Medifast (MED) Collaborates With LifeMD, Discontinues Dividend
Medifast, Inc. MED is committed to providing comprehensive health and wellness solutions to consumers throughout the United States. Management unveiled the first phase of its business transformation. As part of the transformation, Medifast will penetrate the medically supported weight loss market through a collaboration with LifeMD, Inc. (LFMD). LifeMD is a well-known provider of virtual primary care.
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The Zacks Rank #3 (Hold) company expects to make investments worth $20 million in LifeMD. The move integrates OPTAVIA’s personalized coach-guided and habit-based approach with LifeMD’s medical expertise and weight loss medications like GLP-1s. The collaboration, which is intended to create a comprehensive health solution, comes at a time when the obesity crisis and the need for medically-supported weight loss solutions are growing.
In December, Medifast introduced two product bundles for consumers who require medically supported weight loss. These products include ‘OPTAVIA Nutrition Kit for Medically Supported Weight Loss’ and ‘OPTAVIA Muscle Health Kit for Medically Supported Weight Loss’. MED’s strategic entry into the booming medically supported weight loss market holds promise. This space is likely to reach up to $100 billion by 2030.
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Discontinues Dividend
To adjust its capital allocation priorities, Medifast discontinued its quarterly cash dividend, effective immediately. The move will enable management to redirect capital towards technology and growth investments. This will help the company improve customer acquisition and experience to generate higher long-term stockholder returns. Talking about investments, the company designed a new marketing campaign to increase brand awareness and fuel customer adoption.
The discontinuation of dividends gives Medifast the flexibility to evolve its business model, as evidenced by the recent collaboration with LifeMD.
Shares of Medifast have declined 15.3% in the past three months compared with the industry’s 1.2% decline.
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