Medifast(US:MED)2025-08-04 20:51Part I Item 1 – Financial Statements 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 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 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 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 202418 Notes to Condensed Consolidated Financial Statements - The company operates as a single reportable segment named OPTAVIA, which derives revenue from the sale of its products directly to clients6062 - 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 continues5657 - The company terminated its Amended Credit Agreement with Citibank, N.A. on October 30, 2024, and had no outstanding borrowings at the termination date59 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 Management attributes revenue decline to fewer coaches and GLP-1 adoption, improving net income via reduced SG&A and business transformation Overview - The company is undergoing a comprehensive business transformation to address the market shift caused by the rapid acceptance of GLP-1 weight loss medications70 - The business model relies on a network of approximately 22,800 active earning OPTAVIA coaches70 - Medifast has developed distinct program offerings for three client categories: those not using medications, those using GLP-1s, and those transitioning off GLP-1s7476 - 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 continues78 Results of Operations - 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 coaches96 - 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 cancellation100 - 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 period102 - 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 2024105 Liquidity and Capital Resources - Working capital increased to $160.3 million at June 30, 2025, from $150.2 million at December 31, 2024106 - 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 2024107 - The company terminated its credit agreement in October 2024 and had no outstanding borrowings113 Item 3 – Quantitative and Qualitative Disclosures about Market Risk 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 effect115 - 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, 2025116 Item 4 – Controls and Procedures 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, 2025117 - No material changes in internal control over financial reporting occurred during the fiscal quarter ended June 30, 2025118 Part II Item 1 – Legal Proceedings 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 liquidity120 Item 1A – Risk Factors 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-K121 Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds 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 obligations122 - As of June 30, 2025, 1,323,568 shares remained eligible for repurchase under the company's stock repurchase plan, which has no expiration date124 Item 5 – Other Information 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 arrangement125 Item 6 – Exhibits 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 Act126