Title

Presentation

Medifast, Inc. beats earnings expectations. Reported EPS is $-0.19, expectations were $-0.55.

Operator: Ladies and gentlemen, greetings, and welcome to the Medifast, Inc. First Quarter 2026 Earnings Conference Call. At this time, all participants are in listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone requires operator assistance during the conference call, as a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Medifast, Inc. VP, Investor Relations, Steven Zenker. Please go ahead.

Steven Zenker: Good afternoon, and welcome to Medifast, Inc.’s First Quarter 2026 Earnings Conference Call. On the call with me today are Daniel R. Chard, chairman and chief executive officer; Nicholas M. Johnson, president; and James P. Maloney, chief financial officer. By now, everyone should have access to the earnings release for the first quarter ended 03/31/2026 that went out this afternoon at approximately 4:05 PM Eastern Time. If you have not received the release, it is available on the Investor Relations portion of the Medifast, Inc. website at medifastinc.com. This call is being webcast, and a replay will also be available on the company’s website. Before we begin, we would like to remind everyone that today’s prepared remarks contain forward-looking statements, and management may make additional forward-looking statements in response to your questions.

The words believe, expect, anticipate, and other similar expressions generally identify forward-looking statements. These statements do not guarantee future performance and therefore undue reliance should not be placed on them. Actual results could differ materially from those projected in any forward-looking statements. All of the forward-looking statements contained herein speak only as of the date of this call. Medifast, Inc. assumes no obligation to update any forward-looking statements that may be made in today’s release or call. Now I would like to turn the call over to Medifast, Inc. Chairman and Chief Executive Officer, Daniel R. Chard.

Daniel R. Chard: Thanks, Steve, and good afternoon, everyone. We appreciate you joining us today as we share an update on the continued execution of our strategy to transition to serving the metabolic health market. When we spoke to you last quarter, we described the growing focus on metabolic health as a defining shift in our industry and the significant opportunity it presents for Medifast, Inc. We saw early signs that our strategy was beginning to translate into measurable progress and the potential to build on that as we moved into 2026. As we speak today, I am pleased to report that those early indicators have continued to strengthen. We are seeing further evidence that our business is at the beginning of a period of stabilization and that we are making meaningful progress in delivering tangible traction in the market.

We will go into the numbers in more detail in a moment, but as you will have no doubt read in the release, although the number of active earning coaches continues to decline, the first quarter saw our first sequential quarterly revenue growth in three years, a second consecutive quarter of year-over-year coach productivity gains, strong coach leadership advancement, and improved performance in the percentage of coaches acquiring new clients. All of this is indicative of high field engagement and provides encouraging signs that have historically been signals of future growth. Our sector, including Medifast, Inc., has undergone a significant change due to the continuing high rate of adoption of GLP-1 medications, which has disrupted the traditional weight loss market.

We have responded by fundamentally repositioning the company, not by abandoning weight loss, but by reframing it to address the metabolic health crisis that is impacting the vast majority of Americans today. That work is now largely complete, and our focus has shifted decisively from transformation to execution. Nicholas M. Johnson is going to walk you through the substance of what we are seeing across the business, the science that is driving our differentiation, the evidence from the field that our strategy is working, the tools and programs that are supporting our coach community, and the continued work we are doing to position the company for sustainable growth ahead. Over to you, Nick.

Nicholas M. Johnson: Thank you, Dan, and good afternoon, everyone. As Dan mentioned, we are seeing exciting progress right now, and that is indicative of the focused work of both our coaches and our corporate team members. At the core of this work is our foundational 3.0 strategy, which represents the biggest shift in this company’s approach since the introduction of OPTAVIA in 2017. We have strengthened our clinical and scientific foundation and enhanced our ability to link our underlying science to measurable health outcomes over time, and we have meaningfully realigned our cost structure to the realities of the market, which is anticipated to generate more than $30 million in future savings, helping us work towards reattaining profitability even as we tactically invest in long-term growth.

We believe the market opportunity is massive. More than 90% of U.S. adults are metabolically unhealthy, or in other words, are affected by metabolic dysfunction. Our online survey conducted with KRC Research found that nearly 94% of Americans are concerned about at least one aspect of their metabolic health, 85% believe metabolic dysfunction can be reversed, and 84% view metabolic health as central to overall well-being. Yet despite that concern, 80% of Americans report limited understanding of what it truly means to be metabolically healthy. The combination of concern, belief in reversibility, and low understanding of how to achieve change represents a huge opportunity that our science-backed, coach-guided approach is designed to address. At the center of our approach is metabolic synchronization, our breakthrough science that reverses metabolic dysfunction.

Our clinically proven plans create an important shift in the body’s metabolism and activate strong and targeted fat burn, leading to improved body composition. Our most popular plan does this through three critical pillars: burning bad visceral fat, with a 14% reduction in visceral fat demonstrated in just 16 weeks; preserving lean mass, with 98% of lean mass retained over that same period; and protecting healthy muscle to help restore the body’s natural metabolic function. These are not just weight loss outcomes. They represent body composition changes that support broader metabolic health benefits, helping differentiate us in a crowded market. Importantly, our clinical research demonstrates that these outcomes are materially enhanced by working with a coach, thanks to our highly personalized and customized approach.

Clients on our most popular plan who work with a coach achieve better outcomes, including up to 10 times greater weight loss and 17 times greater fat loss than those who attempt to do it on their own. We are continuing to build on this scientific foundation and are planning to launch a new comprehensive metabolic system at our next coach convention in July, featuring products that incorporate clinically studied ingredients designed to further advance metabolic health. This represents our first effort to fully leverage our metabolic synchronization science. We have developed a proprietary ingredient technology for the new product line, which will build on the success of previous products while reinforcing our commitment to improving metabolic health.

We recently initiated a pilot with a small group of clients and coaches utilizing the new product line, and I am pleased to say early feedback has been highly encouraging. As a result, we plan to roll out the new system to all our clients and coaches later in the year. Simplifying how we support clients across every phase of their metabolic health journey is an essential component of our efforts, and we will be making a number of key announcements in this space at our upcoming Coach Convention in July. Our new metabolic system is built around three phases—reset, refine, and renew—giving coaches a clear roadmap to guide clients from a targeted metabolic reset toward optimal metabolic health. Our highly personalized system gives clients the ability to jumpstart their progress with both foundational and targeted nutrition, a coach, and the introduction of new habits, which are then reinforced and mastered in subsequent phases to support long-term health span and vitality.

Our program is eligible for HSA and FSA reimbursement on select insurance plans, reflects the importance of metabolic health in today’s healthcare landscape, and makes our solution more accessible and affordable for a wider range of clients. For many, weight loss is the fundamental starting point for improving metabolic health, which in turn contributes to meaningful health outcomes in areas such as cardiovascular health, joint health, sleep quality, energy levels, liver health, and mental well-being. These metabolic improvements can also support better outcomes in type 2 diabetes and insulin sensitivity. Empowering our coaches to tell their own stories and those of their clients who have had success losing weight on our program is a key aspect of our value proposition.

As clients experience improvements in metabolic functions, these stories become powerful proof points for our metabolic synchronization science. They give coaches a sharper, more compelling story to tell, and we are beginning to see the impact of that in the core metrics that we closely measure. Historically, coach productivity has been a leading indicator of future growth. The first quarter marked our second consecutive quarter of year-over-year coach productivity gains, with an increase of 19% year over year and up 16% on a sequential basis. This is markedly higher than last quarter’s 6% gain, with coach productivity at its highest level in many years. We expect the positive trend to continue throughout the year, and a sustained positive trajectory gives us confidence in the direction of the business.

Our EDGE program continues to strengthen the coach leadership foundation of our field. We are seeing consistent year-over-year improvements in the percentage of active earning coaches reaching the executive director rank, a historically significant indicator of success. This metric has recently hit levels previously linked to periods of robust growth. Retention at this level remains encouraging. Moving forward, we aim to maintain and build upon this momentum, as the duplication of this core leadership rank is the primary driver of coach business growth. Field engagement continues to build across the board, with a focused effort on establishing a repeatable cadence of coach-led product and business opportunity meetings targeting prospective clients and coaches.

We have seen significant acceleration in these field meetings, with activity levels remaining well above the year-ago period. We also recently completed our coach incentive trip and Go Global event, both of which were well attended and reinforced the energy and excitement around our immediate opportunity. Coaches are leaning in right now with confidence and conviction. We are also seeing our referral engine gain strength. March closed with a record-high percentage of new clients coming from referrals, outperforming expectations. Coaches who participate in our referral program are achieving two times higher client acquisition rates compared to nonparticipating coaches, which tells us that when coaches lean into referral activity, the initiative works.

Combined with improving sponsoring activity and a younger tenured coach mix, these dynamics can create a flywheel of momentum that we have seen in prior growth cycles. With that, I will turn it back to Dan.

Daniel R. Chard: Thanks, Nick. It is exciting to see this energy in the field and the delivery against the progress we previously said that we expected to see in 2026. Before I hand it over to Jim, I want to reinforce a few points. We remain focused on executing against a clearly defined long-term strategic plan centered on offering our clients optimal metabolic health. That plan is backed by breakthrough science and delivered through a coach-led model that provides a genuine structural advantage in the market. We are seeing progress already, and that is ahead of a number of key market launch initiatives that we will kick off later in the year. We are encouraged by the metrics showing increased coach productivity and by the energy and enthusiasm we see from the coach base, which is showing up in the percent of coaches reaching executive director and above.

We believe these are early indicators of an expected turn in the business, and we expect these and other metrics to improve as we move through the year and into next year. And we are managing this business with financial discipline. Our balance sheet remains strong, with substantial cash and investments of approximately $169 million, marginally higher than in Q4, and no debt. This positions us well as the business stabilizes and we reestablish revenue growth. We continue to review our cost base for further opportunities that do not compromise our ability to drive growth. We are reconfirming our full-year 2026 guidance today. As we communicated last quarter, we believe improvements toward reattaining profitability will begin in 2026, and we are targeting those improvements to continue into 2027 and beyond.

Now I will turn it over to Jim to review the financials and our outlook.

James P. Maloney: Thank you, Dan. Good afternoon, everyone. First quarter 2026 results for both revenue and EPS were within our guidance ranges, supported by a second consecutive quarter of year-over-year coach productivity growth. Revenue for the first quarter was $76 million, a decrease of 34.3% versus the year-earlier period, primarily due to a decrease in the number of active earning coaches. We ended the quarter with approximately 14,000 active earning coaches, a decrease of 44.9% from 2025. This decline was driven in part by the rapid adoption of GLP-1 medications, which continues to impact the traditional weight loss category. It is also reflective of our continued work to build a new coach leadership structure comprised of the most productive executive director organizations.

This work resulted in average revenue per active earning coach for the first quarter of $5,432, a year-over-year increase of 19.2%. This growth reaffirms the green shoot we saw during Q4 2025, with coach productivity continuing to increase both year over year and sequentially. The 19% year-over-year gain is the largest increase for any quarter in five years, and the sequential quarterly increase of 16% is the highest in eight years. We continue to believe that increases in revenue per active earning coach are an early indicator for future coach growth, which we believe will in turn lead to revenue growth. As a reminder, revenue growth has historically lagged coach productivity by several quarters, and productivity gains need to continue in order for revenue growth to occur.

Gross profit for Q1 2026 decreased 38.6% year over year to $51.8 million, driven by lower sales volumes. Gross profit margin for the current quarter was 68.1%, compared to 72.8% for 2025, primarily driven by the loss of leverage on fixed costs. SG&A expense was down 35.6% year over year to $55.1 million, primarily due to a $16.2 million decrease in coach compensation on lower volume, a $5.6 million decrease in company-led marketing-related expenses, a one-time $2.2 million gain on the sale of our Maryland distribution center, and a $2.0 million decrease in employee compensation resulting from the realignment of the employee base to lower revenue. SG&A as a percentage of revenue decreased 150 basis points, primarily due to approximately 470 basis points of decreased company-led marketing-related expenses and 240 basis points of one-time gain on the sale of our Maryland distribution center building and land, partially offset by 620 basis points of loss of leverage on fixed costs due to lower sales volume.

Loss from operations was $3.3 million in 2026, an increase in losses of $2.0 million versus the year-earlier period as the decline in gross profit was largely offset by lower SG&A. As a percentage of revenue, loss from operations was 4.3% in the first quarter, 320 basis points below the year-earlier level. Other income decreased 24.3% year over year to $1.4 million, primarily due to unrealized gains on our investment in LifeMD common stock in the year-earlier period. As a reminder, we sold our common stock investment in LifeMD during 2025. Income tax expense for the period was $200,000, an effective rate of negative 9.3%, as compared to $1.3 million for 2025, an effective rate of 246.8%. Due to the existence of a full valuation allowance against its deferred tax assets recorded as of 12/31/2025, the company calculated income tax expense for the current period based on actual results for the quarter.

As a result, the company’s income tax provision for the quarter reflects discrete items, primarily state income taxes. The decrease in the effective tax rate was primarily driven by the increased loss incurred in the 03/31/2026 period and the valuation allowance on the net deferred tax assets. Net loss in 2026 was $2.1 million, or $0.19 per share, compared to a net loss of $800,000, or $0.07 per diluted share, in the year-earlier period. With respect to our balance sheet, we ended the quarter with $168.9 million in cash, cash equivalents, and investments, and no debt as of 03/31/2026. Additionally, our working capital, defined as current assets less current liabilities, was $160.4 million as of 03/31/2026. Now I will turn to guidance. We are expecting second quarter revenue to range from $60 million to $80 million and loss per share for the quarter to range from $0.50 to $1.00.

We expect to see continued coach productivity growth during the quarter, up both year over year and sequentially. For the full year 2026, we expect revenue to range from $270 million to $300 million and loss per share between $1.05 and $2.75. Also included in our guidance is that we believe improvements to get back to profitability will start in Q4 2026 following the launch of our new product line, and we will be targeting improvements in earnings to continue into 2027 and beyond. Finally, we believe that our working capital will be more than $140 million at 12/31/2026. With that, let me turn the call back to the operator for questions.

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Operator: Thank you. We will now open the call for questions. Please press star and 1. You may press star and 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to lift your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while we poll for questions. The first question comes from the line of James Ronald Salera from Stephens Inc. Please go ahead.

James Ronald Salera: Wanted to start off with the $30 million in cost savings. I know you have made a lot of progress over the last several years as the business has changed in both the structure of the company and some of the product lineups. Can you just give us a sense for where that is going to come from, COGS and SG&A? And then maybe a steady state—how we should think about gross margin once we start to pivot back towards earnings growth in 4Q and moving forward?

Daniel R. Chard: Jim, this is Dan. I am going to have Jim answer that question. But as we move into the more technical aspect of the financial questions that come in, I just wanted to highlight that what you have heard in our prepared remarks is reflective not only of our progress in the financial cost structure, but also we are very encouraged by the trajectory of some of these key underlying metrics, and not just the metrics, but the consistency, particularly around coach productivity—second consecutive quarter—and now that is actually the seventh month where we have seen that improvement. We see that also translating into top-line improvement. This is the first time in quite some time that we have seen sequential revenue growth, and that is being driven by improved coach effectiveness in acquiring new clients.

That has been one of the key challenges we have had in a GLP-1 environment. We are starting to see our coaches break through. The other thing we want everyone to understand from an investment standpoint is the transition to a model where weight management was the primary benefit to one where optimal metabolic health is the primary benefit, with weight management as a key component, is beginning to take hold. We certainly have more work to do, but our focus remains on execution, particularly around the critical initiatives in the back half of the year as we continue to move in that direction. One of them is what you are referencing, which is the changes in the cost structure to help us get back on that path to profitability. I will let Jim comment specifically on that question around the cost improvement.

James P. Maloney: Thanks for the question. When you think about our prepared remarks regarding the path to profitability—and that starting in Q4—we believe we are going to start seeing improvement in the second half of the year, but more towards the last quarter, in gross margin, and then you will start seeing the same thing within SG&A. We took action last year in December, so it is starting to come through in certain budget line items as we look at our full P&L to make certain that we can get back to profitability starting in Q4 2026 and then go into 2027. That is what we are focusing on. When you think of our margins—you mentioned gross margin or the breakout of it—I cannot really give you specific guidance on that, but I would say that we are expecting in the back half of this year for our gross margin to get better, and within the SG&A line items, we are expecting to start overcoming some of the loss of leverage as we go into Q4.

James Ronald Salera: That is great. Maybe shifting more to Dan’s point on the coach productivity improvement, are you able to share any details with some of the new or newest members that have come into the program given this greater focus on metabolic health? Do you see their tenure with the program being more consistent or longer while they are on the program relative to people in the past who may have been on and off? Any early results that you could share on that?

Daniel R. Chard: Nick is here, and he has the closest connection with coaches, and I think he will be able to give you the answer you need. Go ahead, Nick.

Nicholas M. Johnson: Thanks, Jim, for the question. The good thing about the new coach draft classes is that there is no pre–GLP-1 world for them. They are very steeped in what is going on in the marketplace, so they only know this GLP-1 world that we live in. The reason why that tenure mix is important is because newer coaches tend to drive a lot of productivity. With respect to the client metrics, we did mention this in the prepared remarks—a note around the referral program—and we do see a lot of encouraging activity coming out of that program. Coaches who are engaged in that program are experiencing higher acquisition rates, and I can say that the other metrics that support a client’s journey are seeing improvement. We are encouraged by what we are seeing so far in the client referral program.

James Ronald Salera: Historically, you have talked about that coach productivity improvement as being the first step to indicate a new growth cycle, and then subsequent to that, you will start to see the actual number of coaches return to growth. As we size up the back half of the year, do you have any sense for if it is possible that maybe in conjunction with some of the improving profitability in 4Q, we would see the absolute number of coaches start to improve?

Nicholas M. Johnson: I will start off with that one, Jim, and then I will pass it over to Jim to talk about the back half of the year. Productivity tends to be that leading indicator in our business. The growth of the business comes predominantly through two metrics: one is growing productivity or volume per coach, and then expanding the channel—number of coaches who are active and participating in the business. We do tend to see that sequence of events: coach productivity first, leading to the expansion of the channel. While we said in the prepared remarks that the continuation of growing coach productivity is essential for revenue growth, it is because we tend to create those future draft classes of higher-producing coaches coming from those client draft classes.

We are anticipating good things coming from the productivity numbers. It tends to be a leading indicator, and then we can expect the channel to extend—at least that is what historically has happened. Jim, if you want to make any comments on the back half.

James P. Maloney: We are not going to give exact guidance on when we anticipate coach growth to come back. What we can tell you, Jim, is when you think about our financials, Q4 2025 we were basically at $75 million of revenue. Q1 2026 we were at $76 million in revenue—so sequential growth, even though small. We have not seen that in three years. Any sequential growth—and if you look at our guidance, the midpoint is at $70 million of revenue—means three quarters of relative flatness, so stabilization. With the coach productivity increase of 19% and sequentially growing at 16% for the quarter, that gives us comfort that coach growth will be coming. We are not going to predict exactly which quarter, but based on history, we believe that is going to happen in a short period of time.

James Ronald Salera: I appreciate the thoughts. I will hop back in the queue.

Operator: Thank you. We will take the next question from the line of Doug Lane from Water Tower Research. Please go ahead.

Doug Lane: Hi. Good afternoon, everybody, and thanks for taking the questions. The 19% growth in coach productivity is impressive, and I just wanted to drill down on what is really driving that. Are there coaches selling more products per customer, or do they have more customers per coach? What is really driving the increase in productivity of that magnitude?

Nicholas M. Johnson: Great question. To answer specifically, it is not being driven by spikes in average order sizes. We are seeing average order sizes remain more or less consistent with historical averages. Coach productivity then comes down to an increasing number of clients per coach. That is driving that productivity—and also their length of stay.

Doug Lane: That is an important inflection point. Hopefully, if that momentum keeps building, that is what you are looking for to drive the return to coach growth, and then, of course, the timing of that is unpredictable, which I guess is what your message has been on this call. One thing I wanted to ask you about on this transition to metabolic health is messaging. Weight loss is easy—the scale goes down, the clothes fit better. How do you message metabolic health in a GLP-1 environment?

Nicholas M. Johnson: I think it is critical that we call out that distinction because, to your point, generic weight loss is pretty much commoditized at this point with GLP-1s, and even before that. It is the quality of the weight that is being lost that is a differentiation for our offer. Our value proposition is that we are not focused just on the number on the scale. There are many other numbers and indicators that are important. When we talk about the science of metabolic synchronization, we specifically address the quality of the weight loss that one is experiencing: a 14% reduction in bad visceral fat in 16 weeks—that is bad fat in the wrong places. We are being specific about the type of weight that we are losing—we want to lose the bad fat in the wrong places.

We also want to preserve lean mass—98% preservation of lean mass in 16 weeks is critical in protecting lean muscle. We believe that the focus on metabolic health and the focus on the quality of the weight being lost will be a defining point in the future because, to your point, losing weight is easy. Once you get specific in terms of the quality of the weight that you are losing, you really want to focus on that, because if you are losing too much lean muscle in particular, you would say that the quality of that weight loss was not there, and it leads to other problems down the road metabolically.

Doug Lane: We have read a lot about GLP-1 weight loss being unhealthy. It is such a new phenomenon, and it is so widespread. Has there been any additional science towards that end? I just wondered if that science is still evolving on the unhealthiness of the rapid weight loss with the antagonists.

Nicholas M. Johnson: I think that the GLP-1-only solution—a pharmacological approach that suppresses appetite—is one-dimensional in terms of a problem that is very complex to resolve. We believe that what we see going forward is a need for a comprehensive solution to installing a healthy lifestyle. That comprehensive approach is what we are talking about with the evolution of our program. We view our program as a comprehensive metabolic health system that is comprised of three distinct phases: reset, refine, and renew. The goal of the reset phase, which we are going to be talking more about at our convention in October, comes down to resetting one’s metabolic set point, reduction of bad visceral fat, improving body composition, focusing on lean mass preservation, and protecting healthy muscle. That sets someone up for the refine stage, which is all about improving your body composition. There is a lot of room, and it is a big, big market.

Doug Lane: Thanks, Nick. That is very helpful. Thank you.

Operator: Ladies and gentlemen, as there are no further questions from the participants, I would now hand the conference over to Daniel R. Chard for any closing comments.

Daniel R. Chard: Thanks. Before we close, I want to take a few minutes to share a few final thoughts. As I mentioned on last quarter’s call, I informed the board earlier this year that I plan to step down as chief executive officer effective June 1. I have led this company now for close to ten years, and it has been one of the great privileges of my career. This is not the end of my relationship with Medifast, Inc. I am engaged as CEO through May and will continue to serve as chairman of the board following the transition. I am looking forward to continuing to help this great company as we drive this exciting new path forward in metabolic health. I want to extend my thanks and my best wishes to all of the Medifast, Inc. team, but especially to Nicholas M.

Johnson. Nick has been instrumental in shaping and executing the strategy that we talked about today, and I have every confidence in his ability to lead this company into the next chapter. All of the team at Medifast, Inc., past, present, and at all levels, have been incredible to work with over the years. I am grateful for their partnership and expertise. Finally, thank you to everyone on this call for your time today and for your interest in Medifast, Inc. during my tenure here. This is a company that is building something meaningful, and I am excited to see that continue over the months and the years to come. Thanks, and have a good evening.

Operator: Thank you. Ladies and gentlemen, the conference of Medifast, Inc. has now concluded. Thank you for your participation. You may now disconnect your lines.

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