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Medifast Reports 4th Qtr. & 2022 Results

Feb. 22, 2023

Medifast, the #1 weight loss company by revenues, topped earnings and revenue estimates.

Fourth Quarter 2022

  • Revenue of $337.2 million, with revenue per active earning coach of $5,538
  • Independent active earning OPTAVIA Coaches of 60,900

Full Year 2022 Highlights

  • Revenue increased 4.8% to $1.6 billion
  • Net income of $143.6 million (non-GAAP adjusted net income of $163.5 million)
  • EPS of $12.73 (non-GAAP adjusted EPS of $14.50)
  • Cash, cash equivalents and investment securities of $87.7 million

According to management: “We’ve placed a substantial focus on driving stability in customer retention rates, and with customer satisfaction metrics at all-time highs, we’ve seen retention return to and hold at normal levels,” said Dan Chard, Medifast’s Chairman & Chief Executive Officer. “Our attention is now on driving productivity and Coach growth which were both disrupted in the second half of last year.”

Fourth quarter 2022 revenue decreased 10.7% to $337.2 million from $377.8 million for the fourth quarter of 2021, reflecting lower revenue and Coach productivity. The average revenue per active earning OPTAVIA Coach was $5,538, compared to $6,321 for the fourth quarter last year, a decline of 12.4% driven by continued pressure on customer acquisition. The total number of independent active earning OPTAVIA Coaches increased 1.8% to 60,900 compared to 59,800 for the fourth quarter of 2021.

For the fiscal year ended December 31, 2022, revenue increased 4.8% to $1.6 billion compared to revenue of $1.5 billion in 2021. Net income for 2022 was $143.6 million, or $12.73 per diluted share, based on approximately 11.3 million shares outstanding. This compares to 2021 net income of $164.0 million, or $13.89 per diluted share.

The company expects first quarter 2023 revenue to be in the range of $300 million to $320 million.

See the Complete Press Release With Financial Tables Here:


Conference Call Insights

In the conference call after the market’s close on Feb. 21, management reported that coach productivity is down and that customer acquisition has become more challenging during the past six months. Consumers are feeling the effects of inflation on their disposable income. In addition, there have been changes to the algorithms of social media platforms, making it harder to cut through the clutter.

No full-year 2023 guidance is being provided yet. Medifast lost 15% of its clients going into 2023, vs. 2022. Some of those clients would have become coaches, so coach growth was affected. It was also mentioned that coaches can run their own promotions, and cut prices if needed (lowering their profit margins). Management also said that more weight loss companies are providing coaching today, which increases the competition. New obesity drugs may also be playing a role and are being monitored.

Marketdata Commentary

Medifast’s torrid revenue growth moderated significantly in 2022–only a 4.8% increase. This is in stark contrast to the 63% revenue gain posted in 2021. This is to be expected, since at $1.6 billion it’s more difficult to sustain double-digit gains from here forward off that large base. Other reasons for slowing growth may include more competition from companies such as GoLo and Noom, new obesity drugs on the market, inflation eating away at consumers’ disposable income, and the fact that not as many people may be considering health coaching jobs (which were a more attractive job option during the recession and pandemic). Only a few years ago, the firm was saying that 15% annual growth was very feasible. This just goes to show one how quickly the weight loss market can shift.

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