Medifast, the parent company of direct selling organization OPTAVIA, reported 15% revenue growth during the second quarter of 2022, totaling $453.3 million. Gross profit increased 9.5% to $321.7 million, which the company attributes to higher revenue that was partially offset by elevated cost of sales.
Active earning OPTAVIA Coaches grew in number by 14.9%, totaling 68,000 by the end of the quarter. Revenue for these active coaches averaged $6,667 each, which represented a slight increase over the previous year’s quarter.
Net income and non-GAAP adjusted net income were both down, however, decreasing by 16.7% ($39.1 million) and 5.7% ($44.3 million) respectively. Gross profit as a percentage of revenue was 71%, down from 74.5% during the second quarter of 2021, due to a customer acquisition program and higher raw ingredient costs. Selling, general and administrative expenses rose 17.4% to $272 million. This increase was a result of higher compensation expenses for OPTAVIA Coaches, donations made to support the Ukrainian relief effort, larger credit card fees from higher sales, and continued investment in IT and distribution infrastructure.
Earnings per diluted share (EPS) was down by 13.6% to $3.42, as was non-GAAP adjusted EPS, which dipped 2.5% to $3.87.
“We delivered another solid quarter at Medifast, with revenues up 15%, almost 15% growth in the number of active earning Coaches, and robust Coach productivity,” said Dan Chard, Chairman and Chief Executive Officer of Medifast. “The customized support of OPTAVIA Coaches remains a key differentiator for our business, and these results are a demonstration of the continued strength of our model. We’re not immune to issues in the wider macroeconomic environment, and like many consumer-focused businesses, we’ve seen the impact of inflation on customer retention and consumer sentiment, which will cause slower-than-anticipated growth in the second half. However, we believe we remain well positioned for significant future growth as we continue to execute our core strategies and expand further into the broader health and wellness arena. Our continued confidence in our unique and powerful business model is underscored by our recently announced $100 million accelerated share repurchase program, demonstrating our consistent belief in our ability to drive sustainable long-term growth.”
The company ended the quarter with $61.1 million in cash, cash equivalents and investment securities and $27 million in debt.
