Core Insights - Medifast, Inc. (MED) is strategically focusing on health, nutrition, and lifestyle coaching, expanding its portfolio of nutritionally-balanced meals and supplements tailored to diverse consumer needs [1][10] - The company is enhancing its OPTAVIA coaching network to improve customer acquisition, retention, and re-engagement, streamlining coach development and introducing intuitive incentives [2][10] - Medifast is adopting an integrated approach by launching new product lines (ACTIVE and ASCEND) and enhancing its digital platforms to modernize coach economics and product pricing [3][10] - The company aims to revitalize its coach and customer base through enhanced tools and data-driven support, positioning itself as a holistic partner in lifestyle transformation [4] Financial Performance - Medifast's shares have declined by 17.3% year to date, compared to a 7.2% dip in the industry [7] - The forward price-to-sales ratio for MED is 0.36X, significantly lower than the industry average of 1.03X [8] - The Zacks Consensus Estimate for MED's 2025 earnings per share (EPS) indicates a year-over-year decline of 126.6%, while the 2026 estimate shows growth of 17.4% [9][11] - Current estimates for EPS in 2025 and 2026 have decreased over the past 30 days [9]

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]