Medifast's Third-Quarter Revenue Fell 36%: Is Stabilization Near?

Core Insights - Medifast, Inc. (MED) experienced a significant year-over-year revenue decline of 36.2% in Q3 FY25, with revenue dropping to $89.4 million due to a sharp decrease in active earning OPTAVIA coaches [1][8] - The active coach base fell by 35% to 19,500, and the average revenue per active earning coach decreased by 1.9% to $4,585, indicating pressure on the company's coach-driven business model [1][8] Financial Performance - The company reported a revenue decline of 36.2% in Q3 FY25, primarily attributed to the reduction in active OPTAVIA coaches [1][8] - The Zacks Consensus Estimate for MED's current fiscal-year earnings indicates a year-over-year decline of 158.7% [10] Strategic Initiatives - To counteract the challenges, the company implemented rightsizing actions in October aimed at improving margins, with expectations for coach growth to re-emerge in six to nine months [2] - Medifast anticipates an inflection point in revenue growth by Q4 FY25, with management expecting growth in revenue per active earning coach within the next six months [2][4] Coaching and Digital Investments - The company emphasizes the value of personalized coaching through initiatives like the Premier+ pricing structure and the EDGE leadership program, which are designed to enhance coach productivity [3] - Ongoing investments in digital platforms, including app enhancements and reporting tools, are aimed at improving visibility into client progress and coach performance [3] Market Position - Medifast's shares have declined by 15% over the past six months, compared to a 10.4% decline in the industry [5] - The company trades at a forward price-to-sales ratio of 0.35, significantly lower than the industry's average of 1.05 [7]