Medifast (MED) Targets New Customer Segments

Miller Value Partners, an investment management company, released its “Income Strategy” third-quarter 2023 investor letter. A copy of the same can be downloaded here. In the third quarter, the strategy returned 1.85% (net of fees) outperforming the ICE BofA US High Yield Index’s 0.54% return and the S&P 500 Index’s -3.27% return. There is a weakness in the global market which is largely tied to rates continuing their parabolic move higher. In addition, please check the fund’s top five holdings to know its best picks in 2023.

Miller Value Income Strategy highlighted stocks like Medifast, Inc. (NYSE:MED) in the third quarter 2023 investor letter. Headquartered in Baltimore, Maryland, Medifast, Inc. (NYSE:MED) offers healthy living products and programs. On October 18, 2023, Medifast, Inc. (NYSE:MED) stock closed at $76.46 per share. One-month return of Medifast, Inc. (NYSE:MED) was -6.86%, and its shares lost 33.48% of their value over the last 52 weeks. Medifast, Inc. (NYSE:MED) has a market capitalization of $832.604 million.

Miller Value Income Strategy made the following comment about Medifast, Inc. (NYSE:MED) in its Q3 2023 investor letter:

“Medifast, Inc. (NYSE:MED) reported 2Q23 revenue of $296.2MM, -34.7% Y/Y, ahead of consensus of $253.5MM, and EPS of $2.77, -19.0% Y/Y, ahead of consensus of $1.44. The revenue decline was primarily driven by a 21.9% decline in active earnings OPTAVIA coaches and a 16.3% decline in average revenue per active earning coach. The company generated 2Q23 free cash flow (FCF) of $41.4MM, bringing TTM FCF to $199.6MM, or a FCF yield of 24.5%. The CEO noted that the company is already ahead of their expectations for delivering 200-300bps in annualized cost savings by the end of 2025 and hopes to realize 1/3 of these savings in 2023, which will be primarily earmarked for investing in the company’s various growth initiatives. During the quarter, the company announced a new product line, OPTAVIA ACTIVE, which includes premium exercise supplements and protein powders, as the company targets new customer segments and looks to capitalize on the sports nutrition category, which possesses a total addressable market size of $30B. Management maintained its quarterly dividend of $1.65/share, or an annualized yield of 8.8%, and guided for 3Q23 revenue of $230.0MM and EPS of $1.02, at the respective midpoints.”

Medifast, Inc. (NYSE:MED) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 18 hedge fund portfolios held Medifast, Inc. (NYSE:MED) at the end of second quarter which was 22 in the previous quarter.

We discussed Medifast, Inc. (NYSE:MED) in another article and shared the list of best weight loss stocks to invest in. In addition, please check out our hedge fund investor letters Q3 2023 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.