• Revenue: $168.6 million, a decrease of 43.1% year-over-year.
• Gross Profit: $123.4 million, a decrease of 41.4% year-over-year.
• Gross Profit Margin: Improved by 210 basis points to 73.2%.
• Non-GAAP Adjusted Gross Profit Margin: 74.8%, an increase of 370 basis points from the previous year.
• SG&A Expense: $131.3 million, down 23.7% year-over-year.
• Net Loss: $8.2 million or $0.75 per diluted share.
• Non-GAAP Adjusted Net Income: $10.1 million or $0.92 per diluted share.
• Active Earning OPTAVIA Coaches: Approximately 33,900, a decrease of 36.2% from the previous year.
• Average Revenue per Active Earning OPTAVIA Coach: $4,972, a decline of 10.9% year-over-year.
• Cash, Cash Equivalents, and Investments: $163.5 million, up from $150 million as of December 31, 2023.
• Third Quarter Revenue Guidance: Expected to range from $125 million to $145 million.
• Third Quarter Loss Per Share Guidance: Expected to range from $0.05 to $0.70.

• Warning! GuruFocus has detected 4 Warning Signs with MED.

Release Date: August 05, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Medifast Inc (NYSE:MED) is strategically pivoting to address a larger market, projected to be over six times larger than its previous target, by focusing on GLP-1 medication users.
• The company is enhancing its product offerings with new nutrition products specifically designed for GLP-1 users, expected to launch by year-end.
• Medifast Inc (NYSE:MED) is leveraging its collaboration with LifeMD to provide a comprehensive solution that includes nutrition support, coaching, and clinical support.
• The company is ramping up marketing efforts to increase brand awareness and customer acquisition, with a focus on targeted advertising across various platforms.
• Medifast Inc (NYSE:MED) maintains a strong balance sheet, providing financial flexibility to support strategic investments and long-term growth initiatives.

Negative Points

• Revenue for the second quarter decreased by 43.1% year-over-year, primarily due to a decline in the number of active earning OPTAVIA coaches and lower productivity per coach.
• The company faces significant macroeconomic challenges, including increased competition from GLP-1 medications and a slowdown in consumer spending.
• Medifast Inc (NYSE:MED) reported a net loss of $8.2 million for the second quarter, compared to a net income of $30.3 million in the prior year period.
• The number of active earning OPTAVIA coaches decreased by 36.2% from the second quarter of 2023, impacting customer acquisition.
• The company's strategic investments in marketing and product development are expected to negatively impact EPS in the near term.

Q & A Highlights

Q: Can you provide insight into how many customers started using GLP-1 through the LifeMD partnership versus those who did it independently? A: It's a mix. Some customers were already consulting with their own physicians, while others are just starting to integrate the full solution with LifeMD. We see this as an encouraging sign, with about one-third of our coaches now supporting clients on GLP-1 medications. We believe training and product focus will positively impact this number.

Q: As you ramp up company-supported marketing, will customers be able to order new products directly online without a coach? A: The shakes are in powdered form, not ready-to-drink. While customers can order products online, they are always assigned a coach to provide support. This approach ensures customers have the best chance of achieving their goals with the help of a coach and community.

Q: Did new client acquisition improve from May to June after offering the kits? A: We saw a significant increase in orders from new and reactivated clients as a percentage of our business from May to June. While it's still a small part of our business, we hope this trend continues into Q3, especially with new product launches later this year.

Q: Can you discuss the relationship with LifeMD and the bundled solution pricing? A: The combined offer is priced at $282, with $65 for LifeMD's subscription and $217 for our GLP-1 kit. This does not include medication costs. We are working to highlight the value of our offer, which includes coaching, food, and clinician support.

Q: How are top-performing coaches responding to the LifeMD partnership, and are they convinced of its profitability? A: Confidence in LifeMD is growing, partly due to their physicians being trained on the OPTAVIA program and improved technology integration. This integration enhances the customer experience, increasing confidence among coaches and customers.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.