over 500000 men to date.
Justin Schreiber: <unk> patients typically have ample disposable income are typically over the age of 40, and they know and trust racks for the outstanding service and patient experience we provide.
Justin Schreiber: Our data suggests there is a substantial need for both HRT and weight management services. Among these patients and we believe both of these new offerings have the ability to significantly accelerate the rexam business.
Justin Schreiber: And we believe both of these new offerings have the ability to significantly accelerate the RexMD business and, in turn, the LifeMD growth rate in the years to come. And under our third key 2024 initiative, we continue to make good progress preparing for the launch of our insurance program. We are on track to launch our initial insurance visits on a limited state basis in the second quarter, with the first date expected by late May or early June for our virtual primary care offerings, including weight management. We have several payer contracts in place. We hired our initial head of revenue cycle management.
Justin Schreiber: And in turn the life and the growth rate in the years to come.
Justin Schreiber: And under our third key 2024 initiatives, we continue to make good progress preparing for the launch of our insurance program offering.
Justin Schreiber: We are on track to launch our initial insurance visits on a limited state basis in the second quarter with the first state expected by late May or early June for our virtual primary care offerings, including weight management.
Justin Schreiber: We have several payer contracts in place we hired our initial head of revenue cycle management and we are in the later stages of finalizing our systems deployment for government provider enrollment benefits verification and revenue cycle management.
Justin Schreiber: And we are in the latter stages of finalizing our systems deployment for government provider enrollment, benefits verification, and revenue cycle management. While we do not expect this launch to be material to 2024 results, we do believe insurance capabilities will be extremely valuable and differentiating in 2025 and beyond, while also driving further retention improvements. Additionally, we are extremely excited about launching government insurance capabilities by late 2024 or early 2025. The fact is, this population is an entirely new audience for LifeMD.
Justin Schreiber: While we do not expect this launch to be material to 2024 results. We do believe insurance capabilities will be extremely valuable and differentiating in 2025 and beyond while also driving further retention improvements.
Justin Schreiber: Additionally, we are extremely excited about launching government insurance capabilities by late 2024 or early 2025.
Justin Schreiber: Fact is this population is an entirely new audience for life MD today, there are over 65 million people enrolled in Medicare across the U S with that number growing each year.
Justin Schreiber: Today, there are over 65 million people enrolled in Medicare across the US, with that number growing each year. In addition, with the recent FDA approval of Wigobi for cardiac health, estimates show that approximately 4 million people could receive coverage through Medicare for this drug. Because of this, we believe insurance, and in particular government insurance plans, represent a huge untapped market for LifeMD, which is why we've continued to build our compliance capabilities specifically geared toward supporting the needs of Medicare beneficiaries.
Justin Schreiber: In addition, with the recent FDA approval of the Gobi for cardiac health estimates show that approximately 4 million people could receive coverage through Medicare for this drug.
Justin Schreiber: Because of this we believe insurance and in particular government insurance plans represent a huge untapped market for life and D, which is why we've continued to build our compliance capabilities, specifically geared towards supporting the needs of Medicare beneficiaries.
Marc Benathen: By doing so, we also believe we are further differentiating ourselves as a telemedicine market leader that's capable of servicing the full range of patient populations and a significant number of healthcare needs. I'm pleased to announce that we have made meaningful progress in the implementation of AI across the organization. Since launching pilot AI features in early March, our patient care experts have achieved 60% greater response throughput for patient inquiries, where over 48,000 responses have been sent to patients with support from our trained AI models.
Justin Schreiber: By doing so we also believe we are further differentiating ourselves into a telemedicine market leader that's capable of servicing the full range of patient populations and a significant number of health care needs.
Marc Benathen: I am pleased to announce that we have made meaningful progress in the implementation of AI across the organization.
Marc Benathen: Since launching pilot AI features in early March our patient care experts have achieved 60% greater response throughput for patient inquiries.
Marc Benathen: We're over 48000 responses have been centered patients with support from our our trained AI models.
Marc Benathen: We've now also used AI classifiers to triage over 168,000 patient messages across medical, administrative, shipping, and technical categories for streamlined and improved patient care. We are just scratching the surface in this area, and I'm excited to announce further improvements in our ability to scale, improve cost efficiency, and deliver better care in the quarters to come. In short, we are extremely excited about the potential for continued strong performance in 2024 while building new foundations for additional growth and differentiation in the years to come. And with that, I'll turn the call over to our CFO, Marc Benathen, who will provide a summary of our financial results.
Marc Benathen: We've now also used AI classifiers to triage over 168000 patient messages across medical administration administrative shipping and technical categories for streamlined and improved patient care.
Marc Benathen: We are just scratching the surface in this area and I am excited to announce further improvements on our ability to scale improved cost efficiency and deliver better care is in the quarters to come.
Marc Benathen: In short we're extremely excited about the potential for continued strong performance in 2024, while building new foundations for additional growth and differentiation in the years to come.
Marc Benathen: And with that I'll turn the call over to our CFO, Mark <unk>, who will provide a summary of our financial results Mark.
Marc Benathen: Thank you, Justin, and good afternoon, everyone. LifeMD had solid first quarter financial performance with total revenue growing to $44.1 million and cash adjusted EBITDA of $4.8 million, a 108% increase for this measure versus the prior year comparable period. Q1 revenue was up 33% versus the year-ago period, with telehealth revenues increasing 53% and work simply revenues increasing 3%. Adjusted EBITDA, not including the increase in deferred revenue related to prepaid subscriptions primarily from weight management growth, was approximately $500,000.
Marc Benathen: Thank you Justin and good afternoon, everyone.
Marc Benathen: <unk> had solid first quarter financial performance with total revenue growing to $44 1 million in cash adjusted EBITDA of $4 8, Million% to 108% increase for this measure versus the prior year comparable period.
Marc Benathen: Q1 revenue was up 33% versus the year ago period, with telehealth revenues, increasing 53% and work simply revenues increasing 3%.
Marc Benathen: Adjusted EBITDA, not including the increase in deferred revenue related to prepaid subscriptions, primarily from weight management growth was approximately 500000.
Marc Benathen: Work Simply, which had a soft January and February performance, rebounded sharply in March and ended the quarter with a sequential increase in subscribers of 8,000 versus the prior quarter. Our GLP-1 weight management program continues to overperform, driving growth in telehealth and sizable benefits in cash flow from operations, which exceeded $5 million for the quarter, and positive net cash flow as LifeMD's cash balance grew by $2 million during the quarter, purely on the strength of our D-to-C telehealth business. Telehealth subscriber growth remains strong, with the number of active subscribers increasing 31% year-over-year to approximately 235,000, while work-simply active subscribers contracted 4% to over 166,000.
Marc Benathen: <unk> simply which had soft January and February performance rebounded sharply in March and ended the quarter with a sequential increase in subscribers of 8000 versus the prior quarter.
Marc Benathen: Our <unk> weight management program continued to over perform driving growth in telehealth and sizable benefits and cash flow from operations, which exceeded $5 million for the quarter and positive net cash flow is life on these cash balance grew by $2 million during the quarter purely from strength.
Marc Benathen: A R D to C telehealth business.
Marc Benathen: Powerhouse subscriber growth remains strong with the number of active subscribers, increasing 31% year over year to approximately 235000, while work simply active subscribers contracted 4% to over 166000 as I mentioned works simply.
Justin Schreiber: As I mentioned, Work Simply subscribers did return to growth late in the quarter and ended the first quarter with an increase of 8,000 subscribers compared to the fourth quarter of 2023. Importantly, with this return to growth, we expect Work Simply to meet full-year EBITDA expectations in the range of $17 to $18 million and full-year revenue expectations of $65 million. Consolidated gross margin for the first quarter was a record 89.6%, up 230 basis points versus the prior year period.
Justin Schreiber: Robert did return to growth late in the quarter and ended the first quarter with an increase of 8000 subscribers compared to the fourth quarter of 2023.
Justin Schreiber: Importantly, with this return to growth, we expect works simply to meet full year EBITDA expectations in the range of $17 million to $18 million and full year revenue expectations of $65 million.
Justin Schreiber: Consolidated gross margin for the first quarter was a record 89, 6% up 230 basis points versus the prior year period.
Justin Schreiber: Growth profit for the quarter totaled $39.5 million, an increase of 37% from the year-ago period. Our gap net loss attributable to common stockholders for the first quarter totaled $7.5 million, or a loss of $0.19 per share. This compares to a gap net loss attributable to common stockholders of $4.8 million, or a loss of $0.15 per share, in the first quarter of 2023. Adjusted EPS is a non-GAAP financial measure that excludes interest, taxes, non-cash expenses, dividends, SOX and insurance acceptance readiness, litigation expense, non-controlling interest, M&A, financing transaction costs, and foreign currency translation.
Justin Schreiber: Gross profit for the quarter totaled $39 5 million, an increase of 37% from the year ago period.
Justin Schreiber: Reflecting those adjustments, adjusted diluted EPS for the first quarter was $0.01 compared with $0.06 in the year-ago period. Adjusted EBITDA, which is a non-GAAP financial measure that excludes the same items I noted for adjusted EPS, totaled $0.5 million in the first quarter of 2024. This compares with the justiciability of $2 million in the year-ago quarter. Importantly, though, when adjusting for the sizable increase in deferred revenue related to weight management, cash-adjusted EBITDA totaled $4.8 million, up from $2.3 million in the year-ago period, representing an increase of 108 percent.
Justin Schreiber: Our GAAP net loss attributable to common stockholders for the first quarter totaled $7 5 million or a loss of <unk> 19 per share. This compares to a GAAP net loss attributable to common stockholders of $4 8 million or a loss of <unk> 15 per share in the first quarter of 2023.
Justin Schreiber: Adjusted EPS is a non-GAAP financial measure that excludes interest taxes noncash expenses dividends Socs and insurance acceptance readiness litigation expense noncontrolling interests, M&A financing transaction costs and foreign currency translation, reflecting those adjustments.
Justin Schreiber: Adjusted diluted EPS for the first quarter was one cent compared with six in the year ago period.
Justin Schreiber: Adjusted EBITDA, which is a non-GAAP financial measure that excludes the same items I noted for adjusted EPS totaled <unk> 5 million in the first quarter of 2024.
Justin Schreiber: This compares with adjusted EBITDA of $2 million in the year ago quarter.
Justin Schreiber: Accordingly, though when adjusting for the sizeable increase in deferred revenue related to weight management cash adjusted EBITDA totaled $4 8 million up from $2 3 million in the year ago period, representing an increase of 108%.
Justin Schreiber: LifeMD generated 5.2 million of positive cash flow from operations during the first quarter of 2024 versus negative cash flow from operations of 2.6 million in the year-ago period. This is the fourth consecutive quarter of positive cash flow from operations and the third consecutive quarter of positive net cash flow when factoring in cash flow from investing and financing activities. Cash balances totaled $35.1 million as of March 31st, 2024, an increase of $2 million versus the prior quarter, driven entirely by continued strength in cash flow generation from our telehealth operations.
Justin Schreiber: <unk> generated $5 2 million of positive cash flow from operations. During the first quarter of 2024 versus negative cash flow from operations of $2 6 million in the year ago period. This.
Justin Schreiber: This is the fourth consecutive quarter of positive cash flow from operations in the third quarter of positive net cash flow when factoring in cash flow from investing and financing activities.
Justin Schreiber: Balances totaled $35 1 million as of March 31, 2024, an increase of $2 million versus the prior quarter driven entirely by continued strength in cash flow generation from our telehealth operations.
Justin Schreiber: As Justin mentioned, we are raising our 2024 guidance for total revenue to be at least $205 million, up from at least $200 million previously, while reaffirming our adjusted EBITDA guidance to be between $18 and $22 million. That wraps up our financial results. I'd now like to turn the call back over to Justin.
Justin Schreiber: As Justin mentioned, we are raising our 2024 guidance for total revenue to be at least 205 million up from at least $200 million previously while reaffirming our adjusted EBITDA guidance to be between 18 and $22 million.
Justin Schreiber: This wraps up our financial results I would now like to turn the call back over to Justin.
Justin Schreiber: Thanks, Mark as I've always said on these calls I remain very optimistic and excited about the future of life. Indeed.
Operator: Thanks, Marc. As I've always said on these calls, I remain very optimistic and excited about the future of LifeMD. Our core businesses are growing, have dominant positions in very large markets, and have a clear and long-term growth trajectory. For the remainder of this year, we will focus on profitable growth of our telehealth business. This means relentlessly focusing on creating an amazing patient experience, investing in our differentiated telehealth services and products, and continuing to enhance and optimize our technology platform. Continued focus in these areas drives better patient outcomes, better retention, and better returns for shareholders. With that, I'd like to thank everyone for joining us today, and we'll now open the call to Q&A. Operator?
Operator: Our core businesses are growing have dominant positions in very large markets that have a clear and long term growth trajectory.
Operator: For the remainder of this year, we will focus on profitable growth of our <unk> business.
Operator: This means relentlessly focusing on creating an amazing patient experience investing in our differentiated telehealth services and products and continuing to enhance and optimize our technology platform.
Operator: <unk> focus in these areas drives better patient outcomes, better retention and better returns for shareholders.
Speaker Change: With that I'd like to thank everyone for joining us today, and we'll now open the call to Q&A operator.
Operator: Thank you. Ladies and gentlemen, should you have a question, please press star 1. To withdraw your question, press star 2. One moment, please, for your first question. Your first question comes from David Larsen from DTIG. Please go ahead.
Speaker Change: Thank you ladies and gentlemen should you have a question. Please press star one.
Operator: Richard a question press Star two one moment. Please for your first question.
Operator: Your first question comes from David Larsen.
Operator: Please go ahead.
David Michael Larsen: Hi. Congratulations on the quarter. Can you maybe talk about your expectations for the profitability of the health care business? Like, are you EBITDA break-even right now, or not? What would you expect health care EBITDA to be in, say, 4Q of 24, for example? And then how should we be thinking about an EBITDA margin for health care as we head into 2025? Thank you.
David Michael Larsen: Hi, congratulations on the quarter.
David Michael Larsen: Can you maybe talk about your expectations for profitability of the healthcare business like are you EBITDA breakeven right now or not.
David Michael Larsen: What would you expect health care EBITDA to be in say <unk> of <unk> 24. For example, and then how should we be thinking about an EBITDA margin for healthcare as we head into 2025. Thank you.
Marc Benathen: Yeah, this is Marc, David. So the telehealth EBITDA is slightly negative today, but it is cash flow positive. The only reason it's negative is the deferred revenue from weight management.
David Michael Larsen: Yes. This is mark David so.
Marc Benathen: <unk> EBITDA was slightly negative today. It is cash flow positive. The only reason it's negative is the deferred revenue from weight management.
Marc Benathen: The EBITDA loss from telehealth this quarter was slightly below 1 million, so not very significant actually. It's moving in the right direction, and again with the sizable increase in deferred revenue of 4.3 million, if you add that to the about 1 million dollar loss, the telehealth business is actually 3 million dollars positive on a cash flow basis. So really moving in the right direction. We still expect the business, from a P&L standpoint, to turn profitable in June-July of this year, which would mean the first quarter that you would see standalone profitability for telehealth would be the third quarter, and we expect a pretty steep slope up from that. In the fourth quarter, we do expect between 3 to 5 million dollars of EBITDA from the telehealth business by itself, and then next year we do expect EBITDA to exceed 20 million dollars on a full-year basis.
Marc Benathen: The EBITDA loss from <unk>.
Marc Benathen: <unk> this quarter was slightly below $1 million.
Marc Benathen: So not not very significant actually it's moving in the right direction and again with the <unk>.
Marc Benathen: Sizable increase in deferred revenue of $4 3 million, if you add that too.
Marc Benathen: About $1 million loss Toth business is actually a $3 million positive on a cash flow basis, So really moving in the right direction, we still expect the business.
Marc Benathen: From a P&L standpoint to turn profitable June July of this year, which would mean the first quarter that you would see standalone profitability for telehealth will be the third quarter, and we expect a pretty steep slope up from that in the fourth quarter, we do expect between $3 million to $5 million of EBIT.
Marc Benathen: Often the telehealth business by itself and then next year we.
Marc Benathen: We do expect EBITDA to exceed $20 million on a full year basis.
Speaker Change: Okay fantastic, so $20 million of healthcare EBITA for fiscal 'twenty five I guess is the guide and then can you maybe just talk about what the drivers of that incremental profitability.
David Michael Larsen: Okay, fantastic. So 20 million of health care EBITDA for fiscal 25, I guess, is the guide. And then can you maybe just talk about what the drivers of that incremental profitability are? I mean, isn't it, I mean, nothing simple, but is it as simple as gaining leverage with your I think it's 30 providers you have on your platform as you add more weight management members, you basically scale, and they simply become more profitable? Is it that is that simple? Or are you sort of changing pricing? No, no, no.
David Michael Larsen: Or I mean is it is it I mean, nothing simple, but it is it as simple as gaining leverage with here I think it's 30 provider. So you have on your platform as you add more weight management members. He basically scale and they simply become more profitable is it that simple or are you sort of.
David Michael Larsen: Changing pricing creating them.
Speaker Change: No no no I mean, we're not taking price increases that's not our business. It's a few big factor. So firstly, we have about 70 providers today.
Marc Benathen: I mean, we're not taking price increases. That's not our business. There are a few big factors. First of all, we have about 70 providers today. But, you know, where a lot of the profitability scale comes from are a few factors. One, continuing to leverage our marketing spend as a percent of sales. Right now, we're in a very early growth phase of weight management, so you're not going to get much leverage at this point.
Marc Benathen: But you know where a lot of the profitability scale comes from is a few factors.
Marc Benathen: One continuing to leverage our marketing spend as a percent of sales.
Marc Benathen: Now we're in a very heavy growth early phase of weight management, so youre not going to get much leverage at this point, but as we put on we don't were over 50000 patients.
Marc Benathen: But as we add on, you know, we're over 50,000 patients at this point. As we add more and more, a greater percentage of that revenue comes from rebilling existing patients than comes from new patients. New patients have an acquisition marketing cost associated with them, which we are slightly in the red on. They want on a cash basis, obviously on a gap basis. You look like you're more indirect because you spread most of that over six months.
Marc Benathen: At this point as we put on more and more a greater percentage of that revenue comes from rebuilding of existing patients. Then comes from new patients new patients have an acquisition marketing costs associated with that which we are slightly in the red day, one on a cash basis, obviously, a GAAP basis yolo vacuum <unk>.
Marc Benathen: Right because your spread most of that out over six months rebuild patients almost all of that flows to the bottom line, you've essentially got your Cogs and merchant fees, so something like 70% to 80% of that flows to the bottom line. So that's the biggest lever is obviously leveraging the marketing expense retention of existing.
Marc Benathen: Rebilling patients, almost all of that flows to the bottom line. You've essentially got your COGS and merchant fees. So, you know, something like 70% to 80% of that flows to the bottom line. So that's the biggest lever is, you know, obviously leveraging the marketing expense, and retention of existing patients, which gets bigger and bigger as the base gets bigger in weight management. And then the other piece, as you mentioned, is just continuing to leverage our GNA, which, you know, will move up as we get bigger, but it doesn't move up in lockstep with the rate of growth and revenue, and leverage comes from that as well. Okay, and just one more before I hop back in the queue. How many weight management members did you have on March 31st, and then how many do you have right now?
Marc Benathen: Which gets bigger and bigger as the base gets bigger and weight management and then the other piece as you mentioned is just continuing to leverage our G&A, which will.
Marc Benathen: We will move up as we get bigger, but it doesn't move up in lockstep with the rate of growth in revenue and leverage.
Marc Benathen: Comes from that as well.
Marc Benathen: Okay, and just one more before I hop back in the queue. How many week management remember did you have at March 31st and then how many do you have right now.
Marc Benathen: Yeah, we had 42,000 on March 31st, approximately, and we have slightly over 50,000 now. Okay.
Speaker Change: Yes, we have 42000 in March 31, approximately and we have slightly over 50000 now.
David Michael Larsen: Okay, fantastic quarter, and I'll hop back in the queue.
Speaker Change: Okay fantastic quarter I'll hop back in the queue.
Speaker Change: Thanks, David.
Operator: Your next question comes from Sarah James from Cantor. Please go ahead.
David Michael Larsen: Your next question comes from Sarah James from Cantor. Please go ahead.
Sarah Elizabeth James: Thanks, so much.
Sarah Elizabeth James: Thanks. So it's impressive growth to 70 physicians. Are you guys still looking at adding about four to five a month? And I think previously we talked about there being capacity for about 1,000 patients per physician. So does that mean that you guys are?
Operator: Greg.
Sarah Elizabeth James: Physicians are you guys still looking at adding about four to five months and I think previously you talked about there being capacity for about 1000 patients.
Sarah Elizabeth James: Physicians.
Sarah Elizabeth James: Thank you guys.
Sarah Elizabeth James: Our.
Sarah Elizabeth James: You have the capacity to go up to about 70,000 weight loss patients with your current staffing level.
Sarah Elizabeth James: Had the capacity to go up to about <unk>.
Sarah Elizabeth James: 70000 weight loss patients with your current staffing level.
Justin Schreiber: Hi Sarah, this is Justin. We're continually adding providers to the platform, four to five a month. Sounds like a fairly accurate number. It might be slightly more than that. It's a mix, you know; it's a mix of full-time and part-time providers. We are adding some part-time providers as well.
Sarah Elizabeth James: Hi, Sara this is Justin.
Justin Schreiber: So.
Justin Schreiber: We are continually adding providers to the platform.
Justin Schreiber: Four to five a month.
Justin Schreiber: Sounds like a fairly accurate number it might be slightly more than that it's a mix it's a mix.
Justin Schreiber: We are adding some some part time providers as well.
Justin Schreiber: And then as far as scale I think I think I think we can hit I think we think the number is greater than a 1000 patients for provider, we probably think it's close to doubled out especially of our tech is.
Justin Schreiber: And then as far as scale, I think we think the number is greater than 1,000 patients per provider. We probably think it's close to double that, especially if our tech is. Our tech is in place and kind of doing what we think it should be doing. But generally, the goal, our guide for this year, as we've talked about before, was based on that 350 new patients per day range. We do think we're going to end up coming in ahead of that, which is one of the reasons why we've increased the guidance a little bit today. And if we were to scale to 1,000 patients a day, we would probably have to double. We'd probably have to increase the physician group by at least 50%.
Justin Schreiber: Our tech is in place and kind of doing what we think it should be doing so.
Justin Schreiber: But generally the goal.
Justin Schreiber: Our guide for this year as we've talked about before was based on.
Justin Schreiber: Based on that 350, new patient per day range. We do think we're going to end up coming in ahead of that which is one of the reasons why we've increased the guidance a little bit today.
Justin Schreiber:
Justin Schreiber: And if we were if we were to scale to 1000 patients a day, we would we would have to we would have to probably double that we'd probably have to increase the physician group by at least at least 50%.
Speaker Change: Thanks, Stephanie also alright, great timing.
Justin Schreiber: Thanks, Justin. And also, it's great timing with you guys getting set up in late 24, early 25 to launch government insurance coinciding with the FDA approval of Wacobi for cardiac. How do you plan to tap into that market? So do you guys need to modify your marketing channels and strategy? And how are you thinking about leveraging your installed base with reps to tap into seniors? Well, we think there's a big opportunity there in the
Justin Schreiber: You guys getting set up in late.
Justin Schreiber: Late 'twenty or early 'twenty.
Justin Schreiber: So once the government insurance coinciding with the.
Justin Schreiber: The FDA approval for cardiac.
Justin Schreiber: You plan to tap into that market.
Justin Schreiber: Do you guys need to modify your marketing channels the strategy.
Justin Schreiber: Are you thinking about leveraging your installed base with racks to tap into.
Justin Schreiber: Well, we think there's a big opportunity there in the fee for service World.
Justin Schreiber: Well, we think there's a big opportunity there in the fee-for-service world, you know, with Medicare beneficiaries. I think that we're initially going to tackle this the same way, in a very similar way to our current offerings, but allow people to use their Medicare or use their private insurance and then pay a concierge fee alongside of that for non-covered services.
Justin Schreiber: With Medicare beneficiaries I think they were initially our plan is to.
Justin Schreiber: Tackle this the same way in a very similar way to our current offerings, but allow people to use their Medicare or use their private insurance and then and then pay a concierge to be alongside of that for non covered services.
Speaker Change: Thank you.
Justin Schreiber: Your next question comes from William <unk> from B Riley Securities. Please go ahead.
Operator: Your next question comes from William Wood from B. Reilly Securities. Please go ahead.
William McKinnie Wood: Thank you.
William McKinnie Wood: Thank you, and congratulations on a very nice quarter, and thanks for taking my questions. So, you recently passed the one-year mark when you launched your weight management business. Given that, you know, I've seen figures of upwards of, like, 60 percent of people that use GLP-1 drop off after the first 12 months, do you have any retention data, possibly even for the six months, you know, those people, the first patients who started around this time last year, and then how many have stayed on for six months versus maybe even 12 months?
William McKinnie Wood: Congratulation on the very nice quarter and thanks for taking my questions. So.
William McKinnie Wood: You recently passed the one year Mark on them when you launched your weight management business.
William McKinnie Wood: Given that I have.
William McKinnie Wood: Seen figures of upwards of like 60% of people that use <unk> drop off.
William McKinnie Wood: After the first 12 months.
William McKinnie Wood: Do you have any retention data, possibly even for the six months.
William McKinnie Wood: The people that the first patients who started around this time last year and then how many of state owned for six months versus maybe even 12 months.
Marc Benathen: Yeah, so from a retention standpoint, Marc, patients that go on therapy, so as we've talked about before, we have that initial drop-off due to access issues, people not getting approved for coverage on the branded drugs, not wanting to go on a compounded treatment, and not being able to afford the cash pay, which obviously many people can't afford. When we started the business in April of last year on the weight management side, for the first several months, about 33% of the cohort would drop off during that period.
Speaker Change: Yes, so from a retention standpoint as mark.
Marc Benathen: Patients that go on therapy, so as we've talked about before we have that initial drop was due to access issues people not getting approved for coverage under Brad that not wanting to go onto the compounds of treatment and not being able to afford to cash pay which obviously many people can't afford when we started the business.
Marc Benathen: April of last year on the weight management side for the firm.
Marc Benathen: Several months styles of about 33% of the cohort of a drop off during that period, we're down to 15% to 20% dropping off now prior to approval rates have gotten better our communication, our diligence and our processing as all gotten better so thats been one win.
Marc Benathen: We're down to 15% to 20% dropping off now; prior approval rates have gotten better, our communication, our diligence, and our processing have all gotten better, so that's been one win. If you go then to people that get on treatment, which typically you'll know in most cases within the first 30 days, sometimes it can extend longer because some prior authorizations go longer, the first 90 days that those people are on treatment, we see over 80%, it's actually about 80% or 83%, remain on treatment after 90 days, so really strong initial retention rates.
Marc Benathen: Go to.
Marc Benathen: The people that get on treatment, which typically you'll know in most cases within the first 30 days, sometimes it can extend longer because some prior authorizations go longer. The first 90 days of those people that are on treatment, we see over 80%, it's actually about 80 or 83% remain on treatment. After 90 days so.
Marc Benathen: Really strong initial retention rates.
Marc Benathen: The longest cohorts that we have today that are meaningful, I mean the first couple of months are not really statistically significant, are about 10-11 months old at this point. What we're seeing is that we're seeing retention approaching about 50% of the total, but if you consider the fact that in those cohorts, so say you started with 100 people, 30 of them dropped off for access issues right away, the retention long-term of those people that are going on treatment still looks like it continues to be very good.
Marc Benathen: The longest cohorts that we have today.
Marc Benathen: Our meaningful I mean, the first couple of months, so its not really statistically significant.
Marc Benathen: Our about 10 or 11 months old at this point.
Marc Benathen: What we're seeing is we're seeing retention approaching about 50% of the total but if you consider the fact that in those cohorts. So say it started with 100 people 30 of them dropped off for access issues right away the retention long term of those people that.
Marc Benathen: Our going on treatments still looks like it continues to be very good.
Speaker Change: Got it very helpful. I appreciate that color there.
William McKinnie Wood: Got it. Very helpful. I appreciate that color there.
William McKinnie Wood: You also, I mean, you've noted just recently that to get up to 1,000 patients a day, you would need to increase providers by like 50%. Are you trying to bring in sort of the AI and more of the automation? Or how should we think about the continued scale up and what it's really going to take to grow not only the top line but the bottom line?
William McKinnie Wood: Also I mean, you've noted.
William McKinnie Wood: Just recently, we know that to get up to 1000 patients a day, you would need to increase by providers by like 50%.
William McKinnie Wood: You're trying to bring in sort of the AI and more of the automation or how.
William McKinnie Wood: Should we think about.
William McKinnie Wood: The continued scale up and what it's really going to take.
William McKinnie Wood: With.
William McKinnie Wood: Growing not only the top line, but the bottom line.
William McKinnie Wood: Yes. This is Justin that's a good question I mean, the AI is something we're really excited about is as we talked about during the call as well.
Justin Schreiber: Yeah, this is Justin, William. That's a good question. I mean, AI is something we're really excited about. As we talked about during the call, it's, you know, we're seeing a lot of efficiencies now across the organization from rolling some of these things out. I mean, I think that over time, it certainly will make a big impact on the clinical side. But, you know, in the near term, those that AI and a lot of the efficiencies that come from our technology platform are, you know, really kind of helping us to provide incredible care to more patients as we scale the business. They're reducing, you know, the costs associated with patient care, patient service, the call center, all that stuff.
Justin Schreiber: Seeing a lot of efficiencies now.
Justin Schreiber: Across the organization from Rolling some of the some of these things out.
Justin Schreiber: I mean, I think that over time, it certainly will make a big impact on the clinical side, but no I.
Justin Schreiber: I think near term.
Justin Schreiber: The AI and a lot of the efficiencies that come from our technology platform are really kind of helping us to provide incredible care.
Justin Schreiber: So it certainly is going to play a role and help us to, you know, help us to scale the business without, without expanding the overhead as much as we've had to do so, to kind of go from zero to 50,000.
Justin Schreiber: Two more patients as we scale the business, they're reducing the costs associated with.
Justin Schreiber: Patient care.
Justin Schreiber: Patient service the call center all of that stuff.
Justin Schreiber: So it certainly is going to play a role and help us to help us to scale the business without without expanding the overhead as much as we've had as much as we've had to kind of go from zero to 50000.
Speaker Change: Got it I appreciate that.
William McKinnie Wood: Got it. Appreciate that. And I'll jump back in queue. Thank you for taking our questions.
Speaker Change: I'll jump back in queue. Thank you for taking my questions.
William McKinnie Wood: Your next question comes from Alex Fuhrman from Craig Hallum. Please go ahead.
Operator: Your next question comes from Alex Fuhrman on behalf of Craig Aylin. Please go ahead.
Alex Joseph Fuhrman: Hey, guys. Thanks, very much for taking my question I wanted to ask just about the upcoming launch of a weight management offering under the <unk> brand can you talk a little bit about how youre going to go after that male consumer.
Alex Joseph Fuhrman: Hey guys, thanks very much for taking my question. I wanted to ask Justin about the upcoming launch of a weight management offering under the RexMed brand. Can you talk a little bit about how you're going to go after that male consumer and just how that compares to your existing weight management business under the LifeMD brand? If you could maybe share with us how much of that existing business is male versus female?
Alex Joseph Fuhrman: And just how that compares to your existing weight management business under the life M. D brand. If you could maybe share with us how much of that existing business is male versus female.
Alex Joseph Fuhrman: Yeah, Hi, Alex this is Justin.
Justin Schreiber: Yeah. Hi Alex. This is Justin.
Justin Schreiber: So the initial focus of the Rexam D weight management offering will be will be on our existing database, which is 150 to 200000 active subscribers of half a million subscribers, formerly active subscribers.
Justin Schreiber: So the initial focus of the REX-MD weight management offering will be on our existing database, which is 150,000 to 200,000 active subscribers and half a million formerly active subscribers. And then we have a lot, millions of prospects in that database as well. So that's the initial focus of those efforts. There's clearly a lot of these people, a lot of these men that are 40, 50 years old, which is kind of the target demo for these efforts, that have erectile dysfunction. We know at least 50% of them have multiple chronic conditions. Obesity is typically, or being overweight or obese is typically, one of them.
Justin Schreiber: And then we have a lot of like millions of prospects in that database as well so.
Justin Schreiber: That's the initial focus of those efforts, there's clearly a lot of these people a lot of these men that are.
Justin Schreiber: 40 to 50 years old is kind of the target demo.
Justin Schreiber: Have erectile dysfunction, we know at least 50, 50% of them.
Justin Schreiber: Have multiple chronic conditions obesity is typically are being overweight or obese is typically one of them. So.
Justin Schreiber: As far as how we're going to target them, it's going to be very similar to the way that we targeted band for for erectile dysfunction in the other treatment offerings on Rex M D.
Justin Schreiber: So as far as how we're going to target them, it's going to be very similar to the way that we target men for erectile dysfunction and the other treatment offerings on REX-MD. As far as how it's going to be structured, we plan to use the same technology platform that we use for our ED business, which is an asynchronous platform. There are some sync capabilities in certain states where it's required, but we plan to use that same platform.
Justin Schreiber: As far as how it's going to be structured we have a <unk>.
Justin Schreiber: We plan to use the same technology platform that we use for our <unk> business, which is which is an <unk> platform theres some st capabilities in certain states, where it's required.
Justin Schreiber: But we plan to use we use that same that same platform.
Justin Schreiber: We're planning to launch a bundled offering, which will be basically a therapy provider and the entire program, similar to what we have on the weight management side. It's going to be priced somewhere around $300 a month, according to the plan. There's a big opportunity here within this demographic for a weight management offering, and we're really excited about getting this thing launched. We're gonna be launching in the next couple weeks. So you know, it's a very near-term initiative for us.
Justin Schreiber: It'll be a bundle we're planning to launch a bundled offering which will include which will be a basically a therapy provider in the entire program similar to what we have on the weight management side.
Justin Schreiber: It's going to be priced somewhere around $300 a month is the plan.
Justin Schreiber: Look we just think we think that.
Justin Schreiber: There's a big opportunity here within this demographic for a weight management offering and we're really excited about we're really excited about getting this thing launched we're going to be launching in the next couple of weeks. So.
Justin Schreiber: Very near term initiative for us.
Speaker Change: Great that's really helpful. Justin Thanks, and then.
Alex Joseph Fuhrman: Great. That's really helpful, Justin. Thanks. And then, you know, on the Medifast partnership, it sounds like they're going to be spending quite a bit of money marketing your joint offering in the third and fourth quarters. Can you give us a sense of how much of your expected growth in the back half of the year is expected to come from, you know, this RexMD weight management offering as well as the Medifast partnership?
Alex Joseph Fuhrman: The Medifast partnership it sounds like.
Alex Joseph Fuhrman: They're going to be spending quite a bit of money marketing your your joint offering in the third and the fourth quarter can you give us a sense of how much of your expected growth in the back half of the year is expected to come from this Rexam day light weight management offering as well.
Alex Joseph Fuhrman: Well as the Medifast partnership.
Alex Joseph Fuhrman: The vast majority of the growth that we have in our guide for the year.
Justin Schreiber: The vast majority of the growth that we have in our guide for the year really doesn't include Medifast and RexMD. So, you know, we think both of these things are both going to be successful. And, you know, I think that's, you know, there's a lot of upside for the year. We're excited about both of them.
Justin Schreiber: Really it doesn't include Medifast and Rex M D.
Alex Joseph Fuhrman: Okay, that's really helpful.
Alex Joseph Fuhrman: Well.
Alex Joseph Fuhrman: We think both of these things we think they're both going to be successful.
Alex Joseph Fuhrman: And I think thats.
Alex Joseph Fuhrman: It's a lot of upside for the year, we're excited about both of them.
Speaker Change: Okay. That's really helpful. Thank you gentlemen.
Justin Schreiber: Okay, that's really helpful. Thank you, Justin.
Justin Schreiber: Yeah.
Speaker Change: Ladies and gentlemen, as a reminder, you have a question. Please press star one.
Operator: Ladies and gentlemen, as a reminder, should you have a question, please press star 1. And there are no further questions at this time. I will turn the call over to Justin Schreiber for closing remarks.
Justin Schreiber: And there are no further questions at this time I will turn the call over to Justin <unk> for closing remarks.
Justin Schreiber: Thanks, everybody for your questions and for your interest in <unk>, We look forward to speaking with you once again when we report our second quarter results in August have a good evening.
Justin Schreiber: Thank you, everybody, for your questions and for your interest in LifeMD. We look forward to speaking with you once again when we report our second quarter results in August. Have a good evening. Ladies and gentlemen, this concludes our conference call.
Justin Schreiber: Ladies and gentlemen. This concludes your conference call for today you May now disconnect your lines. Thank you.
Operator: Ladies and gentlemen, this concludes your conference call for today. You may now disconnect your lines. Thank you.
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