April 28, 2025
According to CEO Dan Chard: “This year, we are focused on revitalizing our coach and customer base by supporting them with enhanced tools, data, and new products. Our business focus remains on reestablishing sustainable long-term growth while improving profitability.”
First quarter 2025 revenue decreased 33.8% to $115.7 million from $174.7 million for the first quarter of 2024, a decline of 33%, primarily driven by a decrease in the number of active earning OPTAVIA coaches. The total number of active earning OPTAVIA coaches decreased 32.8% to 25,400 compared to 37,800 for the first quarter of 2024, primarily driven by continued challenges in customer acquisition. The average revenue per active earning OPTAVIA coach was $4,556, compared to $4,623 for the first quarter last year.
Gross profit decreased 33.8% to $84.2 million from $127.3 million for the first quarter of 2024. The company’s loss from operations for the period was $1.3 million, a decrease of 115.9% from income from operations of $7.9 million in the prior year comparable period.
The company expects second quarter 2025 revenue to be in the range of $85 million to $105 million and second quarter 2025 loss per share to be in the range of $0.00 to $0.55.
Conference Call Information
Management reported that Medifast has 32% less coaches than in Q1 2024. They report no impact on the business due to tariffs. They say that 25% of their coaches have used GLP-1 drugs themselves, and that 50% of their clients have used them. They say that most of their GLP-1 clients have insurance that covers the cost of their drugs. They point out that during recessions it’s actually easier to recruit coaches, since people are looking at job opportunities such as MLMs and coaching. This is true. Also, that 74% of GLP-1 users stop taking the drug after one year. Also true, and an opportunity for MED.
Commentary
The slide continues at Medifast, with 2025 revenues estimated by Marketdata (extrapolating first quarter revenues to the full year) to come in at $462 million, which would be another 23% decline from 2024’s $602 million. Yet, the company continues to hold onto $164 million in cash and not increase their advertising spend to acquire customers. Dubious strategy.
The company has invested some money last year in market research related to the medical weight loss market and GLP-1 drugs. However, did they spend anything on research about the non-medical (traditional) weight loss market and dieters that don’t want a medical program? What percent of Medifast customers purchase the 5 & 1 (non-medical) program, that costs about $400/month vs. clinical, GLP-1 customers? That’s a key statistic. We understand that the GLP-1s boom since 2022 has changed the market and commercial diet companies have to adjust, but does MED have to put ALL their eggs in that basket? Why not up the marketing spend to acquire more non-medical customers?
As we’ve said before, we question the strategy of letting coaches do the company’s marketing, via word of mouth and local social media. Not advertising Optavia as a brand via national advertising is a major mistake. Spending only 4% of sales on marketing is a major mistake (last year’s $24 mill. spend vs. $602 million revenues). The ratio should be more like 15% of sales, to run with the big dogs.
Big development: As of April 22, the compounding pharmacies had to stop making compounded weight loss meds. The shortage is over and the FDA has acted. The compounders will NOT be able to tweak their drugs by adding vitamin B-12 to them and claim that this “new” drug does not fall under the FDA mandate. Novo Nordisk and Eli Lilly are already pursuing aggressive legal actions and the compounders will not win that fight. So, the era of cheap compounded weight loss drugs is over. What will happen when dieters suddenly have to pay more for the brand name drugs? Will the insurers cover it? We don’t think so. Whatever business MED is getting via the LifeMD affiliation will shrink.
Management has not mentioned the Mexican and Latin American market at all. We recall some talk a few years ago about this being a potential new geographic market opportunity. So, what changed? It seems to us that overweight people in Mexico, Panama, Columbia, and other nations south of the border would have less disposable income and NOT be good clients for expensive weight loss drugs, but for more traditional meal replacements.
Learn More About The Commercial Weight Loss Market – New Report
Marketdata LLC has just published a new report: “The U.S. Weight Loss Market: Commercial (non-medical) Programs & Products”, March 2025. This is a 220-page analysis of commercial weight loss programs/companies and how they have been affected by and respond to the onslaught of the GLP-1 drugs competition.
The $38 billion U.S. commercial weight loss market is 15% larger than in 2020, but has had to pivot to adjust to huge competition from the popular GLP-1 drugs. The large commercial chains have been hurt the most since 2022. The business has gone virtual, and some competitors have added the GLP-1 drugs to their programs to position themselves for a new future.
However, some commercial markets have held up well. Diet soft drinks have shown surprising strength, and high protein meal replacements have been positioned as an adjunct to the weight loss drugs. The weight loss apps market is growing strongly. The ranks of commercial weight loss centers have been thinned, and franchising is all but dead as a growth model.
Some Report Findings::
- Marketdata estimates that the U.S. commercial (non-medical) weight loss market, for programs, products and services, was worth $38.4 billion in 2024, down slightly from $38.8 billion in 2022. Commercial services represent 53% of the $72.2 billion total market now, down from 82% in 2020, prior to the GLP-1s boom.
- The commercial weight loss programs market segment contracted by 29.2% in 2023, to $3.24 billion, and another 23.7% to $2.47 billion in 2024, due to competition from GLP-1s drugs. This amounts to a 56% decline in just two years.
- Commercial weight loss companies have lost $2 billion in revenues since 2022 due to the competition from GLP-1 drugs. Jeny Craig went bankrupt, Profile Plan closed, and NutriSystem’s private equity parent Wellful is having debt issues.
- The “average” weight loss center had annual receipts of $646,250 in 2022. But, sales have fallen since then, to $484,000 per center in 2024.
- There may be an opportunity for commercial weight loss firms to post some growth in the second half of 2025. The GLP-1s shortage is over, and the compounding pharmacies have to stop making these meds as of May 22. Consumers will then have to pay full price for the brand name meds. Many will opt for less costly (non-medical) diet programs.
- The business has gone virtual. Operating a retail, brick& mortar weight loss center or franchise has become too difficult in this era, with rising real estate and staff costs. Many businesses have pivoted to a virtual delivery model, which can be scaled larger and quicker, and is more profitable.
- Some weight loss market segments have held up well: meal replacements, diet soft drinks, and weight loss apps (a growing $990 million market).
Learn More, Purchase This Report:
The report’s description and Table of Contents are found at this website, see home page, Off The Shelf Market Reports, red link for Diet Market – Our Specialty, or contact us at 813-971-8080 and we’ll email them to you. The report contains 62 tables and charts. Price: $995. A 25-page, $99 Overview Summary report is also available.
Included… dollar value & growth rates of all major commercial weight loss market segments (early 1980s to 2024 and 2025 & 2028 forecasts), latest market trends and company developments, status reports for: diet soft drinks, artificial sweeteners, commercial weight loss centers, multi-level marketing diet plans, retail and MLM meal replacements and weight loss supplements, and low-cal frozen entrees. Analysis of the medical weight loss programs market and competition from MDs, hospitals, medical clinic chains, and telehealth.
The report includes a 35-year revenue analysis of the market through past recessions and fad diet cycles, plus weight loss center franchising, and extensive national/state commercial centers’ operating ratios. Rankings & revenues of top commercial chains, brand sales, and a Reference Directory. Competitor profiles for: Weight Watchers, Jenny Craig, NutriSystem, Medifast, Herbalife, Noom, MyFitness Pal, Slim-Fast (Glanbia), Simply Good Foods (Atkins Nutritionals), Slimgenics, Profile by Sanford, BeachBody, Metabolic Research, Visalis Life Sciences, Isagenix, Shaklee, AMWAY (Quixtar), and Nu-Skin.