Key Takeaways Medifast expands meals, supplements and OPTAVIA coaching for personalized health support.MED is enhancing digital tools, incentives and training to strengthen coach success.New ACTIVE and ASCEND lines plus wellness focus broaden MED's holistic health platform.Medifast, Inc. (MED) is strategically positioning itself at the intersection of health, nutrition and lifestyle coaching. The company is expanding its portfolio of nutritionally-balanced meals and supplements, offering options tailored to ...

Core Insights - Over 90% of U.S. adults are classified as metabolically unhealthy, indicating a growing crisis of metabolic dysfunction [1] - Metabolic dysfunction is associated with various challenges, including being overweight and difficulties in maintaining energy and long-term health [1] - Medifast, a health and wellness company with over 40 years of experience, is focusing on addressing this issue through its science-backed, coach-guided lifestyle system [1]

Core Insights - Medifast's Q2 2025 results showed both net sales and earnings beating estimates, despite year-over-year declines in both metrics [2][3] - The company reported a significant drop in the number of active earning OPTAVIA coaches, impacting revenues [4][5] Financial Performance - Quarterly earnings were reported at 22 cents per share, with adjusted earnings at four cents per share, surpassing the Zacks Consensus Estimate of break-even earnings [3] - Net revenues totaled $105.6 million, a decline of 37.4% year-over-year, but exceeded the Zacks Consensus Estimate of $95 million [4] - Gross profit was $76.6 million, down 37.9% year-over-year, with a gross margin of 72.6%, a decrease of 60 basis points [6] - Selling, general and administrative expenses (SG&A) fell 40.8% year-over-year to $77.7 million, primarily due to reduced OPTAVIA coach compensation [7] - The loss from operations improved to $1.1 million, representing 1% of revenues compared to 4.7% in the previous year [8] Financial Health - As of June 30, 2025, Medifast had cash, cash equivalents, and investment securities totaling $162.7 million, with no debt and total shareholders' equity of $216 million [9] Future Outlook - The company anticipates third-quarter 2025 revenues between $70 million and $90 million, with expected losses ranging from 60 cents to break-even [10] - There has been a downward trend in estimates, with a consensus estimate shift of -116.67% [11][12] Industry Context - Medifast operates within the Zacks Food - Miscellaneous industry, where competitor Lamb Weston reported a revenue increase of 4% year-over-year [15] - Lamb Weston is also experiencing a downward trend in earnings estimates, with a Zacks Rank of 4 (Sell) [16]

Core Insights - Medifast, Inc. is strategically positioning itself at the intersection of health, nutrition, and lifestyle coaching, emphasizing personalized support through its OPTAVIA program amid growing consumer demand for health and wellness solutions [1][11] - The company is redefining itself as a comprehensive health partner by expanding its wellness platform to include areas such as healthy motion, hydration, sleep, and mental well-being [2][5] Product and Service Expansion - Medifast continues to expand its portfolio of nutritionally-balanced meals and supplements, offering options tailored to diverse consumer needs [2] - The introduction of the ACTIVE and ASCEND product lines is part of the company's integrated approach to broaden its product offerings [4] Technology and Engagement - Technology and personalization are core pillars of Medifast's strategy, enhancing customer engagement through improved digital tools and apps that connect consumers with independent OPTAVIA coaches [3][11] - The company is modernizing its coach economics and product pricing models while simplifying coach reporting through enhancements to its mobile app and web platform [4] Financial Performance and Estimates - Medifast's shares have lost 22.1% year to date, compared to the industry's 6.7% dip [7] - The forward price-to-sales ratio for Medifast is 0.33X, significantly lower than the industry average of 1.11X [8] - The Zacks Consensus Estimate for Medifast's 2025 earnings per share (EPS) indicates a year-over-year decline of 125.5%, while the estimate for 2026 shows growth of 40.4% [9]

Core Insights - Medifast, Inc. reported second-quarter 2025 results with both net sales and earnings exceeding Zacks Consensus Estimates, despite year-over-year declines in both metrics [1][11] - The company is focusing on personalized support through its OPTAVIA program to meet growing consumer demand for long-term health and wellness solutions [1] Financial Performance - Quarterly earnings were reported at 22 cents per share, benefiting from an investment in LifeMD, with adjusted earnings at 4 cents per share, surpassing break-even estimates [3][11] - Net revenues fell to $105.6 million, a decline of 37.4% year over year, attributed to a decrease in active earning OPTAVIA coaches, although it exceeded the Zacks Consensus Estimate of $95 million [4][11] - The average revenue per active earning OPTAVIA Coach decreased by 6.9% year over year to $4,630, influenced by challenges in client acquisition and the rise of GLP-1 medications for weight loss [4][11] Coach and Customer Base - The number of active earning OPTAVIA Coaches decreased by 32.7% year over year, dropping to 22,800 from 33,900 [5] - The company is prioritizing the revitalization of its coach and customer base by introducing enhanced tools, data-driven support, and new products [2] Margin and Cost Analysis - Gross profit was reported at $76.6 million, down 37.9% year over year, with a gross margin of 72.6%, reflecting a decrease of 60 basis points [6] - Selling, general and administrative expenses (SG&A) fell by 40.8% year over year to $77.7 million, primarily due to a reduction in OPTAVIA coach compensation [7] Operational Loss and Financial Health - The loss from operations improved by 86.5% to $1.1 million, representing 1% of revenues compared to 4.7% in the previous year [8] - As of June 30, 2025, the company had cash, cash equivalents, and investment securities totaling $162.7 million, with no debt and total shareholders' equity of $216 million [9] Future Outlook - For the third quarter of 2025, Medifast expects revenues between $70 million and $90 million, with potential losses ranging from 60 cents to break-even [12]

Core Viewpoint - Medifast reported Q2 2025 results that exceeded Wall Street estimates, but the company continues to face significant year-over-year revenue declines and challenges in its coach network [1][5][11] Financial Performance - Q2 2025 GAAP revenue was $105.6 million, surpassing the estimate of $101.8 million but down 37.4% from $168.6 million in Q2 2024 [2][5] - Diluted GAAP earnings per share were $0.22, a significant improvement from a loss of $0.75 in Q2 2024 [2][7] - Gross profit for Q2 2025 was $76.6 million, down 37.9% year-over-year, with a gross margin of 72.6%, slightly lower than 73.2% in Q2 2024 [2][6] - Net income for Q2 2025 was $2.5 million, reversing a loss of $8.2 million in the same quarter last year, although this included a one-time gain of $2.0 million from the sale of stock in LifeMD [2][8] Business Model and Strategy - Medifast's core business focuses on weight management products and nutrition plans through its OPTAVIA brand, leveraging a network of independent coaches [3] - The company is integrating medically-supported solutions, such as GLP-1 weight-loss medications, in collaboration with telehealth provider LifeMD [4] - The decline in the number of active earning coaches, which fell 32.7% to 22,800, is a primary driver of revenue contraction [5][6] Operational Insights - Average revenue per active earning coach decreased by 6.9% year-over-year to $4,630, attributed to challenges in attracting new clients [6] - Selling, general, and administrative expenses fell 40.8% to $77.7 million, improving SG&A as a share of revenue to 73.6% from 77.9% in Q2 2024 [6] - The company remains debt-free with $162.7 million in cash and equivalents and $30.2 million in inventory as of June 30, 2025 [8] Future Outlook - For Q3 2025, management expects GAAP revenue between $70 million and $90 million, indicating a potential return to net losses [11] - The company did not provide a full-year outlook but emphasized the need to stabilize and potentially reverse the decline in its coach network [12]

Financial Data and Key Metrics Changes - Revenue for Q2 2025 was $105.6 million, a decrease of 37.4% year-over-year, primarily due to a decrease in the number of active earning OPTAVIA Coaches [19] - Net income for Q2 2025 was $2.5 million or $0.22 per diluted share, compared to a net loss of $8.2 million or $0.75 per share in the prior year [24] - Gross profit decreased 37.9% year-over-year to $76.6 million, with a gross profit margin of 72.6%, down 60 basis points from the previous year [20] - SG&A expenses decreased 40.8% year-over-year to $77.7 million, primarily due to a decrease in OPTAVIA Coach compensation [21] Business Line Data and Key Metrics Changes - The total number of active earning OPTAVIA Coaches was approximately 22,800, a decrease of 32.7% from the previous year [19] - Average revenue per active earning OPTAVIA Coach was $4,630, a year-over-year decrease of 6.9% [20] - Coach productivity improved sequentially for the second consecutive quarter, with a year-over-year decline in productivity improving from a 10.9% decrease in Q2 2024 [20] Market Data and Key Metrics Changes - The company noted that 93% of U.S. adults are metabolically unhealthy, indicating a significant market opportunity for health and wellness solutions [9] - There is a growing need for effective long-term solutions to help individuals maintain weight loss progress, especially in the context of the rising use of GLP-1 medications [7] Company Strategy and Development Direction - The company is focused on transforming its business to capitalize on opportunities related to weight loss and metabolic health, emphasizing coach productivity and growth [5] - A new pricing and incentive structure named Premier Plus was launched to simplify client offers and enhance coach compensation predictability [12][13] - The introduction of the EDGE program aims to support coach growth and align behaviors that drive success [15] Management's Comments on Operating Environment and Future Outlook - Management highlighted the importance of addressing metabolic health as a key driver of health conditions, with a focus on supporting clients using GLP-1 medications and those transitioning off them [30] - The company expects third-quarter revenue to range from $70 million to $90 million, with earnings per share projected between $0.00 and a loss of $0.60 [25] Other Important Information - The effective tax rate for Q2 2025 was 13.7%, down from 23.4% in the prior year, primarily due to changes in executive compensation limitations [24] - The company liquidated its position in LifeMD common stock, realizing a gain of $2.6 million, compared to a loss of $4.2 million in the prior year [23] Q&A Session Summary Question: Changes in Coach Composition - Management noted that 60% of coaches support clients using GLP-1 drugs, with 23% of the client base reflecting individuals who have used or are using these medications [30] Question: Update on ASCEND Sales - ASCEND continues to meet expectations, supporting clients using GLP-1 drugs and those transitioning to maintenance phases [33] Question: Company Supported Marketing - Management indicated that while company-supported marketing is effective for re-engaging past clients, personal stories from coaches are more effective for acquiring new clients [35]

Financial Data and Key Metrics Changes - Revenue for Q2 2025 was $105.6 million, a decrease of 37.4% year-over-year, primarily due to a decrease in the number of active earning OPTAVIA Coaches [18] - Net income for Q2 2025 was $2.5 million or $0.22 per diluted share, compared to a net loss of $8.2 million or $0.75 per share in the prior year [23] - Gross profit decreased 37.9% year-over-year to $76.6 million, with a gross profit margin of 72.6%, down 60 basis points from the previous year [19][20] - SG&A expenses decreased 40.8% year-over-year to $77.7 million, primarily due to a decrease in OPTAVIA Coach compensation [20] Business Line Data and Key Metrics Changes - The total number of active earning OPTAVIA Coaches was approximately 22,800, a decrease of 32.7% from the previous year [18] - Average revenue per active earning OPTAVIA Coach was $4,630, a year-over-year decrease of 6.9% [19] - Coach productivity improved sequentially for the second consecutive quarter, despite a year-over-year decline [19] Market Data and Key Metrics Changes - The company noted that 93% of U.S. adults are metabolically unhealthy, indicating a significant market opportunity for OPTAVIA's programs [9] - There is a growing trend of clients using GLP-1 medications, with 60% of coaches supporting clients who have used these drugs [28] Company Strategy and Development Direction - The company is focused on transforming its business to capitalize on opportunities related to weight loss and metabolic health [5] - A new pricing and incentive structure named Premier Plus was launched to simplify client offers and improve coach compensation predictability [12][13] - The introduction of the EDGE program aims to support coach growth and align behaviors that drive success [14] Management's Comments on Operating Environment and Future Outlook - Management emphasized the importance of sustainable lifestyle changes alongside medication for long-term health [6] - The company is optimistic about addressing the challenges of poor metabolic health and believes its programs can significantly impact this issue [9] - Future guidance for Q3 revenue is expected to range from $70 million to $90 million, with EPS ranging from breakeven to a loss of $0.60 [24] Other Important Information - The effective tax rate for Q2 2025 was 13.7%, down from 23.4% in the prior year [22] - The company has $162.7 million in cash and cash equivalents and no interest-bearing debt as of June 30, 2025 [23] Q&A Session Summary Question: Changes in Coach Composition - Management noted that 60% of coaches support clients using GLP-1 drugs, and 23% of the client base reflects individuals who have used these medications [28][29] Question: Update on ASCEND Sales - ASCEND continues to meet expectations, supporting both clients using GLP-1 drugs and those transitioning to maintenance phases [33] Question: Company-Supported Marketing Strategy - The company found that coach-led personal messages are more effective for client acquisition than company-supported marketing, leading to a more focused budget on coach-driven initiatives [36]

Part I [Item 1 – Financial Statements](index=2&type=section&id=Item%201%20%E2%80%93%20Financial%20Statements) Unaudited financial statements show Q2 2025 net income of **$2.5 million** despite revenue decline and near-zero H1 operating cash flow [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 and H1 2025 vs 2024 Operating Results (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | YoY Change | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $105,555 | $168,558 | -37.4% | $221,283 | $343,297 | -35.5% | | **Gross Profit** | $76,644 | $123,438 | -37.9% | $160,888 | $250,730 | -35.8% | | **Income (Loss) from Operations** | $(1,066) | $(7,876) | +86.5% | $(2,329) | $64 | -3739.1% | | **Net Income (Loss)** | $2,480 | $(8,154) | +130.4% | $1,708 | $163 | +947.9% | | **Diluted EPS** | $0.22 | $(0.75) | +129.3% | $0.15 | $0.01 | +1400.0% | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Balance Sheet Summary (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $101,694 | $90,928 | | **Total Current Assets** | $206,441 | $214,404 | | **Total Assets** | $269,333 | $284,213 | | **Total Current Liabilities** | $46,184 | $64,161 | | **Total Liabilities** | $53,328 | $74,104 | | **Total Stockholders' Equity** | $216,005 | $210,109 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $28 | $20,351 | | **Net cash provided by (used in) investing activities** | $11,303 | $(5,307) | | **Net cash used in financing activities** | $(565) | $(1,511) | - Net cash from operating activities decreased sharply to **$28 thousand** for the first six months of 2025, down from **$20.4 million** in the same period of 2024[18](index=18&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - The company operates as a single reportable segment named OPTAVIA, which derives revenue from the sale of its products directly to clients[60](index=60&type=chunk)[62](index=62&type=chunk) - During Q2 2025, the company sold all of its holdings in LifeMD common stock, realizing a net gain of **$2.6 million** for the quarter, while the business collaboration with LifeMD continues[56](index=56&type=chunk)[57](index=57&type=chunk) - The company terminated its Amended Credit Agreement with Citibank, N.A. on October 30, 2024, and had no outstanding borrowings at the termination date[59](index=59&type=chunk) Inventories, Net (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Finished goods | $22,199 | $33,702 | | **Total** | **$30,201** | **$42,421** | [Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202%20%E2%80%93%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes revenue decline to fewer coaches and GLP-1 adoption, improving net income via reduced SG&A and business transformation [Overview](index=21&type=section&id=Overview) - The company is undergoing a comprehensive business transformation to address the market shift caused by the rapid acceptance of GLP-1 weight loss medications[70](index=70&type=chunk) - The business model relies on a network of approximately **22,800 active earning OPTAVIA coaches**[70](index=70&type=chunk) - Medifast has developed distinct program offerings for three client categories: those not using medications, those using GLP-1s, and those transitioning off GLP-1s[74](index=74&type=chunk)[76](index=76&type=chunk) - A collaboration with LifeMD provides clients access to clinicians and GLP-1 medications; Medifast sold its equity stake in LifeMD in Q2 2025, but the collaboration continues[78](index=78&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) - Q2 2025 revenue decreased **37.4%** year-over-year to **$105.6 million**, primarily driven by a **32.7%** decrease in the number of active earning OPTAVIA coaches[96](index=96&type=chunk) - SG&A expenses for Q2 2025 decreased by **$53.6 million** (**40.8%**) compared to Q2 2024, mainly due to a **$24.3 million** decrease in coach compensation and the non-recurrence of prior-year costs, including **$12.5 million** for supply chain optimization and **$3.0 million** for convention cancellation[100](index=100&type=chunk) - Other income increased significantly in Q2 2025, primarily due to a **$2.6 million** gain on the investment in LifeMD common stock, compared to a **$4.2 million** loss in the prior-year period[102](index=102&type=chunk) - The company reported net income of **$2.5 million** (**$0.22 per diluted share**) for Q2 2025, a substantial improvement from a net loss of **$8.2 million** (**$0.75 per diluted share**) in Q2 2024[105](index=105&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) - Working capital increased to **$160.3 million** at June 30, 2025, from **$150.2 million** at December 31, 2024[106](index=106&type=chunk) - Net cash provided by operating activities fell sharply to less than **$0.1 million** for the first six months of 2025, compared to **$20.4 million** for the same period in 2024[107](index=107&type=chunk) - The company terminated its credit agreement in October 2024 and had no outstanding borrowings[113](index=113&type=chunk) [Item 3 – Quantitative and Qualitative Disclosures about Market Risk](index=30&type=section&id=Item%203%20%E2%80%93%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Primary market risk from interest rate changes on investments is immaterial, with equity investment risk eliminated after selling LifeMD holdings - The company's main market risk is from interest rate changes impacting its investment portfolio, but it estimates a **10%** adverse change would have an immaterial effect[115](index=115&type=chunk) - Market risk related to price fluctuations in LifeMD common stock was eliminated as the company sold its entire investment during the quarter ended June 30, 2025[116](index=116&type=chunk) [Item 4 – Controls and Procedures](index=30&type=section&id=Item%204%20%E2%80%93%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - Management concluded that the Company's disclosure controls and procedures are effective at the reasonable assurance level as of June 30, 2025[117](index=117&type=chunk) - No material changes in internal control over financial reporting occurred during the fiscal quarter ended June 30, 2025[118](index=118&type=chunk) Part II [Item 1 – Legal Proceedings](index=31&type=section&id=Item%201%20%E2%80%93%20Legal%20Proceedings) The company is subject to routine litigation, which is not expected to materially impact its financial results or position - The company does not believe that litigation and claims arising from the ordinary course of business will have a material adverse effect on its results, financial position, or liquidity[120](index=120&type=chunk) [Item 1A – Risk Factors](index=31&type=section&id=Item%201A%20%E2%80%93%20Risk%20Factors) No material changes to risk factors previously disclosed in the company's 2024 Form 10-K have been reported - There have been no material changes to the risk factors set forth in the company's 2024 Form 10-K[121](index=121&type=chunk) [Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202%20%E2%80%93%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 24 shares for employee tax obligations, with **1,323,568 shares** remaining available under its stock repurchase plan - In June 2025, **24 shares** were repurchased at an average price of **$12.66 per share** to cover employee tax withholding obligations[122](index=122&type=chunk) - As of June 30, 2025, **1,323,568 shares** remained eligible for repurchase under the company's stock repurchase plan, which has no expiration date[124](index=124&type=chunk) [Item 5 – Other Information](index=31&type=section&id=Item%205%20%E2%80%93%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the second quarter of 2025 - During the three months ended June 30, 2025, no director or officer of the Company adopted or terminated a Rule 10b5-1 trading arrangement[125](index=125&type=chunk) [Item 6 – Exhibits](index=32&type=section&id=Item%206%20%E2%80%93%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate governance documents and required CEO and CFO certifications - The report includes a list of filed exhibits, such as the CEO and CFO certifications required under Sections 302 and 906 of the Sarbanes-Oxley Act[126](index=126&type=chunk)

Financial Performance - Q2 2025 revenue reached $106 million[11] - The company reported an operating loss of $1.1 million[15] - Earnings per share stood at $0.22[19] - Revenue per active earning coach (AEC) was $4,630[13, 14] - As of June 30, 2025, cash and investments totaled $163 million[6, 21, 22] Coach Network and Productivity - The company has 22,800 active earning coaches[20] - Revenue per active earning coach declined 6.9% year-over-year but increased sequentially for the second consecutive quarter[8] - New coach productivity exceeded the same period last year[8] - 60% of coaches have had at least one client on GLP-1 medications[30, 70] Strategic Initiatives - The company is focusing on science-driven innovation and offer evolution[23, 65] - The Premier+ program streamlines pricing and processes to improve retention and aid recruitment[25, 48, 51] - The OPTAVIA EDGE program is designed to drive coach productivity, client acquisition, and leadership development[52, 71] Market and Health Focus - The company is addressing the rising metabolic health challenge, with 9 out of 10 U S adults being metabolically unhealthy[31, 69] - The OPTAVIA 5&1 Plan has been shown to impact key drivers of metabolic health, retaining 98% of lean mass in a clinical trial[38, 40] Q3 2025 Guidance - The company projects Q3 2025 revenue between $70 million and $90 million[75] - Q3 2025 loss/earnings per share is expected to be between ($0.60) and $0.00[75]