Medifast Inc. earned net income of $5.7 million, or 44 cents per diluted share, during the second quarter of this year, the Owings Mills company reported Thursday after market close.
That’s a nearly 20 percent drop compared to the comparable period last year, when net income was $7.1 million, or 51 cents per diluted share.
Revenue for the quarter also dropped significantly, and expenses followed suit. Still, Medifast’s earnings for the quarter beat the average analyst expectation of 39 cents per share.
Medifast manufactures portion-controlled diet food items and provides weight-loss programs, which are distributed via four different channels, including a personal coaching division and Medifast Weight Control Centers.
The company plans to introduce several new products, such as digital activity trackers, in the coming months. Chairman and CEO Michael C. MacDonald said Medifast will have introduced more than 30 new products by the end of the year, more than the company has ever introduced in any one year.
Officials hope those new products will help reverse significant declines in revenue.
Revenue totaled $80.9 million for the quarter ended June 30 — down 17 percent compared to the second quarter of last year, due to significant decreases in each of those distribution channels.
For example, in the “Medifast Direct” channel, revenue declined 29 percent to $15.2 million compared to $21.5 million during the second quarter of 2013.
MacDonald attributed the drop to ineffective advertising and marketing strategies, which he said the company plans to reevaluate in order to attract new customers.
In the “Take Shape for Life” personal coaching division, revenue was down 12 percent to $54.1 million compared to the same period last year. That was due to a decline in the number of health coaches as well as lower average revenue per coach, company officials said.
Revenue in the “Weight Control Centers and Wholesale Physicians” channel decreased by 18 percent. MacDonald said the company is addressing the decline by streamlining staffing and operational expenses.
The company plans to continue its strategy of transitioning most of its corporate-owned centers to the franchise model. As of June 30, Medifast has 51 corporate-owned centers and 73 franchise centers.
The company now expects full-year revenue to be in the range of $320 million to $330 million, and full-year earnings per diluted share to be in the range of $1.80 to $1.85.
Medifast’s share price ended the day at $29, essentially unchanged from its opening price. But in after-hours trading, the price had fallen nearly 6 percent by 5 p.m.