Medifast's Q2 Earnings Beat Estimates, Lower Revenues Hurt Margins

Medifast, Inc. (MED) delivered second-quarter 2025 results, wherein both the top and bottom lines beat the Zacks Consensus Estimate. Both net sales and earnings experienced year-over-year declines.

Amid growing consumer demand for long-term health and wellness solutions, Medifast has been emphasizing the importance of personalized support through its OPTAVIA program, which offers one-on-one coaching and tailored plans.

Looking ahead, Medifast is prioritizing the revitalization of its coach and customer base by introducing enhanced tools, data-driven support and new products, with a strategic focus on restoring long-term growth and profitability.

Medifast’s Quarterly Performance: Key Insights

MED reported quarterly earnings of 22 cents per share, reflecting a gain from its investment in LifeMD. Excluding this gain, the adjusted earnings were four cents per share comparing favorably with the Zacks Consensus Estimate of break-even earnings. The company reported earnings of 92 cents per share in the year-ago quarter.

Net revenues of $105.6 million declined 37.4% year over year due to a drop in the number of active earning OPTAVIA coaches. However, the metric exceeded the Zacks Consensus Estimate of $95 million. The average revenue per active earning OPTAVIA Coach was $4,630, down 6.9% year over year from $4,972, mainly driven by pressure in client acquisition with challenges in the operating landscape, including rapid adoption of GLP-1 medications for weight loss.

MEDIFAST INC Price, Consensus and EPS Surprise

MEDIFAST INC price-consensus-eps-surprise-chart | MEDIFAST INC Quote

The number of active earning OPTAVIA Coaches has been going downward year over year since the first quarter of 2023, thanks to persistent challenges with client acquisition. The total number of active earning OPTAVIA coaches plunged 32.7% to 22,800 from 33,900 seen in the year-earlier quarter.

MED’s Margin & Cost Details

Gross profit was $76.6 million, down 37.9% year over year on lower revenues. The gross margin was 72.6%, down 60 basis points (bps) year over year. We expected gross profit to be $83.7 million in the second quarter.

Selling, general and administrative expenses (SG&A) fell 40.8% year over year to $77.7 million. This decrease was primarily caused by a $24.3 million reduction in OPTAVIA coach compensation due to lower volume and fewer active earning coaches. As a percentage of revenues, SG&A declined 430 bps year over year to 73.6% of revenues on roughly 740 bps for supply-chain optimization initiatives and 180 bps for cancellation of the OPTAVIA convention incurred in the year-earlier quarter. This was somewhat offset by 440 bps owing to the loss of leveraged fixed costs on reduced sales volumes.

The loss from operations improved 86.5% to $1.1 million. As a percentage of revenues, loss from operations was 1% for the reported quarter compared with 4.7% in the year-ago period.

Medifast’s Financial Health Snapshot

MED concluded the quarter with cash, cash equivalents and investment securities of $162.7 million, no debt (as of June 30, 2025) and total shareholders’ equity of $216 million.

Sneak Peek Into MED’s 2025 Outlook

The company expects third-quarter 2025 revenues between $70 million and $90 million, with the bottom line ranging from a loss of 60 cents to break-even.

This Zacks Rank #3 (Hold) company’s shares have risen 3.8% in the past three months against the industry’s 2.1% drop.

Stocks to Consider in the Consumer Staples Space

Nomad Foods (NOMD), which manufactures frozen foods, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

NOMD delivered a trailing four-quarter earnings surprise of 3.2%, on average. The Zacks Consensus Estimate for Nomad Foods’ current financial-year earnings per share (EPS) indicates growth of 10.4% from the year-ago number.

Mondelez International (MDLZ), which is a leader in the snack food industry, currently carries a Zacks Rank #2 (Buy).

MDLZ delivered a trailing four-quarter earnings surprise of 9%, on average. The Zacks Consensus Estimate for MDLZ’s current financial-year sales indicates growth of 5.4% from the year-ago number.

Ingredion Incorporated (INGR), which is a provider of ingredient solutions specialized in nature-based sweeteners, starches and nutrition ingredients, currently carries a Zacks Rank of 2.

The Zacks Consensus Estimate for INGR’s current financial-year EPS is expected to rise 6.8% from the corresponding year-ago reported figure. INGR delivered a trailing four-quarter earnings surprise of 11.1%, on average.

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This article originally published on Zacks Investment Research (zacks.com).

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