LifeMD (LFMD) has become a more compelling investment after selling its non-core WorkSimply division for $46 million. This move transforms LFMD into a pure-play telehealth company, revealing a much higher core business growth rate of around 32%. The stock appears significantly undervalued compared to its larger competitor, Hims & Hers (HIMS). Based on the analyst's valuation metric, LFMD trades at a substantial discount to HIMS, suggesting significant upside potential. The upcoming Q3 earnings report is a key catalyst to watch, as it will be the first to reflect the company's new, more focused structure.

LifeMD (LFMD)

• The company recently sold its subsidiary, WorkSimply, which was a PDF converter and business template service.
• The speaker views this sale as a very positive (bullish) development for several reasons:
  • Removes AI Risk: The WorkSimply business was seen as being "right in the crosshairs of AI" and likely to be disrupted over the long term. Selling it removes this risk from LifeMD's portfolio.
  • Simplifies the Story: The sale transforms LifeMD into a "pure-play" telehealth company. This makes the business much easier for Wall Street and investors to understand and value, as it was previously a mix of telehealth and a legacy tech service.
  • Unlocks True Growth: WorkSimply's slow growth was dragging down LifeMD's overall reported revenue growth rate, making it look slow compared to competitors like Hims & Hers. Without it, the core telehealth business's faster growth is now visible. The speaker projects the new growth rate will be around 32%, up from the 20-ish percent range.
• Financial Details of the Sale:
  • LifeMD received $22 million in cash upfront, which will be added to its balance sheet.
  • An additional $24 million will be paid over 3 years (12 quarters). The speaker views this as a royalty-like payment that will be almost pure profit, boosting the company's adjusted EBITDA (a measure of profitability).
  • The speaker estimates the sale price was roughly 5x WorkSimply's EBITDA, which is considered a good price for a business facing potential disruption.
• Valuation & Metrics:
  • The speaker believes the stock is "too cheap" at its current price of around $5.50.
  • Using a custom metric of Enterprise Value / Gross Profit / Revenue Growth, LifeMD scores a 0.037. This is significantly cheaper than its competitor Hims, which scores a 0.12.
  • With the added profitability from the sale, LifeMD is now considered a "Rule of 40" business, a positive benchmark for growth and profitability in the tech sector.

Takeaways

• The sale of WorkSimply is a major positive catalyst, turning LifeMD into a more focused, faster-growing, and easier-to-understand telehealth company.
• The company's financial profile is expected to improve, with a higher visible growth rate (32%), better profitability margins, and a stronger balance sheet from the cash infusion.
• Based on the speaker's analysis, LifeMD appears significantly undervalued compared to its main competitor, Hims & Hers.
• The upcoming Q3 earnings report is a key event to watch, as it will be the first report reflecting this new, more focused business structure.

Hims & Hers (HIMS)

• Hims & Hers is mentioned as the primary competitor and benchmark for LifeMD in the telehealth space.
• LifeMD is referred to as a "baby Hims," indicating it is a smaller but similar company with potential to grow.
• A key point of discussion was why LifeMD's top-line revenue growth appeared much slower than Hims's. This was attributed to the slow-growing WorkSimply division, a problem that has now been resolved.
• The speaker uses Hims as a direct valuation comparison to highlight how inexpensive LifeMD is. On the speaker's preferred metric, Hims trades at a 0.12, while LifeMD trades at just 0.03.

Takeaways

• Hims & Hers serves as the main industry comparable for LifeMD.
• The significant valuation gap between HIMS and LFMD is the core of the speaker's bullish thesis. The argument is that as LifeMD proves its new "pure-play" growth story, that valuation gap should narrow, meaning LifeMD's stock price could increase.