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Medifast Reports Q1 2024 Results

April 29, 2024

Management said that: “Our new model is highly differentiated from competitors, with a holistic approach including our habit-based and Coach guided solution along with nutrition products and community support. It will be supported by a reimagined framework for customer acquisition, with a new company-led national marketing campaign, enhancing both awareness of the benefits of our approach, and the visibility of our brand. While 2024 will be a year of investment for future growth, we believe the initiatives we are undertaking will be foundational in creating a platform for sustained company growth in the years ahead.”

First quarter 2024 revenue decreased 49.9% to $174.7 million from $349.0 million for the first quarter of 2023, primarily driven by a decrease in the number of active earning OPTAVIA Coaches, lower Coach productivity, and a $9.1 million impact from a timing difference related to changes in the company’s sales order terms and conditions with its customers realized in the first quarter of 2023. The total number of active earning OPTAVIA Coaches decreased 35.6% to 37,800 compared to 58,700 for the first quarter of 2023. The average revenue per active earning OPTAVIA Coach was $4,623, compared to $5,945 for the first quarter last year, primarily driven by continued pressure on customer acquisition.

Revenue of $174.7 million, with revenue per active earning coach of $4,623

Independent active earning OPTAVIA Coaches of 37,800

Net income of $8.3 million.

The company expects second quarter 2024 revenue to be in the range of $150 million to $170 million

Conference Call Information

Management reported that they have commissioned some research of the medical weight loss market and found that the GLP-1 “support market is worth $13 billion. They intend to capture a share of this market, as dieters need coaching and support in addition to the weight loss drugs. Their research found that patients using the GLP-1s spend about $200 per month on shakes, bars and vitamins. Medifast will be providing a nutritional support package next month which will cost patients $282 per month. It will include a protein supplement, coaching, help with obtaining scripts for the weight loss drug, and access to the Optavia app. The company plans to spend about the same amount on marketing in Q2 as it did during Q1, and the major share of the $30 million yearly spend will take place in Q2 and Q4. Management believes that the current shortage of GLP-1 meds could last several years. No mention was made about the number of clinical patients currently signed up with the LfeMD program, and how much that figure has risen.

DietBusinessWatch/Marketdata Commentary

Wow, these are some drastic numbers, showing just how much the GLP-1 drugs boom has affected the company. At this rate, total company revenues would come in at about $700 million (versus $1.6 billion in 2022 and $1.07 billion in 2023). It appears that LifeMD will offer patients both brand name GLP-1 drugs a s well as compounded meds. Offering compounded meds could be a mistake, and risky. Not all compounding pharmacies are DEA-certified as a class b sterile facility in their state, and many are sending consumers meds through the mail/online without adequate screening. Some may be using peptide ingredients imported from China. Weight Watchers has wisely chosen not to offer compounded weight loss meds.  Compounding of semaglutide is still a “wild west” environment where profits take priority over safety. We don’t know which compounding pharmacy LifeMd is using.

Another headwind that Medifast faces is the recruitment of more coaches that are willing to take on the responsibility of dealing with patients on weight loss drugs and the side effects they may be having. We suspect that much of the attrition in the ranks of Medifast coaches lately is due to the hesitation of coaches to get into this area for fear of liability, coupled with their lack of training and experience in medical weight loss. Recruitment of quality coaches could be difficult, and these coaches would command a higher salary.

For More Information About The Weight Loss Market…

Marketdata LLC (parent company of DietBusinessWatch) has just released new research, a report entitled: “The Telehealth Weight Loss Market”. — The market for weight loss programs delivered via telehealth / telemedicine companies is worth $6.9 billion, and growing.

“The Telehealth Weight Loss Market” report, 88 pages, includes in-depth analyses of: the scope of telehealth usage in the U.S., telehealth user demographics, pros and cons, criticisms, investment in telehealth, 2020-2024 market/revenue estimates, 2028 forecasts, what fees are charged by telehealth companies, recent competitor and market developments, comparisons of weight loss coaches and telemedicine coaches (number, salaries, by state), and the GLP-1 compounding pharmacies situation and its effect on the market. The report contains 22 competitor profiles.  Price: $995. A detailed Table of Contents can be found at www.marketdataenterprises.com (Services tab on home page, then choose The Diet Market – Our Specialty page). Or, email us or call us and we’ll send it to you. Phone: 813-971-8080.  Email: john@marketdataenterprises.com.

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