Nov. 4, 2022
According to management: "We've seen faster than anticipated improvement in customer retention rates back to quarterly historical norms, as we focus on delivering a high quality experience for all customers," said Dan Chard, Chairman & Chief Executive Officer. "At the same time, the world is in a period of economic disruption right now, and that is impacting spending levels and customer acquisition at consumer-facing companies. We're going to see the residual effect of that on Coach productivity and top line revenue as we move through the fourth quarter."
Medifast reported results for the 3rd quarter of 2022. MED delivered soft third-quarter 2022 results as both the top and bottom lines declined year over year. Results were hurt by reduced Coach productivity and cost inflation. Management lowered its guidance for 2022.
Net revenues of $390.4 million declined 5.6% year over year due to reduced Coach productivity. The total number of active earning OPTAVIA Coaches rose 8.5% year over year to 66,200. The average revenue per active earning OPTAVIA Coach was $5,897 compared with $6,773 reported in the year-ago quarter.
The gross profit fell 7.9% to $282.8 million, mainly due to a decline in the number of customers supported by each Coach and escalated product costs resulting from increased raw ingredient, shipping and labor costs. The gross profit, as a percentage of revenues, came in at 72.5%, down from the 74.3% reported in the third quarter of 2021.
Management curtailed its 2022 guidance due to the impact of macroeconomic volatility and increased inflation in customer acquisition. Management anticipates 2022 revenues in the range of $1.51-$1.59 billion. Earlier, MED expected revenues in the range of $1.58-$1.66 billion. Revenues came in at $1.5 billion in 2021.
The complete Press Release, with detailed financial tables, can be found here:
Medifast has been on a roll for a long time. This is the first quarter in a long while that revenues have actually declined vs. the prior year. So, you know that the economic environment currently is not good, especially for discretionary purchases such as weight loss programs. It could be a rough six months ahead, as high inflation continues to take its toll. We'll wait to see if MED rolls out any new services or programs with the new 2023 "diet season".