Wellness company Medifast (NYSE: MED) reported revenue ahead of Wall Street’s expectations in Q2 CY2025, but sales fell by 37.4% year on year to $105.6 million. On the other hand, next quarter’s revenue guidance of $80 million was less impressive, coming in 14.7% below analysts’ estimates. Its GAAP profit of $0.22 per share was significantly above analysts’ consensus estimates.
Is now the time to buy Medifast? Find out by accessing our full research report, it’s free.
Medifast (MED) Q2 CY2025 Highlights:
- Revenue: $105.6 million vs analyst estimates of $101.8 million (37.4% year-on-year decline, 3.7% beat)
- EPS (GAAP): $0.22 vs analyst estimates of -$0.19 (significant beat)
- Revenue Guidance for Q3 CY2025 is $80 million at the midpoint, below analyst estimates of $93.8 million
- EPS (GAAP) guidance for Q3 CY2025 is -$0.30 at the midpoint
- Operating Margin: -1%, up from -4.7% in the same quarter last year
- Market Capitalization: $142.2 million
“We are working diligently to transform our business as we look to help more people achieve optimal metabolic health,” said Dan Chard, CEO of Medifast.
Company Overview
Known for its Optavia program that combines portion-controlled meal replacements with coaching, Medifast (NYSE: MED) has a broad product portfolio of bars, snacks, drinks, and desserts for those looking to lose weight or consume healthier foods.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.
With $480.4 million in revenue over the past 12 months, Medifast is a small consumer staples company, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with retailers.
As you can see below, Medifast’s revenue declined by 33.9% per year over the last three years, a rough starting point for our analysis.
This quarter, Medifast’s revenue fell by 37.4% year on year to $105.6 million but beat Wall Street’s estimates by 3.7%. Company management is currently guiding for a 42.9% year-on-year decline in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to decline by 22.9% over the next 12 months. it’s tough to feel optimistic about a company facing demand difficulties.
Software is eating the world and there is virtually no industry left that has been untouched by it. That drives increasing demand for tools helping software developers do their jobs, whether it be monitoring critical cloud infrastructure, integrating audio and video functionality, or ensuring smooth content streaming. Click here to access a free report on our 3 favorite stocks to play this generational megatrend.
Cash Is King
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
Medifast has shown mediocre cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 5%, subpar for a consumer staples business.
Key Takeaways from Medifast’s Q2 Results
We were impressed by how significantly Medifast blew past analysts’ EPS expectations this quarter. We were also glad its revenue outperformed Wall Street’s estimates. On the other hand, its revenue guidance for next quarter missed, and this weighed on share. The stock traded down 4.1% to $12.91 immediately after reporting.
Big picture, is Medifast a buy here and now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.
