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Medifast (MED) Q2 Earnings Beat Estimates, Revenues Fall Y/Y
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Medifast, Inc. (MED - Free Report) reported second-quarter 2024 results, with the bottom and top lines declining year over year. However, both earnings and net revenues beat the Zacks Consensus Estimate.
Medifast is strategically adjusting its operations to meet the changing demands of the weight loss industry. This involves expanding its customer outreach through enhanced marketing efforts and entering the medically supported weight loss domain in partnership with LifeMD.
These steps are designed to increase its market presence and cater to a wider audience, highlighting a forward-looking approach aimed at driving growth and adapting to market dynamics despite the competitive landscape of the weight loss sector.
Medifast’s adjusted earnings were 92 cents per share in the second quarter, down from $2.77 in the year-ago quarter. The metric surpassed the Zacks Consensus Estimate of earnings of 36 cents per share.
Net revenues of $168.9 million declined 43.1% year over year mainly due to lesser active earning OPTAVIA Coaches and reduced productivity per Coach. The average revenue per active earning OPTAVIA Coach was $4,972, down 10.9% year over year from $5,578 million due to lower customer acquisition.
The total number of active earning OPTAVIA Coaches fell 36.2% to 33,900 from 53,100 in the year-ago quarter. The top line surpassed the Zacks Consensus Estimate of $160 million.
The adjusted gross profit was $126 million, down 40.2% year over year on reduced revenues. The adjusted gross profit margin was 74.8%, up 370 basis points year over year. This increase mainly resulted from the cost reductions achieved through the company's Fuel for the Future initiative, coupled with efficient inventory management.
Adjusted selling, general and administrative expenses (SG&A) fell 33.8% year over year to $113.8 million. The decrease was primarily attributed to several factors, including reduced Coach compensation due to lower sales volumes and fewer active earning Coaches.
As a percentage of revenues, adjusted SG&A expenses increased 940 basis points (bps) to 67.5%, primarily attributed to the loss of leverage on fixed costs due to lower sales volumes and supply-chain optimization costs.
Additionally, the company incurred expenses for market research and investments in medically supported weight loss, costs for exiting hotel commitments for future annual OPTAVIA conventions reflecting a strategic change and costs for company-led customer acquisition initiatives. We expected adjusted SG&A expenses, as a percentage of revenues, to increase 600 bps to 64.1% in the second quarter.
The adjusted income from operations declined 68.4% to $12.2 million. We note that the adjusted operating margin decreased 580 bps year over year to 7.3%.
Image Source: Zacks Investment Research
Other Financial Updates
Medifast concluded the quarter with cash, cash equivalents and investments of $165.3 million, no interest-bearing debt (as of Jun 30, 2024) and total shareholders’ equity of $205.3 million.
Guidance
Management expects revenues to be in the range of $125-$145 million for the third quarter. The company projects loss per share to be in the band of 5-70 cents. The earnings per share guidance excludes costs associated with the initiation of the partnership with LifeMD, as well as any gains or losses related to changes in the market price of the company’s LifeMD investment.
The Zacks Rank #3 (Hold) company’s shares have lost 18.2% in the past three months compared with the industry’s 4.1% decline.
Some Better-Ranked Staple Bets
Here, we have highlighted three better-ranked stocks, namely Vital Farms Inc. (VITL - Free Report) , Ollie's Bargain Outlet Holdings (OLLI - Free Report) and Kimberly-Clark Corporation (KMB - Free Report) .
VITL has a trailing four-quarter earnings surprise of 102.1%, on average.
The Zacks Consensus Estimate for Vital Farms’ current financial year’s earnings and sales indicates growth of 66.1% and 24.9%, respectively, from the year-ago reported figures.
Ollie's Bargain is a value retailer of brand-name merchandise at drastically reduced prices. It presently carries a Zacks Rank #2 (Buy). OLLI has a trailing four-quarter average earnings surprise of 10.4%.
The Zacks Consensus Estimate for Ollie's Bargain's current fiscal-year earnings and sales indicates growth of 12.4% and 8.1%, respectively, from the year-ago reported figures.
Kimberly-Clark is principally engaged in the manufacture and marketing of a wide range of consumer products. It has a Zacks Rank of 2 at present.
The Zacks Consensus Estimate for Kimberly-Clark’s current financial-year earnings indicates growth of 9.7% from the year-ago reported figure. KMB has a trailing four-quarter average earnings surprise of 12.6%.
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Medifast, Inc. (MED - Free Report) reported second-quarter 2024 results, with the bottom and top lines declining year over year. However, both earnings and net revenues beat the Zacks Consensus Estimate.
Medifast is strategically adjusting its operations to meet the changing demands of the weight loss industry. This involves expanding its customer outreach through enhanced marketing efforts and entering the medically supported weight loss domain in partnership with LifeMD.
These steps are designed to increase its market presence and cater to a wider audience, highlighting a forward-looking approach aimed at driving growth and adapting to market dynamics despite the competitive landscape of the weight loss sector.
MEDIFAST INC Price, Consensus and EPS Surprise
MEDIFAST INC price-consensus-eps-surprise-chart | MEDIFAST INC Quote
Q2 in Details
Medifast’s adjusted earnings were 92 cents per share in the second quarter, down from $2.77 in the year-ago quarter. The metric surpassed the Zacks Consensus Estimate of earnings of 36 cents per share.
Net revenues of $168.9 million declined 43.1% year over year mainly due to lesser active earning OPTAVIA Coaches and reduced productivity per Coach. The average revenue per active earning OPTAVIA Coach was $4,972, down 10.9% year over year from $5,578 million due to lower customer acquisition.
The total number of active earning OPTAVIA Coaches fell 36.2% to 33,900 from 53,100 in the year-ago quarter. The top line surpassed the Zacks Consensus Estimate of $160 million.
The adjusted gross profit was $126 million, down 40.2% year over year on reduced revenues. The adjusted gross profit margin was 74.8%, up 370 basis points year over year. This increase mainly resulted from the cost reductions achieved through the company's Fuel for the Future initiative, coupled with efficient inventory management.
Adjusted selling, general and administrative expenses (SG&A) fell 33.8% year over year to $113.8 million. The decrease was primarily attributed to several factors, including reduced Coach compensation due to lower sales volumes and fewer active earning Coaches.
As a percentage of revenues, adjusted SG&A expenses increased 940 basis points (bps) to 67.5%, primarily attributed to the loss of leverage on fixed costs due to lower sales volumes and supply-chain optimization costs.
Additionally, the company incurred expenses for market research and investments in medically supported weight loss, costs for exiting hotel commitments for future annual OPTAVIA conventions reflecting a strategic change and costs for company-led customer acquisition initiatives. We expected adjusted SG&A expenses, as a percentage of revenues, to increase 600 bps to 64.1% in the second quarter.
The adjusted income from operations declined 68.4% to $12.2 million. We note that the adjusted operating margin decreased 580 bps year over year to 7.3%.
Image Source: Zacks Investment Research
Other Financial Updates
Medifast concluded the quarter with cash, cash equivalents and investments of $165.3 million, no interest-bearing debt (as of Jun 30, 2024) and total shareholders’ equity of $205.3 million.
Guidance
Management expects revenues to be in the range of $125-$145 million for the third quarter. The company projects loss per share to be in the band of 5-70 cents. The earnings per share guidance excludes costs associated with the initiation of the partnership with LifeMD, as well as any gains or losses related to changes in the market price of the company’s LifeMD investment.
The Zacks Rank #3 (Hold) company’s shares have lost 18.2% in the past three months compared with the industry’s 4.1% decline.
Some Better-Ranked Staple Bets
Here, we have highlighted three better-ranked stocks, namely Vital Farms Inc. (VITL - Free Report) , Ollie's Bargain Outlet Holdings (OLLI - Free Report) and Kimberly-Clark Corporation (KMB - Free Report) .
Vital Farms, which offers a range of produced pasture-raised foods, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
VITL has a trailing four-quarter earnings surprise of 102.1%, on average.
The Zacks Consensus Estimate for Vital Farms’ current financial year’s earnings and sales indicates growth of 66.1% and 24.9%, respectively, from the year-ago reported figures.
Ollie's Bargain is a value retailer of brand-name merchandise at drastically reduced prices. It presently carries a Zacks Rank #2 (Buy). OLLI has a trailing four-quarter average earnings surprise of 10.4%.
The Zacks Consensus Estimate for Ollie's Bargain's current fiscal-year earnings and sales indicates growth of 12.4% and 8.1%, respectively, from the year-ago reported figures.
Kimberly-Clark is principally engaged in the manufacture and marketing of a wide range of consumer products. It has a Zacks Rank of 2 at present.
The Zacks Consensus Estimate for Kimberly-Clark’s current financial-year earnings indicates growth of 9.7% from the year-ago reported figure. KMB has a trailing four-quarter average earnings surprise of 12.6%.