Sign in

You're signed outSign in or to get full access.

MI

MEDIFAST INC (MED)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue of $105.6M and diluted EPS of $0.22 both came in above company guidance; revenue also beat Wall Street consensus ($101.8M*) and EPS beat materially (-$0.19*) . Results benefited from other income tied to LifeMD stock gains and lower SG&A versus last year; core operations were near breakeven with a -1.0% operating margin .
  • YoY trends remain challenging: revenue -37.4%, active coaches -32.7%, and revenue per coach -6.9%, driven by continued client acquisition headwinds and GLP-1 adoption; sequentially, revenue per coach improved for a second straight quarter .
  • Q3 2025 guidance implies sequential revenue decline ($70–$90M) and EPS range of ($0.60) to $0.00; midpoint sits below Street revenue consensus ($89.7M*) and near Street EPS consensus (-$0.36*) .
  • Strategic catalysts: rollout of “Premier Plus” pricing/incentive structure, the EDGE coach program, digital app upgrades, and continued LifeMD collaboration (after exiting the equity position). Strong balance sheet with $162.7M cash/investments and no debt provides flexibility .

Estimates marked with * retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Beat on revenue and EPS versus company guidance; management explicitly noted Q2 revenue and EPS exceeded guidance ranges .
  • Balance sheet strength maintained: $162.7M in cash, cash equivalents and investment securities; no debt as of June 30, 2025 .
  • Strategic execution: launched Premier Plus (simpler pricing/discounts and incentives) and the EDGE coach program to improve client acquisition, retention, and coach economics; sequential revenue per coach rose for a second quarter; management emphasized transformation and science-led positioning (lean mass preservation) .

What Went Wrong

  • Structural pressure on demand and field: revenue -37.4% YoY to $105.6M; active earning coaches -32.7% YoY to 22,800; revenue per coach -6.9% YoY to $4,630, reflecting ongoing client acquisition headwinds and GLP-1 adoption .
  • Core profitability still weak: gross margin slipped to 72.6% (from 73.2% LY), SG&A intensity remained elevated at 73.6% of revenue, and operating margin was -1.0% (improved YoY but still loss-making on operations) .
  • Outlook signals softer near-term: Q3 revenue guide $70–$90M and EPS ($0.60)–$0.00 point to sequential declines; CFO does not expect appreciable margin benefit from Premier Plus near-term, suggesting limited immediate P&L relief .

Financial Results

Headline metrics vs prior quarters and consensus

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$119.0 $115.7 $105.6
Diluted EPS ($)$0.07 -$0.07 $0.22
Gross Margin (%)74.1% 72.8% 72.6%
SG&A (% of Revenue)73.5% 73.9% 73.6%
Operating Margin (%)0.6% -1.1% -1.0%
Revenue Consensus Mean ($M)*—116.4101.8
Primary EPS Consensus Mean ($)*—-0.25-0.19

Estimates marked with * retrieved from S&P Global.

Year-over-Year comparison (Q2 2025 vs Q2 2024)

MetricQ2 2024Q2 2025YoY Change
Revenue ($USD Millions)$168.6 $105.6 -37.4%
Active Earning Coaches (000s)33.9 22.8 -32.7%
Revenue per Active Coach ($)$4,972 $4,630 -6.9%
Gross Margin (%)73.2% 72.6% -60 bps

KPIs and productivity trend

KPIQ4 2024Q1 2025Q2 2025
Active Earning Coaches (000s)27.1 25.4 22.8
Revenue per Active Coach ($)4,391 4,556 4,630

Notes: Management highlighted two consecutive quarters of sequential improvement in revenue per coach; no promotions were used in Q2 2025 (versus promotional timing late Q1/early Q2 last year) .

P&L drivers and below-the-line items

  • Other income swung to $3.9M from a $2.8M expense LY, driven by gains on LifeMD stock; MED liquidated its LifeMD equity position in Q2, but collaboration continues. Net income was $2.5M ($0.22) versus an $8.2M loss LY; effective tax rate 13.7% (vs 23.4% LY) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ3 2025N/A$70M – $90M New
Diluted EPSQ3 2025N/A($0.60) – $0.00 New
Gross MarginQ3 2025N/AQualitative: “do not expect… appreciable difference… from the [Premier Plus] adjustments” Qualitative comment
DividendsQ3 2025N/ANone providedUnchanged/Not provided

Context: Street Q3 2025 consensus sits at ~$89.7M revenue and -$0.36 EPS*, indicating MED’s revenue midpoint ($80M) is below consensus while the range overlaps the high end; EPS range brackets consensus . Estimates marked with * retrieved from S&P Global.

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
GLP-1 strategy & integrationEmphasized solutions for GLP-1 users and non-users; LifeMD access; focus on tailored plans .GLP-1 adoption a headwind to client acquisition; science-led messaging on preserving lean mass; 60% of coaches have coached a GLP-1 user; 23–25% of coaches have used GLP-1s .Evolving (integration deepening)
Coach productivity & growthPriority to reestablish growth; coach count 27.1k (Q4) then 25.4k (Q1) .Coach count 22.8k (Q2); productivity sequentially improved for second quarter; EDGE incentives launched .Productivity improving; headcount declining
Pricing/promotionsCompany-led marketing spend elevated in Q4; promotional timing impacted comps .Launch of Premier Plus (simpler pricing, upfront discounts, fixed shipping; less reliance on promotions) .Simplifying; less promotional dependency
Marketing mixCompany-led acquisition tested; costs in prior periods .Company-led marketing pared back; coaches’ personal stories more effective; ad spend focused on SEO/SEM .Shift toward coach-led acquisition
Supply chain/OpExPrior-year non-recurring costs (supply chain optimization; convention) inflated SG&A .SG&A down 40.8% YoY; YOY SG&A% benefited ~740 bps (supply chain) and ~180 bps (convention) non-repeat items .Structural costs lower YoY
Digital/app & toolsFocus on tools and data to support coaches (Q1) .New app functionality and reporting enhancements to support coach business building .Enhancing
Balance sheet & capital allocationCancelled credit facility (saves ~$0.5M annually) .$162.7M cash/investments; no debt; liquidated LifeMD equity while maintaining collaboration .Strong, de-risked

Management Commentary

  • CEO strategy focus: “We’re focused on new and impactful ways to reignite coach growth and productivity through targeted initiatives… all while maintaining a disciplined balance sheet.”
  • Science-led differentiation: “People who follow the OPTAVIA 5 & 1 Plan preserve 98% of their lean mass… Preserving lean mass is a critical component of metabolic health.”
  • Platform upgrades: “Premier Plus” pricing and incentives for autoship clients; simpler, upfront discounts and fixed shipping to improve conversion/retention; EDGE incentives and digital app enhancements to align behaviors and provide actionable insights .
  • CFO on margin outlook: “We do not expect to see any appreciable difference in our margins going forward from the [Premier Plus] adjustments, as any impact… is expected to be offset by other incremental actions.”
  • LifeMD investment: “During the quarter, we liquidated our position in LifeMD common stock… we continue to offer our clients access to LifeMD clinicians.”

Q&A Highlights

  • Coach composition in a GLP-1 world: Leadership training reflects the new environment; ~60% of coaches have supported at least one GLP-1 client and ~25% have personally used GLP-1s; emphasis on transition paths on/off medication within program design .
  • Product alignment with GLP-1 use: ASCEND supports clients using GLP-1 and those transitioning to maintenance; many clients pair 5&1 with GLP-1 for higher protein during active loss; ACTIVE supports exercise/muscle maintenance .
  • Acquisition strategy: Company-led marketing is effective for reactivation, but new client acquisition is more efficient via coach storytelling; paid media now focused on SEO/SEM with a pared-back budget .
  • Pricing/incentives impact: Premier Plus launched in July; CFO expects no material margin change given offsets from other actions .

Estimates Context

  • Q2 2025 actuals vs consensus: Revenue $105.6M vs $101.8M*; EPS $0.22 vs -$0.19* — both beats. Note: only one estimate in the consensus for Q2 .
  • Q1 2025 actuals vs consensus: Revenue $115.7M vs $116.4M* (slight miss); EPS -$0.07 vs -$0.25* (beat). Only one estimate .
  • Q3 2025 guide vs consensus: Revenue guide $70–$90M vs ~$89.7M* consensus; EPS guide ($0.60)–$0.00 vs -$0.36* consensus — guide midpoint below consensus revenue, EPS range brackets consensus .

Estimates marked with * retrieved from S&P Global.

Actuals vs S&P Global consensus

PeriodRevenue Actual ($M)Revenue Consensus* ($M)EPS Actual ($)EPS Consensus* ($)
Q1 2025115.7 116.4-0.07 -0.25
Q2 2025105.6 101.80.22 -0.19

Estimates marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Quality of beat: Both revenue and EPS exceeded guidance and consensus; however, EPS benefited from $2.6M other income tied to LifeMD gains and a low tax rate, while operating margin remained slightly negative .
  • Near-term caution: Q3 guide implies sequential revenue pressure and limited near-term margin lift from Premier Plus; watch for pace of client acquisition and coach count stabilization .
  • Sequential productivity improving: Revenue per coach rose for a second straight quarter as pricing/incentive simplification and EDGE roll out; focus remains on reigniting coach growth .
  • GLP-1 integration narrative: MED positions OPTAVIA as complementary to GLP-1s, emphasizing lean mass preservation and maintenance solutions (ASCEND/ACTIVE) — a differentiator as GLP-1 adoption expands .
  • Cost structure tailwinds vs LY: Lapped one-off supply chain and convention costs; SG&A intensity declined YoY though remains high; sustained cost discipline remains key .
  • Balance sheet optionality: $162.7M in cash/investments and no debt de-risk the story and fund transformation initiatives with minimal financial strain .
  • Stock catalysts: Evidence of coach count stabilization, traction from Premier Plus/EDGE and app enhancements, and continued scientific validation of outcomes could drive sentiment improvement despite soft near-term guide .