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Medifast Reports Q4, Full Year Results, Becomes Largest Weight Loss Company by Sales

Feb. 24, 2022

It's official now. Medifast, an MLM model company, has surpassed Weight Watchers as the world's largest weight loss provider, with 2021 revenues of $1.5 billion. CEO Dan Chard said that: "With this engine powering our momentum, we have moved from $275 million in revenue prior to the launch of OPTAVIA and the new business model to today announcing revenues in excess of $1.5 billion."

In the fourth quarter, revenue increased 42.6% over the prior year period to $377.8 million. The number of active earning OPTAVIA Coaches grew 35.3% to 59,800 on a year-over-year basis, and productivity per active earning OPTAVIA Coach rose 6.6% to $6,321.

Full Year 2021 Highlights Compared to the Prior-Year Period

  • Revenue increased 63.2% to $1.526 billion
  • Net income increased 59.5% to $164.0 million
  • EPS of $13.89, an increase of 60.0%
  • Cash, cash equivalents and investment securities of $109.5 million and the company remains free of interest-bearing debt as of December 31, 2021

For the fiscal year ended December 31, 2021, revenue increased 63.2% to $1.526 billion compared to revenue of $934.8 million in 2020. Net income for 2021 was $164.0 million, or $13.89 per diluted share.

The company expects full-year 2022 revenue to be in the range of $1.72 billion to $1.79 billion and full-year 2022 diluted EPS to be in the range of $14.50 to $16.00.

Management reported in its conference call: "...Having achieved significant success, our differentiated model gives us unique permission to play in a much wider space than we do today. As such, it's clear that we can now expand our penetration into the broader $230 billion U.S. market for health and wellness far more deeply than we do today. Technology will be at the core of our expanded growth journey. We will leverage technology, digital apps and data to improve the efficiency of our Coach and Client community and will add to our strong platform of clinically proven products and the Habits of Health system. This will make our offer more attractive to increasing numbers of coaches and clients and unlock opportunities for new service and subscription offers."

The OPTAVIA app, which is designed to support clients on their health transformation journey, added over 91,000 new users in the fourth quarter. Each user of the app is now connected in a new way to their coach and provides the capability to communicate even more closely with their coach as well as manage their subscription order for OPTAVIA products.

"Our client community is now comprised of over 1 million individuals annually who rely on OPTAVIA Coaches throughout their health and wellness journeys. Most of these clients are here in the United States. As we continue to expand into the broader health and wellness segment under this market, we have continued to prioritize a global approach..."

"The number of people setting New Year resolutions has decreased annually according to our surveys, and only 10% of U.S. adults stick with their resolutions. The primary reason respondents failed was loss of motivation, followed by not having a plan or the right support. Less than half of U.S. adults said they were planning on setting a 2022 New Year's resolution, with many wanting to take a different approach and incorporate small changes into their daily lives throughout the year."

"Revenue will be fueled by the large addressable health and wellness market in the United States and our continued expansion into the Asia-Pacific markets and other large markets throughout the world. While mid-teens revenue growth and 15% operating margins remain the focus of our sustainable long-term financial goals, we believe there is significant upside in growth potential above and beyond these objectives..."

Marketdata/DietBusinessWatch Commentary:

Medifast seems to be hitting on all cylinders, and escaped the pandemic untouched. It has proven that the MLM sales model has staying power, and that weight loss coaches and community are a big part of the equation. The company will be moving to expand its client base to younger dieters (Millennials), as well as growing international markets. The non-U.S. market is huge and competitors such as Herbalife Intl. have proven this as they posted sales of $5.8 billion last year ($3.37 billion in weight management products, for 58% of the total. Only 25% of total sales came from North America. No. American weight loss sales are estimated at $829 million in 2021.).

Medifast is, like other weight loss providers, expanding into the broader wellness market, which could also boost revenues. It's interesting that management found that New Years resolutions aren't as important as they once were. This could lessen the importance of the historical "diet season" from Jan. 1 - Memorial Day. The company is also beefing up its technology and apps, again covering the bases to attract Millennials that are more tech savvy than Baby Boomers. If Medifast starts national TV advertising, as it now has the funds to do it, watch out.

All in all, a very impressive 2021 performance and a solid base for future growth.

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