MEDIFAST INC

Greetings and welcome to the Medifast second quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Steven Zenker, Vice President, Investor Relations. Thank you, sir. You may begin.

Good afternoon, and welcome to Medifast's second quarter 2026 earnings conference call. On the call with me today are Nick Johnson, Chief Executive Officer, and Jim Maloney, Chief Financial Officer. By now, everyone should have access to the earnings release for the second quarter ended June 30, 2026, that went out this afternoon at approximately 4.05 p.m. Eastern Time. Thank you for watching. We would like to remind everyone that today's prepared remarks contain forward-looking statements and management may make additional forward-looking statements in response to your questions. The words believe, expect, anticipate and other similar expressions generally identify forward-looking statements. These statements do not guarantee future performance and therefore undue reliance should not be placed on them. Thanks, Steve.

Good afternoon, everyone. It's an honor to be addressing you today in my first earnings call as the CEO of Medifast, and I'm looking forward to conversations with investors over the months and years ahead. In our second quarter, we continued to see positive indicators in our business, maintaining a trend that began in late 2025. Most notably, revenue has stabilized sequentially over the recent quarters, aided by higher coach productivity, which grew for the third consecutive quarter. This is a key metric for us, as positive trends historically have preceded revenue and profitability growth. Improved coach productivity is also reflected in the growing percentage of active earning coaches reaching executive director rank, as our field embraces our strategic transition to metabolic health. We anticipate that these positive trends will continue through the remainder of the year, supported by the launch of our new consumer brand, Trilivi. Trilivi is the first step in our 3.0 strategy, which is the biggest shift for Medifast since we launched Optivia in 2017. The strategy is defined by a 10-year roadmap that will allow us to expand our offer to coaches and clients in the context of a comprehensive metabolic health system, while also broadening our geographic and demographic footprints. We have made substantial progress this year, launching a new brand, a new scientific institute, an enhanced coach compensation structure, and a standardized training system for our coaches. Each is a significant step forward, and together they help form a foundation for us to win in the metabolic health category. The way we are running the 3.0 organization centers around four core defining characteristics, namely speed, simplicity, scale, and stewardship. we have to move quickly to take advantage of the opportunity that exists in metabolic health while also returning the business to profitability this speed imperative is reflected in the launch of a series of new initiatives that we will share more about on this call Thank you for joining us. scale matters because everything we are building is designed to compound each new coach and client fuels our flywheel while stewardship underlines our commitment to building a business that is consistently profitable and that delivers for years to come A key source of fuel for our flywheel is our new consumer brand, Trilivi, which succeeds Optivia as our primary consumer brand. For years, the Optivia brand was known primarily for one outcome, weight loss, which was just a single element of its effectiveness in helping people live a healthier lifestyle. Trilivi reflects the holistic health benefits our system is intended to deliver, a metabolic reset that helps the body work better over time, through three distinct phases. Reset, Refine, and Renew Our science supports clients from end to end in a clear and compelling way that better aligns the brand with the daily realities of our coaches and clients, today and into the future. We believe the opportunity is large. More than 90% of U.S. adults and 1.5 billion adults worldwide are metabolically unhealthy. Our study of more than 1,000 adults found nearly 94% are concerned about at least one aspect of their metabolic health. 85% believe metabolic dysfunction can be reversed, and 84% see it as central to overall well-being. But 80% say they do not really understand what metabolic health means. So there is high public concern, a belief that change is possible, but low understanding of how to do that. Our science-backed, coach-guided system closes that understanding gap. Attention on body composition, lean mass, and muscle preservation has never been higher as GLP-1 adoption and awareness continues to grow. Our comprehensive metabolic health system offers holistic lifestyle change and behavioral modification through the coaching and structured nutrition that is central to all of our plans. We continue to engage the GLP-1 market and beyond, supporting people throughout their health journey. Thank you for joining us. Our most popular plan reduces visceral fat by 14% while retaining 98% of lean mass over 16 weeks. And in a clinical study, clients working with a coach lost up to 10 times more weight and 17 times more fat than those trying on their own. That is the structural advantage at the heart of our model and it sets us apart in a crowded market. In July, we launched the MediFAST Metabolic Health Institute, with a mission to advance metabolic health through rigorous research and credible evidence-based education. Led by recognized experts, including a dedicated scientific advisory board, and backed by teams with more than 390 years of collective professional experience, the Institute organizes our work across research, product development, It serves a clear commercial purpose, to strengthen the evidence base behind our programs, continue to substantiate an expanding set of health claims, and establish MediFAST as a trusted authority in a field that most of the market is only beginning to understand. We expect that this is how we turn our scientific heritage into a durable, competitive advantage. We continue to build on our clinically proven science, utilizing our MediVantage technology platform, with the upcoming launch of our new reset fuelings. Each fueling, like those in our previous fuelings line, is nutrient dense and pre-portioned with high quality protein, fiber, probiotics, and more than two dozen vitamins and minerals. Added to the new product line are three key ingredients intended to make our products even more effective. This proprietary Medivantage technology reset formula is designed to unlock key metabolic pathways to help support normal fat metabolism, healthy insulin function, and reduced waist circumference. The new fuelings anchor our clinically proven Reset 5-in-1 plan, which activates a targeted fat burn to improve body composition, reducing visceral fat while retaining lean mass. This is our first product line designed to fully utilize our Medivantage technology reset formula, and it strengthens our overall market differentiation. We ran a pilot this spring with certain employees, coaches, and clients, and the feedback was overwhelmingly positive. We look forward to putting these products into the hands of all clients and coaches later this month. In the field, engagement is high, and that's showing in the metrics. Although the number of coaches continues to decline, active earning coach productivity was positive for the third straight quarter, with year-over-year productivity up 41% and, sequentially, up 20% versus our first quarter. Revenue per active earning coach is now the highest it has been since the second quarter of 2022, and we expect the trend to continue through 2026. On August 1st, we launched an enhanced compensation plan that significantly sharpens our focus on developing and duplicating executive directors. As high-producing coaches, executive directors are the single greatest driver of sustainable growth for our business. The design of our new compensation plan was heavily informed by the success of our EDGE program, which confirmed our belief that focusing our field on building executive directors empowers stronger leadership development and healthier field performance. The momentum we are seeing today reflects those edge results, with the percentage of active earning coaches at the executive director rank or above continuing to climb, remaining over our 10% benchmark for a healthy, scalable field organization. This is a big area of focus for us as we move forward, and we believe our enhanced compensation plan builds on this proven foundation and will further accelerate growth over time. Our client referral program continues to exceed expectations, which is important as we launch the new product line and seek to capitalize on the enthusiasm and energy of the coaches as they lean into the new metabolic health narrative with clients. The renewed energy and excitement from the coach base was on display at our sold out coach convention in July and was a clear indicator of the strength of coach engagement right now. We use the opportunity to focus coach attention on key initiatives including Trilogy's new products, the simplified compensation plan, and our new coach-developed Trilogy Coach Hub training platform. Simplifying the fundamentals of our products and programs, but also the way we talk about them, is a critical component of our collective commitment to bringing the company back to profitability and improving the scalability of our business. The energy at the conference was remarkable and it's encouraging to see a new generation of coaches engaging with the new brand and the enhanced approach to metabolic health as we seek to reset, refine, and renew lives. Before I turn it over to Jim for a detailed look at the financials, We met expectations for the quarter on both revenue and earnings. Second quarter revenue was $76 million, in line with the guidance we provided in May. The results reflect higher coach productivity and improved client retention trends, and is consistent with a business whose operating indicators are starting to turn more positive. Our balance sheet remains a source of strength. Thank you for joining us. The Catalyst program is designed to drive additional cost savings through facility rationalization, AI-related efficiencies, and other means, all while being certain we do not negatively impact our ability to grow. By intensifying our focus on improving profitability, we believe we will be in a stronger financial position to execute our 10-year growth strategy successfully. Our near-term focus is straightforward. We aim to return to profitability by the fourth quarter of 2026. We are executing on both sides of the equation, enhancing initiatives to grow revenue and eliminating cost across the business, and we believe we are on track to deliver it. All of this comes back to my earlier comments about running this organization on the key tenets of speed, simplicity, scale, and stewardship. We are moving fast without overreaching. simplifying how our coaches build their businesses and building a model designed to strengthen as the field grows. We have a clear long-term plan built around helping clients achieve optimal metabolic health. It is backed by breakthrough science and delivered through a coach-led model that we believe is a real structural advantage. Thank you, Nick. Good afternoon, everyone.