Financial Survey: LifeMD (NASDAQ:LFMD) & Castle Biosciences (NASDAQ:CSTL)

Castle Biosciences (NASDAQ:CSTL) and LifeMD (NASDAQ:LFMD) are both small-cap healthcare companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, valuation, risk, dividends, institutional ownership, profitability and analyst recommendations.

Risk and Volatility

Castle Biosciences has a beta of 1, suggesting that its stock price has a similar volatility profile to the S&P 500.Comparatively, LifeMD has a beta of 2.19, suggesting that its stock price is 119% more volatile than the S&P 500.

Profitability

This table compares Castle Biosciences and LifeMD’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Castle Biosciences	-6.10%	-4.92%	-4.09%
LifeMD	0.10%	-168.23%	-31.27%

Earnings and Valuation

This table compares Castle Biosciences and LifeMD”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Castle Biosciences	$344.23 million	2.89	-$24.16 million	($0.66)	-49.27
LifeMD	$194.05 million	0.59	$14.35 million	($0.05)	-47.40

LifeMD has lower revenue, but higher earnings than Castle Biosciences. Castle Biosciences is trading at a lower price-to-earnings ratio than LifeMD, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Castle Biosciences and LifeMD, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Castle Biosciences	1	1	8	1	2.82
LifeMD	1	1	8	0	2.70

Castle Biosciences currently has a consensus target price of $44.88, suggesting a potential upside of 37.99%. LifeMD has a consensus target price of $7.57, suggesting a potential upside of 219.47%. Given LifeMD’s higher probable upside, analysts clearly believe LifeMD is more favorable than Castle Biosciences.

Institutional and Insider Ownership

92.6% of Castle Biosciences shares are held by institutional investors. Comparatively, 35.5% of LifeMD shares are held by institutional investors. 6.1% of Castle Biosciences shares are held by insiders. Comparatively, 17.2% of LifeMD shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

Castle Biosciences beats LifeMD on 8 of the 14 factors compared between the two stocks.

About Castle Biosciences

Castle Biosciences, Inc., a molecular diagnostics company, provides testing solutions for the diagnosis and treatment of dermatologic cancers, Barrett's esophagus, uveal melanoma, and mental health conditions. It offers DecisionDx-Melanoma, a risk stratification gene expression profile (GEP) test to identify the risk of metastasis for patients diagnosed with invasive cutaneous melanoma; DecisionDx-SCC, a proprietary risk stratification GEP test for patients with cutaneous squamous cell carcinoma; MyPath Melanoma, a test used for patients with difficult-to-diagnose melanocytic lesions; and TissueCypher, a spatial omics test to predict future development of high-grade dysplasia and/or esophageal cancer in patients with non-dysplastic, indefinite dysplasia, or low-grade dysplasia Barrett's esophagus. In addition, the company provides DecisionDx-UM test, a proprietary risk stratification GEP test that predicts the risk of metastasis for patients with uveal melanoma; and IDgenetix, a pharmacogenomic test that helps guide drug treatment for major depressive disorder, schizophrenia, bipolar disorder, anxiety disorders, social phobia, obsessive-compulsive personality disorder, post-traumatic stress disorder, and attention deficit hyperactivity disorder. It offers its products to skin cancer, gastroenterology, and mental health markets. The company was incorporated in 2007 and is headquartered in Friendswood, Texas.

About LifeMD

LifeMD, Inc. operates as a direct-to-patient telehealth company that connects consumers to healthcare professionals for medical care in the United States. The company offers telehealth platform comprising RexMD, a men's telehealth brand that provides access to virtual medical treatment for a variety of men's health needs from licensed physician; ShapiroMD that provides virtual medical treatment, prescription medications, patented doctor formulated OTC products, topical compounded medications, and medical devices treating male and female hair loss; NavaMD, a female-oriented tele-dermatology that offers virtual medical treatment from dermatologists and other providers; and prescription oral and compounded topical medications to treat aging and acne; and Cleared which provides personalized treatments for allergy, asthma and immunology, including in-home tests for both environmental and food allergies, prescriptions for allergies and asthma and immunotherapies for treating chronic allergies. It also provides LifeMD PC, a direct-to-consumer virtual primary care which includes 24/7 access to a provider for their primary care, urgent care, and chronic care needs; and offers virtual consultations and treatment, prescription medications, diagnostics and imaging, wellness coaching, and more. In addition, the company offers PDFSimpli, an online software as a service platform that allows users to create, edit, convert, sign, and share PDF documents; ResumeBuild which provides digital resume and cover letter services; SignSimpli, a digital signature platform; and LegalSimpli, a provider of legal forms for consumers and small businesses. It sells its products directly to consumers and through e-commerce platforms, as well as through third party partner channels. The company was formerly known as Conversion Labs, Inc. and changed its name to LifeMD, Inc. in February 2021. LifeMD, Inc. was incorporated in 1994 and is headquartered in New York, New York.