May 1, 2023
According to management: “We’re pleased to see revenue and operating income both ahead of expectations in the quarter, as we continue to adjust to the changing dynamics of the business environment,” said Dan Chard, Medifast’s Chairman & Chief Executive Officer. “Sustainable long-term growth is at the core of our focus, and we are undertaking a number of initiatives to return the business to a growth trajectory. In addition to working to increase customer acquisition, we are implementing strategies that will expand our addressable market, as we target new demographic segments, geographies, and adjacent categories.”
First quarter 2023 revenue decreased 16.4% to $349.0 million from $417.6 million for the first quarter of 2022, primarily driven by a lower number of active earning OPTAVIA Coaches and lower Coach productivity compared to the prior year.
The average revenue per active earning OPTAVIA Coach was $5,945, compared to $6,536 for the first quarter last year, a decline of 9.0%, as continued pressure on customer acquisition more than offset a price increase implemented in November 2022. The total number of independent active earning OPTAVIA Coaches decreased 8.1% to 58,700 compared to 63,900 for the first quarter of 2022.
Gross profit decreased 18.5% to $246.4 million from $302.3 million for the first quarter of 2022, driven by lower revenue as well as cost inflation from raw ingredients, shipping and labor. Gross profit margin was 70.6% compared to 72.4% in the first quarter of 2022.
The company announced a quarterly cash dividend of $1.65 per share, or $18.0 million, which is payable on May 9, 2023, to stockholders of record as of the close of business on March 28, 2023.
The company expects second quarter 2023 revenue to be in the range of $250 million to $270 million and second quarter 2023 diluted EPS to be in the range of $1.32 to $1.44.
The complete Press Release, with financial tables can be found here:
Conference Call Information
Management reported that pressure on coach productivity will continue in the short term. Headwinds come from competition from prescription obesity drugs, which are now very popular and in high demand, coupled with changing algorithms in social media platforms. The company will place more emphasis on face-to-face meetings between coaches and clients, returning to pre-pandemic tactics. The firm will announce some new products to complement its program in the 2nd quarter, and the company expects the Hispanic market to be a growth niche, with future entry into the Latin American market. The website and literature will be translated into Spanish. Medifast is also offering more incentives for coaches to bring in new clients. The company did not mention any plans to add prescription drugs to their program, or to acquire a clinical company like Weight Watchers did.