# Medifast Inc: Form 10-Q for the period ended Mar 31, 2025

- Company: [Medifast Inc](/companies/med.md) (CIK 910329)
- Form: 10-Q
- Filed: 2025-04-28
- Accepted by EDGAR: Apr 28, 2025, 16:50 ET
- Period: 2025-03-31
- Accession: 0001628280-25-020341
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/910329/000162828025020341/med-20250331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/910329/000162828025020341/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-01-01 to 2025-03-31 | $115.7m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2025-01-01 to 2025-03-31 | $31.5m | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2025-01-01 to 2025-03-31 | $84.2m | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2025-01-01 to 2025-03-31 | $85.5m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2025-01-01 to 2025-03-31 | −$1.3m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2025-01-01 to 2025-03-31 | $1.3m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-01-01 to 2025-03-31 | −$772.0k | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-01-01 to 2025-03-31 | −$0.07 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-01-01 to 2025-03-31 | −$0.07 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-01-01 to 2025-03-31 | 10,948,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2025-01-01 to 2025-03-31 | $3.4m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2025-01-01 to 2025-03-31 | $1.5m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 3 months, 2025-01-01 to 2025-03-31 | $194.0k | us-gaap:PaymentsOfDividends |
| Cash and equivalents | at 2025-03-31 | $91.7m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-03-31 | $213.5m | us-gaap:AssetsCurrent |
| Total assets | at 2025-03-31 | $280.0m | us-gaap:Assets |
| Current liabilities | at 2025-03-31 | $60.6m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-03-31 | $69.1m | us-gaap:Liabilities |
| Shareholders' equity | at 2025-03-31 | $211.0m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 28,648 characters.

### Note Regarding Forward-Looking Statements

Certain information in this report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Act”). Forward-looking statements generally can be identified by use of phrases or terminology such as “intend,” “anticipate,” “expect” or other similar words or the negative of such terminology. Similarly, descriptions of Medifast's objectives, strategies, plans, goals, or targets contained herein are also considered forward-looking statements. These statements are based on the current expectations of our management and are subject to certain events, risks, uncertainties, and other factors. These risks and uncertainties include, but are not limited to, those described in our 2024 Form 10-K and those described from time to time in our future reports filed with the SEC. Although Medifast believes that the expectations, statements, and assumptions reflected in these forward-looking statements are reasonable, it cautions readers to always consider all of the risk factors and any other cautionary statements carefully in evaluating each forward-looking statement in this report. All of the forward-looking statements contained herein speak only as of the date of this report. We undertake no obligation to update any information contained in this report or to publicly release the results of any revisions to forward-looking statements to reflect events or circumstances of which we may become aware after the date of this report.

The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and related notes appearing elsewhere herein.

### Overview

Medifast is the health and wellness company known for its habit-based and coach-guided lifestyle solution, **OPTA**VIA®. The Company is currently executing a comprehensive business transformation that will enable it to succeed in an environment that has been fundamentally impacted by rapid acceptance of GLP-11 weight loss medications.

We believe that we are a well-capitalized business with strong and effective leadership that has grown its lifestyle brand, **OPTA**VIA, into a significant health and wellness brand. We have a powerful business model, building a network of approximately 25,400 active earning **OPTA**VIA coaches and impacting more than 3 million lives. Backed by more than 40 years of experience, clinically proven plans, innovative products, and a powerful integrated coach model, Medifast stands at the forefront of evidence-based wellness solutions. Our business model is differentiated and unique, a scalable coach-based approach that drives both program effectiveness and company growth. With access to clinicians through our collaboration with LifeMD, Inc. (Nasdaq: LFMD) (“LifeMD”), we provide our customers access to GLP-1 weight loss medications, when clinically appropriate.

Medifast offers a simple, yet comprehensive approach to achieving optimal health and wellbeing. Our lifestyle program, **OPTA**VIA, empowers people to make lasting changes. Through the support of our independent **OPTA**VIA coaches, about 90% of whom were customers first, our customers are guided through every step of their wellness journey.

**OPTA**VIA's lifestyle plans deliver proven health benefits as well as evidence-based tools, including scientifically developed products and a framework for habit creation reinforced by independent coaches and community support. We continue to innovate and build upon our scientific and clinical heritage to fulfill our mission of offering Lifelong Transformation, Making a Healthy Lifestyle Second Nature™.

**OPTA**VIA coaches are people who are navigating weight loss at different moments in life, providing unparalleled coaching support along with community, nutrition, and healthy habits. In a world where health and wellbeing are often a difficult and solitary journey, **OPTA**VIA provides intensely personalized support to people who want to transform their health. We believe this holistic approach empowers people to master their weight loss journey through each stage of life and gives them the freedom to do it on their terms. The lifestyle solution is designed for real life and built around four key components:

- **Independent OPTA**VIA **Coaches:** Independent **OPTA**VIA coaches provide individualized support and guidance to customers on the path to optimal health and wellbeing.
- **OPTA**VIA **Community:** A Community of like-minded people provide real-time connection and support.
- **The Habits of Health® Transformational System:** A proprietary system that offers easy steps to a sustainable healthy lifestyle.
- **Products & Plans:** Clinically proven plans and scientifically developed products, backed by dietitians, scientists, and physicians.

To ensure that Medifast continues to thrive as a health and wellness business in the rapidly evolving weight-loss market, we have developed distinct coach-supported program offerings tailored to meet the unique needs of three specific customer categories on their health and wellness journeys:

1\. Those who have never used medications and want to use coach-supported habit-based programs as the core of their weight loss journey;

2\. Individuals using GLP-1 medications as a core element of their weight loss program; and

3\. People looking to manage weight loss and improved health when they come off GLP-1 medications for whatever reason, including cost, side effects, or any other cause.

For each of these customer categories, we are taking an intentional and methodical approach to building out our offerings to ensure that we can provide compelling products and services to new, former, and current coaches and clients, regardless of where they are on their personal health and wellness journeys.

Usage of GLP-1 medications continue to accelerate, with research commissioned by Medifast suggesting that the GLP-1 support market alone could be worth $50 billion or more by 2030.2 Additionally, recent research showed that about one-third of users qui

1 Medical advice, treatment, prescriptions, and the overall practice of medicine must be provided by a licensed healthcare professional. **OPTA**VIA and its coaches do not engage in or provide any medical services.

2 Based on research commissioned by Medifast utilizing publicly available expectations of the number of GLP-1 users and internal spend per customer.

t taking the medication after six months, and that this can rise to as much as 74% after a year.3 Furthermore, research also shows that two-thirds of weight lost on GLP-1 medications is typically regained within 12 months of stopping treatment, with cardiometabolic benefits often reversing as well.4

For audiences looking for a GLP-1 based solution, we have built a collaboration with national virtual primary care provider, LifeMD. Eligible **OPTA**VIA customers have access to board-certified affiliated clinicians and medications, where appropriate, such as GLP-1 medications, that support treatment plans for obesity. With the medications having been shown to be highly effective in conjunction with lifestyle changes, we believe there is strong compatibility with our experience of helping people achieve change through habit-based systems.

Finding new customers and reactivating former customers who do not wish to use medications remains an important area of focus for our business. Our **OPTA**VIA Fuelings and **OPTA**VIA ACTIVE® products address the needs of these customers. We also continue to work on enhancing our digital tools and improving the customer experience to help us achieve our goals. We believe our coach-based model is scalable and drives both customer success and growth, and we continue to work diligently to deliver growth and competitive advantage.

Regardless of need state, our integrated coach-supported, lifestyle-based approach helps customers achieve their health goals. **OPTA**VIA coaches, about 90% of whom were customers first, introduce customers to a set of healthy habits, in most cases starting with the habit of healthy eating, and offer exclusive **OPTA**VIA-branded products. **OPTA**VIA products and plans are one component that support the Company’s mission, and our portfolio of products help make it easier for customers to create healthy habits in their lives.

In December 2024, Medifast introduced two science-backed nutrition plans designed specifically for people on GLP-1 medications and people seeking weight management: the GLP-1 Nutrition Support Plan and the Optimization Plan. Both plans feature **OPTA**VIA ASCEND, a new product offering of high-protein, fiber-rich mini meals as well as a daily nutrient pack. The mini meals support muscle, digestive health and long-term wellness, filling a critical gap in the weight management market.

In all cases, the **OPTA**VIA coaching model is heavily focused on the needs of the customer and helps put each customer into supportive and energized health and wellness communities that share their challenges and goals. **OPTA**VIA coaches provide highly tailored and personalized support to customers and motivate them by sharing their passion for healthy living and lifestyle transformation.

**OPTA**VIA coaches are central to everything that we do, helping to foster a continuous cycle of growth, and attracting and activating new customers, many of whom go on to become **OPTA**VIA coaches. We offer economic incentives designed to support each **OPTA**VIA coach’s long-term success, which we believe plays an important role in their financial wellness, providing the opportunity to improve their finances while changing the health trajectory of families, communities and generations.5

**OPTA**VIA coaches are independent contractors, not employees, who support customers and market our products and services primarily through word of mouth, email, and via social media channels such as Facebook, Instagram, X (formerly known as Twitter), and video conferencing platforms. As independent contractors, **OPTA**VIA coaches market our products to friends, family, and other people in their communities. **OPTA**VIA products are shipped directly to **OPTA**VIA customers. **OPTA**VIA coaches do not handle or deliver merchandise to customers. This arrangement frees our **OPTA**VIA coaches from having to manage inventory and allows them to maintain an arms-length transactional relationship while focusing their attention on support and encouragement.

We believe the Company’s integrated approach that combines lifestyle coaching, community support, and access to medical solutions through LifeMD, positions the business to meet the needs of a broader spectrum of customers. By focusing on innovative products, enhanced customer experiences, and effective marketing strategies, Medifast has created and is continuing to enhance a differentiated and compelling offer. Its financial strength, operational flexibility, and customer-centric philosophy equip the Company to navigate the changing weight loss market and drive sustainable growth.

3 Grosicki et al. Diabetes Obes Metab. 2025; https://pubmed.ncbi.nlm.nih.gov/39743934/

4 Wilding, et al; STEP 1 Study Group. Diabetes Obes Metab. 2022; https://pubmed.ncbi.nlm.nih.gov/35441470/

5 **OPTA**VIA makes no guarantee of financial success. Success with **OPTA**VIA results from successful sales efforts, which require hard work, diligence, skill, persistence, competence and leadership. Please see the **OPTA**VIA Income Disclosure Statement (http://bit.ly/ids**OPTA**VIA) for statistics on actual earnings of coaches.

### Macroeconomic Conditions

Certain global economic challenges, including the impact of inflation or tariffs, have caused macroeconomic uncertainty and volatility in markets where we, our suppliers, and our **OPTA**VIA coaches operate.

Like many product-focused companies, we are exposed to market risks from changes in commodity or other raw material prices. An inflationary economy could impact our cost structure and put pressure on consumer spending. Increases in commodity prices or food costs, including as a result of inflation or tariffs, could affect the global and U.S. economies and could also adversely impact our business, financial condition, or results of operations. Additionally, changes in tariff regulations, particularly those involving trade between the United States and key global markets, may affect the cost and availability of certain raw materials. While the full impact of potential tariff policy changes remains uncertain, we remain attentive to policy developments, and we may reassess our supply chain and investment strategies in response to further volatility in the trade environment.

Our variable cost structure can be utilized to adapt to changing market conditions with potential actions including adjustments to our manufacturing, distribution, and customer support infrastructure. As a response, we may periodically take incremental pricing actions to offset supply chain costs, increases in tariff related costs, and inflationary pressures. In addition, prolonged tariff uncertainty may influence consumer sentiment and purchasing behavior, particularly in discretionary spending categories. Fluctuations in consumer confidence, driven by economic concerns or anticipated price increases, could reduce demand for our products.

In response to changing macroeconomic conditions, the Company may take further actions that alter its business operations as may be required by governmental authorities, or that are determined to be in the best interests of employees, **OPTA**VIA coaches and customers, and stockholders. Our ability to effectively navigate these developments is critical to maintaining operational resilience and achieving our long-term strategic objectives. These macroeconomic uncertainties make it challenging for our management to estimate our future business performance. However, we intend to continue to actively monitor the impact of these developments on our business and will update our practices accordingly.

### Competition

The weight loss industry is very competitive and encompasses a multitude of weight loss products and programs. These include a wide variety of commercial weight loss programs, pharmaceutical products, surgical interventions, books, self-help diets, dietary meal replacements, and appetite suppressants as well as digital tools, app-based health and wellness monitoring solutions, and wearable trackers. The weight loss market is served by a diverse array of competitors. Potential customers seeking to manage their weight can turn to traditional center-based competitors, online diet-oriented sites, self-directed dieting and self-administered products such as prescription medications, over-the-counter medications and supplements, as well as medically supervised programs. Recently, it became clear that medical weight loss solutions, such as GLP-1 medications, have become an increasingly key component of the overall health and wellness ecosystem, and the recent surging awareness and popularity of these weight loss medications serve as another major competitor, as these products have prompted a huge change in the way that consumers think about weight loss and lifestyle modification solutions in general. We recognize that these weight loss medications have attracted significant attention from the market and pose a threat to our interactions with our traditional customer base. Importantly, the efficacy claims of GLP-1 medications for weight loss are based specifically on their incorporation of lifestyle changes that include a reduced calorie diet and increased physical activity. As a result, under Medifast’s **OPTA**VIA offering, weight loss medications are another important element in overall tailored lifestyle plans that also include coaching, community support, nutritionally balanced meals, and exercise.

We believe we have a competitive advantage over traditional diet companies. The **OPTA**VIA model:

- Offers a solution that focuses on holistic wellness; it views healthy weight as a catalyst to greater changes and has impacted more than 3 million lives.
- Provides personalized, empathetic support from coaches who have been in their customers’ shoes.
- Promotes lifelong habit development supported by a proprietary integrated approach to behavior change, the Habits of Health Transformational System.
- Encompasses a vibrant health and wellness community.

We also compete with other direct-selling organizations, some of which have a longer operating history and greater visibility, name recognition and financial resources than we do. We also believe we have advantages over traditional direct selling companies:

- **OPTA**VIA’s innovative model is customer-centric, with one sales price for both **OPTA**VIA coaches and customers. There is no tiered pricing.
- **OPTA**VIA boasts a health and wellness community, which promotes a holistic health and wellness program and is not focused solely on product sales.
- **OPTA**VIA offers a differentiated direct-to-consumer model, with 100% of products shipped directly to customers.
- The field promotes a unified Habits of Health training system that aligns its leaders around a common mission of Lifelong Transformation, Making a Healthy Lifestyle Second Nature.

We believe our scientific and clinical heritage combined with our commitment to evaluating programs, plans, and products through clinical research are primary differentiators that allow us to compete in these markets. Our scientifically designed products were originally developed by a physician, and we have been on the cutting edge in the development of nutrition and weight-management products since our founding.

Medifast has perfected our model over the last 40+ years, with habits, coaches, and community at the core, and we will continue to innovate as the industry evolves.

### Critical Accounting Policies and Estimates

The preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Management develops, and changes periodically, these estimates and assumptions based on historical experience and on various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. Our unaudited condensed consolidated financial statements are prepared in accordance with GAAP. Our significant accounting policies are described in Note 2 to the audited consolidated financial statements included in the 2024 Form 10-K. There were no significant changes in our critical estimates or policies during the first three months of 2025.

### Overview of Results of Operations

Our product sales accounted for approximately 98% of our revenues for each of the three months ended March 31, 2025 and 2024.

The following tables reflect our statements of operations (in thousands, except percentages):

|  | Three months ended March 31, 2025 | 2024 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Revenue | $115,728 | $174,739 | $(59,011) | (33.8)% |
| Cost of sales | 31,483 | 47,447 | (15,964) | (33.6)% |
| **Gross profit** | **84,245** | **127,292** | **(43,047)** | **(33.8)%** |
| Selling, general, and administrative | 85,507 | 119,352 | (33,845) | (28.4)% |
| **Income (loss) from operations** | **(1,262)** | **7,940** | **(9,202)** | **(115.9)%** |
| Other income |  |  |  |  |
| Interest income | 1,301 | 1,223 | 78 | 6.4% |
| Other income | 487 | 2,422 | (1,935) | (79.9)% |
|  | 1,788 | 3,645 | (1,857) | (50.9)% |
| **Income before provision for income taxes** | **526** | **11,585** | **(11,059)** | **(95.5)%** |
| Provision for income taxes | 1,298 | 3,269 | (1,971) | (60.3)% |
| **Net income (loss)** | **$(772)** | **$8,316** | **$(9,088)** | **(109.3)%** |
| **% of revenue** |  |  |  |  |
| Gross profit | 72.8% | 72.8% |  |  |
| Selling, general, and administrative costs | 73.9% | 68.3% |  |  |
| Income (loss) from operations | (1.1)% | 4.5% |  |  |

**Revenue:** Revenue decreased $59.0 million, or 33.8%, to $115.7 million for the three months ended March 31, 2025 from $174.7 million for the three months ended March 31, 2024. The decline in revenue for the three months ended March 31, 2025 was primarily driven by a decrease in the number of active earning **OPTA**VIA coaches to 25,400 as of March 31, 2025 from 37,800 as of March 31, 2024. The decrease in active earning **OPTA**VIA coaches for the quarter, which has been trending downward year-over-year since the first quarter of 2023, has driven by continued challenges in customer acquisition. The average revenue per active earning **OPTA**VIA coach was $4,556 for the three months ended March 31, 2025 compared to $4,623 for the three months ended March 31, 2024. While the average revenue per active earning **OPTA**VIA coach has been declining year-over-year since the third quarter of 2022 due to lower sales volumes, we continue to see lower year-over-year declines in this key metric, driven in part by increased productivity of newer coach cohorts. The year-over-year declines reflect broader challenges in the operating environment, including continued acceptance of GLP-1 medications.

**Cost of sales:** Cost of sales decreased $16.0 million, or 33.6%, to $31.5 million from $47.4 million for the three months ended March 31, 2025 from the corresponding period in 2024. The decrease in cost of sales for the three months ended March 31, 2025 was primarily due to lower sales volumes.

**Gross profit:** For the three months ended March 31, 2025, gross profit decreased $43.0 million, or 33.8%, to $84.2 million from $127.3 million for the three months ended March 31, 2024. The decrease in gross profit for the three months ended March 31, 2025 was primarily attributable to lower revenue. As a percentage of revenue, gross profit was 72.8% for the three months ended March 31, 2025 and 2024.

**Selling, general, and administrative (“SG&A”):** SG&A expenses were $85.5 million for the three months ended March 31, 2025, a decrease of $33.8 million, or 28.4%, as compared to $119.4 million from the corresponding period in 2024. The decrease in SG&A expenses for the three months ended March 31, 2025 was primarily due to a $22.4 million decrease in **OPTA**VIA coach compensation on lower volume, $3.0 million of market research and investment costs related to medically supported weight loss which were incurred during the first quarter of 2024 that did not recur in the current quarter, a $2.5 million decrease in employee compensation, and a $1.3 million decrease in credit card fees. As a percentage of revenue, SG&A expenses were 73.9% for the three months ended March 31, 2025 as compared to 68.3% for the corresponding period in 2024. The increase in SG&A expenses as a percentage of revenue for the three months ended March 31, 2025 was primarily due to approximately 440 basis points of loss of leverage on fixed costs due to lower sales volume and 200 basis points of company-led marketing efforts primarily due to lower sales volumes, partially offset by 170 basis points of market research and investment costs related to medically supported weight loss which were incurred during the first quarter of 2024 that did not recur in the current quarter. SG&A expenses included research and development costs of $1.0 million for both the three months ended March 31, 2025 and 2024, in connection with the development of new products, programs and clinical research activities.

**(Loss) income from operations:** The Company’s loss from operations for the three months ended March 31, 2025 was $1.3 million, a decrease of $9.2 million as compared to income from operations of $7.9 million for the corresponding period in 2024, primarily as a result of decreased gross profit partially offset by decreased SG&A expenses. Loss from operations as a percentage of revenue for the three months ended March 31, 2025 was 1.1% as compared to income from operations as a percentage of revenue of 4.5% for the corresponding period in 2024 due to the factors described above impacting revenue and SG&A expenses.

**Other income:** Other income for the three months ended March 31, 2025 was $1.8 million, a decrease of $1.9 million, or 50.9%, as compared to $3.6 million for the corresponding period in 2024. The decrease in other income for the three months ended March 31, 2025 was primarily due to higher unrealized gains on our investment in LifeMD common stock in the prior year period. The Company's unrealized gain on investment in LifeMD common stock for the first quarter of 2025 was $0.6 million, compared to $2.8 million for the corresponding period in 2024.

**Provision for income taxes:** For the three months ended March 31, 2025, the Company recorded $1.3 million in income tax expense, an effective tax rate of 246.8%, as compared to $3.3 million in income tax expense, an effective tax rate of 28.2%, for the three months ended March 31, 2024. The increase in the effective tax rate for the three months ended March 31, 2025 was primarily driven by the tax rate implication of a change in unrecognized tax benefits due to finalization of a state tax examination, which represented 110.8% of the change, and a tax shortfall for stock compensation, which represented 113.9% of the change. These changes were magnified by the near break-even pre-tax position in the current year.

**Net (loss) income:** Net loss was $0.8 million, or $0.07 per share for the three months ended March 31, 2025 as compared to net income of $8.3 million, or $0.76 per diluted share, for the three months ended March 31, 2024. The period-over-period changes were driven by the factors described above in the section titled “(Loss) income from operations.”

### Liquidity and Capital Resources

The Company had stockholders’ equity of $211.0 million and working capital of $152.9 million at March 31, 2025 as compared with $210.1 million and $150.2 million at December 31, 2024, respectively. The $0.9 million net increase in stockholders’ equity was primarily driven by $1.9 million for share-based compensation partially offset by a net loss of $0.8 million for the three months ended March 31, 2025. The Company’s cash, cash equivalents, and investments increased from $162.3 million at December 31, 2024 to $164.6 million at March 31, 2025.

Net cash provided by operating activities decreased by $3.9 million to $3.4 million for the three months ended March 31, 2025 from $7.3 million for the three months ended March 31, 2024 primarily driven by a $9.1 million decrease in net income, a $5.3 million decrease related to changes in inventory balances partially offset by a $9.9 million decrease in accounts payable and accrued expenses. We decreased our inventory purchases during the period ended March 31, 2025 to align with sales demand.

Net cash used in investing activities was $2.1 million for the three months ended March 31, 2025 as compared to $2.8 million for the three months ended March 31, 2024.

Net cash used in financing activities decreased by $0.9 million to $0.6 million for the three months ended March 31, 2025 from $1.5 million for the three months ended March 31, 2024. This decrease was primarily due to a $0.5 million decrease in cash dividends paid to stockholders and a $0.4 million decrease in net shares repurchased for employee taxes.

In pursuing its business strategy, the Company may require additional cash for operating and investing activities. The Company expects future cash requirements, if any, to be funded from operating cash flow and financing activities.

From time to time the Company evaluates potential acquisitions that complement our business. If consummated, any such transactions may use a portion of our working capital or require the issuance of equity or debt. We have no present understandings, commitments, or agreements with respect to any material acquisitions.

On October 30, 2024, the Company terminated its Amended Credit Agreement with Citibank, N.A. The Company had no borrowings under the Amended Credit Agreement, inclusive of the credit facility and letter of credit sublimit as of the termination date.

## Market risk

As filed, 2,329 characters.

Market risk is the potential loss arising from adverse changes in market rates and prices, such as interest rates and a decline in the stock market. The Company does not enter into derivatives, foreign exchange transactions or other financial instruments for trading or speculative purposes other than strategic investments.

The Company is exposed to market risk related to changes in interest rates and market pricing impacting our investment in money market securities, government and agency securities, and corporate bonds. Other than for strategic investments, its current investment policy is to maintain an investment portfolio consisting of corporate bonds and U.S. money market securities directly or through managed funds. Its cash is deposited in and invested through highly rated financial institutions in North America. Its marketable securities are subject to interest rate risk and market pricing risk and will fall in value if market interest rates increase or if market pricing decreases. If market interest rates were to increase and market pricing were to decrease immediately and uniformly by 10% from levels at March 31, 2025, the Company estimates that the fair value of its investment portfolio would decline by an immaterial amount and therefore it would not expect its operating results or cash flows to be affected to any significant degree by the effect of a change in market conditions on our investments. There were no material changes in the Company's market risk exposure related to changes in interest rates and market pricing impacting our investments from the year ended December 31, 2024.

The Company is exposed to market risk related to price fluctuations in equity markets related to its investment in LifeMD common stock, purchased in December of 2023. If equity prices were to decrease immediately and uniformly by 10% from levels at March 31, 2025, the Company estimates that the fair value of the Company investment would decline by an immaterial amount and therefore it would not expect its operating results or cash flows to be affected by any significant degree by the effect of a change in market conditions on our investment. There were no material changes in the Company's market risk exposure related to the investment in LifeMD common stock from the year ended December 31, 2024.

## Controls and procedures

As filed, 1,284 characters.

Management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Act, as of March 31, 2025. Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Act is recorded, processed, summarized, and reported accurately and on a timely basis. Based on this evaluation performed in accordance with the criteria established in the 2013 Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, our management concluded that the Company’s disclosure controls and procedures are effective at the reasonable assurance level as of the end of the period covered by this report.

### Changes in Internal Control over Financial Reporting

There have been no material changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Act) during the fiscal quarter ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Filed Apr 28, 2025.
Source: SEC EDGAR, the filing index for accession 0001628280-25-020341. Last ingested by Listed: Oct 31, 2026, 14:35 ET. No prices; not investment advice.