雅虎香港財經 MEDIFAST (MED) Down 11.5% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Medifast (MED). Shares have lost about 11.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is MEDIFAST due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Medifast Q4 Earnings Beat Estimates, Revenues Dip Y/Y
Medifast delivered fourth-quarter 2023 results, with the top and bottom lines declining year over year. However, both earnings and net revenues beat the Zacks Consensus Estimate.
Medifast is strategically adjusting its operations to meet the changing demands of the weight loss industry. This involves expanding its customer outreach through enhanced marketing efforts and entering the medically supported weight loss domain in partnership with LifeMD.
These steps are designed to increase its market presence and cater to a wider audience, highlighting a forward-looking approach aimed at driving growth and adapting to market dynamics despite the competitive landscape of the weight loss sector.
Q4 in Details
Medifast’s adjusted earnings were $1.09 per share in the fourth quarter of 2023, down from the $3.70 reported in the year-ago quarter. The metric surpassed the Zacks Consensus Estimate of 99 cents.
Net revenues of $191 million declined 43.4% year over year mainly due to lesser active earning OPTAVIA Coaches and reduced productivity per active earning OPTAVIA Coach. The average revenue per active earning OPTAVIA Coach stood at $4,648, down 16.1% from $5,538 million due to lower customer acquisition. The total number of active earning OPTAVIA Coaches fell 32.5% to 41,100 compared with 60,900 in the year-ago quarter. The top line surpassed the Zacks Consensus estimate of $174 million.
The adjusted gross profit came in at $141.4 million, down 42.5% year over year on reduced revenues. The adjusted gross profit margin was 74%, up 110 basis points year over year. This increase mainly resulted from the cost reductions achieved through the company's Fuel for the Future initiative, coupled with the lack of restructuring expenses that were present in the previous year's period.
Adjusted SG&A fell 35% year over year to $125.1 million. The decrease was primarily attributed to several factors, including reduced Coach compensation due to lower sales volumes and fewer active earning Coaches, as well as the progress made in various cost reduction and optimization initiatives. Additionally, charitable donations made in 2022 contributed to the decrease.
As a percentage of revenues, adjusted SG&A expenses increased 840 basis points (bps) to 65.5%, primarily attributed to the reduced leverage on fixed costs resulting from decreased sales volumes, as well as costs associated with market research and investments in medically supported weight loss endeavors. This was somewhat mitigated by advancements in various cost reduction and optimization efforts, along with the impacts of charitable donations made in 2022.
The adjusted income from operations declined 69.5% to $16.2 million mainly due to a decrease in gross profit. However, this was partially mitigated by reduced SG&A expenses. The adjusted operating margin decreased 730 basis points year over year to 8.5%.
Other Financial Updates
Medifast concluded the quarter with cash, cash equivalents and investments of $150 million, no interest-bearing debt (as of Dec 31, 2023), and total shareholders’ equity of $201.5 million.
Guidance
Management expects revenues of $155-$175 million for first-quarter 2024. The company expects adjusted EPS of 25-35 cents for the first quarter.
In 2023, revenues fell 32.9% to $1.1 billion from $1.6 billion in 2022. Adjusted earnings declined 33.5% year over year to $9.64 per share.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -66.28% due to these changes.
VGM Scores
Currently, MEDIFAST has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, MEDIFAST has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
MEDIFAST belongs to the Zacks Food - Miscellaneous industry. Another stock from the same industry, Flowers Foods (FLO), has gained 0.7% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
Flowers Foods reported revenues of $1.13 billion in the last reported quarter, representing a year-over-year change of +4.3%. EPS of $0.20 for the same period compares with $0.23 a year ago.
For the current quarter, Flowers Foods is expected to post earnings of $0.40 per share, indicating a change of +5.3% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.6% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Flowers Foods. Also, the stock has a VGM Score of B.
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