FREE

Management Series: Medifast (MED)

Medifast (MED; $20.72; $227MM Market Cap) participated in WTR’s Consumer Products Virtual Investor Conference on June 5, 2024. Representing the company were CEO Dan Chard and CFO Jim Maloney. This report contains a transcript of the conversation, which can be accessed on demand. Medifast’s partnership with LifeMD (LFMD; $7.95; $330MM Market Cap), a direct-to-patient telehealth company that prescribes GLP-1 weight loss drugs, is the vehicle with which OPTAVIA, the company’s coach-based weight loss business, can enter the GLP-1 support segment. The company, along with Boston Consulting Group, has recently determined that this segment could be a $50 billion market opportunity over the next six years, which it believes is a much bigger segment than where they were. Clinical studies have shown that anywhere from 20% to 50% of the weight loss from GLP-1 drugs was from lean muscle mass, which can be a problem. However, that number improves when lifestyle is modified. If the person taking GLP-1 drugs is exercising and eating a diet high in protein, that lean muscle mass is preserved, which is what the GLP-1 support program that OPTAVIA recently introduced through its network of coaches is designed to do. Most patients who go on the GLP-1 drugs do not want to be on it for the rest of their lives, and some research shows that many gain much of the weight back once they stop taking GLP-1s. The company’s research shows that more than 80% of those surveyed who were taking GLP-1s and were exposed to the OPTAVIA program said they felt that the OPTAVIA program would help them maintain their health and weight once they went off the drug. The company is supplementing its traditional marketing vehicle, which is word-of-mouth advertising from its coaching community, with an advertising campaign, partnering with the Dentsu Creative advertising agency and iProspect, a digital-first media agency. This campaign will be designed to make current and prospective users of GLP-1 aware that OPTAVIA can be that solution to attaining that additional nutrition that GLP-1 users mostly already know that they need, and who are trying to bundle together themselves. This year is shaping up to be an investment year for the company. Besides the recently announced $30 million advertising campaign, the company is investing in market research and technology changes, as well as in the overall partnership with LifeMD. However, the company has $156 million of cash on its balance sheet with no debt, and has recently eliminated its dividend, which gives it ample firepower to fund these important growth initiatives. WTR held its inaugural Consumer Products Virtual Investor Conference on June 5 and 6. Presentations are available on demand here and 1x1 availability requests can be sent to  .