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Medifast Reports Q3 Results

Nov. 7, 2023

Management stated: “Medically-supported weight loss solutions have brought a fresh focus to the landscape, and it’s important that we continue to develop an approach that recognizes the needs of the customers who choose to utilize medication as part of their health and wellness journey as we broaden our offerings, expand our addressable market, and extend our demographic reach.”

Third Quarter 2023

Third quarter 2023 revenue decreased 39.6% to $235.9 million from $390.4 million for the third quarter of 2022, primarily driven by a decrease in the number of active earning OPTAVIA Coaches and the decline in the productivity per active earning OPTAVIA Coach. The average revenue per active earning OPTAVIA Coach was $5,008, compared to $5,897 for the third quarter last year, a decline of 15.1%, driven by continued pressure on customer acquisition, partially offset by a price increase implemented in November 2022. The total number of active earning OPTAVIA Coaches decreased 28.9% to 47,100 compared to 66,200 for the third quarter of 2022.

Gross profit decreased 37.3% to $177.4 million from $282.8 million for the third quarter of 2022. The decrease in gross profit was mainly due to lower revenue. The company’s gross profit as a percentage of revenue was 75.2% compared to 72.5% in the third quarter of 2022.

The company expects full-year 2023 revenue to be in the range of $1,050 million to $1,070 million

“While our third quarter results were ahead of our guidance, the operating environment remains challenging, and we continue to expect that future growth initiatives will take time to gain traction and deliver meaningful results.”

Revenue of $235.9 million, with revenue per active earning coach of $5,008

Independent active earning OPTAVIA Coaches of 47,100

Net income of $23.1 million

Cash, Cash Equivalents, and Investment Securities of $157.8 million and no interest-bearing debt

Press Release & Financial Tables Found Here:


Conference Call Findings

Market research by the company finds that the market is split relatively evenly regarding weight loss medications. Around half of those looking for weight loss solutions are accepting of medication-based therapies, and around half of them reject the idea of using GLP-1 medications like Wegovy to support weight loss. The company recently launched a pilot initiative with three different telehealth companies to explore how we might incorporate weight loss medication into our coach-centered business model. The company has been working closely with a set of select coaches to bring them up to speed on the benefits of the OPTAVIA solution for those who are currently using or are considering using GLP-1 or other weight loss medications.

“We believe there is significant potential to maintain our market share and growth position by tapping into this important new market, whether that’s through a partnership, acquisition, investment or an organically-developed solution.”

The new OPTAVIA ACTIVE sports nutrition product line expands the breadth of the firm’s overall addressable market. The business opportunity within the sports nutrition market is substantial. The firm is also pursuing the expansion of its customer base by focusing on demographic groups in the U.S. where they are underrepresented — specifically to further penetrate the Hispanic market.

Management said that it’s testing digital marketing/advertising and it may spend more money on this in the future, rather than relying solely on word-of-mouth advertising by its coaches.

DietBusinessWatch/Marketdata Commentary

Revenues down 30% for the first 9 months of 2023 – ouch! The impact of the Semaglutide boom is hurting the non-medical weight loss companies, big time. As expected, the company is researching the integration of medical weight loss and drugs into their program, but this is a BIG challenge. Dealing with customers taking weight loss drugs, and their medical conditions and possible side effects is a totally different animal. It remains to be seen whether these coaches are up to the challenge. We may see further attrition as those coaches who don’t feel comfortable drop out. They certainly don’t have the same background and qualifications as Nurse Practitioners, Physicians Assistants or MDs. The diversification into sports nutrition makes sense, as do the efforts to further penetrate the Hispanic market and Latin America. Just a year ago, MED had revenue of $1.6 billion and a record number of coaches — now sales are estimated at $1.0 billion for 2023 — just shows how fast things can change in the U.S. weight loss market.

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