Nov. 4, 2024
Medifast reported Q3 results today. CEO Dan Chard said: “With tailored plans, personal solutions and a focused approach to driving customer acquisition, we believe that our strategy can drive sustainable growth in the quarters and years ahead.”
Third Quarter 2024
- Revenue of $140.2 million, with revenue per active earning coach of $4,672
- Independent active earning OPTAVIA coaches of 30,000
- Net income of $1.1 million (non-GAAP adjusted net income of $3.9 million.
Third quarter 2024 revenue decreased 40.6% to $140.2 million from $235.9 million for the third quarter of 2023 primarily driven by a decrease in the number of active earning OPTAVIA coaches and lower coach productivity. The total number of active earning OPTAVIA coaches decreased 36.3% to 30,000 compared to 47,100 for the third quarter of 2023. The average revenue per active earning OPTAVIA coach was $4,672, compared to $5,008 for the third quarter last year, primarily driven by continued pressure on customer acquisition.
Gross profit decreased 40.4% to $105.7 million from $177.4 million for the third quarter of 2023.
The company’s balance sheet remains strong with $170.0 million in cash, cash equivalents and investment securities and no debt as of September 30, 2024. The company expects fourth quarter 2024 revenue to be in the range of $100 million to $120 million and fourth quarter 2024 diluted loss per share to be in the range of $0.10 to $0.65.
Revenues through the first 9 months of 2024 are $483 million. With expected Q4 revenues of $110 million, that would bring full-year revenues to $593 million, versus $1.07 billion in 2023 – down 44%.
Conference Call Information
Management reported that 12% of their customers have used a GLP-1 drug this year, versus 4% a year ago. They cited research showing that one-third of GLP-1 users quit after six months, and 50% after one year. Further, that 1 in8 U.S. adults have taken a weight loss drug at some point. The firm mentions improvements in customer tracking, and more personalization. Medifast will also launch some new products in 2025, for clients on GLP-1s. A new program is slated for the upcoming 2025 diet season. The company is also testing new starter kits aimed at attracting new new customers.
Medifast will spend $20-25 million on marketing in 2024. It spent $7 million on marketing in Q3 and will spend $7 million in Q4. It uses social media, but management said that the company still gets 90%of its customers via their coaches.
DietBusinessWatch/Marketdata Commentary
The woes continue at Medifast, as both sales and the number of health coaches slides. One thing we’re puzzled about…We have yet to see ONE TV commercial about Medifast here in Tampa during the past four months. The company said it was going to spend $30 million on marketing (later reduced to $20 million), to take place mainly during the second half of this year. So, where are the commercials? Where are they spending their marketing funds? As we’ve said since first tracking the weight loss market in 1989 – advertising drives demand in the weight loss market. Without it, you are invisible, especially now with a much great number of competitors. Management looks at marketing/advertising as “a new initiative” for them. How can a marketing budget be something new, in an ultra-competitive weight loss market? We don’t understand this thinking.
In addition, any time we see a press release or news by LifeMD, they never mention the “partnership” with Medifast. Why is that? Seems like LifeMD is not much of a partner. One analysts attending the conference call said that she contacted LifeMd to sign up for the program (ostensibly as a mystery shopper?), and the clinician she spoke to knew nothing about Optavia – never heard of it. This is troubling, but not surprising. Management downplayed the analyst’s experience as not being typical, but this sounds about right to us. We just don’t think that LifeMD is pulling their weight in the partnership. The Optavia brand name is not known well amongst the general dieting public.
The complete Press release can be found here:
https://finance.yahoo.com/news/medifast-announces-third-quarter-2024-210500229.html