Medifast Reports Significant Declines in Revenue and Profitability for Q3 and Nine Months of 2024

Medifast Inc. reported significant declines in revenue and profitability for the third quarter and the first nine months of 2024 compared to the same periods in 2023. For the three months ended September 30, 2024, revenue was $140.2 million, a decrease of 40.6% from $235.9 million in the prior year. Similarly, revenue for the nine months ended September 30, 2024, totaled $483.5 million, down 45.1% from $881.0 million in 2023.

Gross profit followed a similar trend, with Q3 2024 gross profit at $105.7 million, down 40.4% from $177.4 million in Q3 2023. For the nine-month period, gross profit decreased to $356.4 million from $634.5 million, a decline of 43.8%. Despite the drop in revenue, the gross profit margin improved slightly to 75.4% in Q3 2024 from 75.2% in Q3 2023, and for the nine months, it increased to 73.7% from 72.0%.

Operating income also saw a dramatic decline, with Q3 2024 income from operations at $2.1 million, down 91.7% from $25.5 million in Q3 2023. For the nine months, income from operations fell to $2.2 million from $117.7 million, a decrease of 98.2%. Net income for Q3 2024 was $1.1 million, a 95.1% drop from $23.1 million in Q3 2023, while for the nine months, net income fell to $1.3 million from $93.4 million, a decrease of 98.6%.

The company’s advertising expenses surged significantly, totaling $6.7 million for Q3 2024 compared to $1.5 million in Q3 2023, and $16.4 million for the nine months ended September 30, 2024, up from $3.0 million in the same period last year. This increase reflects Medifast's strategic shift to enhance brand visibility and customer acquisition amid competitive pressures from medical weight loss solutions, particularly GLP-1 medications.

Medifast's operational adjustments included the closure of its Maryland Distribution Center in June 2024, which was part of a broader supply chain optimization initiative. The company has also partnered with LifeMD, Inc. to integrate medical expertise into its offerings, aiming to provide comprehensive health solutions.

As of September 30, 2024, Medifast reported total assets of $291.2 million, down from $309.9 million at the end of 2023, while total stockholders' equity increased to $207.3 million from $201.5 million. The company maintained a strong cash position, with cash and cash equivalents rising to $115.3 million from $94.4 million at the end of 2023.

Overall, Medifast's financial performance reflects significant challenges in revenue generation and profitability, prompting strategic shifts and increased marketing efforts to adapt to changing market conditions.