MEDIFAST INC Q3 FY2024 earnings call

• The weight loss industry is experiencing change due to GLP-1 medications. Medifast is focusing on three target segments: those using GLP-1 as core, those transitioning off GLP-1, and those never using meds. - Over 95% of coach leaders have completed GLP-1 training, and 40% of active coaches support clients on GLP-1. - Developed OPTAVIA ASCEND brand products for GLP-1 users and those transitioning to maintenance. - Testing starter kits and planning clinical study on OPTAVIA with medications. - Optimizing marketing spend, scaling back less effective areas, and collaborating with LifeMD.

Third quarter 2024 revenue was $140.2 million, a decrease of 40.6% versus the year earlier period. Gross profit decreased 40.4% year-over-year to $105.7 million, with gross profit margin improving 20 basis points to 75.4%. SG&A expense was down 31.8% year-over-year to $103.6 million. Income from operations was $2.1 million in the third quarter of 2024 versus $25.5 million in the prior period. Net income in the third quarter of 2024 was $1.1 million or $0.10 per diluted share. The company ended the quarter with $170 million in cash, cash equivalents and investments and no interest-bearing debt.

• Fourth quarter revenue is expected to range from $100 million to $120 million. - Loss per share for the quarter is expected to range from $0.10 to $0.65. - Expect to spend $7 million during the quarter on company-led marketing. - New products and enhanced customer experience will be ready for resolution season in 2025.

• Competition from GLP-1 medications impacting customer acquisition. - Consumer spending patterns affecting revenue. - Effectiveness of marketing strategies in a crowded market.

Q: About marketing spend, initial plan was $30M, now $7M in 3Q and 4Q. Any areas scaled back and response to company-led marketing?

A: Scaled back less effective areas, social media and email channels effective. 90% client acquisition still through coach channel. 95% coach leaders trained on GLP-1, 40% coaches support GLP-1 clients.

Q: Why rate of top line decline may accelerate in 4Q?

A: Continued pressure on client acquisition, scaling back marketing in Q4 due to seasonality.

Q: Portion of clients on GLP-1 who got script from LifeMD?

A: Not publicly disclosed, some through own physicians, some through LifeMD-trained physicians.

Q: Value of LifeMD partnership if clinicians not oriented to OPTAVIA?

A: LifeMD has trained physicians for OPTAVIA, process may not have routed correctly. Technology routes customers to trained physicians.

Q: Cost of clinical studies?

A: Less than $2 million, mostly in 2025 and beyond.

Q: Launch timeline of vitamins/supplements and price point?

A: Introduced to coaches later this year, ready for resolution season. Price point details to be announced shortly.

Q: Cash balance and credit facility?

A: Canceled credit facility as cash position projected to be maintained, no intention to use it.