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Medifast Reports Q2 Results, Stock Price Sinks

August 4, 2022

Medifast reported its Q2 2022 results. Management reported that:

“We delivered another solid quarter at Medifast, with revenues up 15%, almost 15% growth in the number of active earning Coaches, and robust Coach productivity. The customized support of OPTAVIA Coaches remains a key differentiator for our business, and these results are a demonstration of the continued strength of our model, ” said Dan Chard, Chairman and Chief Executive Officer of Medifast. “We’re not immune to issues in the wider macroeconomic environment, and like many consumer-focused businesses, we’ve seen the impact of inflation on customer retention and consumer sentiment, which will cause slower-than-anticipated growth in the second half. However, we believe we remain well positioned for significant future growth…”

Second quarter 2022 revenue increased 15.0% to $453.3 million from $394.2 million for the second quarter of 2021. Revenue growth was primarily driven by an increase in the total number of active earning OPTAVIA Coaches, which rose 14.9% to 68,000 compared to 59,200 for the second quarter of 2021. The average revenue per active earning OPTAVIA Coach was $6,667, slightly above the second quarter of 2021.

Income from operations decreased 20.3% to $49.0 million from $61.4 million in the prior-year period. As a percentage of revenue, income from operations was 10.8% for the second quarter of 2022 compared to 15.6% in the prior-year.

The company expects full-year 2022 revenue to be in the range of $1.58 billion to $1.66 billion, down from the previously announced range of $1.78 billion to $1.84 billion.. The decline in the company’s outlook is due to macroeconomic factors such as inflation and consumer sentiment which have impacted customer retention.

Second Quarter 2022 Highlights Compared to the Prior-Year Period

  • Revenue increased 15.0% to $453.3 million
  • 14.9% growth in the number of independent active earning OPTAVIA Coaches to 68,000
  • Revenue per active earning OPTAVIA Coach was $6,667 a slight increase above the prior year
  • Net income decreased 16.7% to $39.1 million

The complete Press Release, with detailed financial tables, can be found here, or at the Medifast website:


Conference Call Information

Management said that there is pressure on consumer spending due to inflation, and the economic outlook for the 2nd half is uncertain. The company had a 71% gross margin, which was down due to higher product and labor expenses. Income from operations was down 20%. The company has a $100 million share repurchase program. Users of the Optavia app grew 24% to 288,000, and 25% of the coaches are using that app. Customer retention rates have stabilized. Medifast expects to see greater productivity from its coaches, and will expand via building its Hispanic market in the U.S. and abroad. The firms has a goal of 15% annual revenue growth. Q3 revenues are expected to decline in the mid-teens, and slight growth in Q4 2022.

Marketdata Commentary

Could Medifast’s revised 2022 outlook represent the first sales growth slowdown in years? It could be, as the company has been on a tear lately. However, even the revised revenue estimate is still higher than competitor WW’s expected sales. Beyond 2022, the outlook is still strong, as the company pursues overseas markets.

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