#USA #Securities #San Francisco #LifeMD #RexMD

LifeMD, Inc. Under Securities Class Action After 44% Stock Drop

LifeMD, Inc. (NASDAQ: LFMD) has found itself in a challenging situation as it faces a securities class action lawsuit following a significant drop in share price. The suit, titled Johnston v. LifeMD, Inc., was filed in the Eastern District of New York (No. 1:25-cv-04761) and targets investors who acquired shares between May 7, 2025, and August 5, 2025. This legal action was prompted by LifeMD's disappointing Q2 2025 earnings report, which revealed a 44% collapse in share price, amounting to a loss of $5.31 per share.

Disappointing Earnings Results

On August 5, 2025, LifeMD reported its Q2 financial results and shocked investors with massive earnings misses. The company had previously characterized its position in the healthcare market as robust, claiming to have built a "category-defining competitive moat in virtual obesity care" and reporting promising growth for its RexMD brand, a service focused on erectile dysfunction treatments. However, the August earnings report contradicted these optimistic assertions, revealing that the company had drastically reduced its revenue guidance by approximately 7% and cut its adjusted EBITDA guidance by an alarming 12%-13%.

Impact of Customer Acquisition Costs

During the company's earnings call, executives discussed setbacks in their weight management segment, attributing the challenges to higher-than-expected refund rates. Many patients either lacked insurance coverage for prescribed medications or could not afford the out-of-pocket expenses for branded therapies. Furthermore, the management also noted significant spikes in customer acquisition costs within the competitive ED market, which further worsened the company's outlook and investor confidence.

Accusations of Misleading Information

The class action lawsuit accuses LifeMD of making false representations and failing to disclose critical information regarding its business operations while company insiders sold shares. The complaint claims that the company had not adequately considered rising acquisition costs associated with both its RexMD segment and the sale of obesity treatments when it set its guidance in May 2025. This miscalculation suggests potential recklessness in financial forecasting, which has now led to serious investor losses.

Hagens Berman, a well-known national securities litigation firm, continues to champion the cause of LifeMD investors alleging recklessness in the company’s financial guidance. The lead lawyer in the case, Reed Kathrein, stated, “We’re investigating whether LifeMD may have recklessly guided on May 6, 2025, while its weight management was experiencing higher refund rates and RexMD was facing elevated acquisition costs.”

Responding to the Class Action

LifeMD investors who incurred notable losses during the class period are encouraged to submit their losses to Hagens Berman by October 27, 2025, the deadline for being named lead plaintiff in the case. Furthermore, the firm is looking for anyone who might possess additional information relevant to this case to assist in the investigation.

About Hagens Berman

Founded in the early 2000s, Hagens Berman is a complex litigation firm focusing on corporate accountability and has established a history of representing plaintiffs successfully in securities class actions. With a track record of securing settlements exceeding $2.9 billion in related cases, the firm emphasizes its commitment to helping investors and whistleblowers receive the justice they deserve. Investors with knowledge concerning LifeMD or those who have suffered losses are encouraged to reach out to the firm via email or phone.

The troubling developments under LifeMD, compounded by the legal issues emerging in the wake of disappointing quarterly results, underscore the necessity for due diligence and transparency in corporate practices. Investors must remain vigilant and informed about the ever-shifting landscape of the healthcare sector, especially amid the evolving needs of patients in obesity care and associated pharmaceuticals.

Conclusion

LifeMD's situation serves as a cautionary tale for investors, illustrating the potential pitfalls of relying solely on corporate guidance without sufficient scrutiny. As the legal battle unfolds, the firm's next steps may well set important precedents regarding investor rights and corporate responsibility in the health tech sector.