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Medifast (MED) Raises View on Q3 Earnings & Revenue Beat
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Medifast, Inc. (MED - Free Report) delivered splendid third-quarter 2021 results, wherein both earnings and sales exceeded the Zacks Consensus Estimate and grew year over year. Strength in OPTAVIA remained a key driver, with the average revenue per active earning OPTAVIA coach increasing 7% year over year. Notably, management raised its guidance for 2021.
Continued strength in OPTAVIA Coaches aided the company’s impressive performance. Medifast has been focused on using new technology, such as its app-based platforms, along with social media channels and field-led training platforms to boost the productivity of the OPTAVIA Coaches. We note that consumers’ increased inclination toward health, together with a solid OPTAVIA coach-based model, has been helping Medifast draw new clients. The company is committed to making further investments for improving its infrastructure in order to aid growth.
Medifast posted earnings of $3.56 per share, which crushed the Zacks Consensus Estimate of $2.92 and jumped 22.3% on a year-over-year basis.
Net revenues of $413.4 million soared 52.3% year over year and beat the Zacks Consensus Estimate of $408 million. Total active earning OPTAVIA Coaches jumped 44.9% to 61,000.
The average revenue per active earning OPTAVIA coach increased 7% to $6,773, up from $6,329 in the year-ago quarter. The relevance of the company’s offerings amid an environment, where consumers are choosing health and wellness options, has been an upside.
Gross profit rose 50.5% to $307.1 million, while the gross margin contracted 90 basis points (bps) year over year to 74.3%. The gross margin decline was mainly a result of promotional activities, as well as elevated product and shipping costs stemming from raw material, freight and labor cost inflation.
SG&A expenses escalated 57.9% year over year to $251.9 million in the reported quarter, mainly accountable to elevated OPTAVIA commission costs, credit card fees from increased sales, consulting costs for information technology projects, higher salaries and benefits and escalated costs related to the annual convention. As a percentage of revenues, SG&A expenses ascended 220 basis points to 60.9%.
Income from operations rose 23.8% to $55.2 million. As a percentage of sales, income from operations fell from 16.4% to 13.3%, year over year.
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Other Financial Updates
Medifast concluded the third quarter with cash, cash equivalents and investment securities of $159.9 million, and total shareholders’ equity of $196.2 million. Management did not have any interest-bearing debt on its balance sheet as of Sep 30, 2021.
On Sep 9, management declared a quarterly cash dividend of $1.42 per share, which is payable on Nov 8. The company also used $26.3 million for share buybacks in the third quarter. It has roughly 2.1 million shares remaining under its buyback plan.
Outlook
Management raised its guidance for 2021. It now anticipates revenues of $1.51-$1.53 billion, up from the $1.425-$1.525 billion expected earlier. Full-year earnings per share are now envisioned to be $13.27-$13.96 compared with the earlier guided range of $12.70-$14.17. The effective tax rate for 2021 is estimated at 23.25-24.25%.
In the year-to-date period, shares of the Zacks Rank #3 (Hold) company have gained 12% compared with the industry’s growth of 5.2%.
Hain Celestial (HAIN - Free Report) currently carries a Zacks Rank #2 (Buy) and its bottom line outpaced the Zacks Consensus Estimate by 21.2% in the preceding four quarters, on average.
Chef’s Warehouse (CHEF - Free Report) carries a Zacks Rank #2, at present, and its bottom line has outperformed the consensus mark by a wide margin in the last four quarters, on average.
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Medifast (MED) Raises View on Q3 Earnings & Revenue Beat
Medifast, Inc. (MED - Free Report) delivered splendid third-quarter 2021 results, wherein both earnings and sales exceeded the Zacks Consensus Estimate and grew year over year. Strength in OPTAVIA remained a key driver, with the average revenue per active earning OPTAVIA coach increasing 7% year over year. Notably, management raised its guidance for 2021.
Continued strength in OPTAVIA Coaches aided the company’s impressive performance. Medifast has been focused on using new technology, such as its app-based platforms, along with social media channels and field-led training platforms to boost the productivity of the OPTAVIA Coaches. We note that consumers’ increased inclination toward health, together with a solid OPTAVIA coach-based model, has been helping Medifast draw new clients. The company is committed to making further investments for improving its infrastructure in order to aid growth.
MEDIFAST INC Price, Consensus and EPS Surprise
MEDIFAST INC price-consensus-eps-surprise-chart | MEDIFAST INC Quote
Quarterly Highlights
Medifast posted earnings of $3.56 per share, which crushed the Zacks Consensus Estimate of $2.92 and jumped 22.3% on a year-over-year basis.
Net revenues of $413.4 million soared 52.3% year over year and beat the Zacks Consensus Estimate of $408 million. Total active earning OPTAVIA Coaches jumped 44.9% to 61,000.
The average revenue per active earning OPTAVIA coach increased 7% to $6,773, up from $6,329 in the year-ago quarter. The relevance of the company’s offerings amid an environment, where consumers are choosing health and wellness options, has been an upside.
Gross profit rose 50.5% to $307.1 million, while the gross margin contracted 90 basis points (bps) year over year to 74.3%. The gross margin decline was mainly a result of promotional activities, as well as elevated product and shipping costs stemming from raw material, freight and labor cost inflation.
SG&A expenses escalated 57.9% year over year to $251.9 million in the reported quarter, mainly accountable to elevated OPTAVIA commission costs, credit card fees from increased sales, consulting costs for information technology projects, higher salaries and benefits and escalated costs related to the annual convention. As a percentage of revenues, SG&A expenses ascended 220 basis points to 60.9%.
Income from operations rose 23.8% to $55.2 million. As a percentage of sales, income from operations fell from 16.4% to 13.3%, year over year.
Other Financial Updates
Medifast concluded the third quarter with cash, cash equivalents and investment securities of $159.9 million, and total shareholders’ equity of $196.2 million. Management did not have any interest-bearing debt on its balance sheet as of Sep 30, 2021.
On Sep 9, management declared a quarterly cash dividend of $1.42 per share, which is payable on Nov 8. The company also used $26.3 million for share buybacks in the third quarter. It has roughly 2.1 million shares remaining under its buyback plan.
Outlook
Management raised its guidance for 2021. It now anticipates revenues of $1.51-$1.53 billion, up from the $1.425-$1.525 billion expected earlier. Full-year earnings per share are now envisioned to be $13.27-$13.96 compared with the earlier guided range of $12.70-$14.17. The effective tax rate for 2021 is estimated at 23.25-24.25%.
In the year-to-date period, shares of the Zacks Rank #3 (Hold) company have gained 12% compared with the industry’s growth of 5.2%.
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United Natural (UNFI - Free Report) , which currently flaunts a Zacks Rank #1 (Strong Buy), has a trailing four-quarter earnings surprise of 13.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
Hain Celestial (HAIN - Free Report) currently carries a Zacks Rank #2 (Buy) and its bottom line outpaced the Zacks Consensus Estimate by 21.2% in the preceding four quarters, on average.
Chef’s Warehouse (CHEF - Free Report) carries a Zacks Rank #2, at present, and its bottom line has outperformed the consensus mark by a wide margin in the last four quarters, on average.