Yahoo Finance

Wellness company Medifast (NYSE:MED) missed Wall Street’s revenue expectations in Q1 CY2025, with sales falling 33.8% year on year to $115.7 million. Next quarter’s revenue guidance of $95 million underwhelmed, coming in 15.4% below analysts’ estimates. Its GAAP loss of $0.07 per share was 72% above analysts’ consensus estimates.

Is now the time to buy MED? Find out in our full research report (it’s free).

Medifast (MED) Q1 CY2025 Highlights:

• Revenue: $115.7 million vs analyst estimates of $116.4 million (33.8% year-on-year decline, 0.6% miss)

• EPS (GAAP): -$0.07 vs analyst estimates of -$0.25 (72% beat)

• Adjusted EBITDA: $1.65 million vs analyst estimates of -$2.1 million (1.4% margin, significant beat)

• Revenue Guidance for Q2 CY2025 is $95 million at the midpoint, below analyst estimates of $112.3 million

• EPS (GAAP) guidance for Q2 CY2025 is -$0.28 at the midpoint, missing analyst estimates by 293%

• Operating Margin: -1.1%, down from 4.5% in the same quarter last year

• Free Cash Flow Margin: 1.6%, down from 3.1% in the same quarter last year

• Market Capitalization: $131.9 million

StockStory’s Take

Medifast’s first quarter results reflected ongoing pressure on revenue, which management attributed to declines in the number of active earning OPTAVIA coaches and ongoing shifts in the weight loss industry. CEO Dan Chard emphasized the company’s response to disruption from GLP-1 weight loss medications, noting that new coach cohorts have adapted to this environment and are showing increased productivity. Chard highlighted, “These new cohorts are exhibiting new customer growth ahead of last year and are at levels we experienced back when the business was growing.”

Looking ahead, management’s guidance for the next quarter factors in fewer planned company-led promotions, which were a driver of coach acquisition in Q1. CFO Jim Maloney noted that the absence of similar promotional activity in Q2 is expected to result in a less favorable year-over-year revenue comparison. Management also signaled a shift in marketing investment back toward supporting the coach community, aiming to improve long-term productivity and retention. Despite acknowledging near-term headwinds, leadership expressed optimism that recent improvements in coach recruitment and productivity could contribute to stabilization later in the year.

Key Insights from Management’s Remarks

Management discussed several themes shaping Medifast's performance, especially the impact of GLP-1 medications and the company's evolving coach-centric strategy.

• GLP-1 Disruption and Adaptation: The rise of GLP-1 medications for weight loss has disrupted traditional customer behavior, prompting the company to retrain and support coaches in addressing new client needs, including those transitioning off GLP-1 drugs.

• Coach Productivity Initiatives: Efforts to streamline coach development, enhance digital tools, and provide targeted incentives have begun to yield results, with new coach cohorts showing improved productivity and customer acquisition compared to previous years.

• Product Line Expansion: Launches of OPTAVIA ACTIVE and ASCEND lines are designed to serve both traditional customers and those using or discontinuing GLP-1 medications, with the ASCEND line now accounting for a mid-teens percentage of orders.

• Shift Away from Company-Led Marketing: Management is reducing investment in company-driven marketing campaigns, finding that coach-led customer acquisition is more efficient and sustainable for long-term growth.

• Focus on Cost Management: SG&A reductions have been driven by lower coach compensation and cuts to marketing expenses, helping to maintain a strong balance sheet despite lower sales volumes.