Medifast Inc (MED) Faces Revenue Decline Amid Market Challenges in Q4 and Full Year 2023
Revenue: Q4 revenue dropped to $191.0 million, a 43.4% decrease year-over-year; full-year revenue hit $1.1 billion, down 32.9% from the previous year.
Net Income: Q4 net income fell to $6.0 million; full-year net income at $99.4 million, a significant decrease from the prior year.
Earnings Per Share (EPS): Q4 EPS was $0.55, with a non-GAAP adjusted EPS of $1.09; full-year EPS stood at $9.10, with a non-GAAP adjusted EPS of $9.64.
Gross Margin: Improved to 74.0% in Q4 from 69.3% in the same quarter last year, attributed to cost savings and absence of prior year's restructuring costs.
Balance Sheet: Ended the year with $150.0 million in cash, cash equivalents, and investments, and no interest-bearing debt.
Outlook: Q1 2024 revenue is expected to be between $155 million to $175 million, with diluted EPS ranging from $0.25 to $0.95.
On February 20, 2024, Medifast Inc (NYSE:MED) released its 8-K filing, detailing the financial results for the fourth quarter and full year ended December 31, 2023. The company, known for its OPTAVIA brand, faced significant revenue declines amidst a challenging market, with Q4 revenue falling 43.4% to $191.0 million and full-year revenue decreasing by 32.9% to $1.1 billion. The decrease was primarily driven by a reduction in the number of active earning OPTAVIA Coaches and a decline in productivity per coach.
Medifast Inc (NYSE:MED) reported a Q4 net income of $6.0 million, a stark contrast to the $26.5 million from the same period last year. The full-year net income also saw a downturn, settling at $99.4 million compared to $143.6 million in 2022. Earnings per diluted share (EPS) for Q4 were reported at $0.55, with a non-GAAP adjusted EPS of $1.09. The full-year EPS was $9.10, with a non-GAAP adjusted EPS of $9.64.
The company's gross profit margin improved to 74.0% in the fourth quarter from 69.3% in the prior-year period, primarily due to cost savings from the company's Fuel for the Future program and the absence of restructuring costs incurred in the previous year. Selling, general, and administrative expenses (SG&A) decreased by 34.0% to $132.7 million in Q4, reflecting decreased Coach compensation and progress on cost reduction initiatives.
Medifast's balance sheet remains robust, ending the year with $150.0 million in cash, cash equivalents, and investments, and no interest-bearing debt. This financial position is a testament to the company's resilience in the face of market challenges.
The company's outlook for the first quarter of 2024 anticipates revenue to be in the range of $155 million to $175 million and diluted EPS to be between $0.25 and $0.95, excluding costs related to the initiation of the LifeMD collaboration.
Medifast's CEO, Dan Chard, commented on the company's strategic realignment to adapt to the evolving weight loss industry. Chard emphasized the importance of broadening customer acquisition activities and leaning into the medically-supported weight loss market through collaboration with LifeMD. Despite the challenging market, Chard expressed confidence in the company's investments to drive future growth.
"We are realigning our business to respond to the evolving dynamics of the weight loss industry and to aggressively execute on bold initiatives to transform our business model," said Dan Chard, Chairman & CEO of Medifast. "This remains a challenging market, and it will take time to navigate the transformational path that we are on. However, I believe that the investments were making in our business will broaden our addressable market and strengthen our ability to drive future growth."
Medifast's performance reflects the broader challenges faced by the personal services industry, particularly in the weight loss sector. The company's efforts to innovate and adapt to changing market conditions are crucial for maintaining its competitive edge and ensuring long-term success.
For a more detailed analysis of Medifast's financial performance, including income statements and balance sheets, investors are encouraged to review the full 8-K filing.
Medifast Inc (NYSE:MED) continues to navigate a challenging environment with a strong balance sheet and a clear strategic direction. As the company embarks on its transformational path, investors and stakeholders will be watching closely to see how these initiatives translate into financial performance in the coming quarters.
For further information and to stay updated on Medifast's progress, investors can join the conference call scheduled for today at 4:30 p.m. ET, or access the call through the Investor Relations section of Medifast's website.
Explore the complete 8-K earnings release (here) from Medifast Inc for further details.
This article first appeared on GuruFocus.
