On Monday, BTIG reaffirmed its confidence in LifeMD Inc (NASDAQ: LFMD), sustaining a Buy rating and a $12.00 price target on the company's stock. The endorsement comes amidst recent developments in the legal case involving tirzepatide, a medication for type 2 diabetes and obesity. A Federal judge has approved the Food and Drug Administration's (FDA) request for a voluntary remand and stay, which allows compounding pharmacies to continue dispensing compounded tirzepatide under specific conditions while the FDA conducts its review.
The FDA has been granted time to review and is expected to provide a joint status report by November 21, 2024. This report will inform the court of the agency's review progress. Consequently, a hearing that was scheduled for October 15, 2024, has been canceled. This sequence of events follows a lawsuit filed by the Outsourcing Facilities Association (OFA), which criticized the FDA's decision to remove tirzepatide from the drug shortage list as "reckless and arbitrary," executed through an unlawful process.
The OFA's strong language in the lawsuit reflects the significant market demand for affordable GLP-1 treatments, including compounded alternatives. The temporary relief granted to compounding pharmacies is expected to be advantageous for LifeMD, as well as for Hims & Hers Health, Inc. (NYSE: HIMS), although BTIG does not currently rate Hims. The ongoing situation underscores the importance of accessible medication options in the healthcare market and the potential impact of regulatory decisions on pharmaceutical companies.
In other recent news, LifeMD reported strong second-quarter earnings, particularly within its telehealth and weight management segments, showing a 67% year-over-year revenue growth. Despite a GAAP net loss, the company recorded a consolidated gross margin high and an increase in active subscribers for its core telehealth services. LifeMD reiterated its full-year revenue guidance of at least $205 million, expecting continued growth in the telehealth segment.
LifeMD also announced plans to divest its subsidiary WorkSimpli, focusing on expanding its weight management services, developing new infrastructure, and growing its RexMD brand. This is part of the company's ongoing efforts to adapt and grow in the evolving telehealth landscape.
B.Riley maintains a Buy rating on LifeMD, following news from WeightWatchers about their new compounded semaglutide offering, similar to LifeMD's services. The current lawsuit filed by the Outsourcing Facilities Association against the FDA could impact the availability of semaglutide, a medication on the FDA shortage list.
BTIG also reaffirmed its positive stance on LifeMD, maintaining a Buy rating, following the recent resolution of the tirzepatide shortage by the FDA, which is not expected to significantly impact LifeMD's operations. LifeMD is perceived to be in a strong position for future growth despite the FDA's update on tirzepatide.
InvestingPro Insights
LifeMD Inc (NASDAQ: LFMD) presents a mixed financial picture that aligns with the recent developments in the tirzepatide case. According to InvestingPro data, the company has shown impressive revenue growth of 38.63% over the last twelve months as of Q2 2024, with quarterly revenue growth of 40.94% in Q2 2024. This robust growth trajectory supports BTIG's optimistic stance on the company.
An InvestingPro Tip highlights LifeMD's impressive gross profit margins, which is corroborated by the data showing a gross profit margin of 88.92% for the last twelve months. This strong margin could potentially benefit from the continued availability of compounded tirzepatide, as mentioned in the article.
However, investors should note that the stock has taken a significant hit over the last six months, with a price total return of -54.66%. This volatility may reflect market uncertainty surrounding regulatory decisions in the pharmaceutical industry, as discussed in the article.
For readers interested in a more comprehensive analysis, InvestingPro offers 11 additional tips for LifeMD, providing a deeper understanding of the company's financial health and market position.
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