While the recruitment of coaches is an important aspect for Medifast, as they serve as sales agents and help keep advertising costs low, the company asserts that its growth is not reliant on recruiting many distributors and burdening them with inventory for sale. The focus on recruitment can raise concerns over potential pyramid schemes. Scrutiny of the MLM model often centers around whether a company prioritizes recruitment over product sales. In contrast, customers purchase products directly from Optavia's website, with coaches serving to support the client.įigure 1 (MED Q1 2022 investor presentation) Such practices often lead to predatory behavior among associates. For instance, Optavia coaches do not purchase or hold inventory, receive discounts, or set prices on products, which are all common controversial practices in typical MLM models. Later down the road, successful clients are offered the chance to join on as a coach.ĭespite being categorized as a multi-level marketing (MLM) firm, Medifast upholds better practices compared to many other MLM companies (refer to Figure 1). Having someone to hold clients accountable increases a client’s probability of success. As a result, coaches can share their personal success stories with their clients, and this energy assists with keeping the client motivated, which is a significant chunk of the battle when losing weight. Many are passionate about Optavia, as more than 90% of active coaches have been in their clients’ shoes and used the meal kits themselves. Coaches earn a standard commission of 15%, but their commission can increase up to 31% based on factors such as ongoing education with Optavia and sales volume. Their compensation is primarily tied to client purchases made directly through the Optavia website. Department of Agriculture.įor the majority of Optavia coaches, their role serves to supplement their income. With prices ranging from $395 to $442 per month, Medifast's kits are affordable compared to the estimated monthly food plan expenditure of the average one-person adult household, which falls within the $300 to $420 range according to the U.S. Each kit provides a month's supply of lean protein, low-carb meals, and snacks. Optavia’s products include plans for weight loss, weight maintenance, and plans for people with medical conditions, such as diabetes. These meal plans are customizable, allowing customers to personalize their selections. The efficacy of their products lies in the simple principle of creating a caloric deficit through portion control, helping customers consume fewer calories than they burn. Scientifically speaking, their products work, and there is nothing groundbreaking about them. Through the use of coaches as sales representatives, Medifast sells directly to consumers an interchangeable range of meal replacement plans, kits, and products with the aim of helping customers lose weight. To date, the Optavia network has more than 58,000 coaches, and it has helped more than 2 million customers. The goal with the Optavia platform is to change the lifestyle of those who are overweight by developing small and healthy micro-habits, such as dieting, better sleep, proper hydration, etc. ( NYSE: MED ) is a MLM health and wellness company behind the growing coach-driven community known as Optavia. This is where Optavia steps into the picture. In the U.S., more than 2 in 5 adults are classified as obese, and nearly 76% of adults are overweight. Not only is the widespread epidemic a major problem for the health and finances of obese individuals, but it is also a $173 billion financial strain on the U.S. Moreover, obesity takes a toll on mental health, contributing to depression, anxiety, and low self-esteem. It places a burden on vital organs and leads to reduced mobility, resulting in a diminished quality of life. Physically, obesity significantly increases the likelihood of developing chronic conditions such as cardiovascular disease, diabetes, cancers, and disorders. Obesity poses a range of dangerous health risks, both physical and psychological. Dobrila Vignjevic OVERVIEW OF THE BUSINESS
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