Medifast, the company behind the OPTAVIA coaching system, is navigating a period of significant transition. Its latest financial results reveal substantial challenges, prompting a major strategic shift towards metabolic health solutions. The central question for investors is whether this new direction can stabilize the business after a sharp decline in performance.
Financial Performance Under Pressure
The company’s third-quarter 2025 figures highlight the scale of the current downturn. Revenue fell 36.2% year-over-year to $89.4 million. A primary driver was a 35% reduction in the number of active OPTAVIA coaches, which now stands at 19,500. This contraction directly impacts sales volume.
Profitability metrics also deteriorated. The gross margin contracted to 69.5%, down from 72.6% in the prior-year period, pressured by lower sales and a provision for product reformulation. Consequently, the quarter ended with a net loss of $2.3 million, translating to a diluted loss per share of $0.21.
Looking ahead, management’s guidance suggests continued strain. For the fourth quarter, Medifast projects revenue in the range of $65 million to $80 million and expects a diluted loss per share between $0.70 and $1.25.
A Foundation for Change
Despite operational difficulties, the company’s balance sheet provides a cushion. As of September 30, 2025, Medifast held $173.5 million in cash and securities and carries no debt. This substantial liquidity offers financial flexibility to fund its strategic overhaul.
Should investors sell immediately? Or is it worth buying Medifast?
Some market observers see potential in the stock following its decline. One analyst has set a price target of $16.50, implying an approximate 37% upside from Friday’s closing price. This outlook, however, is contingent on the success of the company’s new strategy.
The New Strategic Direction: Metabolic Health Focus
In response to these challenges, Medifast is executing a comprehensive repositioning. The core of the plan involves moving beyond weight management alone to embrace the broader category of metabolic health. Key initiatives include:
* The launch of a new product line in 2026, featuring clinically studied ingredients.
* Retraining and repositioning the existing network of OPTAVIA coaches, coupled with investments in digital platforms to enhance their productivity.
* Emphasizing the value of human coaching as a key differentiator against emerging competition, such as GLP-1 medications.
This strategy aims to expand the company’s total addressable market and better leverage its established coach-based distribution model. Its success will fundamentally depend on stabilizing and regrowing the coach count, improving coach productivity, and securing market acceptance for the forthcoming products.
The Path Forward
The near-term outlook remains challenging, with Q4 guidance indicating persistent margin pressure and volatility. The critical factors for a potential operational turnaround will be the effectiveness of initiatives to re-engage coaches and the market reception of the new product line slated for 2026. While the company’s strong cash position buys it time to execute, the coming quarters will be decisive in determining if this strategic pivot can reverse the current downward trend.
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