Why Is Medifast (MED) Down 7.6% Since Last Earnings Report?

A month has gone by since the last earnings report for Medifast (MED). Shares have lost about 7.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Medifast due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Medifast Q2 Loss Narrower Than Expected, Coach Productivity Improves

Medifast reported second-quarter 2026 results, wherein both the top and bottom lines surpassed the Zacks Consensus Estimate. However, both metrics declined year over year.

Medifast's Quarterly Performance: Key Insights

The company posted a loss per share of 28 cents, narrower than the Zacks Consensus Estimate of a loss of 67 cents per share. The company posted earnings of 22 cents per share in the prior-year period.

Revenues declined 27.6% year over year to $76.4 million from $105.6 million, slightly exceeding the Zacks Consensus Estimate of $76 million. Higher revenues generated by each active earning coach reflected continued improvements in coach productivity despite a smaller coach network.

Medifast ended the quarter with approximately 11,700 active earning coaches, down 48.7% from 22,800 a year earlier. Management said that the decline in coaches remained the primary factor behind the year-over-year revenue decrease. The company noted that slower client acquisition continues to reflect broader industry pressures, including the rapid adoption of GLP-1 weight-loss medications.

Average revenue per active earning coach increased 41% year over year to $6,529 from $4,630, marking the third consecutive quarter of productivity improvement. Management continues to view stronger coach productivity as an early indicator of future business improvement, noting that historically it has been followed by higher client acquisition, coach growth and revenue expansion.

Medifast's Margin & Cost Performance

Gross profit fell 30.3% year over year to $53.4 million from $76.6 million, due to lower sales volumes. Gross margin contracted 270 basis points to 69.9% from 72.6%, primarily due to reduced leverage on fixed costs.

Selling, general and administrative expenses were $57.7 million, declining 25.7% year over year from $77.7 million. The decrease reflected $12.6 million of lower coach compensation, $2.3 million of reduced employee salary and benefit expenses and $2 million of lower company-led marketing costs. SG&A expenses represented 75.6% of revenues, up 200 basis points from 73.6% a year ago. The increase primarily reflected fixed-cost deleverage and expenses associated with the Trilivy Reset product launch, partly offset by lower marketing spending.

The operating loss widened to $4.3 million from $1.1 million in the year-ago quarter.

MED's Other Financial Information

Medifast ended June 2026 with $169.8 million in cash, cash equivalents and investment securities compared with $167.3 million at Dec. 31, 2025. The company remained debt-free.

Sneak Peek Into MED's Future Outlook

For the third quarter of fiscal 2026, Medifast expects revenues of $60-$80 million and a loss of 15-65 cents per share, excluding one-time costs related to the Catalyst cost-savings program.

Management expects the active earning coach count to continue declining in the near term but anticipates further improvement in coach productivity on both a year-over-year and sequential basis during the third quarter.

For fiscal 2026, Medifast reaffirmed its revenue outlook of $270-$300 million and now expects a loss in the range of 25 cents to $1.75 per share compared with the previous guidance of a loss of $1.55-$2.75 per share.

The company continues to expect progress toward returning to profitability beginning in the fourth quarter of 2026 following the launch of its new product line, with further earnings improvement targeted through 2027 and beyond. Management also expects working capital to exceed $145 million by year-end. 
The company noted that its Catalyst program is expected to generate savings through facility rationalization, AI-related efficiencies and other operational initiatives.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

The consensus estimate has shifted 33.33% due to these changes.

VGM Scores

At this time, Medifast has a average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock has a score of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Medifast has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

Medifast is part of the Zacks Food - Miscellaneous industry. Over the past month, Chefs' Warehouse (CHEF), a stock from the same industry, has gained 5%. The company reported its results for the quarter ended June 2026 more than a month ago.

Chefs' Warehouse reported revenues of $1.17 billion in the last reported quarter, representing a year-over-year change of +12.9%. EPS of $0.78 for the same period compares with $0.52 a year ago.

Chefs' Warehouse is expected to post earnings of $0.61 per share for the current quarter, representing a year-over-year change of +22%. Over the last 30 days, the Zacks Consensus Estimate has changed +11.7%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #1 (Strong Buy) for Chefs' Warehouse. Also, the stock has a VGM Score of C.

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This article originally published on Zacks Investment Research (zacks.com).

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