Terms

Series

8.875% Series A Cumulative Perpetual Preferred Stock

Liquidation Preference

$25.00

Coupon Rate

8.875%

Rate Type

Fixed

Annual Dividend

$2.22

Payment Frequency

Quarterly

Cumulative

Yes

Perpetual

Yes

Convertible

Yes

Callable

Yes

First Call Date

October 15, 2022

First Call Price

$25.75

Capital Stack Ranking

Junior To: All Existing And Future Indebtedness Of Lifemd, Inc., All Indebtedness And Liabilities Of Subsidiaries, Any Future Preferred Equity Expressly Designated As Senior; Pari Passu With: Series B Preferred Stock, Any Future Preferred Stock Expressly Designated As Parity; Senior To: Common Stock, All Other Equity Securities Not Expressly Ranking On Parity Or Senior

Regulatory (Basel III) Call

No

Tax Classification

Qualified Dividend

Qualifies for QDI

Yes

Qualifies for DRD

Yes

Shares Offered

1,400,000

Prospectus Summary

LifeMD, Inc. (Nasdaq: LFMD), a direct-to-patient telehealth company, is offering 1,400,000 shares of its 8.875% Series A Cumulative Perpetual Preferred Stock at $25.00 liquidation preference per share, with an annual dividend of $2.21875 per share paid quarterly on or about January 15, April 15, July 15, and October 15. The stock is fixed-rate, has no maturity date, and is callable beginning October 15, 2022 at $25.75, stepping down to par ($25.00) on and after October 15, 2025. Because the dividends are cumulative, any unpaid dividends accrue and must be satisfied in full before LifeMD may pay dividends on its common stock or other junior securities — providing investors with a meaningful contractual backstop on income. The Series A Preferred Stock sits above common stock and ranks on parity with LifeMD's Series B Preferred Stock, but is effectively junior to all debt obligations of LifeMD and its subsidiaries. As a holding company issuer, LifeMD's subsidiaries — which conduct actual business operations — are separate legal entities with no obligation to upstream funds specifically to service preferred dividends, creating structural subordination risk. There is no bank regulatory capital trigger; instead, the prospectus features a 'special optional redemption' allowing LifeMD to redeem at $25.00 per share within 90 days of a Delisting Event or 120 days of a Change of Control. Notably, a debt incurrence covenant limits new indebtedness above $25 million without holder consent, and any breach automatically raises the dividend rate to 10.875% for the affected dividend period. At the $25.00 offering price, the effective yield is 8.875% annually. Dividends may qualify for the preferential 15%/20% qualified dividend income (QDI) rate for individual investors and the dividends-received deduction (DRD) for corporate holders, but only to the extent LifeMD has sufficient current or accumulated earnings and profits — which is not guaranteed given the company's accumulated deficit. Payment dates are the 15th of January, April, July, and October, with the first payment on January 15, 2022. LifeMD is pre-funding eight quarterly dividend payments (~$6.2 million) into a segregated account at closing, providing approximately two years of dividend coverage, though those funds remain general assets accessible to creditors in insolvency.

Summarized from the SEC prospectus filing.

Distribution History

Subsequent Call Schedule

• Date2023-10-15

  Price25.5
• Date2024-10-15

  Price25.25
• Date2025-10-15

  Price25.0

Conversion Terms

Ranking vs. Other Preferreds

Dividend Stopper Provisions

Dividend Stopper Description

If LifeMD fails to pay cumulative dividends on the Series A Preferred Stock, it may not pay dividends on its common stock or any junior equity securities until all accumulated and unpaid Series A preferred dividends are satisfied.

Div Score Breakdown

Reinvesty's multi-factor safety analysis for this preferred, composite score: 49 (Average)