Medifast CEO on Q2 Earnings that Surpassed Estimates

Dan Chard, Medifast CEO, joined Yahoo Finance to discuss the company's latest earnings result.

Video transcript

- Let's talk about Medifast. It's a stock that's on the move. We brought the numbers to you yesterday. They posted a 79% jump in revenue during their latest quarter. They beat the Street's expectations on both the top and bottom lines.

We want to bring back in Medifast CEO Dan Chard. And Dan, it's great to speak with you again, following up on our check-in that we did yesterday. Let's talk about that growth that you posted-- 79% jump in revenue. When you take a look at a number like that, that's pretty hard to replicate. What's fueling that type of growth in your business?

DAN CHARD: Well, we started about five years ago with a mission to help America get healthy. And we've actually been on a very aggressive growth since then. We, in 2018, grew 66%. In 2019, we grew 42%. During the pandemic year, 31%, and then in the first quarter, 91%, and then as you pointed out, 79% in this last quarter. So we happened to be in the middle of a huge-- I'll say pandemic, if you will, that's not at all related to COVID, which is people aren't as healthy as they used to be.

ADAM SHAPIRO: Dan, it's good to have you here. And I am at the Octavia website right now. And I know this is one of the success stories. If I get something wrong, don't hesitate to correct me. Businesses should have the problem-- I think you're dealing with the success of this because it's coaching as well as healthy products, food products people can buy. But the headline on the website-- we're experiencing order delays due to high product demand. Are these delays part of the pandemic supply chain problems? How quickly can you get on top of that? Because it's a 9 to 11-day-- it's saying on the website-- delay.

DAN CHARD: Yeah. We just actually announced last week-- we're letting things settle in-- but that we have effectively transitioned and transformed our supply chain. So our focus initially was to create a manufacturing structure to support a $2-billion business. Last year, we were just under $1 billion. And we effectively completed that project six months early at the end of June. And the next phase, which will be completed in two months, is to do the same thing on the fulfillment side.

So right now, our order times are close to normal. Within the next two weeks, they'll be back to normal.

- Dan, where are you seeing the most growth just in the US relative to other areas around the world?

ADAM SHAPIRO: Well, we're actually in three markets right now. We started in the United States about 20 years ago with this coach model. This coach model is made up of, right now, just under 60,000 coaches. And a year and a half ago, we expanded into the Asia-Pacific region, first with Hong Kong and Singapore, which we see as gateways to Southeast Asia and to greater China. So right now, the majority of our growth is in the United States because that's where we started.

But quite frankly, every developing country in the world who has changed their eating habits from more processed food and less healthy is going through the same challenge, which is, how do we, the people, learn a new set of healthy habits to become healthy again? And typically, the symptoms are in the United States, 2/3 of Americans are either obese or overweight. Our coaches help people learn a new set of healthy habits to help them transform their health.

ADAM SHAPIRO: Are there cultural barriers with what we do in the United States regarding healthy habits and exercise habits and coaching habits versus what they might do in one of the other regions where you're growing, like Asia?

ADAM SHAPIRO: We've found that ti first starts with the habit of healthy eating, which is learn to eat smaller meals. Rather than three big meals three times a day, eat six smaller meals. And then it has to do with an education about what to eat. So we help initially establish the habit by giving them a set of small meals that they can eat, and then we teach them how to make, on their own, a lean and green meal. So while there might be a few flavor differences in what we offer in Asia-Pacific, they're generally the same. And then the other habits that we teach are healthy exercise, healthy sleep, healthy hydration. And so those things are the same. And they're effectively habits that make humans healthy, not just Americans healthy.

- Dan, how much do you think the pandemic has shed a light onto your business, and really, the industry at large? Because there's obviously been a huge focus on health, especially over the past 15 or 16 months in the midst of this pandemic. And I guess, how do you make sure that that focus doesn't go away a year from now?

DAN CHARD: Yeah, I think that it's created more focus on health. We've done our own survey and found that over 90% of the people have changed their focus to look at their own personal health. We've also surveyed and found that people want some support in helping them get there. And so while the trends were very strong for us prior to the pandemic, we think the pandemic has brought it more into focus. It hasn't necessarily been a boon for us, but it certainly has not slowed us down at all.

- Dan Chard, great to speak with you again. Thanks so much for hopping on with us the second after your earnings were released yesterday. Great to speak with you more in depth today, CEO of Medifast. We look forward to having you back soon.