MED

• Strategic Transition to 3.0 Metabolic Health Strategy: This 10-year strategic roadmap, led by new CEO Nick Johnson, marks Medifast's largest business shift since the 2017 launch of Optavia. It expands the company's offering into the large, underserved metabolic health market, with goals to broaden geographic and demographic reach while returning the business to sustained profitability. The core operating principles for the 3.0 strategy are speed, simplicity, scale, and stewardship. The first major initiative of the strategy is the launch of the new primary consumer brand, Trilivi, which replaces Optavia. Trilivi positions the company's offering as a holistic three-phase (Reset, Refine, Renew) metabolic reset system, expanding beyond Optavia's historical weight loss focus to address broader metabolic health needs. Medifast data shows high unmet demand: over 90% of U.S. adults and 1.5 billion adults globally are metabolically unhealthy, with 94% of surveyed adults concerned about metabolic health, but 80% lack clear understanding of how to improve it. The company's science-backed, coach-guided model fills this gap. The launch is supported by a new enhanced coach compensation plan, standardized coach training system, new scientific institute, and new product line, all of which form the foundation for competition in the metabolic health category. New CEO Nick Johnson is overseeing this transition, in his first earnings call as CEO. The overall market opportunity is growing alongside rising GLP-1 adoption, which has increased consumer focus on body composition and lean muscle mass; Medifast's holistic, coach-led system complements GLP-1 use and supports consumers across all stages of their health journey. Medifast's most popular program reduces visceral fat by 14% while retaining 90% of lean mass over 16 weeks, and clinical data shows coached clients lose up to 10x more weight and 17x more fat than people attempting lifestyle change independently.
• Product and Scientific Innovation: The company launched the Medifast Metabolic Health Institute in July 2026, led by industry experts and a dedicated scientific advisory board with 390+ years of collective professional experience. The institute's mission is to advance evidence-based metabolic health research, strengthen the scientific evidence base for Medifast's programs, substantiate new health claims, and establish Medifast as a trusted authority in the metabolic health space, turning the company's scientific heritage into a durable competitive advantage. The upcoming late-August 2026 launch of new Trilivi Reset fuelings, the first product line built around the proprietary Medivantage technology reset formula, adds targeted ingredients to support healthy fat metabolism, insulin function, and reduced waist circumference, while retaining the core attributes of pre-portioned, nutrient-dense fuelings with high protein, fiber, probiotics, and key vitamins/minerals. These new fuelings anchor the clinically-proven Reset 5-in-1 plan, and spring 2026 pilot feedback from employees, coaches, and clients was overwhelmingly positive.
• Coach Network and Productivity: The company continues to prioritize high-productivity coaches, particularly those at the executive director rank, which has led to three consecutive quarters of growing coach productivity, a key leading indicator for future revenue and profit growth. Year-over-year productivity per active earning coach increased 41% in Q2 2026, and revenue per active earning coach is now at its highest level since Q2 2022. The percentage of active earning coaches at the executive director rank or above has remained above the 10% benchmark for a healthy, scalable field organization. An enhanced coach compensation plan launched on August 1, 2026, designed to accelerate development and duplication of executive director coaches, building on the proven success of the prior EDGE program. Coach engagement is high: the July 2026 national coach convention was sold out, with strong positive response to the new Trilivi brand and strategy. The client referral program continues to exceed expectations.
• Profitability Initiatives: The company launched the Catalyst cost optimization program in Q2 2026, focused on driving incremental cost savings via facility rationalization, AI-driven operational efficiencies, and other streamlining efforts, without negatively impacting top-line growth capacity. The core near-term company goal is to return to GAAP profitability by Q4 2026, achieved via both revenue growth initiatives and company-wide cost reduction. The company's balance sheet remains strong with no debt and high cash levels, supporting execution of the 10-year growth strategy.

• Third quarter 2026 guidance calls for total revenue in the range of $60 million to $80 million, and diluted loss per share in the range of $0.15 to $0.65. This guidance excludes one-time implementation costs associated with Catalyst program initiatives. Management expects the active earning coach count to continue declining in the short term, but forecasts continued year-over-year and sequential growth in average coach productivity.
• Full year 2026 guidance calls for total revenue in the range of $270 million to $300 million, with diluted loss per share between $0.25 and $1.75. Management reaffirmed its prior forecast that a return to GAAP profitability will begin in Q4 2026, following the full launch of the new Trilivi product line, with earnings improvements expected to continue into 2027 and beyond.
• Full-year 2026 guidance projects working capital (current assets less current liabilities) of more than $145 million as of December 31, 2026. Full year 2026 revenue guidance range was maintained unchanged from the prior quarter, while the full year adjusted EPS range was improved compared to prior guidance.
• Longer term, management expects that the observed trend of rising coach productivity will, as it has historically, lead to renewed coach network growth, which will in turn drive top-line revenue growth and restored operating leverage as the business scales into 2027 and beyond.

Medifast is a single-reporting consumer health and wellness company focused on metabolic health programs and coaching, so consolidated segment-level financials are provided here. Q2 2026 total consolidated revenue was $76.4 million, a 27.6% year-over-year decrease driven by a 48.7% YoY drop in active earning coach count to 11,700. Gross profit was $53.4 million, down 30.3% YoY, with a gross margin of 69.9% (down 270 basis points from 72.6% in Q2 2025, due to lost fixed cost leverage from lower sales volume). SG&A expense was $57.7 million, down 25.7% YoY, with SG&A as a percentage of revenue up 200 basis points year-over-year. Operating loss was $4.3 million (5.7% of revenue), an increase of $3.3 million in losses compared to Q2 2025. Net loss was $3.1 million, or $0.28 per diluted share, compared to net income of $2.5 million ($0.22 per diluted share) in the year-earlier quarter. The company ended the quarter with $169.8 million in cash, cash equivalents, and investments, and no debt.

• The rapid adoption of GLP-1 weight loss medications has negatively impacted the traditional weight loss category, and has been the primary driver of the large year-over-year decline in Medifast's active earning coach count and total revenue. While management sees the rising focus on metabolic health from GLP-1 adoption as a long-term opportunity, the near-term negative market impact has pressured top-line results and reduced fixed cost leverage, leading to lower margins and operating losses.
• The Catalyst cost optimization program is still in early implementation. Management has not yet finalized all cost reduction plans, so full quantification of expected annual savings and the timing of savings realization will not be provided until the Q3 2026 earnings call, creating near-term uncertainty for profitability projections.
• The brand and product transition from Optavia to Trilivi is a material strategic shift, and while early coach reception has been positive, unforeseen implementation or adoption hiccups could disrupt the transition and delay revenue and profit improvements.
• The company maintains a full valuation allowance against its net deferred tax assets, which impacts current period effective tax rate calculations and results in a negative effective tax rate for Q2 2026.

Q: What are the expected initial implementation costs and annual savings from the Catalyst program, and when will costs and savings start to flow through the income statement? / A: Management is still working to finalize Catalyst cost reduction plans, so they cannot yet quantify total expected savings at this time. The core goal of Catalyst is to simplify operations and cut costs without making cuts that would negatively impact top-line revenue growth. Full details on implementation costs, expected savings, and the cadence of savings realization will be provided during the Q3 2026 earnings call.

Q: Aside from the Catalyst program, what are the other key drivers that will deliver a return to profitability in Q4 2026? / A: Management maintained the full-year 2026 revenue guidance range unchanged from the prior quarter, and has growing confidence that revenue will stabilize around the $70-$75 million quarterly level that has held since Q4 2025. The full-year loss per share guidance range has improved compared to the prior quarter. Stabilized revenue will restore fixed cost leverage, and the new Trilivi product launch will also contribute to improved margins in Q4 and beyond.

Q: How has coach receptivity to the new Trilivi brand and the transition from Optavia been, and have there been any notable implementation hiccups? / A: Coach reception has been overwhelmingly positive, with strong demand seen during the coach pre-launch of new Trilivi fuelings and a sold-out, high-energy July national coach convention focused on the new brand. Coaches have responded particularly well to the expanded metabolic health opportunity beyond traditional weight loss. There have been no major implementation hiccups to date, and the phased rollout of the new product line across upcoming quarters is proceeding as planned.