Medifast Q2 Revenue Down 39.6% YoY, Focuses on Strategic Changes and Coach Growth

Medifast reported a 39.6% YoY decline in Q2 revenue to $105.6 million, focusing on strategic changes to enhance business outcomes and improve metabolic health. The company is expanding client solutions and boosting coach success, maintaining a strong financial position. Medifast's financial health analysis shows a significant decline in revenue, but strong liquidity and minimal leverage. The stock's valuation suggests potential undervaluation with a P/S ratio of 0.28 and P/B ratio of 0.7.

Medifast Inc. (MED) reported a 39.6% year-over-year (YoY) decline in Q2 2025 revenue to $105.6 million, according to its latest earnings call. The company, which operates in the health and wellness sector, is focusing on strategic changes to enhance business outcomes and improve metabolic health. The company's CEO, Daniel R. Chard, emphasized the company's transformation, highlighting the integration of science and clinical research to address rising metabolic health challenges and support healthy weight loss through the OPTAVIA program [1].

The company announced several strategic initiatives during the earnings call. These include enhancements to its mobile app and web platform, aimed at providing actionable insights and simplifying coach reporting. Additionally, Medifast unveiled the Premier+ pricing and incentive structure for auto-ship clients, which integrates discounts beyond the client's first order and replaces a more complex system of loyalty credits with straightforward upfront savings [1].

Chard also emphasized a strategic limit on future promotions, stating that the company expects to use promotions sparingly going forward. This move is expected to result in more consistent client demand throughout the year. The company's CFO, James P. Maloney, reported that the company's gross profit margin remained strong at 72.6%, despite a 37.9% year-over-year decrease in gross profit [1].

Financial results for the second quarter showed a decrease in revenue and active coaches, but sequential improvement in coach productivity and a significant year-over-year improvement in loss from operations. The company ended the quarter with approximately 22,800 active earning OPTAVIA coaches, a decrease of 32.7% from the previous year. The company's net income for the quarter was $2.5 million, compared to a net loss of $8.2 million in the year-earlier period [1].

Medifast's financial health analysis shows a significant decline in revenue, but strong liquidity and minimal leverage. The company's current ratio is 3.52, and its quick ratio is 2.87, indicating robust liquidity. The debt-to-equity ratio is low at 0.07, reflecting a conservative approach to leveraging [2].

The stock's valuation suggests potential undervaluation with a P/S ratio of 0.28 and P/B ratio of 0.7. Analysts have set a target price for Medifast at $15, reflecting cautious optimism from the market [2].

References:
[1] https://seekingalpha.com/news/4478067-medifast-signals-limited-use-of-promotions-and-unveils-premier-pricing-to-drive-coach
[2] https://www.gurufocus.com/news/3032999/med-anticipates-q3-revenue-between-70m-and-90m