Medifast (MED) AI Stock Analysis

• Market Cap: $142.99M
• Dividend Yield: N/A
• Average Volume (3M): 228.96K
• Price to Earnings (P/E): 66.5
• Beta (1Y): 0.36
• Revenue Growth: -39.47%
• EPS Growth: -110.28%
• Country: US
• Employees: 504
• Sector: Consumer Cyclical
• Sector Strength: 61
• Industry: Personal Products & Services
• EPS (TTM): -0.03
• Shares Outstanding: 10,991,021
• 10 Day Avg. Volume: 212,252
• 30 Day Avg. Volume: 228,958
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: -0.02
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: >-0.01
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $16.50
• Price Target Upside: 29.41% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 1

Medifast's stock score reflects significant financial challenges, including declining revenue and profitability pressures. While the balance sheet strength and cash position are positives, technical analysis shows negative momentum and valuation appears high. The earnings call further underscores operational challenges despite some promising developments.

Medifast Business Overview & Revenue Model

Company Description

Medifast, Inc., through its subsidiaries, manufactures and distributes weight loss, weight management, healthy living products, and other consumable health and nutritional products in the United States and the Asia-Pacific. The company offers bars, bites, pretzels, puffs, cereal crunch, drinks, hearty choices, oatmeal, pancakes, pudding, soft serves, shakes, smoothies, soft bakes, and soups under the OPTAVIA, Optimal Health by Take Shape for Life, and Flavors of Home brands. It markets its products through point-of-sale transactions over ecommerce platform. The company was founded in 1980 and is headquartered in Baltimore, Maryland.

How the Company Makes Money

Medifast generates revenue primarily through the sale of its OPTAVIA-branded products, which include meal replacements such as shakes, bars, and snacks, as well as dietary supplements designed to support weight loss and overall health. The company employs a direct sales model, leveraging a network of independent OPTAVIA Coaches who provide personalized support and guidance to clients. These coaches earn commissions based on their sales, which incentivizes product promotion and customer acquisition. Additionally, Medifast benefits from a recurring revenue stream as customers typically purchase products on a subscription basis to maintain their weight loss and health goals. Key factors contributing to Medifast's earnings include its effective marketing strategies, the quality and efficacy of its products, and the strength of its coaching network, which fosters a community-oriented approach to health and wellness.

Medifast Financial Statement Overview

Summary

Medifast faces significant challenges with declining revenues and negative earnings, but its strong balance sheet and low leverage provide stability. Cash flow is positive but reduced, reflecting broader profitability issues.

Income Statement

The income statement reflects a challenging period for Medifast, with the TTM showing a decline in revenue and a negative EBIT and net income, indicating operational challenges. The TTM gross profit margin is 73.9%, which is solid, but the negative net profit margin of -1.3% highlights profitability concerns. The revenue growth rate from 2023 to the TTM is -49.3%, a significant decrease, raising concerns about demand or market conditions. The EBIT margin has turned negative to -1.2%, reflecting operational inefficiencies. EBITDA margin remains slightly positive at 0.6%, suggesting some ability to cover fixed costs, but overall, profitability is under pressure.

Balance Sheet

Medifast's balance sheet shows a strong equity base with an equity ratio of 75.3% and a low debt-to-equity ratio of 0.07, indicating financial stability and low leverage. The return on equity has turned negative in the TTM, which is concerning, but the company's strong equity position provides a cushion. The decrease in total assets and stockholders' equity from 2023 to TTM suggests a period of asset reduction or potential write-downs. Despite these challenges, the company's low leverage mitigates risk.

Cash Flow

Free cash flow decreased slightly in the TTM compared to the previous year, with the free cash flow to net income ratio indicating cash generation challenges due to negative net income. The operating cash flow to net income ratio is not meaningful due to the negative net income. Overall, while Medifast maintains positive free cash flow and a prudent approach to capital expenditures, the cash flow situation reflects the broader profitability issues seen in the income statement.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
602.46M	1.07B	1.60B	1.53B	934.84M
	Gross Profit
444.62M	775.85M	1.14B	1.13B	697.82M
	EBIT
2.88M	126.40M	184.81M	216.24M	134.16M
	EBITDA
15.59M	139.51M	201.84M	223.05M	134.16M
	Net Income Common Stockholders
2.09M	99.42M	143.57M	164.03M	102.86M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
162.34M	150.04M	87.69M	109.54M	174.47M
	Total Assets
284.21M	309.91M	316.21M	398.33M	276.08M
	Total Debt
16.13M	22.01M	26.05M	32.54M	11.16M
	Net Debt
-74.80M	-72.43M	-61.64M	-71.64M	-152.56M
	Total Liabilities
74.10M	108.43M	161.17M	195.85M	118.84M
	Stockholders Equity
210.11M	201.48M	155.04M	202.47M	157.25M
Cash Flow		Free Cash Flow
17.02M	141.17M	177.89M	60.34M	139.31M
	Operating Cash Flow
24.48M	147.66M	194.57M	94.55M	145.20M
	Investing Cash Flow
-26.52M	-61.05M	-11.41M	-29.06M	-1.28M
	Financing Cash Flow
-1.51M	-79.79M	-199.58M	-125.13M	-57.14M

Medifast Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 12.75
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MED, the sentiment is Negative. The current price of 12.75 is above the 20-day moving average (MA) of 12.61, below the 50-day MA of 13.36, and below the 200-day MA of 16.86, indicating a neutral trend. The MACD of -0.10 indicates Negative momentum. The RSI at 46.39 is Neutral, neither overbought nor oversold. The STOCH value of 64.61 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MED.

Medifast Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	61 Neutral	$6.69B	11.69	3.01%	3.94%	2.60%	-21.51%
MED	56 Neutral	$142.99M	66.49	-3.32%	―	-39.47%	-110.28%
WW	41 Neutral	$63.41M	―	31.02%	―	-10.33%	79.59%
MRM	38 Underperform	$6.48M	5.20	23.48%	―	-7.60%	-118.80%

Medifast Corporate Events

Medifast Faces Revenue Decline, Ends Credit Agreement

Medifast, known for its OPTAVIA lifestyle solution, reported a significant 40.6% drop in third-quarter revenue to $140.2 million due to fewer active OPTAVIA coaches and lower productivity. Despite a decrease in gross profit and net income, the company maintained a strong balance sheet with $170 million in cash and no debt, leading to the termination of its credit agreement to save on fees. Medifast is focusing on innovative health solutions and customer acquisition strategies to drive future growth.