Medifast (MED) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue was $140.2 million, at the upper end of guidance but down 40.6% year-over-year, driven by a 36.3% decline in active-earning coaches and lower productivity.

• Net income was $1.1 million ($0.10 per diluted share), down from $23.1 million ($2.12 per share) a year ago; non-GAAP adjusted net income was $3.9 million ($0.35 per share).

• Gross profit margin improved to 75.4%, up 20 basis points year-over-year, despite a 40.4% drop in gross profit.

• Strategic transformation underway, including new product launches, digital enhancements, and expanded collaboration with LifeMD to support GLP-1 users and broader customer segments.

• Ended Q3 with $170 million in cash, cash equivalents, and investments, and no interest-bearing debt.

Financial highlights

• SG&A expense decreased 31.8% to $103.6 million, but as a percent of revenue rose to 73.9%.

• Income from operations was $2.1 million (1.5% of revenue), down from $25.5 million (10.8%) last year; non-GAAP adjusted income from operations was $3.8 million (2.7%).

• Company-led customer acquisition marketing spend was $7 million in Q3, $2 million less than expected.

• For the nine months ended September 30, 2024, revenue was $483.5 million (down 45.1%), net income was $1.3 million, and diluted EPS was $0.12.

• Cash, cash equivalents, and investment securities increased to $170 million as of September 30, 2024.

Outlook and guidance

• Q4 2024 revenue expected between $100 million and $120 million, with a projected loss per share of $0.10 to $0.65, excluding LifeMD investment gains/losses.

• $7 million in company-led marketing spend planned for Q4; new product launches and enhanced customer experience expected for early 2025.

• Management expects continued short-term pressure on customer acquisition and active coach count due to GLP-1 competition and seasonality.