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Medifast (MED) Looks Great on OPTAVIA, Strategic Investments

Medifast, Inc. MED has been gaining on its OPTAVIA lifestyle solution and coaching support system. OPTAVIA was a key driver for the company’s third-quarter 2021 results, wherein both earnings and sales exceeded the Zacks Consensus Estimate and rose year over year. Medifast raised its 2021 guidance. Apart from this, Medifast’s focus on strategic growth initiatives, including capacity expansion and technological advancements, has been working well. The company is committed to making further investments to improve its infrastructure to aid growth.

OPTAVIA – A Key Driver

Given the evolving consumer interests in health and wellness, Medifast’s OPTAVIA lifestyle solution and coaching support system bodes well. Continued strength in OPTAVIA Coaches aided the company’s impressive third-quarter performance. During the quarter, total number of active earning OPTAVIA Coaches jumped 44.9% to 61,000. Average revenue per active earning OPTAVIA coach increased 7% to $6,773, up from $6,329 in the year-ago quarter. Certainly, the relevance of the company’s offerings amid an environment where consumers are choosing health and wellness options has been an upside.

OPTAVIA follows a holistic approach by focusing on six key areas of a human being, namely weight, eating and hydration, motion, sleep, mind and surroundings. Further, OPTAVIA combines scientifically proven programs, effective products and guidance from its coaches to help consumers lead a healthier lifestyle. The OPTAVIA product line is sold through its community of independent coaches who offer support and guidance to their clients.

Growth-Oriented Investments

Management is committed to allocating capital and investments toward infrastructure development. Medifast is focused on making technological investments. It opened a new technology center in Utah in the beginning of 2020. It is observed that OPTAVIA Coaches have been focused on utilizing technology, including the company’s own app-based platforms along with social media channels and field-led training platforms. Further, the company announced the launch of the OPTAVIA app, which is likely to enhance Clients’ experience with Lean & Green recipes along with an access to order record, auto-ship details and account information among other things.

Medifast’s Connect App has also been working well for Coaches on the go. The company’s constant investments in digital tools as well as in its new, fully integrated mobile apps are likely to enhance the connection between clients and coaches.

Other food companies benefiting from digital investments include Sysco Corporation SYY, B&G Foods BGS and Hormel Foods HRL to name a few.

Sysco is on track with its Recipe for Growth, which involves five strategic priorities aimed at enabling the company to grow 1.5 times faster than the market by FY24 end. Sysco’s five strategic pillars include enhancing customers’ experience via digital tools. In this regard, SYY’s Sysco Shop platform and the new pricing software are working well.

B&G Foods is benefiting from higher online sales, especially thanks to increased social-distancing trends. Management had earlier highlighted that it expects e-commerce retail sales for fiscal 2021 to keep growing at this rate and come in at $275 million.  E-commerce sales are accelerating with pace, mainly attributable to efficient delivery services of B&G Foods’ retail customers. BGS has been making investments to strengthen its online presence and market with several retailers on their websites.

Hormel Foods has been on track with capacity expansion endeavors. As part of this, HRL is focused on initiatives like One Supply Chain, Project Orion and Digital Experience group to accelerate growth. Hormel Foods has been making continued investments in the e-commerce channel, which is important for the company.

Coming back to Medifast, the manufacturer and distributer of weight loss, weight management, healthy living products, and other consumable health and nutritional products is likely to keep its impressive growth story going on the back of the abovementioned upsides.

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