Earlier this month, Medifast reported impressive first-quarter earnings that handily beat analyst expectations. Revenue grew 75% year-over-year to reach $60.6 million, and the company earned $4.9 million in net profits. Nutrition Business Journal features an in-depth profile of Medifast in our May issue, Direct Selling in the Nutrition Industry.
Performance was strong across the board, with the company's Take Shape for Life (TSFL) direct sales division posting 94% growth in annual revenue. The number of health coaches in the division grew from 4,000 to 7,100, a dramatic increase that some industry analysts attribute to the growing attractiveness of multi-level marketers (MLMs) as a source of supplemental income in a tough economy. The company expects to open approximately 15 new weight control centers by year end.
Medifast also plans to up its marketing spend by close to 20% this year, so rapid growth remains a top priority. Said Medifast CEO Michael McDevitt in a statement: "We will expand our platform by strategically investing in our infrastructure and enhancing our message to reach more consumers in both new and existing markets in the future."
Also of note, Medifast recently promoted Brendan Connors to the CFO position, freeing McDevitt from that responsibility.
NBJ Bottom Line
It's good news all around, for Medifast and for the renewed vigor evident in the weight-loss category. Aggressive growth rates reflect Medifast's small base—at annual sales of $25.6 million in 2009, the company registers nary a blip on the $26 billion market for weight-loss products—but larger players should take heed. With declining growth rates at Herbalife, Nutrisystem and Weight Watchers, Medifast is poised to vigorously compete in this space. Innovations in the MLM model—from its friendly commission structure to certifications required of all network marketers—set Medifast a little bit apart, and its vegetarian and gluten-free replacement meals position it well for diet-savvy consumers. With only $5.2 million in debt on hand at quarter end, and $20.8 million in cash and equivalents, Medifast appears nimble and competitive in a space dominated by more tired concepts.
Subscribers can now access NBJ’s current issue for greater analysis and coverage of Medifast and direct sales in the nutrition industry.
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