Medifast Reports Q2 Results, Tops Estimates

August 2, 2019

Medifast reported 2nd quarter results yesterday, beating analyst expectations. Second quarter revenue increased 59.5% to $187.1 million from revenue of $117.3 million for the second quarter of 2018. OPTAVIA-branded products represented 75% of consumable units sold for the second quarter compared to 64% for the same period a year ago.

The total number of active earning OPTAVIA Coaches increased to 30,600, compared to 19,700 for the second quarter of 2018. The average revenue per active earning OPTAVIA Coach increased 7.1% to $5,863 compared to $5,474 for the second quarter last year.

Gross profit increased to $140.7 million from $88.8 million for the second quarter of 2018. The company's gross profit as a percentage of revenue decreased 50 basis points year-over-year to 75.2% from 75.7% as a result of higher product costs, obsolescence cost associated with a specific slow moving product and the cost of complying with new U.S. FDA nutritional labeling requirements.   

Second Quarter 2019 Highlights
(Compared to Prior-Year Period)  

  • Record revenue up 59.5% to $187.1 million
  • Net income up 51.3% to $21.4 million
  • 55.3% growth in active earning OPTAVIA Coaches to 30,600
  • Earnings per diluted share ("EPS") of $1.75, an increase of 50.9%

Cash, cash equivalents, and investment securities increased $12.5 million to $113.5 million as of June 30, 2019 compared to $101.0 million at December 31, 2018. 

Medifast expects third quarter revenue to be in the range of $190 million to $195 million and EPS to be in the range of $1.30 to $1.35.  For the full year 2019, the Company now expects revenue of $730 million to $750 million and EPS of $6.75 to $6.95, compared to the Company's previous guidance for revenue of $720 million to $740 million and EPS of $6.70 to $6.90.

The complete press Release and financial tables can be found here:

https://ir.medifastinc.com/2019-08-01-Medifast-Inc-Announces-Second-Quarter-2019-Results

Marketdata Commentary:

Medifast continues to set new sales records and to impress. It has already reached it's year-end goal of having 30,000 active health coaches, and has no debt. It is now on track to hit $730-750 million in sales, surpassing NutriSystem as the second largest weight loss company by revenue. It will be interesting to see how much the entry into the Asian market (Hong Kong, Singapore) will add to this growth. Some bumps in the road in Hong Kong may be hit, as the country seems to be in political turmoil now with ongoing protests. It will also be interesting to see if management decides to finally do some national TV and/or print advertising to increase brand name recognition and exposure.

https://seekingalpha.com/pr/17591317-medifast-inc-announces-second-quarter-2019-results

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