LifeMD, a leading direct-to-patient telehealth company, closed on a new senior secured credit facility with Avenue Capital. The credit agreement, which matures on October 1, 2026, provides up to $40 million in total term loan capital including a first tranche of $15 million funded at closing, a second tranche of $5 million of committed capital and an additional accordion option to upsize the credit facility by an additional $20 million.
The term loans provide for an 18-month interest-only period, which can be extended to 24 months upon satisfaction of certain conditions. The second tranche will be available for draw at the Company’s election in the fourth quarter 2023 provided the Company is in compliance with the agreement. The additional accordion option is available subject to mutual approval by the Company and Avenue Capital. The credit facility bears interest at an annual rate equal to the greater of (i) the sum of four and three-quarters percent (4.75%) plus the Prime Rate, and (ii) twelve and one-half percent (12.50%). The obligations under the Avenue Capital credit facility are secured by a lien on substantially all of the assets of the Company.
“We are very pleased to secure this financing and excited to partner with a leading institutional investor, Avenue Capital, as we continue to execute upon our strategic growth and profitability plans,” said Justin Schreiber, Chairman & CEO, LifeMD. “This financing strengthens our balance sheet and provides LifeMD with what we believe to be more than sufficient capital to meet our long-term needs. We believe Avenue’s decision to invest in LifeMD is a testament to the strength of our current business and our long-term outlook.”
LifeMD CFO Marc Benathen commented, “This financing provides LifeMD with important, minimally dilutive capital to meet our long-term needs. By combining this capital with the Company’s expectation of a near-term elimination of our cash burn, we believe LifeMD is now capitalized to execute against our strategic plans with an enhanced level of financial flexibility. The investment from a leading institution, Avenue Capital, further validates the strength of our Company. Lastly, this investment affords LifeMD the opportunity to retain its majority interest in WorkSimpli which we believe to be substantially accretive to shareholder value and expect WorkSimpli to generate 20%+ EBITDA margins in 2023.”
The Company also issued warrants with an exercise price of $1.24 per share to purchase up to 967,742 shares of its common stock to Avenue Capital.