Q2 2025 Medifast Inc Earnings Call
At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. If you require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce you to your host, Stephen Zenker, VP of Investor Relations. Thank you, Stephen. You may begin.
Good afternoon and welcome to the Metifast Q2 2025 earnings conference call.
on the call with me today are Dan chard, chairman and chief executive officer and Jim Maloney Chief Financial Officer
by now, everyone should have access to the earnings release for the second quarter and the June 30th 2025 that went out this afternoon at approximately 4:05 p.m. eastern time. If you have not received the release it is available on the investor relations portion of metaphase website at www.etapestry.com.
Before we begin, we would like to remind everyone that today's prepared remarks contain 4 looking statements and management may make additional for looking statements and response to your questions. The words believe expect anticipate and other similar Expressions. Generally identify for looking statements,
These statements do not guarantee future performance and therefore, under Reliance should not be placed on them. Actual results could differ materially from those projected in any forward-looking statements
All of the forward-looking statements contained herein speak only as of the date of this call.
Metastreet assumes no obligation to update any forward-looking statements, that may be made in today's release or call.
Now, I would like to turn the call over to metaphase chairman and chief executive officer Dan chard.
Thank you, Steve and good afternoon everyone. We're glad to be here with you today to share some updates on our progress, over the second quarter of 2025.
We continue to work diligently to transform our business and capitalize on the significant opportunities in helping people achieve their health goals, especially as it relates to weight loss and optimal metabolic health.
We are also keenly focused on Coach productivity and Coach growth through targeted initiatives that aim to enhance our offer support coach businesses, success, and help us maintain a strong balance sheet.
The rapid adoption of GLP-1 medications has brought unprecedented attention to the issue of obesity and the critical role that weight plays in overall health.
Glp1 can be a powerful appetite. Suppressant, helping to turn down the food noise, but studies are in agreement that medication on its own does not help users develop the lifestyle changes necessary to achieve and sustain optimal metabolic Health, which includes preserving lean mass
Research indicates that, without adopting sustainable lifestyle changes, individuals who lose weight using GLP-1 medications often experience loss of lean mass.
Which includes muscle of up to 40% of total weight loss and tend to regain most of the weight back within a year, after discontinuing use of the drug.
This is where our programs are built to make a difference.
Each program is developed to guide individuals in adopting and maintaining healthy habits that not only promote weight loss. But also maximize fat burn while preserving lean mass
In fact, a recent study of randomized, clinical trial data. Showed that clients using the optivia 5 and 1 plan, maintained 98% of lean mass during weight loss.
this is due to a holistic nutrition and lifestyle approach to ensure a lean mass support during the active weight loss phase and through the critical maintenance phase that follows
We believe that healthy habits are essential to long-term health.
And with research showing that up to 74% of people, stops glp1 medications for weight loss, within a year or less of starting them. There's a growing need for an effective long-term solution that helps people maintain their weight loss progress, whether or not they have used medications as part of their efforts to improve their health.
The science that supports our clinically studied programs is rooted in 3. Key Design Elements, first fostering sustainable change through coach and Community Support second targeting an optimizing fat burn and lean muscle maintenance and third supporting gut health.
As science evolves, so do we—meeting people where they are and helping them navigate life changes and challenges.
Coaches while offering tailored solutions to our clients.
We cater to individuals looking to lose weight and achieve optimal metabolic health, whether they are currently using GLP-1 medications, transitioning off of them, or not using medications at all.
Our focus is on helping all clients protect their lean body mass.
And adopt a healthy lifestyle to achieve their best health outcomes.
We're now entering into the next phase of our evolution. As we leverage science and clinical research to extend the impact of our flagship 511 program and product line to address the growing challenges associated with poor metabolic health.
Ninety-three percent of U.S. adults are metabolically unhealthy, which leads to weight gain, low energy, and a higher risk of chronic illness.
This is a growing Health Challenge that based on recent study data, we believe optivia will be in a position to address.
We'll have more to say about this in the specifics later this year.
At the heart of our approach is leveraging important science and breakthroughs that we believe will enhance our performance in areas of strength, while also addressing important new areas of performance. Our focus is to deliver optimal metabolic health and well-being for our clients.
As always, our programs are supported by a personalized experience powered by dedicated coaches and a supportive community.
An approach designed to inspire meaningful lasting transformation.
Coaches are a central driver of the long-term success of our program.
Many of our coaches have experienced their own transformation through the program and are uniquely equipped to help others on their path to Optimal metabolic health.
23% often vehicle coaches, have personal experience in using glp-1 drugs in their own health journey. And now 60% have coached a client who has used glp-1 medication.
Their experience combined with a simple and actionable plan is what makes our program distinctive and effective.
Helping clients at every stage from weight loss, to Optimal metabolic health.
We are a coach-first business. Our focus is squarely on energizing and upgrading the tools that help coaches build their businesses and maximize their impact on clients.
We are doing this in an integrated phased way, starting with broadening our Port product portfolio, through the introduction of the active and Ascend lines. And now expanding into enhancements to our mobile app and web platform.
These changes are designed to deliver actionable. Insights simplify coach reporting and streamline. Both our coach economics and product pricing models.
In July, we launched a new pricing and incentive structure for our auto ship clients who represent over 90% of our client base.
This new structure named Premier Plus integrates discounts Beyond a client's first order and replaces a more complex system of loyalty credits with straightforward upfront savings.
Simplifying, the value proposition for clients and giving coaches, a more consistently priced client offer than previously available.
From a client perspective, the new pricing is simpler and easier to understand.
They get discounts on every order, provided they meet minimum order size and client requirements.
Pay 1, fixed price for shipping, regardless of order size.
These improvements help make our program more compelling to prospective clients and easier to explain for coaches.
The coaches should benefit by making it easier to attract and retain clients while also making the coach Compensation Plan payout more predictable and easy to understand as no adjustments have to be made for promotions or loyalty credits.
This also makes it easier for coaches to recruit new coaches and help those new coaches grow their businesses.
Going forward, we expected our use of promotions, will be limited likely resulting in more consistent client demand across the year.
We also believe this new approach will encourage clients to stay on the program longer.
Additionally, because our model works best when our coaches are aligned and focused on the same core client. Support and business. Building behaviors, we introduced a program called Edge in the second quarter, which features a set of integrated coach incentives, best practices and recognition tools, to reinforce the behaviors that drive success and business building.
It's designed to be accessible for both new and experienced coaches, providing a clear and motivating structure for growth and alignment to help them turn part-time work into a thriving business.
Is The Edge program, introduces our intended to simplify on boarding for coaches to bring non- new clients.
Create faster and more meaningful early wins.
And provide a clear pathway for advancement and compensation growth.
We're complementing this with improved leadership development training, empowering coaches to build thriving businesses.
In addition new digital app functionality provides more robust data for coaches to allow them to track, both their own business building, progress, and their clients progress in their optimal metabolic Health Journey.
All of this enables a greater focus on personalized client service and provides better insights into how coaches can best build their businesses.
Now turning into quarterly results.
Revenue and EPS came in above our guidance.
The total number of coaches during the quarter total 22,800 down 33% from Q2 of 2024.
Year-over-year coach productivity declined 7% versus Q2 2024, in part reflecting the timing of promotions.
In this year's second quarter, we did not utilize any promotions.
Although the total number of coaches and the average revenue per coach declined compared to the same quarter last year, average revenue per coach increased sequentially for the second consecutive quarter.
New coach acquisition growth in the second quarter was down compared to the prior year. Again, reflecting the absence of promotions compared with last year's second quarter.
We continue to see strong productivity among new coaches at levels with historically seen during growth periods in the past and we expect that Trend to continue into next year.
While our transformation continues to evolve, we are taking meaningful steps to position the company for future success in the years ahead.
Reigniting. The coach growth engine is a top priority and we have initiatives underway on multiple fronts to support this.
Now, I will turn it over to Jim to go over the quarter and our projections for the next quarter.
Thank you Dan, good afternoon, everyone.
As Dan mentioned earlier, second quarter 2025 results for both revenue and EPS were above our guidance ranges.
Revenue for the second quarter was 105.6 million. A decrease of 37.4%
versus the year-earlier period, primarily due to a decrease in the number of active earning Opa coaches.
we ended the quarter with approximately 22,800, active, earning Opa coaches, a decrease of 32.7% from the second quarter of 2024.
Average, revenue per active, earning Opa coach. For the second quarter was 4,630, a year-over-year decrease of 6.9%.
Primarily driven by continued pressure on client acquisition and timing differences in promotional activity.
In 2024, promotional activity occurred in late q1 into early Q2. While in 2025, promotional activity, only occurred in q1.
Coach productivity was actually up sequentially for the second consecutive quarter, and the percentage decline improved year-over-year from Q2 2024, which decreased 10.9%.
Gross profit decreased 37.9% year-over-year to 76.6 million driven by lower sales volumes.
Gross profit margin for the current quarter was 72.6%, which decreased 60 basis points compared to the year earlier, period.
A expense was down 48.8% year-over-year to 77.7 million primarily, due to 24.3 million. Decrease in optavia coach compensation on fewer active earning coaches, and lower volumes.
Additionally, the company incurred cost in the second quarter of 2024, that did not recur. In the second quarter of 2025, including 12.5 million for supply chain optimization, 3 million, for cancellation, of opa via conventions in the future years and 2 million for the company's collaboration with life MD.
Via convention incurred in the second quarter of 2024, that did not recur in the second quarter of 2025.
Partially offset by 440 basis points attributable to the loss of Leverage on fixed cost due to lower sales volumes.
Loss from operations was $1.1 million in the second quarter of 2025, representing an improvement of $6.8 million versus the year earlier period. The decline in gross profit was more than offset by lower SG&A.
As a percentage of revenue, loss from operations was 1% in the second quarter.
An increase of 370 basis points compared to the year-earlier period.
Other income increased 242.1%, year-over-year to 3.9 million primarily due to a gain on investment in life. MD, common stock, the companies gain on investment in life MD, common stock for the second quarter of 2025 was 2.6 million compared to a loss of investment of 4.2 million for the corresponding period in 2024,
During the quarter, we liquidated our position in LifeMD common stock.
We initially invested in life MD to Kickstart our collaboration. And while we continue to offer our clients access to life, MD clinicians,
we do not need to hold the common stock investment in life MD to sustain this strategy.
We never viewed the investment in life MD, common stock, as a long-term investment. Our goal, with all our investments is to favor ones. That protect our principal and meet certain duration and risk parameters.
The effective tax rate was 13.7% for the second quarter of 2025 compared to 23.4% in the prior year period.
The change in the effective tax rate. For the 3 months, ended June 30th 2025 was primarily driven by the increase in the limitation for executive compensation, which was magnified by the near Break, Even pre-tax position in the current year.
Net income in the second quarter of 2025 was $2.5 million or 22 cents per diluted share, compared to a net loss of $8.2 million or 75 cents per share in the year-earlier period.
Importantly, our financial position remains strong with 162.7 million in cash and cash, equivalents, and no interest bearing debt as of June 30th 2025.
Now, I will turn to guidance. We are expecting third quarter revenue to range from $70 million to $90 million, and earnings per share for the quarter to range from 0 cents to a loss of 60 cents.
Dan mentioned earlier that we have begun rolling out our new Premiere Plus auto ship program in the third quarter. I did want to mention that we do not expect to see any appreciable difference in our margins going forward from the adjustments.
As any impact from the pricing changes is expected to be offset by other incremental actions taken under the program.
With that, let me turn the call to the operator for questions.
Thank you. You'll now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad, a confirmation toe and will indicate your line is in the question queue, you may press star 2. If you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star Keys 1 moment, please while we pull for questions.
Thank you. Our first question comes from the line of Jim Solera with Stevens, please proceed.
Um, group of coaches, replacing some of the old ones that are more focused on GLP-1 as the messaging? Or do you have kind of a split between legacy coaches that still focus on the traditional Optavia messaging? And then a new segment approaches that focus on the more, you know, GLP on the line? Just any thoughts on kind of how the coaches are adapting to this changing landscape?
Yeah, Jim. Let me, uh, take that one, and also I'll introduce, um, Nick Johnson, who has been on this call before, who's our Chief Field Operations Officer. Um, I'm going to make a couple of comments and then ask him to address that, um, uh, that point specifically because I think, uh, one of the announcements we made, um, kind of drives toward an important part of what we're, uh, how we're working with our coaches and how we're changing the business to help, uh, operate in this, um, this new environment. Um, so,
You, you heard us talk a little bit about the, the new study on clinical research um, that we're increasing our focus on metabolic health because it's an upstream driver of many of the age related health conditions, including overweight and obesity. So this is an important move for us which partly because it addresses something that affects over 90% of Americans, um uh, who are experiencing some kind of metabolic dysfunction. So when metabolic health is out of balance, it can trigger a Cascade of challenges that millions of adults. Uh,
Face today. And you know, that's it's an important thing because it's it's it's tied also to 1 of the things that is becoming um more challenged in an environment that has
A growing number of people are using GLP-1 drugs. We now have 60% of our coaches who are supporting at least one client who has used a GLP-1 drug, which reflects roughly 23% of our client base. This indicates that people who have either used or are currently using GLP-1 drugs are becoming more prevalent.
But most importantly, and then I'll turn it, uh, over to Nick to Nick to ask the question that, uh, the US is that, um, as we go forward, we'll be announcing some additional findings related to that, uh, new research to further reinforce this direction.
Um, and that will affect both products and the way our coaches.
Uh, approach clients in terms of reversing the impact of metabolic defunctioning.
Nick, thanks Dan, and thanks for the question. Yeah, important 1. I mean productivity for our new coaches is important because this leads to the creation of the next generation of leaders and ultimately reigniting the flywheel of our business. So we've done a lot to focus specifically on supporting those folks over the last couple of quarters important to note. I mean, this kind of is obvious but coach leaders.
Have evolved their training to the new environment. So new coaches, only know a world with glp 1's in them, so they're very familiar with it, coach leadership talks about it, trains to it understands them and understands what they do and do not do
understands where they fall short in the, in the realm of metabolic Health, specifically around some, of those outages that Dan alluded to, that would be talking about more, the training, specifically includes those who are on glp1 currently and also those who are coming off of GLT ones. How did they transition? So, half of our coaches have supported, someone on glp1 medication and like, Dan said earlier, a 25% of coaches have used a glp-1 medication themselves. So we see that transition happening.
Great. And this is if I can ask a follow-up, uh, just on a send.
In the past, you know, you guys have talked about that as being particularly targeted towards.
The kind of glp1 um, use case, you know, comparing Us in with somebody who's who's utilizing glp-1 drugs? Just give us an update on if you're able to share a send sales as as a percentage of total or or just what you're seeing there in terms of Engagement. Um and how that how that's been rolling out.
Yeah, continues to uh, to meet expectations. The product is it was developed. Um, as you pointed out was, uh, to to perform 2 functions. 1 was to uh, to support
uh,
Having them, uh, uh, clients use the 5 in 1 program while they're on, uh, a GLP-1 regimen, um, and then transitioning to, uh, to send, uh, later on. And that's, that's true, um, largely because the 5 in 1 provides, uh,
More protein. Um, and, and uh, to to, uh, and overall calories at a time when glp1, um, clients, uh, need to have support and maintaining that lean, lean body mass that, uh, clinical research that I mentioned earlier is, is related to that, uh, that critical number. But overall, we see both the Ascend line and its continued performance as well as the active line, um, which is tied to, uh, clients who are exercising and need to make em, maintain muscle as critical parts to our overall programs.
Great. And then maybe just one last one.
I know in, in the past, we
Tested some companies supported marketing outside of the traditional coach LED, uh, client acquisition.
Then we part that back a little bit, just any thoughts on, you know how company supported marketing is going to play a hand and kind of driving consumer engagement going forward.
Yeah. This this has been an important part of what we've been doing. What we found is. Uh, those programs are highly effective at bringing back.
Uh, customers or clients who have been on the Optavia program before. Um, we've found consistently that our coaches sharing their own personal messages is much more effective, um, in bringing on new clients. It's also far more efficient, uh, for the company. So while we'll continue to, uh, strategically use um, advertising dollars, largely to um, affect and influence.
Uh, search engine management search engine optimization. Um, we will continue to look, uh, to our coaches, to share their personal stories of Health transformation. And um, and as we go forward in the future and have a uh, uh more paired back, budget related to company, LED acquisition
Right, so I appreciate the detail. I'll pop back in with you.
Thank you. There are no further questions at this time. I'd like to pass the call back over to Dan chard for any closing remarks.
I'd like to thank everyone for your time today. This is an important moment for our business as we continue to transform.
Uh, to meet the pressing need of today's health and wellness landscape.
With 93% of adults facing some form of metabolic dysfunction, the opportunity to help millions of people, protect their health, and sustain their weight losses has never been greater.
We're building this business for the long term, with a science-backed approach, a community of experienced coaches, and an offering that is designed to meet clients wherever they are in their journey. We'll be participating in several investor conferences this fall, including the County Court Genuity and the Annual Growth Conference on August 13.
We look forward to continuing the conversation. Thanks again, and we appreciate your continued interest in metaphysics.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.