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MI

MEDIFAST INC (MED)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $115.7M and diluted EPS was -$0.07, with gross margin steady at 72.8%; revenue declined 33.8% YoY due to a 32.8% drop in active earning OPTAVIA coaches, while revenue per coach decreased only 1.4% YoY, reflecting improving productivity in newer cohorts .
  • Versus S&P Global consensus, MED delivered a small revenue miss ($115.7M vs $116.4M*) but a meaningful EPS beat (-$0.07 vs -$0.25*); consensus coverage was thin (one estimate each) [GetEstimates].
  • Management introduced Q2 2025 guidance of $85–$105M revenue and LPS of $0.00–$0.55, citing the timing of promotions and a strategic pullback in company-led marketing; they do not expect tariffs to impact 2025 .
  • Early signs of stabilization include double-digit YoY growth in new coaches and moderating declines in revenue per coach; ASCEND adoption reached the mid-teens percent of orders in Q1, supporting GLP-1 users and those focused on maintenance .

Values retrieved from S&P Global for consensus fields (*).

What Went Well and What Went Wrong

What Went Well

  • New coach cohorts showed double-digit YoY growth, exhibiting new-customer growth consistent with prior high-growth periods; management highlighted “first meaningful YoY increase in new coaches in the past 3 years” .
  • Revenue per active earning coach decline moderated to -1.4% YoY (vs -22% in Q1 2024), supported by increased productivity of newer cohorts .
  • ASCEND product line traction: mid-teens percent of orders by quarter end, tracking to expectations; designed to support GLP-1 users and maintenance, with high-protein mini meals and nutrient packs .

What Went Wrong

  • Active earning coach count fell 32.8% YoY to 25,400, driving the 33.8% revenue decline; SG&A as % of revenue rose to 73.9% from 68.3% due to deleverage and company-led marketing .
  • Net loss (-$0.8M, -$0.07 diluted EPS) reflects lower revenue and a sharply higher effective tax rate (246.8%) from adjustments in unrecognized tax benefits and a stock comp shortfall, magnified by near break-even pretax income .
  • Company-led marketing CAC remains less efficient than coach-led acquisition; guidance embeds reduced promotional activity in Q2, implying a weaker top line vs the recent deceleration trend .

Financial Results

MetricQ1 2024Q4 2024Q1 2025Q1 2025 Consensus
Revenue ($USD Millions)$174.7 $119.0 $115.7 $116.4*
Diluted EPS ($USD)$0.76 $0.07 -$0.07 -$0.25*
Gross Profit Margin %72.8% 74.1% 72.8% N/A
Operating Income (Loss) ($USD Millions)$7.94 $0.71 -$1.26 N/A
Operating Margin %4.5% 0.6% -1.1% N/A
SG&A (% of revenue)68.3% 73.5% 73.9% N/A
Other Income ($USD Millions)$3.65 $0.57 $1.79 N/A
Effective Tax Rate %28.2% 37.3% 246.8% N/A

Values retrieved from S&P Global for consensus fields (*).

KPIs

KPIQ3 2024Q4 2024Q1 2025
Independent active earning OPTAVIA coaches30,000 27,100 25,400
Revenue per active earning coach ($USD)$4,672 $4,391 $4,556
Cash, cash equivalents & investment securities ($USD Millions)$170.0 $162.3 $164.6
ASCEND share of orders (%)N/A~17% in Jan’25 Mid-teens %

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)Q1 2025$100–$120 N/A (actual reported $115.7) Achieved within prior range
Diluted EPS ($USD)Q1 2025-$0.50 to $0.00 (LPS to breakeven) N/A (actual -$0.07) Better than midpoint
Revenue ($USD Millions)Q2 2025N/A$85–$105 New guidance introduced
Loss per share ($USD)Q2 2025N/A$0.00 to $0.55 New guidance introduced
Guidance exclusionsQ2 2025N/AExcludes LifeMD mark-to-market gains/losses Noted

Earnings Call Themes & Trends

TopicQ3 2024 (11/4/24)Q4 2024 (2/18/25)Q1 2025 (4/28/25)Trend
GLP-1 positioning & LifeMD collaboration95% coach leaders trained; ~40% coaches support ≥1 GLP-1 client; ~12% of customers used GLP-1 in last 12 months 44% coaches support ≥1 GLP-1 client; 17% customers used GLP-1 in past 12 months; ASCEND launched ~50% coaches have supported GLP-1 clients; ~25% coaches have personal GLP-1 experience Integration increasing across coach/customer base
Coach productivity & recruitmentRev/coach down 6.7% YoY; active coaches 30k; company-led marketing scaled back for efficiency Rev/coach down 5.5% YoY; expectation to turn positive in 2025; active coaches 27.1k Rev/coach down 1.4% YoY; first meaningful YoY increase in new coaches (double-digit) Moderation improving; early stabilization
Company-led marketing & CAC$7M in Q3 spend; optimizing mix; email and website engagement improving ~$24M full-year; expect lower non-working spend in 2025; coach comp more efficient Pullback in Q2 promotions; reactivation favored; focus on coach-led acquisition Recalibration toward coach efficiency
Product performance (ASCEND)Launch planned early 2025 Launched Dec; ~17% of Jan orders include ASCEND Mid-teens share of Q1 orders; aligned with expectations Ramping adoption
Macro/tariffsConsumer headwinds noted Strong cash; cancelled credit facility No material tariff impact expected in 2025 Neutral to supportive
Regulatory/legal/R&DClinical study planned; < $2M cost expected (mostly 2025+) Studies to initiate in 2025 Continued development; science messaging emphasized Studies commencing
Tax / accounting——ETR 246.8% due to state exam, stock comp shortfall, magnified by near break-even One-off spike

Management Commentary

  • “Q1 marked the first meaningful year-over-year increase in new coaches in the past 3 years, with a double-digit increase... we believe it sets the stage for future improvement in overall coach productivity and new customer acquisition” — Dan Chard, CEO .
  • “Average revenue per active earning OPTAVIA coach for the first quarter was $4,556, a year-over-year decrease of 1.4% compared to a year-over-year decrease of [22%] during Q1 of 2024” — Jim Maloney, CFO .
  • “Currently, almost half of OPTAVIA coaches have supported GLP-1 medication patients... with 25% of coaches having had personal experience using GLP-1 medications” — Dan Chard, CEO .
  • On Q2 outlook: “We did run a promotion in Q1... In this year, in our guidance, we’re not really planning on having a promotion [in Q2]” — Jim Maloney, CFO .
  • “We presently do not expect tariffs to have any meaningful impact on our business this year” — Dan Chard, CEO .

Q&A Highlights

  • Guidance cadence: Midpoint of Q2 revenue range implies a faster YoY decline than recent trend due to Q1 promotions and the decision not to repeat in Q2; management cautioned not to extrapolate acceleration beyond Q2 .
  • ASCEND adoption: Mid-teens percent of orders by end of Q1; tracking to expectations; supports GLP-1 users and off-ramp/maintenance segments .
  • Marketing mix: Pullback in company-led spend where CAC was less efficient; reactivation programs work well; coach compensation is a more efficient growth lever .
  • LifeMD economics: Subscription cost “less than $20” per month; most GLP-1 users covered by their own physician/insurance; LifeMD used where appropriate .
  • Coach initiatives: Training evolved to GLP-1 environment; incentives designed to drive client acquisition and coach sponsoring; new cohorts showing productivity at high-growth period levels .

Estimates Context

  • Q1 2025: Revenue $115.7M vs consensus $116.4M* (miss ~$0.7M); EPS -$0.07 vs consensus -$0.25* (beat $0.18). Coverage: 1 estimate for revenue and EPS [GetEstimates] .
  • Implication: The EPS beat, despite lower revenue, reflects stable gross margin and SG&A reductions; estimate dispersion is not meaningful given single-analyst coverage, but directionally, EPS estimates may need upward adjustment given cost control and LifeMD mark-to-market exclusion in guidance .

Values retrieved from S&P Global for consensus fields (*).

Key Takeaways for Investors

  • EPS outperformed thin consensus despite a sizable YoY revenue decline; improving coach productivity and ASCEND adoption underpin early stabilization signals — actionable for monitoring estimate revisions and sentiment shifts [GetEstimates].
  • Q2 guidance embeds the impact of fewer promotions and a shift away from less efficient company-led marketing; near-term top line likely softer, but management emphasized that trend should not be extrapolated beyond Q2 .
  • Strategic pivot toward coach-led acquisition seems to deliver better CAC and productivity; watch for sustained positive turn in revenue per coach as a leading indicator before coach count growth .
  • GLP-1 integration is deepening across the network (≈50% coaches have coached GLP-1 users; ≈25% have personal experience), broadening target segments and supporting ASCEND ramp — a key narrative driver .
  • Tax rate spike was idiosyncratic (state exam resolution + stock comp shortfall) and magnified by near breakeven; not reflective of ongoing operations — reduces read-through risk .
  • Balance sheet strength (cash/investments $164.6M; no debt) provides flexibility for execution across marketing mix, product launches, and clinical studies (<$2M expected cost, mostly 2025+) .
  • Trading setup: Expect volatility around near-term revenue trajectory and guidance cadence; medium-term thesis hinges on ASCEND traction, productivity turning positive, and coach count stabilization — monitor KPIs quarterly .