Medifast Reports First Quarter 2025 Financial Results, Focuses on Revitalizing Growth and Enhancing Wellness Offerings
Medifast, a leading health and wellness company known for its clinically supported and coach-guided lifestyle solution, OPTAVIA®, has announced its financial results for the first quarter ended March 31, 2025. Despite ongoing macroeconomic challenges and a decline in active coach engagement, the company remains committed to its long-term strategy of empowering individuals to achieve sustainable, healthy lifestyles through personalized support and science-backed programs.
Q1 2025 Financial Highlights
For the first quarter of 2025, Medifast reported total revenue of $115.7 million, representing a 33.8% decline compared to $174.7 million in the same period last year. The drop in revenue was primarily attributed to a significant reduction in the number of active earning OPTAVIA coaches, which fell 32.8% to 25,400 from 37,800 in Q1 2024. The average revenue generated per active coach was $4,556, slightly below the $4,623 figure from the prior year.
The company posted a net loss of $0.8 million, or $0.07 per diluted share, compared to a net income of $8.3 million, or $0.76 per diluted share, in the first quarter of 2024. Despite the loss, Medifast maintained a strong financial position with $164.6 million in cash, cash equivalents, and investment securities, and remained debt-free.
Included in the net loss figure was an unrealized gain of $0.4 million (net of tax) related to Medifast’s investment in LifeMD, Inc. (Nasdaq: LFMD), down from $2.8 million in unrealized gains reported in the prior-year quarter.
CEO Commentary: A Commitment to Lifestyle Transformation
“In today’s health and wellness landscape, more people than ever are seeking guidance not just for weight loss but for learning how to lead a healthier lifestyle,” said Dan Chard, Chairman and Chief Executive Officer of Medifast. “However, research we commissioned indicates that 83% of those looking to lose weight lack confidence in their ability to make the transition to a healthy lifestyle that supports long-term wellness.”
Chard emphasized that Medifast’s OPTAVIA program is uniquely positioned to address this gap in consumer confidence. “Our program is built to provide essential knowledge and tools through a combination of personalized coaching and clinically studied nutrition plans. Our coaches play a central role in guiding and supporting clients through every stage of their wellness journey—from weight loss to long-term maintenance and beyond.”
Looking ahead, Chard noted that the company is focusing on revitalizing its coach and customer base through investments in new digital tools, enriched data analytics, and innovative product offerings. “We are taking meaningful steps to position our business for sustainable, long-term growth while simultaneously improving our operational efficiency and profitability,” he added.
Operational and Segment Performance
The steep decline in revenue during the quarter was closely tied to the contraction in the company’s independent active earning coach base. With 25,400 active coaches as of March 31, 2025, compared to 37,800 a year earlier, the drop reflects continued headwinds in customer acquisition and coach recruitment. Nonetheless, the company reported that the year-over-year decline in revenue per coach has moderated, in part due to increasing productivity among newer coach cohorts.
Gross profit for the quarter fell 33.8% to $84.2 million, down from $127.3 million in the first quarter of 2024. Gross margin remained stable year-over-year at 72.8%, demonstrating the company’s ability to maintain cost efficiencies despite lower volume.
Selling, general, and administrative (SG&A) expenses were $85.5 million, a 28.4% reduction from $119.4 million in Q1 2024. The decline in SG&A was primarily due to:
- A $22.4 million reduction in coach compensation expenses, reflecting lower sales volume
- A $3.0 million reduction in non-recurring market research and medically supported weight loss investments incurred in Q1 2024
- A $2.5 million decrease in employee compensation costs
- A $1.3 million drop in credit card processing fees
As a percentage of revenue, SG&A expenses increased to 73.9%, compared to 68.3% in the prior-year period. This increase reflects the loss of operating leverage caused by the revenue decline, with approximately 440 basis points attributed to fixed cost absorption and 200 basis points to company-led marketing efforts. These were only partially offset by the absence of certain one-time costs from the prior year.
Profitability and Other Income
Medifast reported an operating loss of $1.3 million for the quarter, compared to income from operations of $7.9 million in Q1 2024. This translates to an operating margin of -1.1%, a decrease from 4.5% in the prior-year period.
Other income totaled $1.8 million, down from $3.6 million in the same quarter last year. The decline was primarily due to lower unrealized gains on the company’s investment in LifeMD common stock. The unrealized gain for Q1 2025 stood at $0.6 million, a sharp drop from $2.8 million in Q1 2024.
The company’s effective tax rate surged to 246.8% from 28.2% in the prior-year quarter. This unusually high rate was the result of multiple factors, including:
- A tax impact from changes in unrecognized tax benefits following the finalization of a state tax examination (contributing 110.8% of the change)
- A tax shortfall related to stock compensation (contributing 113.9% of the change)
- The amplification effect of a near break-even pre-tax income base
Solid Liquidity and No Debt
Despite the quarterly loss, Medifast’s balance sheet remains solid. As of March 31, 2025, the company held $164.6 million in cash, cash equivalents, and investment securities, compared to $162.3 million at the end of 2024. The company continues to operate with no debt, positioning it well to navigate market uncertainties while investing in strategic growth initiatives.
Strategic Priorities for 2025
Medifast is focused on strengthening its core business while adapting to evolving consumer expectations around health, wellness, and weight management. Key areas of focus for the remainder of 2025 include:
- Coach and customer revitalization: New tools, data-driven insights, and personalized resources aimed at improving engagement and retention.
- Product innovation: Continued development and rollout of clinically backed nutrition plans and wellness products.
- Operational efficiency: Ongoing cost discipline and investments in scalable infrastructure to support long-term margin improvement.
While Medifast faces short-term headwinds due to the decline in its coach network and shifting market dynamics, the company remains confident in the power of its habit-based, coach-guided approach to health and wellness. With a clear focus on innovation, digital transformation, and customer-centricity, Medifast aims to reaccelerate growth and deliver improved outcomes for its clients and shareholders alike.
“We’re committed to helping people not only lose weight but also transform their lives through healthier habits and lasting change,” concluded Chard. “The journey ahead will require thoughtful execution and ongoing innovation, but we believe our mission and model are more relevant than ever.”
