Medifast(MED) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $115.7 million, a decrease of 33.8% year over year, primarily due to a decrease in the number of active earning OPTAVIA Coaches [19] - Net loss for Q1 2025 was$ 800,000 or $0.07 per share, compared to net income of$ 8.3 million or $0.76 per diluted share in the prior year [22] - Gross profit decreased 33.8% year over year to$ 84.2 million, with a gross profit margin of 72.8%, consistent with the previous year [20] Business Line Data and Key Metrics Changes - The number of active earning OPTAVIA Coaches decreased by 32.8% year over year to approximately 25,400 [19] - Average revenue per active earning OPTAVIA Coach for Q1 was $4,556, a year-over-year decrease of 1.4%, showing a moderation compared to a 22% decrease in Q1 2024 [20] Market Data and Key Metrics Changes - The company noted that a weaker economy could present consumer demand headwinds, but historically, economic slowdowns have increased coach recruitment as more individuals seek additional income opportunities [16] Company Strategy and Development Direction - The company is focusing on empowering coaches to be more productive and successful, with a strategy that includes streamlining coach development, enhancing tools and insights for coaches, and broadening product offerings [10][12][13] - The introduction of the OPTAVIA Ascend line aims to support individuals using GLP-1 medications, helping preserve lean muscle mass [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for growth, citing early positive indicators and a focus on coach-led strategies [17] - The company expects to see clearer signs of a turnaround by the end of 2025, with a focus on improving coach productivity and customer acquisition [17] Other Important Information - The company is currently developing studies to evaluate the efficacy of the new Ascend line and the established Essential line, which will support the business transformation over the next 12 to 18 months [14] - The financial position remains strong with$ 164.6 million in cash and no interest-bearing debt as of March 31, 2025 [22] Q&A Session Summary Question: Clarification on second quarter top line guidance - Management explained that the guidance reflects the timing of promotions and that the absence of a planned promotion in Q2 could lead to an acceleration in the year-over-year rate of decline [26][28] Question: Impact of GLP-1 on coaching community - Management indicated that the introduction of GLP-1 medications has created training opportunities rather than controversy, allowing coaches to better support clients on and off these medications [50][55] Question: Monthly cost of GLP-1 and supporting nutritional programs - The monthly cost for the OPTAVIA program is approximately $400, which covers 80% of daily meals, while LifeMD charges less than$ 20 for their telehealth service [57][59]