Medifast Q2 2024 Earnings Call Transcript

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August 5, 2024

There are 7 speakers on the call.

Operator

And welcome to the Medifast Second Quarter 20 24 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. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Steve Zekhan, Vice President of Investor Relations.

Operator

Please go ahead.

Speaker 1

Good afternoon, and welcome to Medifast's 2nd quarter 2024 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 June 30, 2024 that went out this afternoon at approximately 4:0:5 p. M. Eastern Time.

Speaker 1

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 also be available on the company's website. Before we begin, 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.

Speaker 1

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 statements that may be made in today's release or call. And with that, I would like to turn the call over to Medifast's Chairman and Chief Executive Officer, Dan Chard.

Speaker 2

Thank you, Steve, and thank you all for joining us today. With me today is Jim Maloney, Medifast's CFO. I'm pleased to report on our business transformation progress and share our vision for Medifast in this fast moving and exciting time for our sector. Medical innovations are enabling more people than ever before to access transformative health solutions. As we have discussed in previous earnings calls, the rapid expansion in both the availability and acceptance of GLP-one medications in the United States and beyond is reshaping the weight loss landscape, which we believe presents both significant challenges and opportunities for our company.

Speaker 2

Our mission refined over the course of the last 40 years remains focused on helping individuals achieve healthier lifestyles through integrated holistic solutions. But now we, in conjunction with our incredible OPTAVIA independent coaches and in collaboration with LifeMD Telehealth Physicians, expect to be able to put healthy lifestyle transformation within the reach of more people than ever before. Industry projections indicate that as many as 20,000,000 people or more in the U. S. Could be utilizing GLP-one medications by 2,030, whether it be medications we already see in the marketplace today or from further innovations that will emerge over the coming years.

Speaker 2

Indeed, research we have commissioned with BCG finds that the support market for this population could reach $50,000,000,000 per year or more by the year 2,030, vastly exceeding the $8,000,000,000 structured weight loss market we previously targeted. Nutrition products make up over half of this GLP-one support market, and it is interesting to note that a recent national survey commissioned by Capital Coefficient showed that approximately 90% of GLP-one users showed interest in food specifically created for GLP-one patients. Put simply, as a result of this shift, we are positioning Medifast to address a market is projected to be more than 6x larger than that where we previously operated. This strategic pivot not only broadens our addressable market, but also draws upon our expertise in lifestyle modification, which has always been central to our approach. A focus on medically supported weight loss is a natural extension of our core competencies, allowing us to provide what we believe is an even more robust solution and support system for our customers.

Speaker 2

We will position ourselves effectively against competitors in this evolving market structure by leveraging our capabilities in science based product development and clinically proven plans. We are enhancing our product offerings, expanding customer acquisition channels and elevating the customer experience to drive engagement and retention, all to enable us to take advantage of the potential opportunities that lie ahead. We are focusing on initiating 2 incremental channels for growth, company led advertising to drive brand awareness and customer acquisition, and we're also testing a new channel approach through our collaboration with LifeMD to support their patients who are seeking lifestyle support beyond medication. We believe our new comprehensive solution provides us with a differentiated position in the marketplace, providing a more inclusive approach that encompasses nutrition support, dedicated coaching, community engagement and through our collaboration with LifeMD, access to medications and clinical support where appropriate. Our mission of helping customers achieve healthier lifestyle remains unchanged and as we are evolving to provide the necessary tools and resources to meet their needs.

Speaker 2

This approach ensures that our customers receive the best possible care and support regardless of where they are in their health journey and makes it easier for customers to make lasting lifestyle changes, whether they are utilizing medication, transitioning off medications or pursuing traditional weight loss methods. Turning to our 2nd quarter results. Revenues came in within our guidance range at $169,000,000 We continue to face macroeconomic challenges, including increased competition in the health and wellness space, including the expansion and disruptive effect of GLP-one regimens adoption and a broad slowdown in consumer spending. While we do not expect these pressures to ease in the short term, we anticipate that our initiatives will begin to positively impact our top line late this year and as we move into 2025. These initiatives include strategic investments in marketing and product development that are essential to driving long term growth.

Speaker 2

Although these investments will negatively impact our EPS in the near term, we believe that they are critical to positioning Medifast for the long term success. These investments are supported by our strong balance sheet, which provides the financial flexibility needed to execute our strategy effectively. We're not only making use of our strong balance sheet, but also our strong historical understanding of the market and how to compete effectively in the changing landscape. The new products and plans we are developing are targeted for individuals on GLP-one medications as well as those who are looking to transition off GLP-one medications, whether because they have reached their weight loss goal, have plateaued in their weight loss or no longer have GLP-one insurance coverage. These products and plans are also designed to help customers maintain their weight loss and overall health and wellness as they work with an OPTAVIA Coach to learn healthy habits that make a healthy lifestyle second nature.

Speaker 2

In May, we introduced a new product and service offer, which included a GLP-one nutrition support kit, a dedicated independent OPTAVIA coach, and access to clinician support through LifeMD. This package is priced at $2.82 per month for a 6 month commitment, plus the cost of medications. This represents our 1st bundled solution for this demographic. We're also developing additional targeted products designed to help minimize the side effects of weight loss medications, provide appropriate nutrition and aid in lean muscle mass retention. All this targets those groups that are looking to GLP-one medications as part of their efforts to improve their overall health and wellness.

Speaker 2

These new products, which we expect to launch by year end, will feature more protein, fiber and calcium. They will be available in various forms, including bars and shakes with an enhanced flavor profile to appeal to customers who are using GLP-one medications. We also anticipate introducing vitamin and mineral supplements around the end of this year. These new offerings will be integrated into the comprehensive plans supported by personalized coaching and community engagement. Later in 2025 and into 2026, we anticipate releasing additional products, which extend beyond our current offer and tap into additional ways to improve one's health and wellness, including targeting categories in which we do not currently have products.

Speaker 2

The company led marketing efforts, which I mentioned earlier, are ramping up in the Q3 with the aim of building brand awareness and highlighting our new GLP-one support solutions. We conducted a series of advertising pilots over the last to refine our strategies and optimize our future efforts. Our advertising is planned to span various platforms, including social media, Internet search, digital display, connected TV and radio. As the campaign kicks into full gear, we'll launch earned PR and influencer campaigns along with online video to further support awareness and demand generation. We are targeting 3 key audiences: those curious about GLP-one medications current GLP-one users seeking support as they use or transition away from the medications and individuals aiming for a healthy lifestyle without using weight loss medications.

Speaker 2

In total, we spent $4,600,000 on these company led marketing activities in the 2nd quarter. Year to date, that number is $9,700,000 We expect that our focus will drive customer acquisition and engagement. Our goal is to create a seamless experience for our customers from initial interest to long term relationship. We are committed to building on this progress, delivering a highly personalized solution for customers at various stages in their weight loss journeys. By creating digital ecosystems that utilize dashboards and tracking methods, we enable better monitoring of individual progress.

Speaker 2

This information will be accessible to customers and coaches fostering greater engagement and longer customer retention. Enhanced tools for coaches will provide deeper insights into their customer base, allowing them to offer more personalized support. Our efforts to enhance the customer experience are driven by our belief that personalized support is the key to helping customers achieve long term success. By integrating digital tools and personalized coaching, we can provide our customers with the support they need to achieve their health and wellness goals. We believe that this approach will not only improve customer satisfaction, but also will drive higher engagement and retention rates, ultimately contributing to our long term growth.

Speaker 2

So to summarize, we are making significant strides in our business transformation. Based on a survey we conducted, we estimate that approximately 10,000 or 1 third of our active coaches are now supporting at least one client using GLP-one medications, reflecting our continued learning in this market. Our product and plan development shows continued progress with new offerings set to launch around year end, And we expect to make significant enhancements to the customer experience as we move through the rest of the year, which we believe will make it easier for customers to sign up for our integrated solutions and will result in them staying longer with our programs. The weight loss market is undergoing significant transformation, presenting substantial opportunities. There is work to be done, and we must be agile to ensure that we shift and adapt to meet the needs of a market that is rapidly changing.

Speaker 2

However, Medifast's holistic approach combining customers, coaches and clinicians through LifeMD positions us uniquely to support GLP-1 users in achieving their long term health goals. With our financial strength, strategic flexibility and expertise, we believe we are well equipped to capitalize on these opportunities. I'm confident in our team's ability to execute our strategy and drive growth in this rapidly evolving space. Thank you for joining us this afternoon. Now I'll turn it over to Jim to review the quarterly financial details.

Speaker 3

Thank you, Dan. Good afternoon, everyone. As Dan mentioned, Q2 2024 revenue was at the upper end of our guidance range as we continue to make progress on our business transformation initiatives. Revenue for the quarter was 168 point $6,000,000 a decrease of 43.1 percent versus the year earlier period, primarily driven by a decline in the number of active earning OPTAVIA Coaches and lower productivity per active earning OPTAVIA Coach, customer acquisition continues to be impacted by competition from GLP-one medications and consumer spending patterns. We ended the quarter with approximately 33,900 active earning OPTAVIA Coaches, a decrease of 36.2% from the Q2 of 2023.

Speaker 3

Average revenue per active earning OPTAVIA Coach for the 2nd quarter was $4,972 a year over year decline of 10.9%, reflecting the continued headwinds to customer acquisition. Gross profit decreased 41.4 percent year over year to $123,400,000 driven by lower revenue. Gross profit margin improved 210 basis points to 73.2 percent, positively impacted by cost savings from our Fuel for the Future initiatives and efficiencies in inventory management. On a non GAAP adjusted basis, which excludes the one time expenses in connection with the company's restructuring of external manufacturing agreements, gross profit decreased 40.2% to $126,000,000 Non GAAP adjusted gross profit margin was 74.8%, an increase of 370 basis points from the year ago period. SG and A expense was down 23.7% year over year to $131,300,000 primarily reflecting lower compensation expense due to lower volumes and fewer active earning coaches.

Speaker 3

SG and A as a percentage of revenue increased 1980 basis points to 77.9 percent, primarily as a result of the loss of leverage of fixed costs due to lower sales volumes and supply chain optimization costs. We also incurred costs during the quarter to support our business transformation initiatives, which include market research and investment costs related to medically supported weight loss, cost to exit hotel commitments for our annual OPTAVIA convention in future years, reflecting a change in strategy and cost for our company led acquisition initiatives. On a non GAAP adjusted basis, which excludes expenses related to the company's supply chain optimization cost, cost to exit hotel commitments for our annual OPTAVIA convention in future years and cost for the collaboration with LifeMD, SG and A decreased 33.8 percent to $113,800,000 and moved 9.40 basis points higher as a percent of revenue to 67.5%. Loss from operations was $7,900,000 in the Q2 of 2024 versus a gain of $38,700,000 in the prior period, driven by lower gross profit, partially offset by lower SG and A. As a percentage of revenue, loss from operations was 4.7% in the 2nd quarter, a decrease of 1780 basis points versus the year earlier period.

Speaker 3

On a non GAAP adjusted basis, which excludes the adjustments described previously, income from operations decreased 68.4 percent to $12,200,000 as a percentage of revenue. Non GAAP adjusted income from operations was 7.3%, a decrease of 580 basis points from the year ago period. The effective tax rate of 23.4 percent was higher than the 22.6% recorded in the prior year's 2nd quarter due to the net loss position in 2024 and the corresponding rate impact from research and development tax credits, partially offset by the rate impact from the limitation for executive compensation. On a non GAAP adjusted basis, the effective tax rate in the Q1 was 26.2%. Net loss in the Q2 of 2024 was $8,200,000 or $0.75 per diluted share compared to net income of $30,300,000 or $2.77 per diluted share in the year earlier period.

Speaker 3

On a non GAAP adjusted basis, net income in the Q2 of 2024 was $10,100,000 or $0.92 per diluted share. Turning to our balance sheet. We ended the quarter with $163,500,000 in cash, cash equivalents and investments in no interest bearing debt. This is up from $150,000,000 as of December 31, 2023. Now I'll turn to our guidance.

Speaker 3

We are expecting 3rd quarter revenue to range from $125,000,000 to $145,000,000 reflecting a continued decrease in the number of active earning OPTAVIA Coaches as a result of near term challenges to customer acquisition due to growing acceptance of GLP-one medications in the marketplace. We expect our loss per share for the quarter to range from $0.05 to $0.70 The guidance includes expectations of spending $9,000,000 during the quarter on company led marketing and another $4,000,000 on our Coach convention. However, it excludes the cost related to the initiation of our LifeMD collaboration and any gains and losses from changes in the market price of our LifeMD common stock holding, which we are unable to estimate. I do want to note that while we initially expected to spend around $30,000,000 on marketing this year, we now expect that the number to be approximately $25,000,000 We have made a conscious decision to better align our spending with the availability of the full complement of our new offer, which includes the new products enhanced customer experience that we expect will be ready for the start of resolution season at the beginning of 2025. In summary, we believe that our strong balance sheet will allow us to weather the current market conditions, while making the strategic investments necessary to execute our business transformation, while maintaining a strong financial position.

Speaker 3

And that transformation of our business is the most effective way to provide lasting value for the company and stockholders. With that, let me turn the call to the operator for questions.

Operator

Thank you. We will now be conducting a question and answer session. Our first question comes from Jim Celera with Stephens. Please go ahead.

Speaker 4

Hi, guys. Good afternoon. Dan, I believe in your prepared remarks you mentioned that about a third of the coaches have someone that they're currently working with that's on GLP-one drugs. Can you give us some insight into how many of those customers started using GLP-one through the LifeMD partnership or just they did it on their own and they just happen to also have an OPTAVIA Coach?

Speaker 2

Yes, Jim, it's a mix. And there are a number of reasons that we think it's a mix. A part of it has to do with some of them were already consulting with their own physicians, so they stuck with their primary care physician. The other part of it is that we're just starting on integrating the full solution. So, but we see that as an encouraging sign, as you pointed out with 1 I mean that's reflective of our training.

Speaker 2

We have about 90% of our coach leaders now, who have gone through the training for mentally supported weight loss. So we're starting to see that have an impact on the ability to bring in new clients who are on GLP-one. We also have about 17% of our total active earning coaches who have now been trained. So we believe that training will have a positive impact on that number. The other big thing that we touched on in the prepared remarks relate to the product focus that we have.

Speaker 2

I think there's one of the statistics we shared for the first time was related to a third party study that continues to it's an area that continues to come up and reinforce this area of GLP-one support, which is that 90% of GLP-one users indicate they're interested in food specifically formulated for people who are on GLP-one drugs. And that is also kind of reinforces the other part of what we're looking at for the support market, which is that with our own research 80% of those who are open to medically supported weight loss medications are also interested in this combined offer that we are putting forward. So we think that this launch of the gap filler in that sense of this nutrition support kit, which sells for about $2.82 and offers coaching, food and 6 months of clinician support is an important part of our new product offer. And we're starting to see that become a more significant part of our sales, particularly in the months of May sequential improvement in between May June. And this we also just sell our convention and we announced and actually sampled a new product line, which is as a brand of Ascend, which is a line that was specifically formulated for people on GLP-one drug.

Speaker 2

So the other the current nutrition support product was a bundle of our current products. This new one is completely reformulated. The last thing, I think, just rounding out this question of why we think this number of active earning coaches who are supporting GLP-one clients will continue to increase as we're continuing to improve the integration between our technology, LifeMD's technology, making it easier for our coaches to support their clients with this clinician supported model in collaboration with LifeMD. And we also, as pointed out, are activating not only our own company led acquisition spending, but also testing in collaboration with LifeMD, how we might support their patients with our combined offer. So we feel like we're still very much at the beginning of the transformation.

Speaker 2

But as we add more components to support our transformation, we're starting to see the impact, although it's going to take some time for the impact to translate into real impact on the top line as we kind of restructure and recreate what we were very successful in doing in the past most of the past 8 years, which is having that flywheel that brings in new clients who a portion of whom convert to coaches and who are able to bring in more new clients. So we're feel good about where we are in the transformation, but feel a real, I'll say, urgency to start seeing that new client number improve so that we can see top line improvement, which we anticipate will be largely part of next year's results. I

Speaker 4

appreciate all the detail. Maybe one other thing to drill in on. As you start to ramp the company supported marketing, you talked about new products, ready to drink shakes or I took it as ready to drink shakes, maybe if not, please feel free to correct me, as well as the bars. Is that something that if the customer comes to that driven by the advertisements that are company led, is there going to be a way for them to order it just direct online without any interaction with a coach? Or is it still going to require them having a relationship with a coach in order to get the product?

Speaker 2

Yes. So the shakes are not rated ring. The shakes are in a powder form to answer that first question. And we sell the products, but these are really part of programs And the program and we changed to this several years ago, we found that there's far more success for each of these clients to for these customers in terms of achieving their ultimate goals if they are tied in with a coach and the community and understand that the habits of health. So yes, I mean, it's possible for somebody to kind of continue on their own, but they're always assigned a coach, so that they can have that support if they need it.

Speaker 2

But that it's a little bit of self-service support, if you will. So yes, they can get it, and through the website and but they will be assigned to Coach at the same time. Got it.

Speaker 4

Okay. Appreciate all the detail. I'll hop back in the queue. All right. Thanks, Jim.

Operator

Next question, Linda Bolton Weiser with D. A. Davidson. Please go ahead.

Speaker 2

Linda, if you're speaking, we can't hear you.

Speaker 5

Hi. Can you hear me now?

Speaker 2

Yes, we can.

Speaker 5

Okay. Sorry about that. So if your coaches if the main problem they're having in acquiring new clients is that the GLP-one drug is kind of a threat, Why the question went out of my head. Oh, I know what I was going to ask. Can you comment on whether the new client acquisition improved from May to June?

Speaker 5

Because you started offering the kit in May. So it seems that if the main threat is the GLP-one drugs, the solution was offered starting in May. So it seems like it would have an immediate effect on improving the number of new clients. So was there a sequential increase in new clients from May to June?

Speaker 3

Yes. So we don't really give detail regarding clients inter quarter. But what I can tell you Linda is that our as a percent of our business for new clients and reactivated clients, we did see a significant increase of orders as a percent of new clients and reactivated from May to June. So it was a very small percent in the month of May that we were seeing those orders. It did increase dramatically in June, but I would still say it's still a small part of our business.

Speaker 3

We're hopeful that we see that continue into Q3. And then as Dan mentioned in the prepared remarks that we're launching new products within that line later on this year. So we're hopeful that we'll keep increasing as a percent of our business and become much more meaningful as we move into 2025.

Speaker 5

Okay. So I guess I'm confused, maybe we can talk offline. But so the revenue from new clients increased sequentially from May to June, but the number of new clients did not? I'm confused how that would happen.

Speaker 3

No. So no, as a percent of our business, the orders that we were receiving from customers that actually increased. Those people were ordering more of the kit that was associated with the GLP-one versus our old 5 in-one program or any other program that we had. So it just that portion of our business grew in June versus May. Doesn't mean the entire business grew in June though.

Speaker 3

So we're seeing that movement as we move through this transformation.

Speaker 2

So a high level way to look at it, Linda, is we have a higher number of our coaches. Who are supporting those on GLP-one drug. So that's the third of our coaches roughly who are supporting at least one client on GLP-one drug. And an increasing portion of those clients who are coming in are ordering the nutrition support GLP-one nutrition support product kit. And we anticipate that as we continue to train that that proportion of our client base will continue to increase.

Speaker 2

But there's still a lot of noise out there. So even though we see our coaches and our client community kind of making progress in the sense that we're bringing in a more, I'll say diverse mix that includes more GLP-1 clients, we are still facing those headwinds that are a result no longer of not being able to offer, but also of a very competitive marketplace where a lot of people are offering. I think another interesting statistic that kind of well, it's stated more as a qualitative measure is that we are seeing more of these clients that we're talking about as well who are transitioning off GLP-one products and who are interested in using our program for maintenance. So you can read about some of that obviously in the news, but we're starting to see those clients who feel like they've achieved their weight, but they didn't learn kind of the lifestyle component who are coming to our coaches to make sure they don't achieve the weight gain. So that's I think going to be a meaningful target and segment for the long term.

Speaker 5

Okay. And then, sorry again if you said this and I didn't understand, but you said a third of your coaches have at least one patient using a GLP-one drug. Can you say how many or what percentage of your coaches had a client get the prescription through LifeMD?

Speaker 2

I mentioned that earlier. So we have a mix right now. And what we've seen in these early stages is that quite a few of our customers that are working through coaches are going directly through their primary care physician because that's where they started their conversations. So increasingly, as we kind of integrate the offer more completely, we're seeing more of those go to LifeMD. So we saw improvements in those numbers, but I think we're still at the very early stages of creating the integration and also helping them understand how to use LifeMD if they already have a primary care physician.

Speaker 2

But we feel like we're making progress there. But right now, it's very much a

Speaker 5

mix. Okay. And then, I guess, if you talk about you gave your numbers for advertising spend and it does point to a smaller amount in Q4 than in Q3. I guess that would make sense based on the seasonality of the business. Is that the main reason there would be a sequential reduction?

Speaker 5

Because I mean you're trying to really make a dent here and get some attention in a very crowded market. So I'm wondering like are you thinking that during seasonal high points, this $10,000,000 per quarter is what you're going to be spending? Or and also related to that, can you comment on Weight Watchers said the CAC has become just inordinately high, given the election and the Olympics and everything going on in the weight loss space. So is your LTV to CAC coming out different than what you thought when you put together the plan for advertising? Has that projection changed at all?

Speaker 3

Yes. Let me see if I can address those questions. So in the prepared remarks, we mentioned that we're going to reduce our marketing spend from $30,000,000 to $25,000,000 That does have some to do with the seasonality. We do want to continue to invest in this year at a higher degree than we did in Q1 and in Q2, because we want to make sure that we're spending enough to get additional brand awareness as we move into 2025 because as you know Linda that the brand itself, the awareness has been done through coaches and not through advertising in the past. So, we believe we need to continue to invest at a good rate.

Speaker 3

But those that's why we're considering the second half of twenty twenty four to be an investment period of time. So, as we go into 2020 5, we're hopeful that that investment will pay off in those periods plus pulling back a little bit on the spend and we would spend that money in 2025 in better periods like you just said. The things like the Olympics and the election, those do make it more difficult to spend the dollars when there's a lot of noise out there in social media and other means.

Speaker 2

So

Speaker 3

we're relatively we're obviously much newer at advertising. I would say that on the CAC question, we're seeing that the CAC

Speaker 2

is relatively

Speaker 3

what we expected, but we need to hit a target that is lower and we're looking to do that as we move through 2024. So we realize that this is going to take us some time and that's why we're willing to invest and learn in what that right message is to get to the amount of customers or potential customers that lower that CAC.

Speaker 5

Okay. Can I also ask, I mean according to my model and this is not your guidance of course, but I've got like $25,000,000 of free cash flow for the year, significantly down? Are you pretty committed to maintaining you've got cash on your balance sheet, so you've got an ability to invest in the business, meaning negative free cash flow. Are you pretty committed to keeping free cash flow positive? Or do you think that you could just take some time here and invest heavily in the next year or 2?

Speaker 3

Yes. So we don't we're as you articulated, we do have a strong balance sheet. We do want to continue having that strong balance sheet. Once we have more learnings on our advertising spend, we are expecting to accelerate that, but we won't do that unless the investment is right for the shareholders. So we're looking at the CAC also and we're looking at LTV and we're making those calls based on the return on investment.

Speaker 3

So I know that's a I'm not really directly answering your question, but we do again, we want to keep a strong balance sheet. We will increase the amount of spending once we know there is a good return to shareholders.

Speaker 5

Okay. Yes, that's helpful. Let's see what else was I I I will take the rest offline. Thank you.

Speaker 4

Thanks Linda. Thanks.

Operator

Next question comes from David Larsen with BTIG. Please go ahead.

Speaker 6

Hi. Can you talk about your relationship with LifeMD and the go forward model? Like how much will you be charging for a bundled solution? What does that bundled solution look like? And how much of the money goes to you?

Speaker 6

How much goes to LifeMD? And what sort of uptake do you expect in terms of members going to your platform and LifeMD's platform at a steady stage? Any more color there would be very helpful. Thank you.

Speaker 3

I mean, currently, the way we're working together, and we're obviously just at the start of this. If you look at the combined offer, we're charging together $2.82 $65 is for the a 6 month commitment that LifeMD subscription and our GLP-one kit is $2.17 So that's how you get to the $2.82 That does not include the medication, but we're going to work through this. We don't really have any more to communicate on pricing, but we're going to work through this over the coming months and coming quarters to make sure that we're highlighting the value that we bring as an offer. When you think about it, we have a lot of elements that consumers are looking for when you consider someone that's going on medication to become more healthy. So we have pretty much all the elements that you would want as a patient or a customer.

Speaker 6

It certainly makes a lot of sense to me. You have a GLP-one, you have the diet coaching piece as well. How are your top performing coaches responding to the relationship with LifeMD? Like I guess, if you take these GLP-1s, maybe you're not as hungry, so you order less food. How convinced are they that you'll make more money with LifeMD?

Speaker 2

Thanks. Yes. I'd say there's a growing confidence in LifeMD. LifeMD is a has over the years built a great service with their primary care physicians. We actually now for the 2nd year in a row have had a LifeMD physician come and present and run a panel for our coaches most recently 2 weeks ago at our OPTAVIA convention.

Speaker 2

So the confidence is growing and part of the growth in that confidence comes from their physicians being trained specifically on what the OPTAVIA program is. Part of the confidence comes from the improvement in the technology integration, which means that there are customers and our coaches customers have a much better experience. So for example, it's not the ability to check eligibility to schedule time with a clinician and to order products is all now integrated into the OPTAVIA app. And so the more integrated into the overall solution it is, the greater, the confidence becomes. I think so I think where we believe we would be at this stage, but we also expect to see improvements in that as we continue to integrate the service between the two companies.

Speaker 6

Okay. Great. Thanks very much. Appreciate it.

Operator

Thank you. I would like to turn the floor over to Dan for closing remarks.

Speaker 2

I'd like to thank everybody for joining us today and we look forward to seeing many of you at the Canaccord Genuity Growth Conference next week and then at the Wells Fargo Consumer Conference in September. Thank you for joining.

Operator

This concludes today's teleconference. You may disconnect your lines at this time. And thank you for your participation.

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