Core Insights - The article emphasizes the importance of the Zacks Rank system and Style Scores in identifying strong investment opportunities, particularly in value investing [1][2][3] Company Overview - MEDIFAST (MED) is highlighted as a strong value stock, currently holding a Zacks Rank of 1 (Strong Buy) and a Value grade of A [3] Valuation Metrics - MED has a Price-to-Book (P/B) ratio of 1.09, which is attractive compared to the industry average of 2.20. The P/B ratio has fluctuated between 0.92 and 4.26 over the past 52 weeks, with a median of 1.35 [4] - The Price-to-Sales (P/S) ratio for MED is 0.32, significantly lower than the industry average of 0.92, indicating potential undervaluation [5] - MED's Price-to-Cash Flow (P/CF) ratio stands at 5.33, compared to the industry average of 17.36. This ratio has ranged from 2.64 to 6.84 in the past year, with a median of 4.87 [6] Investment Outlook - The combination of these valuation metrics suggests that MEDIFAST is likely undervalued, and its strong earnings outlook positions it as one of the market's strongest value stocks [7]

Group 1 - Medifast, Inc. (NYSE: MED) reported better than expected quarterly EPS and is making significant investments in new marketing strategies to enhance future net sales [1] - The company is incorporating AI technologies into its operations, indicating a focus on innovation and modernization [1] Group 2 - The analyst has a beneficial long position in the shares of MED, indicating confidence in the company's future performance [2]

Core Viewpoint - Medifast, Inc. reported third-quarter 2024 results that exceeded Zacks Consensus Estimates for both earnings and revenues, although both metrics showed a year-over-year decline due to increased competition and changing consumer behaviors [1]. Financial Performance - Adjusted earnings for the third quarter were 35 cents per share, a significant drop from $2.12 in the same quarter last year, but still better than the Zacks Consensus Estimate of a loss of 15 cents per share [2]. - Net revenues totaled $140.2 million, reflecting a 40.6% decline year over year, attributed to fewer active-earning OPTAVIA Coaches and reduced productivity [3]. - The average revenue per active-earning OPTAVIA Coach decreased to $4,672 from $5,008, while the number of active-earning Coaches fell by 36.3% to 30,000 from 47,100 [3]. - Gross profit was reported at $105.7 million, down 40.4% year over year, with a gross profit margin of 75.4%, slightly up from 75.2% in the previous year [4]. Expenses and Margins - Selling, general, and administrative (SG&A) expenses decreased by 31.8% to $103.6 million, primarily due to lower compensation for OPTAVIA coaches and reduced event costs [5]. - SG&A expenses as a percentage of revenues increased by 950 basis points to 73.9%, driven by customer acquisition efforts and reduced leverage on fixed costs [6]. - Adjusted income from operations fell 85.3% to $3.8 million, with the adjusted operating margin decreasing by 810 basis points to 2.7% [6]. Financial Health - As of September 30, 2024, the company had cash, cash equivalents, and investments totaling $115.3 million, with no debt and total shareholders' equity of $207.3 million [7]. - The company held a $225 million credit facility but decided to terminate the credit agreement effective October 30, 2024, as part of its Fuel for the Future initiative [8]. Future Outlook - For the fourth quarter, Medifast expects revenues to range between $100 million and $120 million, anticipating continued challenges in customer acquisition due to the rise of GLP-1 medications [9]. - Management forecasts a loss per share for the quarter between 10 to 65 cents, including an expected $7 million in marketing spending [10].

Core Viewpoint - Medifast reported quarterly earnings of $0.35 per share, significantly beating the Zacks Consensus Estimate of a loss of $0.15 per share, although this is a decline from $2.12 per share a year ago, indicating a substantial earnings surprise of 333.33% [1] Group 1: Earnings Performance - The company has surpassed consensus EPS estimates three times over the last four quarters [2] - Medifast's revenues for the quarter ended September 2024 were $140.16 million, exceeding the Zacks Consensus Estimate by 3.48%, but down from $235.87 million year-over-year [2] - The company has topped consensus revenue estimates four times over the last four quarters [2] Group 2: Stock Performance and Outlook - Medifast shares have declined approximately 72.4% since the beginning of the year, contrasting with the S&P 500's gain of 20.1% [3] - The company's earnings outlook is mixed, with a current Zacks Rank of 3 (Hold), suggesting shares are expected to perform in line with the market in the near future [6] - Current consensus EPS estimate for the coming quarter is $0.16 on revenues of $162.26 million, and $1.12 on revenues of $641.01 million for the current fiscal year [7] Group 3: Industry Context - The Food - Miscellaneous industry, to which Medifast belongs, is currently in the bottom 45% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Medifast's stock performance [5]

Financial Data and Key Metrics Changes - Revenue for Q3 2024 was $140.2 million, a decrease of 40.6% year-over-year, primarily due to a decline in the number of active earning OPTAVIA Coaches and lower productivity per coach [36] - Net income for Q3 2024 was $1.1 million or $0.10 per diluted share, compared to $23.1 million or $2.12 per diluted share in the prior year [43] - Gross profit decreased 40.4% year-over-year to $105.7 million, while gross profit margin improved by 20 basis points to 75.4% [38] Business Line Data and Key Metrics Changes - The number of active earning OPTAVIA Coaches decreased by 36.3% year-over-year to approximately 30,000 [36] - Average revenue per active earning OPTAVIA Coach for Q2 was $4,672, reflecting a year-over-year decline of 6.7% [37] - 12% of customers have used GLP-1 medications over the last 12 months, up from 4% at the beginning of the year [14] Market Data and Key Metrics Changes - The GLP-1 support market is projected to grow to $50 billion or more by 2030, indicating a significant opportunity for the company [13] - External research indicates that about one-third of GLP-1 medication users quit after six months, with this number potentially rising to half by one year [17] Company Strategy and Development Direction - The company is executing a strategic transformation plan to adapt to the changing weight loss market, focusing on three customer segments related to GLP-1 medications [9][10] - A new program under the OPTAVIA ASCEND brand is expected to launch in early 2025, featuring products designed for those on GLP-1 medications [23] - The company aims to improve customer experience through better tracking dashboards and advanced data capabilities [19] Management's Comments on Operating Environment and Future Outlook - Management acknowledges significant impacts from the adoption of GLP-1 medications on business fundamentals but believes there is an opportunity to return to growth [6][7] - The company expects Q4 2024 revenue to range from $100 million to $120 million, reflecting continued challenges in customer acquisition [46] - Management remains cautiously optimistic about improved performance in 2025 and beyond due to new product launches and enhanced customer experience [32] Other Important Information - The company ended Q3 2024 with $170 million in cash and no interest-bearing debt, up from $150 million at the end of 2023 [44] - The effective tax rate for Q3 2024 was 28.5%, higher than the previous year's 12.9% due to a decrease in tax benefits [42] Q&A Session Summary Question: Can you provide insights on the marketing spend and areas of scaling back? - The company spent $7 million in Q3 and plans to spend another $7 million in Q4, focusing on optimizing customer acquisition costs [51] Question: What channels have been more or less successful in company-led advertising? - Social media channels have been highly effective, with 90% of client acquisition still coming through the coach channel [53][54] Question: Why is there an expected acceleration in revenue decline for Q4? - Continued pressure on client acquisition and a seasonal decline in health and wellness focus contribute to the expected revenue decline [62] Question: What portion of clients on GLP-1 drugs got their prescriptions from LifeMD? - The company did not disclose specific numbers but indicated a mix of sources for prescriptions among clients [65] Question: What are the expected costs associated with clinical studies? - Initial estimates for clinical studies are less than $2 million, with most costs occurring in 2025 and beyond [75] Question: When will the new vitamins and supplements be available? - The new products will be introduced to coaches in late 2024 and available for clients during the resolution season [75]

Financial Performance - Revenue for Q3 2024 was $140,163,000, a decrease of 40.5% compared to $235,869,000 in Q3 2023[6] - Gross profit for Q3 2024 was $105,674,000, down 40.5% from $177,377,000 in Q3 2023[6] - Net income for Q3 2024 was $1,129,000, a significant decline of 95.1% from $23,131,000 in Q3 2023[6] - Earnings per share (EPS) for Q3 2024 was $0.10, compared to $2.12 in Q3 2023, reflecting a decrease of 95.3%[6] - Net income for the nine months ended September 30, 2024, was $1,290,000, a significant decrease from $93,380,000 in the same period of 2023, reflecting a decline of approximately 98.6%[11] - The company reported a net income of $1.1 million for the three months ended September 30, 2024, compared to $23.1 million for the same period in 2023, indicating a decrease of approximately 95.2%[33] Assets and Liabilities - Total assets as of September 30, 2024, were $291,237,000, down from $309,908,000 as of December 31, 2023[9] - Total liabilities decreased to $83,895,000 as of September 30, 2024, from $108,427,000 at the end of 2023[9] - As of September 30, 2024, the total equity balance is $207,342,000, with retained earnings of $175,977,000[13] Cash Flow and Dividends - The company reported a net cash flow provided by operating activities of $29,423,000 for the nine months ended September 30, 2024, down from $137,135,000 in the same period of 2023[11] - Cash dividends declared per share were $0.00 in Q3 2024, compared to $1.65 in Q3 2023[6] - Cash dividends paid to stockholders decreased significantly to $715,000 from $55,039,000, a reduction of about 98.7%[11] Expenses - Selling, general, and administrative expenses for the nine months ended September 30, 2024, were $354,235 thousand, down from $516,755 thousand in the same period of 2023, reflecting a reduction of 31.4%[6] - Advertising expenses for the nine months ended September 30, 2024, totaled approximately $16.4 million, a significant increase from $3.0 million for the same period in 2023[23] - The total share-based compensation expense for the nine months ended September 30, 2024, was $5.2 million, compared to $5.8 million for the same period in 2023, reflecting a decrease of approximately 9.8%[43] Inventory - As of September 30, 2024, total inventories decreased to $40.1 million from $54.6 million as of December 31, 2023, representing a decline of approximately 26.6%[30] - The company reported a decrease in inventories to $14,496,000 from $60,629,000, indicating a reduction of about 76%[11] Shareholder Information - The number of shares issued increased from 10,896,000 on December 31, 2023, to 10,937,000 on March 31, 2024[13] - The weighted average shares outstanding for basic earnings per share were 10,937 thousand for the three months ended September 30, 2024, compared to 10,892 thousand for the same period in 2023[6] Credit and Financing - The Company entered into a credit agreement providing for a $225 million senior secured revolving credit facility, maturing on April 13, 2026, with no borrowings outstanding as of September 30, 2024[59][64] - The applicable rate for Term SOFR Loans as of September 30, 2024, was 1.25% per annum, with a commitment fee ranging from 0.20% to 0.40% based on the Company's Total Net Leverage Ratio[62][61] Supply Chain Optimization - The Company completed a supply chain optimization initiative, closing its Maryland Distribution Center, with no associated impairment on the asset group[65] - For the nine months ended September 30, 2024, the total supply chain optimization charges amounted to $12,502 thousand, which includes accelerated depreciation charges of $9,190 thousand and a loss on impairment of equipment held for sale of $2,499 thousand[67] Accounting and Compliance - The company is currently evaluating the impact of adopting ASU 2023-09 on its consolidated financial statements, which is effective for annual periods beginning after December 15, 2024[27] - The company is currently evaluating the impact of adopting ASU 2023-07 on its consolidated financial statements, which will require additional segment disclosures starting after December 15, 2023[28]

Medifast® Q3 2024 Earnings Supplement © 2024 Medifast, Inc. All Rights Reserved. Safe Harbor Statement2 This presentation contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements generally can be identified by use of phrases or terminology such as "intend," "anticipate," "expect" or other similar w ...

Core Viewpoint - Medifast, Inc. is expected to report a significant decline in both revenue and earnings for the third quarter of 2024, with revenues projected at $135.5 million, reflecting a 42.6% decrease year-over-year [1] Financial Performance - The consensus estimate for the bottom line remains unchanged at a loss of 15 cents per share, a substantial drop from the previous year's earnings of $2.12 per share [2] - Medifast has a trailing four-quarter earnings surprise of 64.5% on average, with a notable 155.6% surprise in the last reported quarter [2] Market Challenges - The company faces macroeconomic challenges, including increased competition in the health and wellness sector, the rise of GLP-1 medications, and a decline in consumer spending, which are expected to persist [3] - Management anticipates revenues between $125 million and $145 million for Q3 2024, indicating a continued decline in the number of active OPTAVIA Coaches due to challenges in customer acquisition linked to the acceptance of GLP-1 medications [4] Cost Management and Investments - Medifast is experiencing rising selling, general, and administrative (SG&A) costs and plans to invest significantly in customer acquisition, including $9 million on marketing initiatives and $4 million for a coach convention [5][6] - The company is implementing measures to enhance growth, including improving product offerings and customer experience, and testing new growth channels through collaboration with LifeMD [7] Strategic Initiatives - The 'Fuel for the Future' program aims to optimize expenditures and improve efficiency, potentially providing some relief in the upcoming quarter [8] Earnings Prediction - The current Zacks model does not predict an earnings beat for Medifast, as it holds a Zacks Rank of 3 and an Earnings ESP of 0.00% [9]

Core Insights - Medifast, Inc. is adapting to the evolving healthcare landscape influenced by the growing acceptance of GLP-1 medications, which are impacting the weight loss sector [1] - The company's integrated approach, combining OPTAVIA coaches and LifeMD clinicians, provides comprehensive lifestyle support, distinguishing it in the market [2] Expansion and Growth Strategy - Medifast is proactively expanding its product offerings and customer acquisition channels, investing $4.6 million in marketing during Q2 to enhance brand awareness and capture market share [3] - The potential for up to 20 million people in the U.S. using GLP-1 medications by 2030 positions Medifast favorably to tap into this growing market [4] - The company is focused on long-term growth through product innovation, market expansion, and refining client experiences [5] Operational Efficiency - Medifast's "Fuel for the Future" program aims to reduce costs and improve operational efficiency, resulting in a 370 basis point expansion in adjusted gross margin due to IT cost savings and better inventory management [7] Challenges and Market Conditions - The company faces challenges in customer acquisition due to macroeconomic factors, including competition and a slowdown in consumer spending, which have impacted revenue and the number of active OPTAVIA Coaches [8][9] - Rising Selling, General and Administrative (SG&A) costs are affecting profits, prompting the company to make significant investments in marketing and product development, which may impact short-term earnings per share [10] Financial Performance - Medifast's revenues declined in Q2 2024, with expectations for Q3 revenues between $125 million and $145 million, reflecting ongoing challenges in customer acquisition [9] - The company's stock has declined 0.8% over the past three months, contrasting with the industry's growth of 7.6% [12]

Core Viewpoint - Medifast, Inc. has experienced a significant decline in stock price, dropping 48.9% over the past six months, underperforming compared to the industry and broader market indices [1][2] Company Performance - In Q2 2024, Medifast reported revenues of $168.9 million, a decrease of 43.1% year-over-year, attributed to fewer active earning OPTAVIA Coaches and reduced productivity per Coach [5] - The average revenue per active earning OPTAVIA Coach fell by 10.9% to $4,972 from $5,578 due to lower customer acquisition [5] - The total number of active earning OPTAVIA Coaches decreased by 36.2% to 33,900 compared to 53,100 in the same quarter last year [6] Market Challenges - Medifast faces challenges in customer acquisition due to macroeconomic factors, intense competition, and the adoption of GLP-1 medications, which are reshaping the weight loss market [4][6] - The company anticipates continued revenue decline in Q3 2024, projecting revenues between $125 million and $145 million [6] Operational Costs - Rising Selling, General and Administrative (SG&A) costs are impacting Medifast's profitability, prompting the company to invest significantly in marketing and product development [7] - The company expects a loss of 5-70 cents per share for Q3, factoring in $9 million for marketing initiatives and $4 million for a coach convention [8] Strategic Initiatives - Medifast is positioning itself to adapt to the evolving weight loss market, with a focus on aligning its strategies with the growing acceptance of GLP-1 medications [8][9] - The company aims to drive long-term growth through product innovation, market expansion, and enhancing customer and coach experiences [10][11] Future Outlook - Medifast's strategic vision includes leveraging financial strength and expertise to capitalize on growth opportunities in the weight loss sector [9][10] - The company is focused on data-driven decision-making and enhancing operational efficiency to support its growth strategies [11]