Medifast — Third Quarter 2026 Earnings Summary

Financial Performance:

• Revenue decreased 19.4% year-over-year to $72.0 million from $89.4 million in the third quarter of 2025.
• Net loss was $17.5 million ($1.57 per diluted share), compared to a net loss of $2.3 million ($0.21 per share) in the prior year period.
• Non-GAAP adjusted net loss was $2.1 million ($0.19 per diluted share).
• Gross profit decreased 19.5% to $50.0 million from $62.2 million; gross profit margin remained at 69.5%.
• Non-GAAP adjusted gross profit was $51.7 million, with a non-GAAP adjusted gross profit margin of 71.7%, an increase of 220 basis points year-over-year.
• Selling, general, and administrative (SG&A) expenses increased 4.8% to $69.4 million from $66.2 million, driven by $13.8 million in Catalyst Restructuring charges.
• Non-GAAP adjusted SG&A decreased 16.0% to $55.6 million.
• Loss from operations was $19.4 million compared to $4.1 million in the prior year; non-GAAP adjusted loss from operations improved to $4.0 million.
• Adjusted EBITDA was $0.4 million, compared to $0.3 million in the prior year; Adjusted EBITDA excluding interest income was $1.9 million, up from $1.7 million.
• Cash, cash equivalents, and investment securities totaled $172.5 million with no debt outstanding.

Guidance and Future Outlook:

• Fourth quarter 2026 revenue is expected to range between $55 million and $75 million.
• Fourth quarter 2026 income per share is projected to range from $0.00 to $0.25.
• Full year 2026 revenue guidance is set between $280 million and $300 million.
• Full year 2026 loss per share is expected to range from $1.80 to $2.05 on a GAAP basis, and between $0.45 and $0.70 on a non-GAAP basis.
• Fourth quarter 2026 Adjusted EBITDA excluding interest income is forecasted to range from $2 million to $6 million.
• Full year 2026 Adjusted EBITDA excluding interest income is projected to range from $10 million to $14 million.
• The company expects the number of active earning coaches to continue declining through the end of 2026.

Business Segments and Product Lines:

• The number of independent active earning coaches decreased 47.7% to 10,200 from 19,500 in the prior year period.
• Revenue per active earning coach increased 54.1% year-over-year to $7,064 from $4,585.
• The Trilivy™ metabolic health system, Reset Fuelings product line, new compensation plan, and Coach Hub have been launched.
• The Catalyst cost savings project execution was completed in the second quarter of 2026, with the majority of restructuring actions occurring in the third quarter.
• The Essential product line was reformulated in the prior year comparable period, impacting costs.

Market and Competitive Landscape:

• Client acquisition pressure and broader operating environment challenges, specifically the rapid adoption of GLP-1 medications for weight loss, contributed to the decline in active earning coaches.
• Management notes that coach productivity improvements have occurred for four consecutive quarters, historically preceding coach and revenue growth.
• The company is actively executing on a metabolic health strategy to address the metabolic health crisis.

Risks and Challenges:

• Continued decline in the number of active earning coaches is expected through the end of 2026.
• Risks include inability to maintain and grow the coach network, competition from new weight loss products and GLP-1 medications, and effectiveness of the strategic pivot to metabolic health.
• Other risks involve online security, supply chain disruptions, product liability, and regulatory impacts.

Management Commentary and Tone:

• CEO Nick Johnson stated the third quarter was about execution, with major pieces of the "3.0 strategy" now in market.
• Management expressed confidence that the company is on track to deliver profitability in the fourth quarter.
• Founder Dr. Wayne Scott Andersen highlighted the company's conviction in addressing the metabolic health crisis through habits and coaching rather than medication alone.
• Management noted enthusiasm in the Field as coaches embrace the new brand and compensation plan.

Other Key Points:

• The Catalyst Restructuring initiative included simplifying the business, reducing distribution network size, reassessing geographic locations, streamlining internal software, and aligning organization resources with revenue levels.
• The company recorded a $13.8 million increase in SG&A specifically due to Catalyst Restructuring charges.
• A Trilivy Convention was held in the current quarter with no comparable event in the prior year, contributing 3 percentage points to the increase in SG&A as a percentage of revenue.
• Income tax benefit was $0.3 million with an effective rate of 1.8%, reflecting a full valuation allowance against deferred tax assets.
• The company has impacted more than three million lives through its mission.