LifeMD Faces Class Action Lawsuit Over Allegations of Financial Misrepresentation and Cost Concealment

LifeMD Faces Legal Challenges

A recent federal class action lawsuit has been filed against LifeMD (NASDAQ: LFMD), a telehealth provider, suggesting that the company and its management allegedly misled investors regarding its operational and financial performance. The lawsuit, initiated by Hagens Berman, aims to address the perceived concealment of rising customer acquisition costs and refund issues, particularly concerning its RexMD brand and weight management services. This legal action was prompted by a significant stock price drop in August, which followed LifeMD's disappointing earnings announcement.

Details of the Lawsuit

The lawsuit centers around the class period spanning from May 7 to August 5, 2025. It was during this timeframe that LifeMD reportedly failed to disclose pertinent operational challenges that it was facing. Specifically, investors are accused of being misled by LifeMD's optimistic statements made on May 6, 2025, when the company revealed its first-quarter results. At that time, LifeMD amplified its revenue and adjusted EBITDA guidance while highlighting a strong market position. However, the subsequent performance revealed a dramatically different landscape, leading to allegations of securities fraud.

According to the complaint, LifeMD painted a picture of sustained success driven by what it termed a ‘category-defining competitive moat’ in virtual obesity care and robust results from its RexMD brand. However, the suit suggests that this upbeat portrayal omitted critical information regarding skyrocketing customer acquisition costs and an unexpected surge in refund requests within the weight management segment—issues that were crucial for investors to know.

Impact of Earnings Report

LifeMD's situation escalated dramatically on August 5 when the company announced dismal second-quarter results, missing both revenue and earnings estimates. The announcement forced LifeMD to drastically downgrade its full-year guidance. During the earnings call, executives acknowledged unforeseen operational hurdles such as “temporary elevated customer acquisition costs” linked to RexMD and an uptick in refund issues impacting its weight management offerings. Following this, LifeMD's stock plummeted more than 44%, leading many investors to question the transparency and accuracy of the company's previous statements.

Options for Affected Investors

This class action lawsuit, which is labeled Johnston v. LifeMD, Inc., represents a significant opportunity for investors who have suffered losses during the aforementioned period to seek remuneration. Hagens Berman is actively encouraging affected shareholders to reach out, especially before the impending deadline of October 27, 2025.

Hagens Berman partner Reed Kathrein, who is spearheading the investigation, emphasized the significance of understanding if LifeMD was aware of operational issues but chose not to disclose them. The firm is committed to examining all aspects of the case and is open to gathering additional insights from former employees or whistleblowers.

Whistleblower Program

In line with encouraging transparency, the SEC has introduced a whistleblower program that rewards individuals who come forward with original information that leads to successful enforcement actions. Whistleblowers could earn up to 30% of the recovery for such cases, presenting a vital opportunity for individuals with insider knowledge about LifeMD's practices.

For those interested in participating or exploring their options, more information is available through Hagens Berman's designated channels.

About Hagens Berman

Established as a leading plaintiffs’ rights firm, Hagens Berman specializes in complex litigation aimed at holding corporations accountable. The firm has secured over $2.9 billion on behalf of clients and emphasizes representing investors, whistleblowers, and consumers affected by corporate malpractice. Their ongoing investigation into LifeMD underscores a broader commitment to pursuing justice and transparency in corporate practices.

For continued updates, investors can follow Hagens Berman on its official channels. Interested parties are encouraged to reach out with any pertinent information or inquiries regarding the lawsuit or related matters.