LifeMD Inc

Previous wording

The following discussion should be read in conjunction with the financial statements and related notes contained elsewhere in this Quarterly Report on Form 10-Q. Certain statements made in this discussion are “forward-looking statements” within the meaning of 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements are based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by the Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used herein, the words “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “future,” “intend,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including the risks relating to the Company’s business, industry, and the Company’s operations and results of operations. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.

Current wording

The following discussion should be read in conjunction with the financial statements and related notes contained elsewhere in this Quarterly Report on Form 10-Q. Certain statements made in this discussion are “forward-looking statements” within the meaning of 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements are based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by the Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used herein, the words “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “future,” “intend,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including the risks relating to the Company’s business, industry, and the Company’s operations and results of operations. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ materially from those anticipated, believed, estimated, expected, intended, or planned.

Previous wording

We are a direct-to-patient telehealth company providing a high-quality, cost-effective, and convenient way to access comprehensive, virtual and in-home healthcare. We believe the traditional model of visiting a doctor’s office, traveling to a retail pharmacy, and returning for follow up care or prescription refills is complex, inefficient, and costly, and discourages many individuals from seeking much needed medical care. LifeMD is improving the delivery of healthcare experience through telehealth with our proprietary technology platform, affiliated and dedicated provider network, broad and expanding treatment capabilities, and unique ability to nurture patient relationships.

Current wording

We are a direct-to-patient telehealth company providing a high-quality, cost-effective, and convenient way to access comprehensive, virtual and in-home healthcare. We believe the traditional model of visiting a doctor’s office, traveling to a retail pharmacy, and returning for follow-up care or prescription refills is complex, inefficient, and costly which discourages many individuals from seeking much-needed medical care. LifeMD is improving the delivery of the healthcare experience through telehealth with our proprietary technology platform, affiliated and dedicated provider network, broad and expanding treatment capabilities, and the unique ability to nurture patient relationships.

Previous wording

The LifeMD telehealth platform integrates best-in-class capabilities including a 50-state medical group, a nationwide pharmacy network, nationwide laboratory and diagnostic testing capabilities, a fully integrated electronic medical records (“EMR”) system and an internal patient care and service call center. These capabilities are integrated by an industry-leading, proprietary telehealth technology that supports a broad range of primary care, chronic disease and lifestyle healthcare needs. Currently, LifeMD treats approximately 269,000 active patient subscribers across a range of their medical needs including primary care, men’s sexual health, weight management, sleep, hair loss and hormonal therapy by providing telehealth clinical services and prescription and over-the-counter (“OTC”) treatments, as medically appropriate. Our virtual primary care services are primarily offered on a subscription basis. Since inception, we have helped approximately 1,059,000 customers and patients by providing them greater access to high-quality, convenient, and affordable care.

Current wording

The LifeMD telehealth platform integrates best-in-class capabilities including a 50-state medical group, a nationwide pharmacy network, a wholly-owned affiliated commercial pharmacy, nationwide laboratory and diagnostic testing capabilities, a fully integrated electronic medical records (“EMR”) system and a patient care and service call center. These capabilities are integrated by an industry-leading, proprietary telehealth technology that supports a broad range of primary care, chronic disease and lifestyle healthcare needs. Currently, LifeMD treats approximately 291,000 active patient subscribers across a range of their medical needs including primary care, men’s sexual health, weight management, sleep, hair loss and hormonal therapy by providing telehealth clinical services and prescription and over-the-counter (“OTC”) treatments, as medically appropriate. Our virtual primary care services are primarily offered on a subscription basis. Since inception, we have helped more than 1,191,000 customers and patients by providing them with greater access to high-quality, convenient, and affordable care.

Previous wording

Our mission is to empower people to live healthier lives by increasing access to high-quality and affordable virtual and in-home healthcare. We believe our success has been, and will continue to be, attributable to an amazing patient experience, made possible by attracting and retaining the highest-quality providers in the country, and our proprietary end-to-end technology platform. As we continue to pursue long-term growth, we plan to continue to introduce new telehealth product and service offerings that complement our already expansive treatment areas. During April 2023, we launched a highly successful and differentiated GLP-1 Weight Management offering driven by our existing primary care capabilities that already had more than 71,000 patient subscribers as of September 30, 2024. Patients receive a range of weight loss services including prescriptions for GLP-1 medications, as medically appropriate, lab work services, general primary care and holistic healthcare and coaching. The GLP-1 medically supported weight loss market is rapidly growing and is projected to increase from over $13 billion to over $100 billion by 2030, according to J.P. Morgan Research.

Current wording

Our mission is to empower people to live healthier lives by increasing access to high-quality and affordable virtual and in-home healthcare. We believe our success has been, and will continue to be, attributable to an amazing patient experience, made possible by attracting and retaining the highest-quality providers in the country, and our vertically integrated care platform. As we continue to pursue long-term growth, we plan to continue to introduce new telehealth product and service offerings that complement our already expansive treatment areas.

Previous wording

Our telehealth revenue increased 62% for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. Total revenue from recurring subscriptions is approximately 92%. In addition to our telehealth business, we own 73.32% of WorkSimpli, which operates PDFSimpli, a rapidly growing software as a service platform for converting, signing, editing, and sharing PDF documents. WorkSimpli revenue from recurring subscriptions is 100%.

Current wording

Our telehealth revenue increased 70% for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. Total revenue from recurring subscriptions is approximately 86%. In addition to our telehealth business, we own 73.3% of WorkSimpli, which operates PDFSimpli, a software as a service platform for converting, signing, editing, and sharing PDF documents. WorkSimpli revenue from recurring subscriptions is 100%.

Previous wording

We are a patient-centric telehealth company dedicated to delivering seamless end-to-end virtual healthcare directly to consumers and through select enterprise (“B2B”) partnerships. Our mission is facilitated by our robust technology platform that is purpose-built to seamlessly connect the various touchpoints involved in delivering complex care, including scheduling for a national provider network, EMR capabilities, secure synchronous and asynchronous communication, digital prescriptions, cloud pharmacy and more. Our platform enables us to deliver modern personalized health experiences and offerings through our websites and mobile applications, spanning customer discovery, purchase and connection with licensed providers, to pharmacy and OTC order fulfillment, through ongoing care. We believe that our seamless approach significantly reduces the complication, cost and time burden of healthcare, incentivizing consumers to stick with our brands.

Current wording

We are a patient-centric telehealth company dedicated to delivering seamless end-to-end virtual healthcare directly to consumers and through select enterprise (“B2B”) partnerships. Our mission is facilitated by our robust technology platform that is purpose-built to seamlessly connect the various touchpoints involved in delivering complex care, including scheduling for a national provider network, an EMR system, secure synchronous and asynchronous communication, prescriptions, pharmacy and laboratory integrations, and more. Our platform enables us to deliver modern personalized health experiences and offerings through our websites and mobile applications, spanning customer discovery, purchase and connection with licensed providers, to pharmacy and OTC order fulfilment, through ongoing care. We believe that our seamless approach significantly reduces the complication, cost and time burden of healthcare, therefore incentivizing consumers to stick with our brands.

Previous wording

Our offerings are sold to consumers on a subscription basis thus creating a relationship-driven patient experience to bolster retention rates and recurring revenue. Our offerings range from prescription medication and OTC products fulfilled on a recurring basis, to primary care and weight management clinical services and ongoing care from a team of dedicated medical providers. In general, our offerings seek to serve a patient throughout the lifecycle of both their general and chronic healthcare needs. As appropriate, prescription medications and OTC products are filled by pharmacy fulfillment partners, and are shipped directly to the patient. The number of patients and customers we serve across the nation continues to increase at a robust pace, with approximately 1,059,000 individuals having purchased our products and services to date.

Current wording

Our offerings are sold to consumers on a primarily subscription basis, thus creating a relationship-driven patient experience to bolster retention rates and recurring revenue. Our offerings range from prescription medication and OTC products fulfilled on a recurring basis, to primary care and weight management clinical services delivered by a team of dedicated medical providers. In general, our offerings seek to serve a patient throughout the lifecycle of their urgent, chronic, and lifestyle healthcare needs. As appropriate, prescription medications and OTC products are filled by our in-house mail order pharmacy or third-party pharmacy fulfilment partners, and are shipped directly to patients. The number of patients and customers we serve across the nation continues to increase at a robust pace, with more than 1,191,000 individuals having purchased our products and services to date.

Previous wording

We leverage our telehealth technology platform and services across the three core areas described below:

Current wording

We leverage our telehealth technology platform and services across the two core areas described below:

Previous wording

We also leverage our telehealth platform’s provider network, cloud pharmacy, and EMR capabilities across our direct-to-patient telehealth brands. Our telehealth brands RexMD, ShapiroMD, NavaMD, and Cleared address largely unaddressed or underserved needs and are leading destinations in their respective treatment verticals of men’s health, hair loss, dermatology, and immunology.

Current wording

We leverage our telehealth platform’s affiliated provider network, pharmacy, and EMR capabilities across our direct-to-patient telehealth brands. Our core telehealth brands LifeMD and Rex MD target largely unaddressed or underserved healthcare needs and are leading destinations in their respective treatment verticals of virtual primary care and men’s health.

Previous wording

Organizations selling healthcare products face a challenging commercial landscape. Increased competition, shrinking market sizes and challenges reaching patients via the traditional brick-and-mortar physician offices are forcing pharmaceutical, medical device and diagnostic companies to rethink their commercial strategies and increase their focus on digital patient awareness and engagement initiatives. It is estimated that spending on digital solutions to facilitate greater access to end markets accounts for one-third of the collective $30 billion commercial spend by these companies in the U.S. We believe LifeMD’s unique telehealth technology platform and virtual care expertise is well-positioned to address the unmet needs of healthcare product companies as they relate to digital patient awareness, access to care, adherence and compliance. To date, LifeMD has executed the following enterprise commercial agreements providing access to our industry leading telehealth platform capabilities.

Current wording

Organizations selling healthcare products face a challenging commercial landscape. Increased competition, shrinking market sizes, and challenges reaching patients via the traditional brick-and-mortar physician offices are forcing pharmaceutical, medical device, and diagnostic companies to rethink their commercial strategies and increase their focus on digital patient awareness and engagement initiatives. It is estimated that spending on digital solutions to facilitate greater access to end markets accounts for one-third of the collective $30 billion commercial spend by these companies in the U.S. We believe LifeMD’s unique telehealth technology platform and virtual care expertise is well-positioned to address the unmet needs of healthcare product companies as they relate to digital patient awareness, access to care, adherence, and compliance.

Previous wording

WorkSimpli is a leading provider of workplace and document services for consumers, gig workers and small businesses. WorkSimpli operates the following brands: (1) PDFSimpli, an online software as a service platform that allows users to create, edit, convert, sign, and share PDF documents, (2) ResumeBuild, a leading provider of digital resume and cover letter services, (3) SignSimpli, a digital signature platform and (4) LegalSimpli, a provider of legal forms for consumers and small businesses. We acquired WorkSimpli through the purchase of 51% of the membership interests of WorkSimpli Software LLC, a Puerto Rico limited liability company, which operates a marketing-driven software solutions business. On January 22, 2021, LifeMD consummated a transaction and increased its ownership of WorkSimpli to 85.6%. Effective September 30, 2022, two option agreements were exercised which further restructured the ownership of WorkSimpli. As a result, the Company’s ownership interest in WorkSimpli decreased to 73.6%. Effective March 31, 2023, the Company redeemed 500 membership interest units in WorkSimpli and, as a result, the Company’s ownership interest in WorkSimpli increased to 74.1%. Effective June 30, 2023, an option agreement was exercised which further restructured the ownership of WorkSimpli. As a result, the Company’s ownership interest in WorkSimpli decreased to 73.3%.

Current wording

WorkSimpli is a leading provider of workplace and document services for consumers, gig workers, and small businesses. WorkSimpli operates the following brands: (1) PDFSimpli, an online software as a service platform that allows users to create, edit, convert, sign, and share PDF documents, (2) ResumeBuild, a leading provider of digital resume and cover letter services, (3) SignSimpli, a digital signature platform and (4) LegalSimpli, a provider of legal forms for consumers and small businesses. As a result of a series of restructuring transactions, the Company’s ownership interest in WorkSimpli is 73.3%. WorkSimpli had more than 158,000 active subscriptions as of March 31, 2025.

Previous wording

Total revenue, net. Revenues for the three months ended September 30, 2024 were approximately $53.4 million, an increase of 38% compared to approximately $38.6 million for the three months ended September 30, 2023. The increase in revenues was attributable to an increase in telehealth revenue of 65%, partially offset by a decrease in WorkSimpli revenue of 8%. Telehealth revenue accounts for 75% of total revenue and has increased during the three months ended September 30, 2024 due to an increase in online sales demand primarily for LifeMD primary care which experienced an increase of approximately $18.1 million during the three months ended September 30, 2024 compared to the three months ended September 30, 2023. WorkSimpli revenue accounts for 25% of total revenue and has decreased slightly year over year due to a lower demand.

Current wording

Total revenue, net. Revenues for the three months ended March 31, 2025 were approximately $65.7 million, an increase of 49% compared to approximately $44.1 million for the three months ended March 31, 2024. The increase in revenues was attributable to the increase in telehealth revenue of 70%. Telehealth revenue accounts for 80% of total revenue and has increased during the three months ended March 31, 2025 due to an increase in online sales demand primarily for LifeMD primary care which experienced an increase of approximately $22.5 million during the three months ended March 31, 2025 compared to the three months ended March 31, 2024. WorkSimpli revenue accounts for 20% of total revenue and has stayed consistent year over year.

Previous wording

Total cost of revenue. Total cost of revenue consists of the cost of (1) telehealth revenues, which primarily include product costs, pharmacy fulfillment costs, physician consult fees, and shipping costs directly attributable to our prescription and OTC products and (2) the cost of WorkSimpli revenue consisting primarily of information technology fees related to providing the services made available on our online platform. Total cost of revenue increased by approximately 5% to approximately $5.0 million for the three months ended September 30, 2024 compared to approximately $4.8 million for the three months ended September 30, 2023. The combined cost of revenue increase was due to increased telehealth sales volume during the three months ended September 30, 2024 when compared to the three months ended September 30, 2023. Telehealth costs decreased to 11% of associated telehealth revenues experienced during the three months ended September 30, 2024, from 18% of associated telehealth revenues during the three months ended September 30, 2023 primarily due to improved pricing. WorkSimpli costs were 5% of associated WorkSimpli revenues for the three months ended September 30, 2024 as compared to 2% of associated WorkSimpli revenues for the three months ended September 30, 2023.

Current wording

Total cost of revenue. Total cost of revenue consists of the cost of (1) telehealth revenues, which primarily include product costs, pharmacy fulfilment costs, physician consult fees, and shipping costs directly attributable to our prescription and OTC products and (2) WorkSimpli revenue consisting primarily of information technology fees related to providing the services made available on our online platform. Total cost of revenue increased by approximately 88% to approximately $8.6 million for the three months ended March 31, 2025 compared to approximately $4.6 million for the three months ended March 31, 2024. The combined cost of revenue increase was due to increased sales volume during the three months ended March 31, 2025 when compared to the three months ended March 31, 2024. Telehealth costs increased to 16% of associated telehealth revenues experienced during the three months ended March 31, 2025, from 14% of associated telehealth revenues during the three months ended March 31, 2024. WorkSimpli costs increased to 4% of associated WorkSimpli revenues for the three months ended March 31, 2025 as compared to 3% of associated WorkSimpli revenues for the three months ended March 31, 2024.

Previous wording

Gross profit. Gross profit increased by approximately 43% to approximately $48.4 million for the three months ended September 30, 2024 compared to approximately $33.8 million for the three months ended September 30, 2023, as a result of increased telehealth revenue and improved pricing. Gross profit as a percentage of revenues was 91% for the three months ended September 30, 2024 as compared to 88% for the three months ended September 30, 2023. Gross profit as a percentage of revenues for telehealth was 89% for the three months ended September 30, 2024 compared to 82% for the three months ended September 30, 2023, and for WorkSimpli was 95% for the three months ended September 30, 2024 compared to 98% for the three months ended September 30, 2023. The increase in sales volume and demand for LifeMD primary care and improved pricing have contributed to the increase in gross profit.

Current wording

Gross profit. Gross profit increased by approximately 44% to approximately $57.1 million for the three months ended March 31, 2025 compared to approximately $39.5 million for the three months ended March 31, 2024. Gross profit as a percentage of revenues was approximately 87% for the three months ended March 31, 2025 as compared to approximately 90% for the three months ended March 31, 2024. Gross profit as a percentage of revenues for telehealth was 84% for the three months ended March 31, 2025 compared to 86% for the three months ended March 31, 2024, and for WorkSimpli was 96% for the three months ended March 31, 2025 compared to 97% for the three months ended March 31, 2024. The increase in sales volume and demand for LifeMD primary care partially offset by an increase in shipping and physician consult fees have contributed to the increase in gross profit. The increase in shipping and physician consult fees also contributed to the decrease in gross profit as a percentage of telehealth revenue.

Previous wording

Total expenses. Operating expenses for the three months ended September 30, 2024 were approximately $53.1 million, as compared to approximately $38.4 million for the three months ended September 30, 2023. This represents an increase of approximately 38%, or $14.7 million. The increase is primarily attributable to:

Current wording

Total expenses. Operating expenses for the three months ended March 31, 2025 were approximately $54.5 million, as compared to approximately $45.7 million for the three months ended March 31, 2024. This represents an increase of 19%, or approximately $8.8 million. The increase is primarily attributable to:

Previous wording

Interest expense, net. Interest expense, net consists of interest expense related to the Avenue Facility and notes payable, partially offset by interest income on the Company’s cash account balances for the three months ended September 30, 2024 and interest expense related to the Avenue Facility, notes payable and interest accrued on the Company’s Series B Convertible Preferred Stock for the three months ended September 30, 2023. Interest expense, net decreased by approximately $155 thousand during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, primarily due to an increase in interest income on the Company’s cash account balances for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

Current wording

Interest expense, net. Interest expense, net consists of interest expense related to the Avenue Facility, partially offset by interest income on the Company’s cash account balances for the three months ended March 31, 2025 and interest expense related to the Avenue Facility and notes payable, partially offset by interest income on the Company’s cash account balances for the three months ended March 31, 2024. Interest expense increased by approximately $149 thousand during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, primarily due to an increase in interest expensed on the Avenue Facility during the three months ended March 31, 2025.

Previous wording

Working capital decreased by approximately $18.1 million during the nine months ended September 30, 2024. The increase in current assets is primarily attributable to an increase in cash of approximately $4.4 million. Current liabilities increased by approximately $24.2 million, which was primarily attributable to an increase in accounts payable and accrued expenses of $11.9 million as a result of timing of payments and the Company extending payables and credit terms with vendors, an increase in deferred revenue of $7.6 million as a result of increased recurring telehealth subscription revenue, and an increase in current portion of long-term debt of $5.3 million.

Current wording

Working capital increased by approximately $593 thousand during the three months ended March 31, 2025. The increase in current assets is primarily attributable to an increase in accounts receivable of approximately $2 million, partially offset by a decrease in cash of approximately $611 thousand and a decrease in other current assets of approximately $445 thousand. Current liabilities increased by approximately $646 thousand, which was primarily attributable to an increase in current portion of long-term debt of approximately $3.2 million and an increase in deferred revenue of approximately $145 thousand, partially offset by a decrease in accounts payable and accrued expenses of approximately $2.6 million.

Previous wording

Net cash provided by operating activities was approximately $15.9 million for the nine months ended September 30, 2024, as compared with approximately $3.1 million for the nine months ended September 30, 2023. The significant factors contributing to the net cash provided by operating activities during the nine months ended September 30, 2024, include: (1) an increase in accounts payable and accrued expenses of $12.5 million, (2) $9.1 million in non-cash stock-based compensation charges, (3) an increase in deferred revenue of $7.6 million, and (4) $7.3 million in non-cash depreciation and amortization. These increases were partially offset by the Company’s net loss of $19.0 million for the nine months ended September 30, 2024. Net cash provided by operating activities for the nine months ended September 30, 2023, was driven primarily by the following: (1) $8.8 million in non-cash stock-based compensation charges, (2) $5.0 million in non-cash depreciation and amortization, (3) a net increase in accounts payable, accrued expenses and other operating activities of $4.6 million, (4) a $325 thousand loss on debt extinguishment and (5) an increase in deferred revenue of $692 thousand. These increases were partially offset by the Company’s net loss of $14.6 million for the nine months ended September 30, 2023.

Current wording

Net cash provided by operating activities was approximately $3.1 million for the three months ended March 31, 2025, as compared with approximately $5.2 million for the three months ended March 31, 2024. The significant factors contributing to the net cash provided by operating activities during the three months ended March 31, 2025, include: (1) the Company’s net income of $1.9 million, (2) $2.8 million in non-cash depreciation and amortization and (3) $2.5 million in non-cash stock-based compensation charges, partially offset by a decrease in accounts payable and accrued expenses of $2.6 million. The significant factors contributing to the net cash provided by operating activities during the three months ended March 31, 2024, include: (1) an increase in deferred revenue of $4.4 million, (2) an increase in accounts payable and accrued expenses of $2.6 million, (3) $2.5 million in non-cash stock-based compensation charges and (4) $2.2 million in non-cash depreciation and amortization, partially offset by the Company’s net loss of $6.6 million.

Previous wording

Net cash used in investing activities for the nine months ended September 30, 2024 was approximately $8.8 million, as compared with approximately $6.5 million for the nine months ended September 30, 2023. Net cash used in investing activities for the nine months ended September 30, 2024, was due to cash paid for capitalized software costs of approximately $7.5 million, and cash paid for the purchase of equipment of approximately $1.3 million. Net cash used in investing activities for the nine months ended September 30, 2023, was due to cash paid for capitalized software costs of approximately $6.3 million, cash paid for the purchase of intangible assets of $149 thousand and cash paid for the purchase of equipment of approximately $94 thousand.

Current wording

Net cash used in investing activities for the three months ended March 31, 2025 was approximately $2.9 million, as compared with approximately $2.2 million for the three months ended March 31, 2024. Net cash used in investing activities for the three months ended March 31, 2025, was due to cash paid for capitalized software costs of approximately $2.7 million, and cash paid for the purchase of equipment of approximately $122 thousand. Net cash used in investing activities for the three months ended March 31, 2024, was due to cash paid for capitalized software costs of approximately $2.0 million, and cash paid for the purchase of equipment of approximately $176 thousand.

Previous wording

Net cash used in financing activities for the nine months ended September 30, 2024 was approximately $2.7 million as compared with approximately $14.7 million in net cash provided by financing activities for the nine months ended September 30, 2023. Net cash used in financing activities for the nine months ended September 30, 2024, consisted of: (1) preferred stock dividends of $2.3 million, (2) repayments of notes payable of approximately $328 thousand, (3) distributions to non-controlling interest of $108 thousand, and (4) the final contingent consideration payment made related to the ResumeBuild acquisition of approximately $31 thousand, partially offset by proceeds from the exercise of options of approximately $108 thousand. Net cash provided by financing activities for the nine months ended September 30, 2023, consisted of: (1) $19.5 million in net proceeds received from the Avenue Facility, (2) $2.3 million in proceeds received from notes payable and (3) $900 thousand in net proceeds received for the sale of common stock under the ATM Sales Agreement (as defined below). These factors contributing to net cash provided by financing activities were partially offset by repayments of notes payable of approximately $5 million net of a $325 thousand loss on debt extinguishment on the CRG Financial loan, preferred stock dividends of approximately $2.3 million, payments made to redeem 500 WorkSimpli membership interest units of approximately $306 thousand, contingent consideration payments made related to the ResumeBuild brand acquisition of approximately $188 thousand and distributions to non-controlling interest of $108 thousand.

Current wording

Net cash used in financing activities for the three months ended March 31, 2025 was approximately $813 thousand as compared with approximately $1.0 million for the three months ended March 31, 2024. Net cash used in financing activities for the three months ended March 31, 2025, consisted of: (1) preferred stock dividends of $777 thousand, and (2) distributions to non-controlling interest of $36 thousand. Net cash used in financing activities for the three months ended March 31, 2024, consisted of: (1) preferred stock dividends of $777 thousand, (2) repayments of notes payable of approximately $212 thousand, (3) distributions to non-controlling interest of $36 thousand, and (4) the final contingent consideration payment made related to the ResumeBuild acquisition of approximately $31 thousand, partially offset by proceeds from the exercise of options of approximately $8 thousand.

Previous wording

To date, the Company has been funding operations primarily through the sales of its products, issuance of common and preferred stock, and through loans and advances. The Company’s continued operations are dependent upon obtaining an increase in its sale volumes or the issuance of additional shares of common stock. Our primary short-term and long-term requirements for liquidity and capital are for customer acquisitions, funding business acquisitions and investments we may make from time to time, working capital including our noncancelable operating lease obligations, noncontingent consideration, capital expenditures and general corporate purposes. For more information on our operating lease obligations, see Note 9—Leases to our unaudited condensed consolidated financial statements included in this report. There can be no assurances that we will be successful in increasing revenues and improving operational efficiencies.

Current wording

To date, the Company has been funding operations primarily through the sales of its products, issuance of common and preferred stock, and through loans and advances. The Company’s continued operations are dependent upon obtaining an increase in its sale volumes and obtaining funding from third-party sources or the issuance of additional shares of common stock. Our primary short-term and long-term requirements for liquidity and capital are for customer acquisitions, funding business acquisitions and investments we may make from time to time, working capital including our noncancelable operating lease obligations, long-term debt obligations, capital expenditures and general corporate purposes. For more information on our operating lease obligations, see Note 8—Leases to our unaudited condensed consolidated financial statements included in this report. There can be no assurances that we will be successful in increasing revenues, improving operational efficiencies, or that financing will be available or, if available, that such financing will be available under favorable terms.

Previous wording

On March 21, 2023, the Company entered into and closed on a Credit Agreement, and a supplement to the Credit Agreement with Avenue. The Credit Agreement provides for a convertible senior secured credit facility of up to an aggregate amount of $40 million, comprised of the following: (1) $15 million in term loans funded at closing, (2) $5 million of additional committed term loans which the Company received on September 26, 2023 under the Avenue First Amendment and (3) $20 million of additional uncommitted term loans, collectively referred to as the “Avenue Facility”. The Avenue Facility matures on October 1, 2026. The Company issued Avenue warrants to purchase $1.2 million of the Company’s common stock at an exercise price of $1.24, subject to adjustments. In addition, Avenue may convert up to $2 million of the $15 million in term loans funded at closing into shares of the Company’s common stock at any time while the loans are outstanding, at a price per share equal to $1.49. Proceeds from the Avenue Facility were used to repay the Company’s outstanding notes payable balances with CRG Financial and are expected to be used for general corporate purposes.

Current wording

On March 21, 2023, the Company entered into and closed on a loan and security agreement (the “Avenue Credit Agreement”), and a supplement to the Credit Agreement (the “Avenue Supplement”), with Avenue Venture Opportunities Fund II, L.P. and Avenue Venture Opportunities Fund, L.P. (collectively, “Avenue”). The Avenue Credit Agreement provides for a convertible senior secured credit facility of up to an aggregate amount of $40 million, comprised of the following: (1) $15 million in term loans funded at closing, (2) $5 million of additional committed term loans which the Company received on September 26, 2023 under the First Amendment to the Avenue Credit Agreement (the “Avenue First Amendment”) and (3) $20 million of additional uncommitted term loans, collectively referred to as the “Avenue Facility”. The Avenue Facility matures on October 1, 2026. The Company issued Avenue warrants to purchase $1.2 million of the Company’s common stock at an exercise price of $1.24, subject to adjustments. In addition, Avenue may convert up to $2 million of the $15 million in term loans funded at closing into shares of the Company’s common stock at any time while the loans are outstanding, at a price per share equal to $1.49. Proceeds from the Avenue Facility were used to repay the Company’s outstanding notes payable balances with CRG Financial and are expected to be used for general corporate purposes.

Previous wording

On November 15, 2023, Avenue converted $1 million of the principal amount of the outstanding term loans into shares of the Company’s common stock. This resulted in 672,042 shares of common stock issued to Avenue. Additionally on November 15, 2023, Avenue exercised 96,773 of the Avenue Warrants on a cashless basis resulting in 79,330 shares of the Company’s common stock issued.

Current wording

On November 15, 2023, Avenue converted $1 million of the principal amount of the outstanding term loans into shares of the Company’s common stock. This resulted in 672,042 shares of common stock issued to Avenue. Additionally on November 15, 2023, Avenue exercised 96,773 of the Avenue Warrants on a cashless basis resulting in 79,330 shares of the Company’s common stock issued. As of March 31, 2025, there was $19.0 million outstanding under the Avenue Facility.

Previous wording

The Company entered into an At Market Issuance Sales Agreement (the “ATM Sales Agreement”) with B. Riley Securities, Inc. and Cantor Fitzgerald & Co. relating to the sale of its common stock. In accordance with the terms of the ATM Sales Agreement, the Company may, but is not obligated to, offer and sell, from time to time, shares of common stock having an aggregate offering price of up to $60 million, through or to the Agents, acting as agent or principal. Sales of common stock, if any, will be made by any method permitted that is deemed an “at the market offering” as defined in Rule 415 under the Securities Act. On June 7, 2024, the Company filed a shelf registration statement on Form S-3 under the Securities Act, which was declared effective on July 18, 2024 (the “2024 Shelf”). Under the 2024 Shelf at the time of effectiveness, the Company had the ability to raise up to $150.0 million by selling common stock, preferred stock, debt securities, warrants, and units including $53.3 million of its common stock under the ATM Sales Agreement. As of September 30, 2024, the Company had $53.3 million available under the ATM Sales Agreement, which is part of the $150.0 million available under the 2024 Shelf.

Current wording

The Company entered into an At Market Issuance Sales Agreement (the “ATM Sales Agreement”) with B. Riley Securities, Inc. and Cantor Fitzgerald & Co. relating to the sale of its common stock. In accordance with the terms of the ATM Sales Agreement, the Company may, but is not obligated to, offer and sell, from time to time, shares of common stock, through or to the Agents, acting as agent or principal. Sales of common stock, if any, will be made by any method permitted that is deemed an “at the market offering” as defined in Rule 415 under the Securities Act. On June 7, 2024, the Company filed a shelf registration statement on Form S-3 under the Securities Act, which was declared effective on July 18, 2024 (the “2024 Shelf”). Under the 2024 Shelf at the time of effectiveness, the Company had the ability to raise up to $150.0 million by selling common stock, preferred stock, debt securities, warrants, and units including $53.3 million of its common stock under the ATM Sales Agreement. As of March 31, 2025, the Company had $53.3 million available under the ATM Sales Agreement, which is part of the $150.0 million available under the 2024 Shelf.

Previous wording

The Company reviewed its forecasted operating results and sources and uses of cash used in management’s assessment, which included the available financing and consideration of positive and negative evidence impacting management’s forecasts, market, and industry factors. Positive indicators that lead to the Company’s expectation that it will have sufficient cash over the next 12 months following the date of this report include: (1) the Company’s continued strengthening of the Company’s revenues and improvement of operational efficiencies across the business, (2) the expected improvement in its cash burn rate over the next 12 months and positive operating cash flows during the nine months ended September 30, 2024, (3) cash on hand of $37.6 million as of September 30, 2024, (4) $53.3 million available under the ATM Sales Agreement, which is part of the $150.0 million available under the 2024 Shelf, (5) management’s ability to curtail expenses, if necessary, and (6) the overall market value of the telehealth industry, which it believes will continue to drive interest in the Company already evidenced by the Medifast Collaboration and Medifast Private Placement noted above.

Current wording

As of May 5, 2025, the Company has a current cash balance of approximately $24.5 million. The Company reviewed its forecasted operating results and sources and uses of cash used in management’s assessment, which included the available financing and consideration of positive and negative evidence impacting management’s forecasts, market, and industry factors. Positive indicators that lead to the Company’s expectation that it will have sufficient cash over the next 12 months following the date of this report include: (1) the Company’s continued strengthening of its revenues, reduction in losses and improvement of operational efficiencies across the business, (2) the expected improvement in its cash burn rate over the next 12 months and positive operating cash flows during the three months ended March 31, 2025, (3) cash on hand of $34.4 million as of March 31, 2025, (4) $53.3 million available under the ATM Sales Agreement, which is part of the $150.0 million available under the 2024 Shelf, (5) management’s ability to curtail expenses, if necessary, and (6) the overall market value of the telehealth industry, which the Company believes will continue to drive interest in the Company as evidenced by the collaboration with Medifast, Inc. (“Medifast”) during the year ended December 31, 2024. The Company received $10 million to support the collaboration, funding enhancements to the Company platform, operations and supporting infrastructure, of which $5 million was paid at the closing on December 12, 2023, $2.5 million was paid during the three months ended March 31, 2024, and the remaining $2.5 million was paid during the three months ended June 30, 2024 (the “Medifast Collaboration”).

Previous wording

In addition, in connection with the Medifast Collaboration, on December 11, 2023, the Company entered into a stock purchase agreement with Medifast’s wholly-owned subsidiary, Jason Pharmaceuticals, Inc., whereby the Company issued 1,224,425 shares of its common stock in the Medifast Private Placement, at a purchase price of $8.1671 per share, for aggregate proceeds of approximately $10 million.

Current wording

The Company also entered into a stock purchase agreement and registration rights agreement with Medifast’s wholly-owned subsidiary, Jason Pharmaceuticals, Inc., whereby the Company issued 1,224,425 shares of its common stock in a private placement (the “Medifast Private Placement”) at a purchase price of $8.1671 per share, for aggregate proceeds of approximately $10 million, which was paid at the closing on December 12, 2023.

Previous wording

In December 2023, the FASB issued ASU 2023-09,Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to improve its income tax disclosure requirements. Under ASU 2023-09, entities must annually: (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 will become effective for the Company beginning on January 1, 2025. The Company does not expect the application of ASU 2023-09 to have a material impact to its consolidated financial statements and related disclosures.

Current wording

In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09,Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to improve its income tax disclosure requirements. Under ASU 2023-09, entities must annually: (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold. The amendments in this update are effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact that ASU 2023-09 will have to its consolidated financial statements and related disclosures.

Previous wording

All other accounting standards updates that have been issued or proposed by the FASB that do not require adoption until a future date are not expected to have a material impact on the unaudited condensed consolidated financial statements upon adoption.

Current wording

All other accounting standards updates that have been issued or proposed by the FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.