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Medifast (MED) Benefits From Solid OPTAVIA Lifestyle Solution

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Medifast, Inc. (MED - Free Report) has been benefiting from strength in its OPTAVIA lifestyle solution and coaching support system due to consumers’ rising inclination toward health. Also, the company’s focus on developing tools and programs to increase the efficiency of coaches has been working well. These upsides drove first-quarter 2022 results, wherein earnings and sales grew year over year and beat the Zacks Consensus Estimate. Management raised its guidance for 2022, despite witnessing pressure on margins.

Let’s delve deeper into the factors working well for this Zacks Rank #2 (Buy) company.

Things Working Well for Medifast

Given the evolving consumer interests in health and wellness, Medifast’s OPTAVIA lifestyle solution and coaching support system bodes well. OPTAVIA follows a holistic approach by focusing on the six key areas of a human being, namely weight, eating and hydration, motion, sleep, mind and surroundings. Further, it combines scientifically proven programs, effective products and guidance from its coaches to help consumers lead a healthier lifestyle. The OPTAVIA product line is sold through its community of independent coaches who offer support and guidance to their clients.

The continued strength in OPTAVIA Coaches aided the company’s splendid first-quarter 2022 performance. The total number of active earning OPTAVIA Coaches rose 21.7% year over year to 63,900. The average revenue per active earning OPTAVIA Coach was $6,536, up 1.3% from the $6,454 reported in the year-ago quarter. Management highlighted that it is impressed with coach growth and productivity gains, fueled by continued growth in the number of customers supported by each coach and higher average customer spend. The relevance of the company’s offerings amid an environment where consumers are choosing health and wellness options has been an upside. MED’s constant focus on developing tools and programs to increase the efficiency of coaches has been yielding results.

Medifast has been speeding up its long-term supply-chain efforts to ensure that it is able to manage the expected growth in the next few years. To this end, Medifast is focused on optimizing and increasing capacity by strengthening its network of co-manufacturers. Apart from this, the company is focused on making technological investments. We note that OPTAVIA Coaches have been focused on utilizing technology, including the company’s app-based platforms, along with social media channels and field-led training platforms. The company’s OPTAVIA app, rolled out in late July 2021, marks its first innovation that stemmed from its strategy of concentrating on digital products and technology. Medifast’s Connect App has also been working well for Coaches on the go. The company’s constant investments in digital tools and its new, fully integrated mobile apps are likely to enhance the connection between clients and coaches.

Medifast is focused on its strategies aimed at driving long-term growth. These include driving product and program innovation, expanding segments and geographies, improving coach and client experiences, utilizing deeper data and insights and optimizing operational effectiveness. Concerning these strategies, Medifast focuses on new and compelling products and programs. Further, it undertakes a systematic approach toward global markets and product adjacencies. The company is also committed to enhancing the scale via better organizations, systems, processes and alliances. Moving on, Medifast is focused on developing the culture that drives attraction, engagement and loyalty. Also, MED has been working on data-driven decision-making.

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A Look at Q1 & Ahead

Medifast posted earnings of $3.59 per share in the first quarter of 2022, which surpassed the Zacks Consensus Estimate of $3.56 and increased 3.8% on a year-over-year basis. Net revenues of $417.6 million soared 22.6% year over year, mainly reflecting an increased number of active earning OPTAVIA Coaches and greater productivity per active earning OPTAVIA Coach. The metric beat the Zacks Consensus Estimate of $415.2 million.

Due to the solid performance in the first quarter, coupled with an impressive outlook for the remaining part of the year, management raised its 2022 revenue and earnings per share (EPS) guidance. Management anticipates 2022 revenues in the range of $1.78-$1.84 billion. Earlier, the company expected revenues in the range of $1.72-$1.79 billion. Revenues came in at $1.5 billion in 2021. The company expects the 2022 EPS in the band of $14.60-$16.05, up from the earlier guidance in the band of $14.50-$16. The company posted an EPS of $13.89 in 2021.

Although shares of Medifast have dipped 1.5% in the past three months, they have outpaced the industry’s decline of 5.3%.

3 Other Solid Staple Stocks

Some other top-ranked stocks are Pilgrim’s Pride (PPC - Free Report) , Sysco Corporation (SYY - Free Report) and Campbell Soup (CPB - Free Report) .

Pilgrim’s Pride, which produces, processes, markets and distributes fresh, frozen and value-added chicken and pork products, sports a Zacks Rank #1 (Strong Buy). Pilgrim’s Pride has a trailing four-quarter earnings surprise of 31.4%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for PPC’s current financial-year EPS suggests growth of almost 43% from the year-ago reported number.

Sysco, which engages in marketing and distributing various food and related products, carries a Zacks Rank #2. Sysco has a trailing four-quarter earnings surprise of 9.1%, on average.

The Zacks Consensus Estimate for SYY’s current financial-year sales and EPS suggests growth of 32.6% and 124.3%, respectively, from the year-ago reported number.

Campbell Soup, which manufactures and markets food and beverage products, currently carries a Zacks Rank #2. Campbell Soup has a trailing four-quarter earnings surprise of 10.8%, on average.

The Zacks Consensus Estimate for CPB’s current financial-year sales suggests growth of 0.5% from the year-ago reported figure.