Q1 2024 Earnings Summary
- Strong patient growth and retention: The weight management business has shown robust subscriber growth—rising from 42,000 patients as of March 31 to over 50,000 currently, with excellent retention (over 80% of patients remaining on therapy after 90 days). This indicates a solid and expanding addressable market.
- Improving profitability metrics: The telehealth business is on track to achieve stand-alone profitability by Q3 2024, with expectations of generating between $3 million and $5 million EBITDA in Q4. This improving trend in cash flow and EBITDA supports a bullish outlook on margin expansion.
- Expansion through new product launches: The launch of a weight management offering under the RexMD brand—targeting a substantial male demographic with a bundled offering at around $300 per month—and strategic partnerships (like Medifast) are expected to further drive subscriber growth and diversify revenue streams, bolstering long-term upside potential.
- Delayed Path to Sustainable Profitability: The telehealth business is currently reporting a slight EBITDA loss (below $1 million), largely due to deferred revenue adjustments from weight management. This negative P&L performance poses a risk if the deferred revenue pattern shifts or fails to sustain the anticipated turnaround, potentially impacting overall profitability.
- Retention Challenges in Weight Management: Although initial 90-day retention is strong (over 80%), long-term retention of weight management patients approaches only 50%, which may limit revenue growth from existing patients and increases dependence on costly new customer acquisitions.
- Scaling Provider Network and Operational Efficiency Risks: Achieving scaling targets—such as supporting 1,000 patients per provider—requires a 50% increase in physicians and effective integration of AI and automation. Failure to secure sufficient provider capacity or realize expected efficiencies could slow both top-line growth and margin expansion.
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Health EBITDA
Q: Profit health care EBITDA progress?
A: Management explained that while telehealth EBITDA was slightly negative owing to deferred revenue, the business is cash flow positive and on track to be profitable by Q3—with expected telehealth EBITDA of $3–$5M in Q4. -
Future EBITDA
Q: Fiscal ‘25 EBITDA targets and drivers?
A: They forecast over $20M in health care EBITDA for fiscal 2025, driven by better margins from re-billed patients and improved operational leverage. -
Patient Retention
Q: What are weight loss retention rates?
A: Management reported that over 80% of patients remain on treatment after 90 days and roughly 50% of initiators persist at 10–11 months, indicating strong retention trends. -
Subscriber Growth
Q: How many weight management subscribers now?
A: Subscriber numbers grew from about 42,000 as of March 31 to over 50,000 currently, reflecting robust demand. -
RexMD Offering
Q: How will RexMD approach male weight management?
A: The upcoming RexMD offering will target adult males with a bundled therapy priced around $300 monthly, utilizing the established asynchronous platform. -
Provider Expansion
Q: Adding enough providers to scale?
A: They are adding approximately 4–5 new providers monthly, which should enable scaling capacity to potentially exceed 1,000 patients per provider over time. -
AI Automation
Q: How is AI aiding operational scaling?
A: AI enhancements have boosted patient response throughput by 60%, helping streamline care and lower service costs as the business scales. -
Medifast Partnership
Q: What growth role does Medifast play?
A: Although Medifast brings a $25M marketing investment with promising volume increases, management stressed that their core growth is independent of this partnership.