Medifast Announces First Quarter 2025 Financial Results BALTIMORE – (BUSINESS WIRE)--Medifast (NYSE: MED), the health and wellness company known for its habit-based and coach-guided lifestyle solution, OPTAVIA®, today reported results for the first quarter ended March 31, 2025. First Quarter 2025 "In today's health and wellness landscape, more people than ever are seeking guidance not just for weight loss but for learning how to lead a healthier lifestyle," said Dan Chard, CEO of Medifast. "However, researc ...

Core Viewpoint - Medifast, Inc. is expected to report a decline in both revenue and earnings for the first quarter of 2025, with revenues projected at $119.9 million, reflecting a 31.4% decrease year-over-year [1] Revenue Outlook - The Zacks Consensus Estimate for Medifast's first-quarter revenues is $119.9 million, indicating a significant decline from the previous year's figure [1] - Management previously projected revenues between $100 million and $120 million for the first quarter, highlighting ongoing challenges in customer acquisition and engagement [4] Earnings Outlook - The consensus estimate for Medifast's bottom line has narrowed to a loss of 7 cents, down from a profit of 66 cents in the same quarter last year [2] - The company anticipates a bottom line between break-even and a loss of 50 cents, reflecting financial strain from declining sales and high customer acquisition costs [5] Market Challenges - Medifast faces a challenging macroeconomic environment, including increased competition in the health and wellness sector, the impact of GLP-1 weight loss medications, and a general decline in consumer discretionary spending [3] - The evolving dynamics of the weight loss market, particularly the rapid adoption of GLP-1 therapies, are altering consumer preferences and behavior, further complicating Medifast's performance [4] Strategic Initiatives - Despite the challenges, Medifast is pursuing strategic initiatives aimed at growth, including expanding its product portfolio and enhancing customer experience [6] - The "Fuel for the Future" program is an enterprise-wide cost optimization initiative that aims to improve operational efficiency and may provide some buffer against broader market pressures [6] Earnings Prediction Model - The Zacks model does not predict an earnings beat for Medifast this quarter, as it currently holds a Zacks Rank of 3 and an Earnings ESP of 0.00% [7]

Core Viewpoint - Medifast, Inc. has experienced a significant decline in stock price, dropping 28.2% over the past six months, underperforming both the industry and broader market indices [1][3][15] Financial Performance - In Q4 2024, Medifast reported revenues of $119 million, a 37.7% year-over-year decline, despite being at the upper end of guidance [4] - The company ended Q4 with a coach base down more than 34% from the previous year, and average revenue per coach declined by over 5% [5] - Projected revenues for Q1 2025 are expected to be between $100 million and $120 million, indicating ongoing challenges [7] Cost and Profitability Challenges - Rising SG&A expenses have significantly pressured profitability, with increased marketing efforts and reduced efficiency leading to higher expenses as a percentage of revenues [6] - The company's operating income has deteriorated sharply, reflecting the escalating costs amid declining revenues [6] Market Dynamics and Strategic Initiatives - The adoption of GLP-1 medications is reshaping consumer preferences in the weight loss market, impacting customer acquisition for Medifast [5] - Medifast is launching OPTAVIA ASCEND in early 2025 to cater to the nutritional needs of GLP-1 users, aiming to enhance customer acquisition and experience [11][12] - The company is pursuing a long-term growth strategy focused on innovation, market expansion, and operational excellence, with initiatives to improve the coach and client experience [13] Cost Optimization Efforts - The "Fuel for the Future" program has delivered $21 million in cost savings in 2024, with expectations of an additional $15 million to $20 million in 2025 [14] Consensus Estimates - The Zacks Consensus Estimate for fiscal 2025 has seen a downward revision, with a projected loss of 1 cent for the current fiscal year and earnings of 2 cents for the next fiscal year [10]

Company Overview - Medifast, Inc. operates the Optavia wellness brand, providing weight loss and management plans through supplements, meals, and coaching services [1] - As of the end of 2024, Medifast has 27.1 thousand active earning coaches [1] Investment Philosophy - The investment philosophy focuses on identifying mispriced securities by understanding the drivers behind a company's financials, often revealed through a DCF model valuation [1] - This approach allows for flexibility beyond traditional value, dividend, or growth investing, considering all prospects of a stock to assess risk-to-reward [1]

Core Insights - Medifast, Inc. reported a decline in both earnings and net revenues for the fourth quarter of 2024, but both metrics exceeded the Zacks Consensus Estimate [1][4][5] Financial Performance - Adjusted earnings per share (EPS) were 10 cents, down from $1.09 in the same quarter last year, surpassing the Zacks Consensus Estimate of an adjusted loss of 27 cents [4] - Net revenues totaled $119 million, a decrease of 37.7% year over year, attributed to fewer active earning OPTAVIA Coaches and reduced productivity per Coach, but exceeded the Zacks Consensus estimate of $111 million [5] - The average revenue per active earning OPTAVIA Coach was $4,391, down 5.5% from $4,648, with the total number of active earning Coaches falling 34.1% to 27,100 from 41,000 [5] Margin and Cost Analysis - Gross profit was $88.2 million, down 37.6% year over year, with a gross margin of 74.1%, which is an increase of 10 basis points year over year [7] - Adjusted selling, general and administrative expenses (SG&A) decreased by 30.1% year over year to $87.5 million, primarily due to reductions in coach compensation and nonrecurring costs [8] - Adjusted SG&A expenses as a percentage of revenues increased by 800 basis points to 73.5%, driven by higher marketing expenditures and reduced leverage on fixed expenses [9] Operational Insights - Adjusted income from operations declined 95.6% to $0.7 million, with the adjusted operating margin decreasing by 790 basis points year over year to 0.6% [10] - The company ended the quarter with cash, cash equivalents, and investments of $162.3 million, with no interest-bearing debt and total shareholders' equity of $210.1 million [11] Future Outlook - For the first quarter of 2025, Medifast expects revenues between $100 million and $120 million, with EPS ranging from a loss of 50 cents to break-even [12]

Financial Data and Key Metrics Changes - Revenue for Q4 2024 was $119 million, a decrease of 37.7% year-over-year, primarily due to a decrease in the number of active earning OPTAVIA coaches and lower coach productivity [30] - Earnings per share (EPS) for Q4 2024 was $0.07, down from $0.55 in the prior year [34] - Gross profit decreased 37.6% year-over-year to $88.2 million, while gross profit margin improved by 10 basis points to 74.1% [31] - SG&A expenses decreased 34.1% year-over-year to $87.5 million, reflecting a significant reduction in OPTAVIA coach compensation and other costs [32] Business Line Data and Key Metrics Changes - The number of active earning OPTAVIA coaches decreased by 34.1% year-over-year to approximately 27,100 [30] - Average revenue per active earning OPTAVIA coach was $4,391, a year-over-year decline of 5.5%, but an improvement from a decline of 22.2% in Q1 2024 [31][10] - The percentage of customers using GLP-1 medications rose to 17% at year-end, up from just over 3% at the beginning of 2024 [11] Market Data and Key Metrics Changes - Approximately 44% of coaches were supporting at least one customer on a GLP-1 medication at year-end, up from 12% at the start of 2024 [11] - The ASCEND product line, launched in December, has been well received, with 17% of customer orders in January including ASCEND products [16] Company Strategy and Development Direction - The company is focusing on adapting to the health and wellness market influenced by the rising acceptance of GLP-1 weight loss medications [7] - Priorities for 2025 include accelerating customer acquisition, improving coach productivity, advancing clinical research, expanding product offerings, and evaluating entry into new categories [24][26] - The company aims to provide integrated solutions that combine lifestyle modifications, clinical guidance, and community support to meet diverse customer needs [27] Management's Comments on Operating Environment and Future Outlook - Management noted continued pressure on new customer acquisition but indicated early signs of stabilization in certain areas [17] - The company expects challenges in customer acquisition to persist through at least the first half of 2025, with hopes for positive comparisons in the second half [36] - Management emphasized the importance of transitioning to support customers on GLP-1 medications and those managing weight loss without medications [55] Other Important Information - The company ended the year with $162.3 million in cash and no debt, providing flexibility for growth initiatives [35] - The "Fuel for the Future" cost reduction initiatives delivered $21 million in savings in 2024, with expectations for an additional $15 million to $20 million in 2025 [23] Q&A Session Summary Question: Thoughts on Q1 guidance and ASCEND launch impact - Management indicated that coach productivity will be an early indicator of return to growth, with expectations for improvement in 2025 [41][42] Question: Marketing efforts and ASCEND product visibility - Management plans to optimize marketing spend and focus on coach compensation to drive customer acquisition [46][47] Question: Retention rates for customers transitioning off GLP-1 - Management noted mixed retention rates, with a portion of customers using coaching to maintain weight loss after transitioning off GLP-1 [60][62] Question: Operating cash flow and capital spending for 2024 - Operating cash flow for 2024 was approximately $24.5 million, with capital expenditures at $7.5 million [67] Question: Marketing spend for 2025 - Management indicated that marketing spend in 2025 will likely be lower than in 2024 due to less non-working marketing [71] Question: Sequential uptick in coaches expected in Q1 2025 - Management expects continued pressure on the number of coaches until coach productivity improves [91][94]

Medifast, Inc. (MED) has introduced a high-protein product line, OPTAVIA ASCEND, designed to support individuals using GLP-1 medications and those seeking help to maintain weight loss. The new line features fiber-rich mini meals and daily nutrient packs, which aim to boost muscle health, digestive function and bone strength.OPTAVIA ASCEND is integrated into two new science-backed nutrition plans, complementing OPTAVIA's comprehensive approach to fill a critical gap in the weight management sector. This laun ...

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].