Medifast Inc (MED) 2022 Q3 法說會逐字稿

Good day, and welcome to the Medifast Third Quarter 2022 Earnings Conference Call. (Operator Instructions) Please note, this event is being recorded.

美好的一天，歡迎參加 Medifast 2022 年第三季度收益電話會議。 （操作員說明）請注意，此事件正在記錄中。

I would now like to turn the conference over to Reed Anderson with ICR. Please go ahead.

我現在想把會議交給 ICR 的 Reed Anderson。請繼續。

Good afternoon, and welcome to Medifast's Third Quarter 2022 Earnings Conference Call. On the call with me today are Dan Chard, Chairman and Chief Executive Officer; and Jim Maloney, Chief Financial Officer. By now, everyone should have access to the earnings release for the quarter ended September 30, 2022, and went out this afternoon at approximately 4:05 p.m. Eastern Time. If you have not received the release, it is available on the Investor Relations portion of Medifast's website at www.medifastinc.com. This call is being webcast, and a replay will be available on the company's website.

下午好，歡迎參加 Medifast 2022 年第三季度收益電話會議。今天與我通話的是董事長兼首席執行官 Dan Chard；和首席財務官吉姆·馬洛尼。到目前為止，每個人都應該可以訪問截至 2022 年 9 月 30 日的季度財報，並在下午 4:05 左右發布。東部時間。如果您沒有收到新聞稿，可在 Medifast 網站 www.medifastinc.com 的投資者關係部分獲取。此次電話會議正在進行網絡直播，公司網站上將提供重播。

Before we begin, we would like to remind everyone that the 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 upon them.

在開始之前，我們想提醒大家，準備好的評論包含前瞻性陳述，管理層可能會針對您的問題做出額外的前瞻性陳述。相信、期望、預期和其他類似的表達方式通常識別前瞻性陳述。這些陳述不保證未來的表現，因此不應過分依賴它們。

Actual results could differ materially from those projected in any forward-looking statements. All of the forward-looking statements contained herein speak only as of the date of this call. Medifast assumes no obligation to update any forward-looking projections that may be made in today's release or call.

實際結果可能與任何前瞻性陳述中預測的結果大不相同。此處包含的所有前瞻性陳述僅在本次電話會議之日發表。 Medifast 不承擔更新今天發布或電話會議中可能做出的任何前瞻性預測的義務。

And with that, I would like to turn the over to Medifast's Chairman and Chief Executive Officer, Dan Chard.

有了這個，我想把這個交給 Medifast 的董事長兼首席執行官 Dan Chard。

Thank you, Reed, and good afternoon, everyone. Thank you for taking time to be with us today. On the call with me is Jim Maloney, our Chief Financial Officer. I'll start with an overview of the third quarter and continued evolution of our business. Then Jim will run through our financial results in more detail.

謝謝你，里德，大家下午好。感謝您今天抽出時間與我們在一起。與我通話的是我們的首席財務官 Jim Maloney。我將從概述第三季度和我們業務的持續發展開始。然後，Jim 將更詳細地介紹我們的財務結果。

Third quarter has been one of calibration and adjustment. We are pleased to see a faster-than-expected recovery in customer retention, which is now back to historical norms following the disruption in Q2 due to consumer spending pressure from higher inflation and interest rates. Customer satisfaction numbers remain at historical highs as our operating infrastructure continue to enable us to deliver a high-quality customer experience that drives retention and brand ambassadorship. Customer experience is one of the key differentiators that allows us to maintain our leadership position, which was recently underscored when Euromonitor, an independent market research firm, named OPTAVIA as the top weight loss program in the U.S. by revenue for last year.

第三季度一直是校準和調整之一。我們很高興看到客戶保留率的恢復速度快於預期，在第二季度由於通脹和利率上升帶來的消費者支出壓力而中斷後，現在恢復到歷史常態。客戶滿意度保持在歷史高位，因為我們的運營基礎設施繼續使我們能夠提供高質量的客戶體驗，從而推動保留和品牌形像大使。客戶體驗是使我們能夠保持領先地位的關鍵差異化因素之一，最近，獨立市場研究公司 Euromonitor 將 OPTAVIA 列為美國去年收入最高的減肥計劃，這一點得到了強調。

Revenue of $390 million in the third quarter was down less than 6% versus the prior year period, representing an improvement on the outlook we provided earlier in the year of a mid-teen double-digit decline. The number of OPTAVIA Coaches increased 8.5% year-over-year to 66,200, while revenue per active earning coach declined 12.9% to $5,897. Gross margin of 72.5% was down year-over-year but improved 150 basis points sequentially.

第三季度的收入為 3.9 億美元，與去年同期相比下降了不到 6%，這比我們在今年早些時候提供的中期兩位數下降的前景有所改善。 OPTAVIA 教練的數量同比增長 8.5% 至 66,200 名，而每位活躍收入教練的收入下降 12.9% 至 5,897 美元。毛利率為 72.5%，同比下降，但環比提高 150 個基點。

Additionally, we proactively manage our SG&A expenses, taking meaningful steps to bring costs in line with how our business is operating, and we delivered 110 basis point reduction on an adjusted basis versus last year despite lower revenue. We achieved earnings per share of $3.27, a decrease of 8.1% compared to the prior year and earnings per share of $3.32 on an adjusted basis compared to $3.56 in the prior year period. As we move forward, we will continue to execute a disciplined capital allocation strategy and prioritize investments that will drive meaningful growth.

此外，我們主動管理我們的 SG&A 費用，採取有意義的措施使成本與我們的業務運營方式保持一致，儘管收入下降，但我們在調整後的基礎上減少了 110 個基點。我們實現了每股收益 3.27 美元，與去年同期相比下降了 8.1%，調整後的每股收益為 3.32 美元，而去年同期為 3.56 美元。隨著我們的前進，我們將繼續執行嚴格的資本分配戰略，並優先考慮能夠推動有意義增長的投資。

As we look back over the last few months, there are several important learnings that will help us inform the way we plan and manage our business going forward in this new environment. The programming we implemented in early 2022 proved successful in attracting new customers, confirming the continued demand for the OPTAVIA offer. The program attracted the largest new customer cohort in company history, but repeat rates were negatively impacted in the most price-sensitive customers across all customer cohorts. Repeat purchase rates among our remaining customer base across all cohorts returned to their historical ranges in the third quarter, but there is a lingering overall impact on coach productivity as measured by new customer acquisition for coach.

回顧過去幾個月，有幾項重要的經驗將幫助我們了解我們在新環境中規劃和管理業務的方式。事實證明，我們在 2022 年初實施的計劃成功地吸引了新客戶，證實了對 OPTAVIA 產品的持續需求。該計劃吸引了公司歷史上最大的新客戶群，但所有客戶群中對價格最敏感的客戶的重複率受到了負面影響。在第三季度，我們所有群組的剩餘客戶群的重複購買率恢復到了歷史範圍，但對教練生產力的整體影響仍然揮之不去，以獲取教練的新客戶來衡量。

With this in mind, we made several changes to our programming and operations to help put the business back on a growth track and improve profitability as we finish 2022 and be in 2023. First, using the learning from the successful new coach accelerator program that we put in place during Q3 to accelerate building our base of active earning coaches and acquiring new customers, we expanded the program to include all coaches and extended the program period through the end of the year. This means that all of our coaches have an incremental financial incentive to drive customer acquisition.

考慮到這一點，我們對我們的計劃和運營進行了一些更改，以幫助我們在 2022 年和 2023 年結束時使業務重回增長軌道並提高盈利能力。首先，利用我們從成功的新教練加速器計劃中學到的知識在第三季度實施，以加速建立我們的活躍收入教練群和獲取新客戶，我們將該計劃擴大到包括所有教練，並將計劃期限延長到今年年底。這意味著我們所有的教練都有增量的財務激勵來推動客戶獲取。

Second, in partnership with our coach leaders, we identified a set of programming adjustments that reflect learnings from early 2022 to help drive customer acquisition in the new business environment through 2023 and beyond. This programming change will be implemented in the first quarter of 2023 and will focus on accelerating new customer acquisition.

其次，我們與我們的教練領導合作，確定了一系列反映 2022 年初經驗教訓的計劃調整，以幫助在 2023 年及以後推動新業務環境中的客戶獲取。這一計劃變更將在 2023 年第一季度實施，並將專注於加速新客戶的獲取。

Third, we will implement a price increase across the entire product assortment that will be effective in November. The increase is tied to a set of margin assurance and productivity initiatives that will have a positive impact on the P&L in Q4 and provide further profitability support in 2023. The price increase will be an average of 4.5% on our consumable products. Concurrent with this price increase, we will increase shipping prices as well as adjust purchasing thresholds within our premier loyalty program to further support productivity.

第三，我們將在 11 月生效，對整個產品品種進行提價。這一增長與一系列利潤率保證和生產力舉措相關，這些舉措將對第四季度的損益產生積極影響，並在 2023 年提供進一步的盈利支持。我們的消耗品價格平均上漲 4.5%。在此次提價的同時，我們將提高運費，並在我們的首要忠誠度計劃中調整購買門檻，以進一步支持生產力。

Fourth, we have made minor changes to optimize the compensation plan and our G&A operating structure that will improve results and better align with our long-term strategy.

第四，我們對薪酬計劃和 G&A 運營結構進行了細微調整，以改善業績並更好地與我們的長期戰略保持一致。

And finally, leveraging our investment in technology and digital capabilities remains a key area of focus to drive deeper engagement and seamless connectivity across the OPTAVIA community of coaches and customers. We continue to add capabilities and work closely with coaches to integrate these powerful tools to serve existing customers more efficiently and effectively as well as grow their businesses.

最後，利用我們在技術和數字能力方面的投資仍然是推動 OPTAVIA 教練和客戶社區更深入的參與和無縫連接的關鍵領域。我們將繼續增加功能並與教練密切合作，以整合這些強大的工具，以更有效地服務現有客戶並發展他們的業務。

Consumer focus and awareness around health and wellness has not dissipated. In a recent Medifast survey, while the majority of U.S. adults said they have cut their spending in the last 6 months, 70% of U.S. adults say they don't plan on letting their health and well-being falter and plan on implementing better lifestyle changes in the coming year. Our unique positioning of a personalized transformation experience remains a critical point of differentiation in this important sector, and our programs and initiatives will help us drive further growth and energy in our business as we continue to scale.

消費者對健康的關注和意識並未消散。在最近的一項 Medifast 調查中，雖然大多數美國成年人表示他們在過去 6 個月中削減了開支，但 70% 的美國成年人表示他們不打算讓自己的健康和福祉動搖，而是計劃實施更好的生活方式來年的變化。我們對個性化轉型體驗的獨特定位仍然是這一重要領域差異化的關鍵點，我們的計劃和舉措將幫助我們在繼續擴大規模時推動業務的進一步增長和活力。

Clearly, there are near-term challenges for consumer-facing businesses as they adjust to the changing environment. At Medifast, we remain confident in our ability to navigate this shift and in the strength of our long-term growth strategy. Our coaches and customers remain deeply engaged, and satisfaction levels continue to be near all-time highs. We have a dominant position in a $7 billion weight loss industry with a model that is clearly differentiated and a plan that is clinically proven and consistently delivers positive outcomes for coaches and customers.

顯然，面向消費者的企業在適應不斷變化的環境時會面臨近期挑戰。在 Medifast，我們對自己駕馭這一轉變的能力以及我們長期增長戰略的實力充滿信心。我們的教練和客戶仍然深入參與，滿意度繼續接近歷史最高水平。我們在價值 70 億美元的減肥行業中佔據主導地位，其模式明顯差異化，計劃經臨床驗證並始終如一地為教練和客戶帶來積極成果。

Over the years, the OPTAVIA community has grown to millions of individuals working in partnership with OPTAVIA Coaches, who provide customized support and teach customers healthy habits that can lead to lifelong transformation. We continue to be well positioned for the long-term growth and remain committed to our target of 15% average annual revenue growth and 15% operating margin. Our investments in technology and infrastructure provide an efficient pathway and significant capacity for growth, as we continue to expand our international footprint as well as move into the broader $230 billion health and wellness market in the future.

多年來，OPTAVIA 社區已經發展到數百萬與 OPTAVIA 教練合作的人，他們提供定制的支持並教給客戶健康的習慣，從而實現終身轉變。我們繼續為長期增長做好準備，並繼續致力於實現 15% 的年均收入增長和 15% 的營業利潤率的目標。我們對技術和基礎設施的投資提供了一條有效的途徑和巨大的增長能力，因為我們將繼續擴大我們的國際足跡，並在未來進入更廣泛的 2300 億美元的健康和保健市場。

Medifast has a bold mission to transform lives one healthy habit at a time. We are achieving that in the field with coaches and customers, who are achieving change that they previously thought impossible. We are also helping drive change in the classroom with the healthy habits for all curriculum that is helping school children make healthy choices regardless of socioeconomic background. And we are doing it through our partnership with No Kid Hungry, which has provided up to 10 million nutritious meals to children facing hunger.

Medifast 有一個大膽的使命，即一次改變一種健康的習慣。我們正在與教練和客戶一起在現場實現這一目標，他們正在實現他們以前認為不可能的改變。我們還通過所有課程的健康習慣幫助推動課堂變革，幫助學童做出健康的選擇，無論社會經濟背景如何。我們通過與 No Kid Hungry 的合作來實現這一目標，該公司為面臨飢餓的兒童提供了多達 1000 萬份營養餐。

Our mission motivates us to continue the work we're doing every day. From profit-generating activities to corporate social responsibility initiatives, it's important work that drives us to be better every day to overcome obstacles and to work as a team to drive better outcomes for everybody, for clients to coaches, to employees, to investors.

我們的使命激勵我們繼續我們每天所做的工作。從創造利潤的活動到企業社會責任倡議，這項重要的工作促使我們每天變得更好，克服障礙，並作為一個團隊為每個人、為客戶、教練、員工和投資者帶來更好的成果。

With that, let me now turn the call over to Jim Maloney, who will walk you through the financial results. Jim?

有了這個，現在讓我把電話轉給吉姆馬洛尼，他將引導你了解財務結果。吉姆?

Thank you, Dan. Good afternoon, everyone. Revenue in the third quarter of 2022 decreased 5.6% to $390.4 million from $413.4 million in the third quarter of 2021. We ended the quarter with approximately 66,200 active earning OPTAVIA Coaches, an increase of 8.5% from the third quarter of 2021. Average revenue per active earning OPTAVIA Coach from the third quarter was $5,897, a decline of 12.9% driven by a decrease in the number of customers supported by each coach.

謝謝你，丹。大家下午好。 2022 年第三季度的收入從 2021 年第三季度的 4.134 億美元下降 5.6% 至 3.904 億美元。我們在本季度末有大約 66,200 名活躍的 OPTAVIA 教練，比 2021 年第三季度增長 8.5%。從第三季度開始，OPTAVIA Coach 的活躍收入為 5,897 美元，下降了 12.9%，原因是每個教練支持的客戶數量減少。

Gross profit for the third quarter of 2022 decreased 7.9% to $282.8 million compared to $307.1 million in the prior year period, reflecting lower coach productivity. Gross profit was 72.5% in the third quarter of 2022 versus 74.3% in the comparable prior year period. The 180 basis point decline in gross profit margin was mainly due to inflationary economic conditions that are driving higher raw ingredients, shipping and labor costs.

與去年同期的 3.071 億美元相比，2022 年第三季度的毛利潤下降 7.9% 至 2.828 億美元，反映出教練生產力下降。 2022 年第三季度的毛利潤為 72.5%，而去年同期為 74.3%。毛利率下降 180 個基點主要是由於通貨膨脹的經濟狀況導致原材料、運輸和勞動力成本上漲。

SG&A expenses for the third quarter of 2022 decreased 6.8% to $234.7 million compared to $251.9 million for the third quarter of 2021. SG&A as a percentage of revenue decreased 80 basis points year-over-year to 60.1% versus 60.9% in the third quarter of 2021.

與 2021 年第三季度的 2.519 億美元相比，2022 年第三季度的 SG&A 費用下降 6.8% 至 2.347 億美元。SG&A 佔收入的百分比同比下降 80 個基點至 60.1%，而第三季度為 60.9% 2021 年。

Non-GAAP adjusted SG&A decreased 7.3% to $233.6 million, and non-GAAP adjusted SG&A as a percentage of revenue decreased 110 basis points year-over-year to 59.8%. The decrease in non-GAAP SG&A was primarily due to lower OPTAVIA Coach compensation expense. Non-GAAP adjusted SG&A excludes expenses related to donations made to support the Ukrainian relief effort.

Non-GAAP 調整後的 SG&A 下降 7.3% 至 2.336 億美元，non-GAAP 調整後的 SG&A 佔收入的百分比同比下降 110 個基點至 59.8%。非 GAAP SG&A 的減少主要是由於 OPTAVIA Coach 補償費用減少。非公認會計原則調整後的 SG&A 不包括與支持烏克蘭救災工作的捐款有關的費用。

Income from operations decreased 12.7% compared to the prior year period or $7 million to $48.2 million primarily as a result of decreased gross profit partially offset by decreased SG&A. Income from operations as a percentage of revenue was 12.3% for the third quarter of 2022 compared to 13.3% in the same period in 2021.

與去年同期相比，運營收入下降了 12.7%，即 700 萬美元至 4820 萬美元，主要是由於毛利潤下降部分被 SG&A 下降所抵消。 2022 年第三季度的運營收入佔收入的百分比為 12.3%，而 2021 年同期為 13.3%。

Non-GAAP adjusted income from operations, which excludes the Ukrainian donation, decreased $5.9 million to $49.2 million. Non-GAAP adjusted income from operation as a percentage of revenue was 12.6%, a decrease of 70 basis points from the year ago period.

不包括烏克蘭捐贈的非公認會計原則調整後的運營收入減少了 590 萬美元至 4920 萬美元。非美國通用會計準則調整後的營業收入佔收入的百分比為 12.6%，比去年同期下降 70 個基點。

The effective tax rate was 24.5% from the third quarter of 2022 compared to 23.9% in the prior year's third quarter. The increase in the effective tax rate was primarily driven by an increase in state income taxes partially offset by increased tax benefits for donations made in the quarter and research and development tax credits. The non-GAAP effective tax rate was 24.9% as compared to 23.9% in the prior year period.

自 2022 年第三季度起，有效稅率為 24.5%，而去年第三季度為 23.9%。有效稅率的增加主要是由於州所得稅的增加部分被本季度捐贈的稅收優惠和研發稅收抵免增加所抵消。非公認會計原則有效稅率為 24.9%，而去年同期為 23.9%。

Net income in the third quarter of 2022 was $36.2 million or $3.27 per diluted share, compared to net income of $42 million or $3.56 per diluted share in the prior year's third quarter. The non-GAAP adjusted net income was $36.8 million or $3.32 per diluted share.

2022 年第三季度的淨收入為 3620 萬美元或稀釋後每股收益 3.27 美元，而去年第三季度的淨收入為 4200 萬美元或稀釋後每股收益 3.56 美元。非公認會計原則調整後的淨收入為 3680 萬美元或每股攤薄收益 3.32 美元。

Additionally, on September 8, the company's Board of Directors declared a quarterly cash dividend of $18.2 million or $1.64 per share, which is payable on November 8, 2022, to the stockholders of record as of September 20, 2022. This represents a 15.5% per share increase compared to the third quarter of the prior year.

此外，在 9 月 8 日，公司董事會宣布向截至 2022 年 9 月 20 日在冊的股東派發 1820 萬美元或每股 1.64 美元的季度現金股息，該股息將於 2022 年 11 月 8 日支付。這代表 15.5%與去年第三季度相比，每股增長。

Turning to the balance sheet and cash flows. We believe our financial position remains strong with $69.7 million in cash, cash equivalents and no interest-bearing debt as of September 30, 2022. During the 9 months ended September 30, 2022, our net cash flow from operating activities was $142.8 million, an increase of 40% from the year ago period.

轉向資產負債表和現金流。我們相信我們的財務狀況仍然強勁，截至 2022 年 9 月 30 日，我們的現金、現金等價物和無息債務為 6970 萬美元。在截至 2022 年 9 月 30 日的 9 個月中，我們的經營活動產生的淨現金流為 1.428 億美元，同比增長40%。

As cash flows have improved over the past 5 years, we have returned excess cash to stockholders in the form of dividends and stock buybacks. We've increased our dividend since 2017 by more than 240%, and the dividend yield is 5.6% as of October 31, 2022. We have additionally increased the rate of stock buybacks over the last several years, including the $100 million accelerated stock repurchase program that was completed in Q3 2022. We have continually increased the return to stockholders in the form of dividends and stock buybacks because we are confident in our long-term growth strategy.

隨著過去 5 年現金流的改善，我們以股息和股票回購的形式向股東返還了多餘的現金。自 2017 年以來，我們將股息提高了 240% 以上，截至 2022 年 10 月 31 日，股息收益率為 5.6%。過去幾年，我們還提高了股票回購率，包括 1 億美元的加速股票回購該計劃於 2022 年第三季度完成。我們不斷以股息和股票回購的形式增加對股東的回報，因為我們對我們的長期增長戰略充滿信心。

I will now turn to our guidance for the full year 2022. As Dan discussed, the macroeconomic environment has remained challenging over the past several months. And while our retention rates have returned to historical norms, there is a residual impact on new customer acquisition. We expect full year revenue in the range of $1.51 billion to $1.59 billion and diluted non-GAAP EPS to be in the range of $11.61 to $13.05. Our guidance assumes a 24% to 25% effective tax rate.

我現在將轉向我們對 2022 年全年的指導。正如丹所討論的，過去幾個月宏觀經濟環境仍然充滿挑戰。雖然我們的保留率已恢復到歷史標準，但對新客戶的獲取仍有影響。我們預計全年收入在 15.1 億美元至 15.9 億美元之間，攤薄後的非公認會計原則每股收益在 11.61 美元至 13.05 美元之間。我們的指導假設有效稅率為 24% 至 25%。

Finally, we believe that along with our 66,000 coaches, we'll be able to navigate the new business environment in the coming quarters. So we are confident in our long-term 15% growth and 15% operating income targets. With that, let me turn the call back to Dan.

最後，我們相信，與我們的 66,000 名教練一起，我們將能夠在未來幾個季度駕馭新的商業環境。因此，我們對 15% 的長期增長和 15% 的營業收入目標充滿信心。有了這個，讓我把電話轉回給丹。

Thanks, Jim. In closing, we are confident in the power of our coach-based model and the habits of health transformation system to change lives for the better. It is our unique model backed by an incredible coach community that is highly adept at engaging and nurturing relationships. We have a strong management team with a proven track record of running and scaling businesses and talented and nimble groups of employees with a passion for what we do. More than that, we have a unique, powerful business model that is scientifically proven to be effective and that is changing lives every single day.

謝謝，吉姆。最後，我們相信我們以教練為基礎的模式的力量和健康轉型系統的習慣可以讓生活變得更好。這是我們獨特的模式，由一個非常擅長參與和培養關係的令人難以置信的教練社區提供支持。我們擁有一支強大的管理團隊，在經營和擴展業務方面有著良好的記錄，以及對我們所做的工作充滿熱情的才華橫溢和靈活的員工群體。不僅如此，我們還擁有獨特而強大的商業模式，經科學證明是有效的，並且每天都在改變生活。

The core of this business is strong, and we have invested appropriately over the recent years to create a foundation that we can build on for many years to come. There's more work to be done, and we must always fine-tune our operations, processes and initiatives to reflect market conditions. The reality is that the environment today is one of constant change, and that means developing a resilient and strong business capable of succeeding whatever the circumstances. We feel confident that our initiatives and long-term strategy set us up well to deliver our growth and financial objectives for 2023 and beyond.

這項業務的核心是強大的，近年來我們進行了適當的投資，以建立一個我們可以在未來多年繼續發展的基礎。還有更多工作要做，我們必須始終微調我們的運營、流程和計劃以反映市場狀況。現實情況是，當今的環境是不斷變化的環境之一，這意味著發展一個有彈性且強大的企業，無論在何種情況下都能取得成功。我們相信，我們的舉措和長期戰略使我們能夠很好地實現 2023 年及以後的增長和財務目標。

With that, let me turn the call over to the operator for questions.

有了這個，讓我把電話轉給接線員提問。

(Operator Instructions) And our first question comes from Christina Xue with D.A. Davidson.

（操作員說明）我們的第一個問題來自 Christina Xue 和 D.A.戴維森。

This is Christina Xue on for Linda from D.A. Davidson. So firstly, we are really happy to hear that the retention rate is now back on track. A couple of questions. Firstly, do you mind commenting a little about do you expect the coaches to be up or down sequentially in the fourth quarter? I think for the third quarter, we were up quarter-over-quarter, we were down a little sequentially. So just want to get some opinions on the fourth quarter.

這是來自 D.A. 的 Christina Xue 為 Linda 主持的節目。戴維森。因此，首先，我們很高興聽到保留率現在重回正軌。幾個問題。首先，你介意評論一下你認為教練在第四節會依次上升還是下降？我認為第三季度，我們環比增長，環比下降。所以只是想得到一些關於第四季度的意見。

Yes, Christina, this is Dan. I'll give you a little bit of color around that and let Jim ask the -- answer the specific detail that you talked about or that you questioned about related to coaches. So it's important to kind of go back and understand where we've been, to kind of give some context and some rounding for where we're going. As you know, we finished 2021 strong, growing 60%. We finished our supply chain build-out initiatives, which allows us to grow into the future, and we initiated a 3.5% price increase to counter some of the inflationary pressures. So that's where we ended last year.

是的，克里斯蒂娜，這是丹。我會給你一點色彩，讓吉姆問 - 回答你談到的或你質疑的與教練有關的具體細節。因此，重要的是要回過頭來了解我們去過的地方，為我們要去的地方提供一些背景和一些四捨五入。如您所知，我們在 2021 年表現強勁，增長了 60%。我們完成了供應鏈建設計劃，這使我們能夠成長為未來，我們啟動了 3.5% 的價格上漲來應對一些通脹壓力。這就是我們去年結束的地方。

As we started 2022, we had a strong start. We focused on bringing in new clients and executed a similar program to what we had executed in 2022 -- excuse me, in 2020. And importantly, what we saw was that we were able to bring in the highest number of new customers in the history of the company, just under 0.25 million new customers came in. Equally important is that our coach productivity was the highest in company history. So those coaches, who we're acquiring, and this was during an inflationary period, we're able to do so at a high rate.

當我們開始 2022 年時，我們有一個強勁的開端。我們專注於引入新客戶，並執行了與我們在 2022 年執行的計劃類似的計劃——對不起，在 2020 年。重要的是，我們看到的是我們能夠引入歷史上最多的新客戶在公司中，有不到 25 萬新客戶進來。同樣重要的是，我們的教練生產力是公司歷史上最高的。因此，我們正在收購的那些教練，這是在通貨膨脹時期，我們能夠以很高的速度這樣做。

The challenge we brought into in the latter half of Q2, as you know, was that our client retention was disrupted. Or another way of thinking about that is our repeat rates were disrupted. So we lost approximately 15% of our active clients across all cohorts. That's true regardless of whether they joined in 2020, 2021 or more recently. And what we know is after surveying those customers is the primary reason for leaving was inflation as well as uncertainty around what the economic future was going to bring with it.

如您所知，我們在第二季度後半段遇到的挑戰是我們的客戶保留率被打亂了。或者另一種思考方式是我們的重複率被打亂了。因此，我們在所有群組中失去了大約 15% 的活躍客戶。無論他們是在 2020 年、2021 年還是最近加入，情況都是如此。我們知道，在對這些客戶進行調查後，他們離開的主要原因是通貨膨脹以及未來經濟將帶來的不確定性。

So as we entered the Q3, we executed several new programs, which I described earlier, were that supported active burning coaches of 66,000 for the quarter and also brought in a new cohort of clients. The positive thing, which you just highlighted is that client retention rates or client repeat rates have rapidly returned to historical norms. So they're back to where they were prior to Q2. What has remained, however, is client acquisition rates that still are feeling -- we still feel pressure from those, and they are roughly 85% of historical norms in Q3.

因此，當我們進入第三季度時，我們執行了我之前描述的幾個新計劃，這些計劃支持本季度 66,000 名活躍的燃燒教練，並帶來了一批新客戶。您剛才強調的積極的事情是客戶保留率或客戶重複率已迅速恢復到歷史標準。所以他們回到了第二季度之前的狀態。然而，仍然存在的是客戶獲取率仍然存在——我們仍然感受到來自這些方面的壓力，它們大約是第三季度歷史標準的 85%。

So as we think about Q4, the outlook has been adjusted to reflect that new environment. So I think an obvious question around this is what's the plan for the return to growth. So we won't provide outlook on this call. We will when we report fourth quarter earnings.

因此，當我們考慮第四季度時，前景已經調整以反映新環境。所以我認為圍繞這個問題的一個明顯問題是恢復增長的計劃是什麼。因此，我們不會就此次電話會議提供展望。我們將在報告第四季度收益時。

But we've learned a lot about how to make our new environment, our growth environment. We ran through earlier the programs we plan to put in place and the programs that we've executed in Q3 and we'll carry on through Q4. We are implementing a 4.5% price increase to offset some of the inflationary pressure. And we're also making some optimizing adjustments to our compensation plan to help keep our coaches focused on client acquisition.

但是我們已經學到了很多關於如何創造我們的新環境，我們的成長環境的知識。我們早些時候完成了我們計劃實施的計劃以及我們在第三季度執行的計劃，我們將繼續進行到第四季度。我們正在實施 4.5% 的價格上漲以抵消部分通脹壓力。我們還對我們的薪酬計劃進行了一些優化調整，以幫助我們的教練專注於客戶獲取。

As it relates to how we're guiding for Q4, Q4 is a conservative number. It assumes the macro headwinds remain constant in terms of what we've seen. We also are in a state where our coach and client tenure remains a challenge. In other words, as we would normally bring in a large cohort that would build through the year and have younger clients and younger coaches, that is not the case, which is reflected in the lower productivity per coaches.

由於它與我們如何指導第四季度有關，第四季度是一個保守的數字。它假設宏觀逆風就我們所看到的而言保持不變。我們也處於一個狀態，我們的教練和客戶任期仍然是一個挑戰。換句話說，因為我們通常會引入一個龐大的團隊，這些團隊會在一年中建立起來，並擁有年輕的客戶和年輕的教練，但事實並非如此，這反映在每位教練的生產力較低上。

If you remember, our productivity per coach revenue before is measured by revenue per active earning coach is up over 50% versus what it was in 2016. So we'll continue to see some pressure there. And as we move into the last 2 months of the year, November, December, this typically is our lowest seasonality as people are thinking about how to enjoy the holidays, which usually involves eating. And many clients choose to hold off or prospective customers or clients choose to hold off joining the OPTAVIA program until the start of the new year. So we'll continue to focus on client acquisition, but the real work and progress around client acquisition will be made in the first quarter of 2023.

如果您還記得的話，我們之前的每位教練收入的生產力是由每位活躍收入教練的收入來衡量的，與 2016 年相比增長了 50% 以上。因此，我們將繼續看到那裡的一些壓力。隨著我們進入一年中的最後兩個月，即 11 月、12 月，這通常是我們的最低季節性，因為人們正在考慮如何享受假期，這通常涉及到吃飯。許多客戶選擇推遲或潛在客戶或客戶選擇推遲加入 OPTAVIA 計劃，直到新年開始。因此，我們將繼續專注於客戶獲取，但圍繞客戶獲取的真正工作和進展將在 2023 年第一季度完成。

With that, I'll turn it back to Jim and let him ask the question -- answer the question about sequential coach growth and year-over-year coach growth.

有了這個，我將把它轉回給吉姆，讓他問這個問題——回答關於教練連續增長和教練年同比增長的問題。

Yes. So Christina, as Dan mentioned, the guidance we provided assumes the macro headwinds. And as Dan mentioned, we believe it's conservative guidance. And the good news is retention has recovered in Q3, which is really good news. However, the carryforward impact from Q2 of the retention issues left us with suboptimal coaching customer tenure that put pressure -- that will put pressure on Q4.

是的。所以克里斯蒂娜，正如丹所提到的，我們提供的指導假設了宏觀逆風。正如丹所說，我們認為這是保守的指導。好消息是第三季度的留存率已經恢復，這真是個好消息。然而，第二季度留存問題的結轉影響給我們留下了不理想的教練客戶任期，這給我們帶來了壓力——這將給第四季度帶來壓力。

So in Q3 and beginning in Q4, what we're seeing is lower-than-anticipated customer acquisition, which we expect will impact the productivity in Q4. So productivity, we're expecting to be lower, and we'll have a more modest headwind in coach count in Q4. So as Dan mentioned, the good news is we'll be heading right into January, which is the best time for client -- customer acquisition for our company, that will help with the 10-year mix with coaches and customers.

因此，在第三季度和第四季度開始，我們看到的是低於預期的客戶獲取，我們預計這將影響第四季度的生產力。因此，我們預計生產力會降低，並且我們將在第四季度的教練人數方面遇到更溫和的逆風。所以正如丹所說，好消息是我們將進入一月份，這是客戶的最佳時機——我們公司的客戶獲取，這將有助於與教練和客戶的 10 年組合。

Okay. That makes sense. So with regard to the retention rate, I think you mentioned there is going to be another round of price increase roughly starting in November, if I remember correctly. So I wonder what are your thoughts on how do you expect your clients to react on the latest price increase, would it be an issue for retention rate again?

好的。那講得通。所以關於留存率，如果我沒記錯的話，我想你提到大約從 11 月開始將會有另一輪價格上漲。所以我想知道您對您希望您的客戶對最近的價格上漲有何反應有何看法，這會再次成為保留率的問題嗎？

Yes. We approached pricing very thoughtfully and took some extra time to contemplate and actually learn from what we had seen versus last year and also through the year as we've looked at how we can optimize our acquisition offer.

是的。我們對定價進行了非常深思熟慮的處理，並花了一些額外的時間來思考和實際學習我們所看到的與去年相比的情況，以及在我們研究如何優化收購報價的這一年中。

So the 4.5% reflects what I'd describe as a modest increase that we believe will be easily absorbed by new clients. And it's being coupled with some initiatives to make our acquisition kits more easily kind of affordable for new clients. So I think a good way to think about this is the client acquisition kit and the pricing and price point is the most important base. What we have seen is once a client will see success on the program, likes the food and likes the coach, that's what ultimately drives the repeat rates or the retention rates.

因此，4.5% 反映了我所說的適度增長，我們認為新客戶很容易吸收。它與一些舉措相結合，使我們的採購套件更容易為新客戶負擔得起。所以我認為考慮這一點的一個好方法是客戶獲取工具包，定價和價格點是最重要的基礎。我們所看到的是，一旦客戶在計劃中看到成功，喜歡食物並喜歡教練，這就是最終推動重複率或保留率的因素。

So we feel confident that we can increase the -- we can execute the 4.5% across all of our consumer -- consumable products without creating a significant headwind from a pricing standpoint that will cause any further impact on client acquisition.

因此，我們有信心我們可以增加 - 我們可以在所有消費者中執行 4.5% 的消耗品，而不會從定價的角度造成重大不利因素，這將對客戶獲取造成任何進一步影響。

And I'll add, Christina, that, when you look at 2023, we have in the longer term to get to our objective of 15% operating income margin. So looking at the long term, we have more than enough margin assurance initiatives. Dan mentioned the price increase, but we also have increased our capabilities over the last 12 months in our procurement organization, which have a significant amount of cost savings opportunities that we'll start seeing in 2023, and it will continue into 2024. We also have value engineering initiatives that not only will reduce overall cost, it will also increase customer satisfaction.

我要補充一點，克里斯蒂娜，當你展望 2023 年時，我們可以從長遠來看實現 15% 的營業利潤率目標。因此，從長遠來看，我們有足夠的保證金保證計劃。 Dan 提到了價格上漲，但我們在過去 12 個月中也提高了採購組織的能力，我們將在 2023 年開始看到大量節省成本的機會，並將持續到 2024 年。我們還具有價值工程計劃，不僅可以降低總體成本，還可以提高客戶滿意度。

And then finally, we are looking at optimizing our coach compensation and G&A costs to support our growth and help us adjust in these new business norms.

最後，我們正在考慮優化我們的教練薪酬和 G&A 成本，以支持我們的增長並幫助我們適應這些新的業務規範。

Okay. So a follow-up on the price increase. Is it applicable to all customers? Or is it only applied to the new customers?

好的。於是跟進漲價。它適用於所有客戶嗎？還是只適用於新客戶？

To all customers.

給所有客戶。

Okay. Maybe last question from me. So what do you expect your clients to react? Well, actually, maybe -- and sorry, another one. Do you have -- do you possibly like have a rough idea in which quarter of 2023, we will see a positive year-over-year sales growth? Would you be able to comment on that?

好的。也許是我的最後一個問題。那麼你希望你的客戶有什麼反應呢？好吧，實際上，也許——對不起，另一個。您是否有一個粗略的想法，在 2023 年的哪個季度，我們將看到銷售額同比增長？你能對此發表評論嗎？

Yes. Go ahead.

是的。前進。

Yes. So yes, we don't really -- we're not providing guidance for 2023. And so it's difficult to answer that question. But all we really can say is we haven't gone off our long-term objectives of 15% growth in the long term on an annual basis consistently. So that's our objective as a company, and we're building out capacity and technology capabilities, and we're not slowing down with those investments because we know that our offering is well needed, as Dan mentioned about the -- that consumers still need our offerings. So even though they're adjusting their spend, health and wellness is one of the spends that we believe they're going to continue with.

是的。所以是的，我們真的沒有——我們沒有為 2023 年提供指導。所以很難回答這個問題。但我們真正能說的是，我們並沒有始終如一地實現每年 15% 的長期增長目標。所以這是我們作為一家公司的目標，我們正在建設能力和技術能力，我們並沒有放慢這些投資的步伐，因為我們知道我們的產品是非常需要的，正如 Dan 提到的 - 消費者仍然需要我們的產品。因此，即使他們正在調整支出，健康和保健也是我們相信他們將繼續進行的支出之一。

Great. Thank you for your questions and for taking time to join us today. The last 3 years has been interesting for businesses of all shapes and sizes to navigate. First, the global COVID pandemic upended many of the practices we held to be true. And now we're in a period of sustained inflation, interest rate rises and possibly a recession.

偉大的。感謝您提出問題，並感謝您今天抽出時間加入我們。過去 3 年對於各種形式和規模的企業來說都很有趣。首先，全球 COVID 大流行顛覆了我們認為正確的許多做法。現在我們正處於持續通脹、利率上升和可能出現衰退的時期。

I can say that at Medifast, we're committed to delivering shareholder value for the long term, regardless of the macro conditions. This means driving for consistent growth, not just today, but in years to come. It's our job to adjust, learn and continue to build, and that's exactly what we plan to do. Thank you, as always, for your interest in Medifast, and we look forward to speaking with you again next quarter.

我可以說，在 Medifast，無論宏觀條件如何，我們都致力於為股東創造長期價值。這意味著推動持續增長，不僅在今天，而且在未來幾年。調整、學習和繼續建設是我們的工作，而這正是我們計劃要做的。一如既往地感謝您對 Medifast 的興趣，我們期待在下個季度再次與您交談。

Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.

謝謝你。今天的電話會議到此結束。我們感謝大家出席今天的演講。您現在可以斷開線路，度過美好的一天。