Medifast, Inc. (NYSE:MED) Q1 2023 Earnings Call Transcript

We’re not ready to announce that yet. But we’re also making investments in, as we said in the prepared remarks, in translating our materials. So, our core materials are more than 50% translated. Same thing is true of our app, and we’ve also started the process of translating our Internet side. So, all those things are the investments that are taking place beginning now through the back half of the year to focus and help reestablish, just in the same way that we have our retention levels, reestablish our coach productivity metrics, which is around client acquisition to historical norms.

Linda Bolton-Weiser: Okay. And then I’ve had some questions from investors. And I guess, it’s highlighted even more here about your dividend because it’s $1.65 per quarter and yet your EPS guidance for the second quarter is $1.32 to $1.44. So it’s below the dividend levels. So, just kind of wondering if this situation persists, clearly, you have cash on the balance sheet and you have an untapped revolver. How long would you tap into the revolver and/or use cash on the balance sheet to pay your dividend, if necessary?

Jim Maloney: Yes. So, we — our capital allocation strategy or principles, Linda, have really not changed that significantly. So, first, we are going to continue to invest in organic growth opportunities, and we’re also evaluating inorganic opportunities, all to achieve getting back to 15% or better growth. We do believe we have sufficient funds for the foreseeable future regarding our cash flows for the dividend. So, we believe that we have significant funds that should cover the dividend. As we invest in this growth and get back to growth, we believe that the dividend is not at risk at all. So, excess cash flows from organic growth opportunities and the dividend, we still will continue to look at opportunities and stock repurchases.

Linda Bolton-Weiser: Okay. And then with regard to the drugs, the GLP-1 drugs, I would assume, but correct me if I’m wrong, that it wouldn’t make a lot of sense for you to acquire a telehealth platform or something like that, like Weight Watchers did. But correct me if I’m wrong on that. And if that’s the case, then do you plan to modify your program such that it’s kind of — is complementary in some way to usage of the drug?

Dan Chard: Yes. So, we’re obviously spending a lot of time thinking about this. Our heritage, our history, and actually our founding was all in the medical side, originated with the doctor who is trying to help physicians help their patients in their health and wellness journey. So, that remains at the core of who we are and what we do. And as a result, that’s why we have a lot of health care professionals who are among our coach ranks. And that’s why we invest in clinical studies. That’s why we invest in the science, all tied to that background. So as we see the drugs, which mean this set of drugs are new, but drugs and other medical interventions are not new. We evaluate those changes individually and try to understand how they can — how we can help use those with one singular goal, which is to help the customers of our coaches get healthy.

So what we’re seeing right now is that it’s generating a lot of noise. I think we’re all seeing it. There’s — GLP-1 drugs are in the news. There’s a lot of advertising going on. It’s throughout social media. And so there’s a lot of noise right now. And we’re starting to get more questions coming up through clients that to our coaches about, how they should be looking at GLP-1 drugs. We do, as you are aware, fairly frequent national surveys to understand what the sentiment is around health and wellness, what people are doing. And our most recent national survey show that customers prefer 3:1 a lifestyle and behavioral change solution to their weight management versus a drug therapy. Now having said that, those numbers have probably changed since the beginning, so we’ll continue to watch that and track this number closely.