Medifast’s first quarter results reflected ongoing headwinds in customer demand and a rapidly evolving health and wellness landscape. Management cited the decline in active earning coaches as the primary driver behind the significant revenue drop, though they noted encouraging trends in the productivity of newer coach cohorts. CEO Dan Chard highlighted that recent efforts to streamline coach development and leverage incentives have led to “the first meaningful year-over-year increase in new coaches in the past three years,” offering cautious optimism about future improvements. The company acknowledged persistent challenges related to the integration of GLP-1 weight loss medications in the market and emphasized the necessity of adapting its coaching and product approach to this new environment.
Is now the time to buy MED? Find out in our full research report (it’s free).
Medifast (MED) Q1 CY2025 Highlights:
- Revenue: $115.7 million vs analyst estimates of $116.4 million (33.8% year-on-year decline, 0.6% miss)
- EPS (GAAP): -$0.07 vs analyst estimates of -$0.25 (72% beat)
- Adjusted EBITDA: $1.65 million vs analyst estimates of -$2.1 million (1.4% margin, significant beat)
- Revenue Guidance for Q2 CY2025 is $95 million at the midpoint, below analyst estimates of $112.3 million
- EPS (GAAP) guidance for Q2 CY2025 is -$0.28 at the midpoint, missing analyst estimates by 293%
- Operating Margin: -1.1%, down from 4.5% in the same quarter last year
- Market Capitalization: $146.1 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Medifast’s Q1 Earnings Call
- Jim Salera (Stephens) asked why Q2 guidance implies a sharper year-over-year sales decline, despite recent improvement trends. CFO Jim Maloney explained that timing of Q1 promotions created a tough comparison and that no similar Q2 promotion is planned.
- Jim Salera (Stephens) followed up on the productivity of new coach cohorts, asking about their experience with GLP-1 medications and the proportion using them. President Nick Johnson said detailed segmentation was not yet available but would follow up post-call.
- Jim Salera (Stephens) inquired about the impact of reduced company-led marketing on SG&A expenses. Maloney clarified that while there will be some pullback, marketing costs are small relative to coach compensation and reactivation campaigns will continue.
- Doug Lane (Water Tower Research) asked about the effect of GLP-1 adoption on the coaching community and whether it created controversy. Johnson responded that it is more a training challenge than a controversy, with new coaches adapting well to the environment.
- Doug Lane (Water Tower Research) questioned the total monthly cost for clients using both GLP-1 medications and OPTAVIA programs. CEO Dan Chard detailed cost structures, emphasizing that insurance often covers much of the GLP-1 expense, while OPTAVIA’s core program averages about $400 per month.
Catalysts in Upcoming Quarters
Looking forward, the StockStory team will monitor (1) whether the recent increase in new coach cohorts translates into sustained productivity and higher active coach counts, (2) the progression and acceptance of the OPTAVIA ASCEND line as GLP-1 usage patterns evolve, and (3) the effectiveness of the company’s shift from company-led marketing to a coach-empowered acquisition model. Additional key drivers will include Medifast’s ability to manage costs while investing in product innovation and coach support.
Medifast currently trades at $14.13, up from $12.58 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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