Medifast (MED) looks appetizing, the OPTAVIA solution is a key benefit
Medifast, Inc. MED is in great shape, largely gaining strength from its OPTAVIA lifestyle solution and coaching support system. Apart from that, the strong efforts focused on growing the company have been helpful. The impact of these benefits was evident in the first quarter of 2021, where earnings and sales saw significant year-over-year growth. Additionally, both metrics exceeded their respective Zacks consensus estimate.
We note that the increased consumer inclination for health, coupled with a strong model based on the OPTAVIA coach, has helped Medifast attract new customers. In particular, the company remains determined to make new investments to improve its infrastructure in order to promote growth. Notably, Medifast has offered a forecast for 2021, which suggests year-over-year profit and sales growth. Management expects revenues for 2021 to be between $ 1.4 billion and $ 1.475 billion. Earnings per share for the full year are expected to be between $ 12.69 and $ 14.14. In 2020, revenue and earnings per share were $ 934.8 million and $ 9.14, respectively.
The strength in OPTAVIA
With changing consumer health and wellness interests, Medifast’s OPTAVIA lifestyle solution and coaching support system bodes well. OPTAVIA follows a holistic approach by focusing on six key areas of a human being, namely weight, diet and hydration, movement, sleep, mind and environment. In addition, OPTAVIA combines scientifically proven programs, effective products and advice from its coaches to help consumers adopt a healthier lifestyle. Notably, OPTAVIA brand products represented 88.9% of consumables sold in the first quarter of 2021, compared to 79% in the previous quarter. Incidentally, the total number of OPTAVIA coaches with active income jumped 61% to 52,500. In addition, the average income per active earning OPTAVIA coach was $ 6,454, compared to $ 5,333 in the same period l last year. We note that the company’s constant focus on developing tools and programs to increase coach effectiveness has paid off.
Other growth efforts
Medifast, which shares space with Ingredients darling DAR, Nomadic foods NOMD and Celsius Fund CELH has taken a number of steps to stimulate growth, even amid the coronavirus outbreak. The company has ramped up its long-term supply chain efforts to ensure it is able to handle the growth expected over the next several years. To this end, Medifast is focused on optimizing and increasing capacity by strengthening its network of co-manufacturers. This will likely help the company meet demand in 2021 and provide it with $ 2 billion in manufacturing capacity. In addition, the company is expanding its distribution network through expansions to existing facilities, while leveraging current 3PL relationships and alliances to build a distribution system, which matches its manufacturing capacity.
Apart from these, Medifast is focused on technology investments, where it opened a new technology center in Utah in 2020 from 2020. We note that the OPTAVIA coaches have focused on the use technology, including enterprise application-based platforms, as well as social media channels and on-the-job training platforms. Gains from these efforts were seen in the first quarter. Certainly, Medifast’s emphasis on developing a digital-centric approach seems to be bearing fruit. The company’s constant investments in digital tools, as well as its new, fully integrated mobile applications have the potential to improve the connection between clients and coaches.
That said, we believe the relevance of the company’s offerings in an environment where consumers choose health and wellness options will likely continue to perform well.
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