Medifast Inc.

08/03/2026 | Press release | Distributed by Public on 08/03/2026 14:51

Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Note Regarding Forward-Looking Statements
Certain information in this report contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Act"). Forward-looking statements generally can be identified by use of phrases or terminology such as "intend," "anticipate," "expect," or other similar words or the negative of such terminology. Similarly, descriptions of Medifast's objectives, strategies, plans, goals, or targets contained herein are also considered forward-looking statements. These statements are based on the current expectations of our management of Medifast and are subject to certain events, risks, uncertainties, and other factors. These risks and uncertainties include, but are not limited to, those described in our 2025 Form 10-K and those described from time to time in our future reports filed with the SEC. Although Medifast believes that the expectations, statements, and assumptions reflected in these forward-looking statements are reasonable, it cautions readers to always consider all of the risk factors and any other cautionary statements carefully in evaluating each forward-looking statement in this report. All of the forward-looking statements contained herein speak only as of the date of this report. We undertake no obligation to update any information contained in this report or to publicly release the results of any revisions to forward-looking statements to reflect events or circumstances of which we may become aware after the date of this report.
The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and related notes appearing elsewhere herein.
Overview
Medifast, Inc. ("Medifast," the "Company," "we" or "us") is the health and wellness company known for its science-backed, comprehensive metabolic health system. In October 2025, Medifast announced its strategic transformation, unveiling its focus on holistic metabolic health. The Company started 2026 by moving from transformation to execution, leveraging its extensive experience in structured weight loss coupled with recent scientific research and enhanced product offerings to address the needs of a broader metabolic health market. In July 2026, Medifast announced the launch of Trilivy, a comprehensive metabolic health system uniquely designed to support healthy lifestyle change. The transition from OPTAVIA® to a new brand with the launch of Trilivy represents an evolution of the company's vision, platform, and purpose, expanding beyond traditional weight
loss to address the broader metabolic health challenges impacting more than 90% of U.S. adults today. Medifast's approach focuses on addressing the root cause of metabolic dysfunction. This strategic shift targets a larger and what is believed to be a more sustainable market, focusing on a long-term growth strategy intended to guide the Company over the next decade by aligning science, products, and coaching with increasing demand for new solutions as awareness of metabolic dysfunction grows.
This growth strategy will initially be focused on improving coach productivity and expanding our coach network. We operate a well-capitalized business with a powerful lifestyle solution and a business model that has impacted over 3 million lives and, for the quarter ended June 30, 2026, had a network of approximately 11,700 active earning independent coaches. Medifast stands at the forefront of evidence-based wellness solutions, and its coach-first model creates significant opportunities for coaches' individual businesses. This is designed to create a "flywheel effect" as new clients join, driving coach productivity, which in turn attracts new active earning coaches, leading to even more new clients and further productivity.
The Company offers a simple, yet comprehensive approach to achieving optimal metabolic health and well-being by empowering individuals to make lasting changes. Through the dedicated support of our coaches, approximately 90% of whom were clients first, our clients are guided through every step of their wellness journey.
Our scientifically developed products and habit creation framework, reinforced by coaches and community support, provide proven health benefits and serve as a promising foundation to develop a comprehensive metabolic health system. We continuously innovate and build upon our scientific and clinical heritage to fulfill our mission of lifelong transformation, through metabolic science and human connectionTM. Coaches provide unparalleled support along with community, nutrition, and healthy habits. In a world where health and well-being can often be a difficult and solitary journey, our comprehensive system offers intensely personalized support to individuals seeking to transform their health. The goal of this holistic approach is to empower people to master their metabolic health and improve body composition, beginning with a quality weight loss journey and offering the flexibility to achieve it on their own terms. At the heart of the metabolic health system is a powerful three-part delivery model that helps individuals build healthier habits, unlock their potential and achieve optimal metabolic health:
Independent Coaches & Community: Coaches provide individualized support and guidance to clients on their path to optimal metabolic health and well-being and a community of like-minded individuals offer real-time connection and support.
The Habits of Health Transformational System: A proprietary system that provides easy steps toward a sustainable healthy lifestyle.
Science & Products: Clinically proven plans and scientifically developed products, backed by dietitians, scientists, and physicians.
In October 2025, the Company introduced Metabolic Synchronization® - a breakthrough science that reverses metabolic dysfunction through a targeted reset of the body's metabolism. Research demonstrates that the Company's comprehensive system improves metabolic health by activating strong and targeted fat burn (i.e., by reducing bad visceral fat), preserving lean mass, and protecting muscle.1 This approach results in healthy, quality weight loss that extends beyond the scale, ultimately empowering individuals to achieve their health goals.
Metabolic health, often misunderstood or overlooked, refers to the body's ability to efficiently convert food into energy and regulate critical bodily functions. Metabolic dysfunction is a state that can often go unnoticed, placing strain on the body's metabolic processes and potentially leading to serious health challenges.
Science has always been integral to Medifast's identity. Through ongoing research and compelling data that elevate the science behind the Company's plans and innovative products, the Company is energizing its coach community to empower individuals to take control of their metabolic health. In July 2026, the company introduced the Trilivy Reset Fueling line, enhanced with MetaVantage Technology™, which further supports metabolic health by helping reduce waist circumference while also supporting normal fat metabolism and healthy insulin function.2 We expect to bring the updated product line fully to market this quarter. These upcoming innovations are expected to further strengthen the Company's offerings to help clients achieve optimal metabolic health.
1 In a clinical study, individuals on the Company's 5 & 1 Plan experienced a reduction of 14% visceral fat and 98% of lean mass was retained at 16 weeks. Arterburn, L.M., C.D. Coleman, J. Kiel, et al. Randomized controlled trial assessing two commercial weight loss programs in adults with overweight or obesity. Obes Sci Pract 2019; 5/1: 3-14.
2 Pedret, A., R.M. Valls, L. Calderon-Perez, et al. Effects of daily consumption of the probiotic Bifidobacterium animalis subsp. lactis CECT 8145 on anthropometric adiposity biomarkers in abdominally obese subjects: a randomized controlled trial. Int J Obes (Lond). 2019;43(9):1863- 1868. doi: 10.1038/s41366-018-0220-0.
While GLP-1 medication usage continues to accelerate, medication alone may not be adequate for achieving sustainable, long-term health outcomes without the integration of comprehensive lifestyle modifications, nutritional guidance, and behavioral support. Recent research indicates that approximately one-third of users discontinue the medication after six months, and up to 74% stop after a year.3 Furthermore, studies show that two-thirds of weight lost on GLP-1 medications is typically regained within 12 months of stopping treatment, with cardiometabolic benefits often reversing as well.4 GLP-1 medications can be effective tools, but lasting results require more than just medication-they demand holistic behavior change.
The need for change extends beyond the obesity epidemic, as over 90% of Americans are metabolically unhealthy,5 impacting biomarkers of poor health, energy regulation, and weight management. Healthy, quality weight loss that prioritizes burning fat while preserving muscle is essential for improving metabolic health but it demands commitment, consistency, and support. Given that GLP-1 medications are shown to be most effective when combined with lifestyle changes, we see strong alignment with our expertise in helping people create durable habits through coach-supported, behavior-based systems. Our experience in guiding individuals towards change through habit-based systems, supported by a coach, is highly compatible with the demonstrated effectiveness of these medications when paired with lifestyle modifications.
In addition to coach support, by focusing on the root causes of metabolic dysfunction, Medifast is seeking to unlock new opportunities to reach and empower individuals at every stage of their health journey. For those utilizing weight loss medications, Medifast's programs are intended to provide complementary solutions to enhance metabolic function and overall health.
Regardless of their need states, our integrated, coach-supported, lifestyle-based approach helps clients achieve their health goals. Coaches introduce clients to a set of healthy habits, often beginning with healthy eating, alongside exclusive products and plans. These offerings are a key component that supports the Company's mission and helps clients to build and sustain healthy habits in their lives.
Finding new clients and reactivating former clients remains an important area of focus for our business and our coaches. We believe our coach-based model is scalable, drives both client success and growth, and represents a key competitive advantage. The coaching model is anchored on clients' needs, helping place them into supportive and energized health and wellness communities that share similar challenges and goals. With a coach, clients successfully lost 10 times more weight and 17 times more fat than those attempting to lose weight on their own.6 Coaches deliver highly tailored and personalized support and motivation, sharing their passion for healthy living and lifestyle transformation. Despite their diverse geographies and backgrounds, our coaches form a tight-knit community that supports, encourages, and inspires one another.
Our coaches are independent contractors, not employees, who support clients and market our products and services to friends, family, and other people in their communities, primarily through word-of-mouth, email, and social media channels including Facebook, Instagram, X (formerly known as Twitter), and video conferencing platforms. Products are shipped directly to clients; coaches do not handle or deliver products. This model enables our coaches to focus on client support and encouragement without having to manage inventory and allows them to maintain an arms-length transactional relationship. We provide economic incentives designed to support long-term coach success, which we believe contributes to their financial wellness, and offers the opportunity to improve their personal finances while elevating the health trajectories of those they support.7
In the third quarter of 2026, the Company launched a new compensation plan along with a new coach-developed Trilivy Coach Hub training platform for coaches. The new compensation plan and training platform are designed to develop and duplicate highly successful coaches, which has historically been a significant driver of growth. The new compensation plan emphasizes progressive business building behaviors and rewards, designed to be easily adoptable by new and experienced coaches alike. It prioritizes leading indicators of success, not just outcomes or ranking. The compensation plan and training platform together provide a structured approach for coaches to maximize their potential, improve their leadership skills, expand their reach, and achieve recognition for their progress. We expect that simplifying the fundamentals of our products and programs, and also the way we talk about them, will increase client acquisition and the conversion of clients into new coaches.
Medifast continues to invest strategically in tools, programs, and educational resources to support our coaches - the Company's most effective client acquisition engine. In July 2025, we rolled out Premier+, a refreshed auto-ship program that offers a new tiered pricing discount on monthly orders, reduces list pricing on several popular products, and provides a more reliable and
3 Grosicki et al. Diabetes Obes Metab. 2025; https://pubmed.ncbi.nlm.nih.gov/39743934/
4 Wilding, et al; STEP 1 Study Group. Diabetes Obes Metab. 2022; https://pubmed.ncbi.nlm.nih.gov/35441470/
5 O'Hearn M et al. Trends and Disparities in Cardiometabolic Health Among U.S. Adults, 1999-2018. J Am Coll Cardiol. 2022; 80(2):138-151. doi:10.1016/j.jacc.2022.04.046
6 In a clinical study, the group on the OPTAVIA 5 & 1 Plan using a coach lost 17x more fat than the self-directed control group
7 OPTAVIA makes no guarantee of financial success. Success with OPTAVIA results from successful sales efforts, which require hard work, diligence, skill, persistence, competence, and leadership. Please see the OPTAVIA Income Disclosure Statement (http://bit.ly/4lFIPRP) for statistics on actual earnings of Coaches.
predictable compensation structure for coaches. These enhancements were designed to make client acquisition and retention easier for our coaches.
In July 2026, we also launched the Medifast Metabolic Health Institute (the "Institute"), with a mission to advance metabolic health through rigorous research and credible, evidence-based education. The Institute is led by recognized experts, including a dedicated Scientific Advisory Board, backed by teams with more than 390 years of collective professional experience. It's goal is to organize the company's work across research, product development, scientific communications, and education into one central location, establishing Medifast as a key player in this space.
We believe Medifast is uniquely positioned to serve a broader range of clients and lead the advancement of metabolic health through its personalized coaching, community support, and science-backed nutrition solutions. By addressing the underserved crisis of metabolic dysfunction with our innovative products, enhanced client experiences, and unmatched support system, we have created and are continuing to enhance a differentiated and compelling offer. Our financial strength, operational flexibility, and client-centric philosophy position us to navigate the changing weight loss market and drive sustainable growth.
Macroeconomic Conditions
Certain global economic challenges, including the impact of inflation and tariffs, have caused macroeconomic uncertainty and volatility in markets where we, our suppliers, and our independent coaches operate.
Like many product-focused companies, we are exposed to market risks from changes in commodity, or other raw material prices. An inflationary economy could impact our cost structure and put pressure on consumer spending. Increases in commodity prices, food costs, or tariffs could affect the global and U.S. economies and could also adversely impact our business, financial condition, or results of operations. Additionally, changes in tariff regulations, particularly those involving trade between the United States and key global markets, may affect the cost and availability of certain raw materials. While the full impact of potential tariff policy changes remains uncertain, we remain attentive to policy developments, and we may reassess our supply chain and investment strategies in response to further volatility in the trade environment.
Our variable cost structure can be utilized to adapt to changing market conditions with potential actions including adjustments to our manufacturing, distribution, and client support infrastructure. As a response, we may periodically take incremental pricing actions to offset supply chain costs, increases in tariff-related costs, and inflationary pressures. In addition, prolonged tariff uncertainty may influence consumer sentiment and purchasing behavior, particularly in discretionary spending categories. Fluctuations in consumer confidence, driven by economic concerns or anticipated price increases, could further reduce demand for our products.
In response to changing macroeconomic conditions, the Company may take further actions that alter its business operations as may be required by governmental authorities, or that are determined to be in the best interests of employees, coaches, clients, and stockholders. Our ability to effectively navigate these developments is critical to maintaining operational resilience and achieving our long-term strategic objectives. These macroeconomic uncertainties make it challenging for our management to estimate our future business performance. However, we intend to continue to actively monitor the impact of these developments on our business and will update our practices accordingly.
Competition
The metabolic health and weight loss industry is very competitive and encompasses a multitude of metabolic health and weight loss products and programs. These include a wide variety of commercial metabolic health and weight loss programs, medications, pharmaceutical products, surgical interventions, books, self-help diets, dietary meal replacements, protein-fortified consumables, and appetite suppressants as well as digital tools, app-based health and wellness monitoring solutions, and wearable trackers. The metabolic health and weight loss market is served by a diverse array of competitors. Potential clients seeking to manage their metabolic health or weight can turn to traditional center-based competitors, online diet-oriented sites, self-directed dieting and self-administered products such as prescription medications, over-the-counter medications and supplements, as well as medically supervised programs. Medical weight loss solutions, such as GLP-1 medications, have become an increasingly key component of the overall health and wellness ecosystem, and the recent surging acceptance and popularity of these weight loss medications serve as another major competitor, as these products have prompted a huge change in the way that consumers think about weight loss and lifestyle modification solutions in general. We recognize that these weight loss medications have attracted significant attention from the market and pose a threat to our interactions with our traditional client base. Importantly, the efficacy claims of GLP-1 medications for weight loss are based specifically on their incorporation of lifestyle changes that include a reduced calorie diet and increased physical activity. As a result, under
Medifast's offerings, weight loss medications can be an important element that fits into the overall tailored lifestyle plans that also include coaching, community support, nutritionally balanced meals, and exercise.
We believe we have a competitive advantage over traditional diet companies as our model:
•Offers a solution that focuses on metabolic health powered by a breakthrough approach and human coaching and has impacted more than 3 million lives;
•Provides advanced science and comprehensive behavioral support, with its breakthrough approach, Metabolic Synchronization, that reverses metabolic dysfunction through targeted metabolic reset;
•Provides personalized, empathetic support from coaches who have been in their clients' shoes;
•Promotes lifelong habit development supported by a proprietary integrated approach to behavior change, the Habits of Health Transformational System; and
•Encompasses a vibrant health and wellness community.
We also compete with other direct-selling organizations, some of which have a longer operating history and greater visibility, name recognition and financial resources than we do. We also believe we have advantages over traditional direct selling companies. Our model:
•Is client-centric, with one sales price for both coaches and clients. There is no tiered pricing.
•Incorporates personalized coach support serving as a key differentiator to our model.
•Is comprehensive, including nutritional products and support.
•Boasts a health and wellness community, which promotes a holistic health and wellness program and is not focused solely on product sales.
•Offers a differentiated direct-to-consumer model, with 100% of products shipped directly to clients.
•Promotes a unified Habits of Health training system that aligns its coach leaders around a common mission of lifelong transformation, through metabolic science and human connection.
We believe our scientific and clinical heritage combined with our commitment to evaluating programs, plans, and products through clinical research are primary differentiators that allow us to compete in these markets. Our scientifically designed products were originally developed by a physician, and we have been on the cutting edge in the development of nutrition and weight-management products since our founding.
Medifast has perfected our model over the last 45 years, with habits, coaches, and community at the core, and we will continue to innovate as the industry evolves.
Critical Accounting Policies and Estimates
The preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Management develops, and changes periodically, these estimates and assumptions based on historical experience and on various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. Our unaudited condensed consolidated financial statements are prepared in accordance with GAAP. Our significant accounting policies are described in Note 2 to the audited consolidated financial statements included in the 2025 Form 10-K. There were no significant changes in our critical estimates or policies during the first six months of 2026.
Overview of Results of Operations
Our product sales accounted for approximately 96% of our revenues for the three months ended June 30, 2026 and 2025, respectively, and approximately 96% and 97% for the six months ended June 30, 2026 and 2025, respectively.
The following tables reflect our statements of operations (in thousands, except percentages):
Three months ended June 30,
2026 2025 $ Change % Change
Revenue $ 76,384 $ 105,555 $ (29,171) (27.6) %
Cost of sales 22,988 28,911 (5,923) (20.5) %
Gross profit 53,396 76,644 (23,248) (30.3) %
Selling, general, and administrative 57,723 77,710 (19,987) (25.7) %
Loss from operations (4,327) (1,066) (3,261) (305.9) %
Other income
Interest income 1,347 1,369 (22) (1.6) %
Other income (expense)
(11) 2,572 (2,583) (100.4) %
1,336 3,941 (2,605) (66.1) %
Income (loss) before provision for income taxes (2,991) 2,875 (5,866) (204.0) %
Provision for income taxes 109 395 (286) (72.4) %
Net income (loss) $ (3,100) $ 2,480 $ (5,580) (225.0) %
% of revenue
Gross profit 69.9 % 72.6 %
Selling, general, and administrative costs 75.6 % 73.6 %
Loss from operations (5.7) % (1.0) %
Six months ended June 30,
2026 2025 $ Change % Change
Revenue $ 152,428 $ 221,283 $ (68,855) (31.1) %
Cost of sales 47,276 60,395 (13,119) (21.7) %
Gross profit 105,152 160,888 (55,736) (34.6) %
Selling, general, and administrative 112,774 163,217 (50,443) (30.9) %
Loss from operations (7,622) (2,329) (5,293) (227.3) %
Other income
Interest income 2,726 2,671 55 2.1 %
Other income (expense) (36) 3,059 (3,095) (101.2) %
2,690 5,730 (3,040) (53.1) %
Income (loss) before provision for income taxes (4,932) 3,401 (8,333) (245.0) %
Provision for income taxes 290 1,693 (1,403) (82.9) %
Net income (loss)
$ (5,222) $ 1,708 $ (6,930) (405.7) %
% of revenue
Gross profit 69.0 % 72.7 %
Selling, general, and administrative costs 74.0 % 73.8 %
Loss from operations (5.0) % (1.1) %
Revenue: Revenue decreased $29.2 million, or 27.6%, to $76.4 million for the three months ended June 30, 2026 from $105.6 million for the three months ended June 30, 2025. The decline in revenue for the three months ended June 30, 2026 was primarily driven by a decrease in the number of active earning coaches to 11,700 for the three months ended June 30, 2026 from 22,800 for the three months ended June 30, 2025. Revenue decreased $68.9 million, or 31.1%, to $152.4 million for the six months ended June 30, 2026 from $221.3 million for the six months ended June 30, 2025. The decline in revenue for the six months ended June 30, 2026 was primarily driven by a decrease in the number of active earning coaches. The decrease in active earning coaches, which has been trending downward year-over-year since the first quarter of 2023, was driven by continued pressure with client acquisition reflecting broader challenges in the operating environment, including rapid and continued adoption of GLP-1 medications for weight loss, and prioritizing productive coaches and efficient coach network structures. While the Company continues its transformation to focus on metabolic health, we expect the number of active earning coaches to continue to decline in 2026. The average revenue per active earning coach was $6,529 for the three months ended June 30, 2026, a 41.0% increase compared to $4,630 for the three months ended June 30, 2025. We believe that the increase in revenue per active earning coach for the three months ended June 30, 2026 was driven by greater alignment of our network of coaches, prioritizing productive coaches and efficient coach network structures.
Cost of sales: Cost of sales decreased $5.9 million, or 20.5%, to $23.0 million for the three months ended June 30, 2026 from $28.9 million for the three months ended June 30, 2025. The decrease in cost of sales for the three months ended June 30, 2026 was primarily driven by lower sales volumes. Cost of sales decreased $13.1 million, or 21.7%, to $47.3 million from $60.4 million for the six months ended June 30, 2026. The decrease in cost of sales for the six months ended June 30, 2026 was primarily driven by a $18.0 million decrease attributable to lower volumes, partially offset by $4.7 million attributable to loss of leverage on fixed costs.
Gross profit: Gross profit decreased $23.2 million, or 30.3%, to $53.4 million for the three months ended June 30, 2026 from $76.6 million from the corresponding period in 2025. The decrease in gross profit for the three months ended June 30, 2026 was due to lower revenue, partially offset by lower cost of sales. As a percentage of revenue, gross profit decreased 270 basis points to 69.9% for the three months ended June 30, 2026 from 72.6% for the corresponding period in 2025 primarily due to loss of
leverage on fixed costs. Gross profit decreased $55.7 million, or 34.6%, to $105.2 million from $160.9 million for the six months ended June 30, 2025. The decrease in gross profit for the six months ended June 30, 2026 was due to lower revenue, partially offset by lower cost of sales. As a percentage of revenue, gross profit decreased 370 basis points to 69.0% for the six months ended June 30, 2026 from 72.7% for the corresponding period in 2025 primarily due to loss of leverage on fixed costs.
Selling, general, and administrative ("SG&A"): SG&A expenses were $57.7 million for the three months ended June 30, 2026, a decrease of $20.0 million, or 25.7%, as compared to $77.7 million from the corresponding period in 2025. SG&A expenses decreased for the three months ended June 30, 2026 primarily due to a $12.6 million decrease in coach compensation on lower volume and fewer active earning coaches, a $2.3 million decrease in employee salary and benefit expenses, and a $2.0 million decrease in Company-led marketing costs. As a percentage of revenue, SG&A expenses were 75.6% for the three months ended June 30, 2026 as compared to 73.6% for the corresponding period in 2025. SG&A expenses as a percentage of revenue increased for the three months ended June 30, 2026 primarily reflecting approximately 290 basis points associated with loss of leverage on fixed costs and 60 basis points associated with the launch of our new Trilivy Reset product line, partially offset by a 190 basis point reduction related to Company-led marketing. SG&A expenses included research and development costs of $1.1 million for both the three months ended June 30, 2026 and 2025, in connection with the development of new products and plans, and clinical research activities. SG&A expenses were $112.8 million for the six months ended June 30, 2026, a decrease of $50.4 million, or 30.9%, as compared to $163.2 million from the corresponding period in 2025. SG&A expenses decreased for the six months ended June 30, 2026 primarily due to a $28.7 million decrease in coach compensation on lower volume and fewer active earning coaches, a $7.6 million decrease in Company-led marketing costs, a $4.3 million decrease in employee salary and benefit expenses, and a $2.2 million one-time gain on the sale of our Maryland Distribution Center building and land previously classified as held for sale. As a percentage of revenue, SG&A expenses were 74.0% for the six months ended June 30, 2026 as compared to 73.8% for the corresponding period in 2025 primarily reflecting 430 basis points associated to loss of leverage on fixed costs, partially offset by a 340 basis point reduction related to Company-led marketing costs. SG&A expenses included research and development costs of $2.1 million and $2.2 million for the six months ended June 30, 2026 and 2025, respectively, in connection with the development of new products and plans, and clinical research activities.
Loss from operations: For the three months ended June 30, 2026, the Company's loss from operations was $4.3 million as compared to $1.1 million for the corresponding period in 2025, a change of $3.3 million, primarily as a result of decreased gross profit partially offset by decreased SG&A expenses. For the three months ended June 30, 2026 the Company's loss from operations as a percentage of revenue was 5.7% as compared to 1.0% for the corresponding period in 2025, due to the factors described above impacting gross profit and the factors impacting SG&A expenses. For the six months ended June 30, 2026, the Company's loss from operations was $7.6 million as compared to $2.3 million for the corresponding period in 2025, a change of $5.3 million, primarily as a result of decreased gross profit and the factors impacting SG&A expenses. Loss from operations as a percentage of revenue was 5.0% for the six months ended June 30, 2026 compared to 1.1% for the corresponding period in 2025 due to the factors above impacting gross profit and the factors impacting SG&A expenses.
Other income: Other income for the three months ended June 30, 2026 was $1.3 million, a decrease of $2.6 million, or 66.1%, as compared to $3.9 million for the corresponding period in 2025. The decrease in other income for the three months ended June 30, 2026 was primarily due to a $2.6 million gain on our investment in LifeMD common stock that occurred during the corresponding period in 2025. The Company sold its investment in LifeMD during the second quarter of 2025. Other income for the six months ended June 30, 2026 was $2.7 million, a decrease of $3.0 million, or 53.1%, as compared to $5.7 million for the corresponding period in 2025. The decrease in other income for the six months ended June 30, 2026 was primarily due to a $3.2 million gain on our investment in LifeMD common stock that occurred during the corresponding period in 2025.
Provision for income taxes: The Company calculates income tax expense for interim periods based on actual results for the quarter. Income tax expense for the three months ended June 30, 2026 was $0.1 million, an effective rate of negative 3.6%, as compared to $0.4 million for the three months ended June 30, 2025, an effective rate of 13.7%. The decrease in the effective tax rate was primarily driven by the increased loss incurred during the three months ended June 30, 2026 and the valuation allowance on the net deferred tax assets. Income tax expense for the six months ended June 30, 2026 was $0.3 million, an effective rate of negative 5.9%, as compared to $1.7 million for the six months ended June 30, 2025, an effective rate of 49.8%. The decrease in the effective tax rate was primarily driven by the increased loss incurred during the six months ended June 30, 2026 and the valuation allowance on the net deferred tax assets. The Company will continue to assess the realizability of its deferred tax assets and the need for a valuation allowance on a quarterly basis. Should the valuation allowance be released in whole or in part, the Company expects to return to applying an estimated annual effective tax rate in future interim periods.
Net income (loss): Net loss was $3.1 million, or $0.28 loss per diluted share for the three months ended June 30, 2026 as compared to net income of $2.5 million, or $0.22 per diluted share, for the three months ended June 30, 2025. Net loss was $5.2
million, or $0.47 per diluted share for the six months ended June 30, 2026, as compared to net income of $1.7 million, or $0.15 per diluted share for the six months ended June 30, 2025. The period-over-period changes were driven by the factors described above.
Liquidity and Capital Resources
The Company had stockholders' equity of $196.4 million and working capital of $160.5 million at June 30, 2026 as compared with $198.9 million and $158.7 million at December 31, 2025, respectively. The $2.5 million net decrease in stockholders' equity was primarily driven by a net loss of $5.2 million for the six months ended June 30, 2026, partially offset by $3.7 million for share-based compensation. The Company's cash, cash equivalents and investment securities increased to $169.8 million at June 30, 2026 from $167.3 million at December 31, 2025.
Net cash provided by operating activities increased by $1.9 million to $2.0 million for the six months ended June 30, 2026 from less than $0.1 million for the six months ended June 30, 2025 primarily driven by a $14.9 million increase attributable to accounts payable and accrued expenses and a $5.9 million increase from income taxes, partially offset by a $13.2 million decrease related to changes in inventory balances and a $6.9 million decrease in net income.
Net cash used in investing activities was $18.4 million for the six months ended June 30, 2026 as compared to net cash provided by investing activities of $11.3 million for the six months ended June 30, 2025. The increase in net cash used in investment activities was primarily driven by $34.1 million net increase in investments resulting from the use of proceeds from debt securities previously classified as cash to purchase debt securities classified as investments, partially offset by $3.6 million of proceeds from the sale of the Company's Maryland Distribution Center building and land.
Net cash used in financing activities increased by $0.4 million to $1.0 million for the six months ended June 30, 2026 from $0.6 million for the six months ended June 30, 2025. This increase was primarily due to a $0.4 million increase in net shares repurchased for employee taxes.
In pursuing its business strategy, the Company may require additional cash for operating and investing activities. The Company expects future cash requirements in both the short term and the long term, if any, to be funded from operating cash flow, and financing activities as warranted by management's investment and leverage strategies.
The Company is currently investing in new growth initiatives which we believe have the potential to impact liquidity in future periods. The Company's current growth initiatives, including its transformation to focus on metabolic health, engaging, developing, and empowering new coaches, and developing updated product formulations under the Trilivy brand, are not expected to require any material contractual commitments or capital expenditures in future periods. Since the future costs of these endeavors are variable in nature and will be scaled at the discretion of management, we do not believe there is any significant impact on our liquidity or capital resources.
From time to time, the Company evaluates potential acquisitions that complement our business. If consummated, any such transactions may use a portion of our working capital or require the issuance of equity or debt. We have no present understandings, commitments or agreements with respect to any material acquisitions.
Medifast Inc. published this content on August 03, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on August 03, 2026 at 20:51 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]