med-20250630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from________ to ________.

Commission File Number: 001-31573

Medifast, Inc.

(Exact name of registrant as specified in its charter)


Delaware						13-3714405
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

100 International Drive

Baltimore, Maryland 21202

Telephone Number: (410) 581-8042

(Address of Principal Executive Offices, Zip Code and Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, par value $0.001 per share

MED

New York Stock Exchange

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by checkmark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

The number of shares of the registrant’s common stock outstanding at July 28, 2025 was 10,991,064.

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Medifast, Inc. and Subsidiaries

Index


Part 1 – Financial Information



Item 1 – Financial Statements


Condensed Consolidated Statements of Operations (unaudited) for the Three and Six Months Ended June 30, 2025 and 2024			2

Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the Three and Six Months Ended June 30, 2025 and 2024			3

Condensed Consolidated Balance Sheets (unaudited) as of June 30, 2025 and December 31, 2024			4

Condensed Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended June 30, 2025 and 2024			5

Condensed Consolidated Statements of Changes in Stockholders’ Equity (unaudited) for the Three and Six Months Ended June 30, 2025 and 2024			6

Notes to Condensed Consolidated Financial Statements (unaudited)			7

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations			16

Item 3 – Quantitative and Qualitative Disclosures about Market Risk			25

Item 4 – Controls and Procedures			25

Part II – Other Information

Item 1 – Legal Proceedings			26

Item 1A – Risk Factors			26

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds			26

Item 5 – Other Information			26

Item 6 – Exhibits			27

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MEDIFAST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(U.S. dollars in thousands, except per share amounts & dividend data)


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024

Revenue	$	105,555	$	168,558	$	221,283	$	343,297
Cost of sales	28,911		45,120		60,395		92,567
Gross profit	76,644		123,438		160,888		250,730

Selling, general, and administrative	77,710		131,314		163,217		250,666

Income (loss) from operations	(1,066)		(7,876)		(2,329)		64

Other income (expense)
Interest income	1,369		1,296		2,671		2,519
Other income (expense)	2,572		(4,070)		3,059		(1,647)
	3,941		(2,774)		5,730		872

Income (loss) before provision for income taxes	2,875		(10,650)		3,401		936

Provision (benefit) for income taxes	395		(2,496)		1,693		773

Net income (loss)	$	2,480	$	(8,154)	$	1,708	$	163

Earnings (loss) per share - basic	$	0.23	$	(0.75)	$	0.16	$	0.01

Earnings (loss) per share - diluted	$	0.22	$	(0.75)	$	0.15	$	0.01

Weighted average shares outstanding
Basic	10,991		10,937		10,970		10,923
Diluted	11,060		10,937		11,045		10,967

The accompanying notes are an integral part of these condensed consolidated financial statements.

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MEDIFAST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

(U.S. dollars in thousands)


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024

Net income (loss)	$	2,480	$	(8,154)	$	1,708	$	163

Other comprehensive income (loss), net of tax:
Foreign currency translation	—		32		—		43
Unrealized net losses on investment securities	(60)		(28)		(1)		(265)
	(60)		4		(1)		(222)

Comprehensive income (loss)	$	2,420	$	(8,150)	$	1,707	$	(59)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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MEDIFAST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(U.S. dollars in thousands, except par value)


	June 30, 2025		December 31, 2024

ASSETS
Current Assets
Cash and cash equivalents	$	101,694	$	90,928
Inventories, net	30,201		42,421
Investments	60,979		71,416
Income taxes, prepaid	4,513		—
Prepaid expenses and other current assets	9,054		9,639
Total current assets	206,441		214,404

Property, plant and equipment, net of accumulated depreciation	34,597		37,527
Right-of-use assets	8,856		11,155
Other assets	7,979		9,667
Deferred tax assets, net	11,460		11,460


TOTAL ASSETS	$	269,333	$	284,213

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses	$	40,260	$	56,494
Income taxes payable	—		1,485
Current lease obligations	5,924		6,182
Total current liabilities	46,184		64,161

Lease obligations, net of current lease obligations	7,144		9,943


Total liabilities	53,328		74,104

Stockholders' Equity
Common stock, par value $0.001 per share: 20,000 shares authorized;
10,991 and 10,938 issued and outstanding
at June 30, 2025 and December 31, 2024, respectively	11		11
Additional paid-in capital	37,323		33,136
Accumulated other comprehensive income	179		180
Retained earnings	178,492		176,782

Total stockholders' equity	216,005		210,109

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	269,333	$	284,213

The accompanying notes are an integral part of these condensed consolidated financial statements.

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MEDIFAST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(U.S. dollar in thousands)


	Six months ended June 30,
	2025		2024

Operating Activities
Net income	$	1,708	$	163
Adjustments to reconcile net income to cash provided by operating activities
Depreciation and amortization	7,325		6,328
Non-cash lease expense	2,299		2,225
Share-based compensation	4,557		4,625
Loss on disposal of property, plant and equipment	395		51
Realized gain on sale of investment securities	(3,303)		(74)
Amortization of discount on investment securities	—		(372)
Deferred income taxes	—		9
Unrealized loss on equity investment securities	—		1,752
Non-cash charges for supply chain optimization	(358)		11,689
Change in operating assets and liabilities:
Inventories	12,220		14,988
Prepaid expenses and other current assets	585		(1,808)
Other assets	(308)		206
Accounts payable and accrued expenses	(19,094)		(19,430)
Income taxes	(5,998)		(1)
Net cash flow provided by operating activities	28		20,351

Investing Activities
Purchase of investment securities	(31,062)		(17,646)
Proceeds from sale and maturities of investment securities	45,265		16,118
Purchase of property and equipment	(2,900)		(3,779)
Net cash flow provided by (used in) investing activities	11,303		(5,307)

Financing Activities


Options exercised by directors	—		36
Net shares repurchased for employee taxes	(370)		(833)
Cash dividends paid to stockholders	(195)		(714)

Net cash flow used in financing activities	(565)		(1,511)

Foreign currency impact	—		43

Increase in cash and cash equivalents	10,766		13,576
Cash and cash equivalents - beginning of the period	90,928		94,440
Cash and cash equivalents - end of period	$	101,694	$	108,016

Supplemental disclosure of cash flow information:
Income taxes paid	$	7,104	$	504
Dividends included in accounts payable and accrued expenses	$	452	$	659

The accompanying notes are an integral part of these condensed consolidated financial statements.

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MEDIFAST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)

(U.S. dollars in thousands)


	Six months ended June 30, 2025
	Number of Shares Issued	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income		Retained Earnings		Total

Balance, December 31, 2024	10,938	$	11	$	33,136	$	180	$	176,782	$	210,109
Net loss	—	—		—		—		(772)		(772)
Share-based compensation	80	—		1,930		—		—		1,930
Net shares repurchased for employee taxes	(27)	—		(369)		—		—		(369)
Other comprehensive income	—	—		—		59		—		59
Forfeiture of dividends on unvested awards	—	—		—		—		2		2


Balance, March 31, 2025	10,991	$	11	$	34,697	$	239	$	176,012	$	210,959
Net income	—	—		—		—		2,480		2,480
Share-based compensation	—	—		2,627		—		—		2,627
Net shares repurchased for employee taxes	—	—		(1)		—		—		(1)
Other comprehensive loss	—	—		—		(60)		—		(60)


Balance, June 30, 2025	10,991	$	11	$	37,323	$	179	$	178,492	$	216,005

The accompanying notes are an integral part of these condensed consolidated financial statements.


	Six months ended June 30, 2024
	Number of Shares Issued	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income		Retained Earnings		Total

Balance, December 31, 2023	10,896	$	11	$	26,573	$	248	$	174,649	$	201,481
Net income	—	—		—		—		8,316		8,316
Share-based compensation	59	—		2,171		—		—		2,171
Options exercised by directors	1	—		36		—		—		36
Net shares repurchased for employee taxes	(19)	—		(817)		—		—		(817)
Other comprehensive loss	—	—		—		(226)		—		(226)

Balance, March 31, 2024	10,937	$	11	$	27,963	$	22	$	182,965	$	210,961
Net loss	—	—		—		—		(8,154)		(8,154)
Share-based compensation	—	—		2,454		—		—		2,454
Net shares repurchased for employee taxes	—	—		(16)		—		—		(16)
Other comprehensive income	—	—		—		4		—		4
Forfeiture of dividends on unvested awards	—	—		—		—		34		34
Balance, June 30, 2024	10,937	$	11	$	30,401	$	26	$	174,845	$	205,283

The accompanying notes are an integral part of these condensed consolidated financial statements.

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MEDIFAST, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation - The accompanying unaudited condensed consolidated financial statements of Medifast, Inc. and its wholly-owned subsidiaries (“Medifast,” the “Company,” “we,” “us,” or “our”) included herein have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim reporting and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and notes that are normally required by GAAP have been condensed or omitted. However, in the opinion of management, all adjustments consisting of normal, recurring adjustments considered necessary for a fair presentation of the financial position and results of operations have been included and management believes the disclosures that are made are adequate to make the information presented not misleading. The condensed consolidated balance sheet at December 31, 2024 has been derived from the 2024 audited consolidated financial statements at that date included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (“2024 Form 10-K”).

The results of operations for the three and six months ended June 30, 2025 are not necessarily indicative of results that may be expected for the fiscal year ending December 31, 2025. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto, which are included in the 2024 Form 10-K.

Presentation of Financial Statements - The unaudited condensed consolidated financial statements included herein include the accounts of the Company. All significant intercompany accounts and transactions have been eliminated.

Use of Estimates - The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates.

The Company is, from time to time, subject to a variety of litigation and similar proceedings that arise out of the ordinary course of its business. Based upon the Company’s experience, current information and applicable law, it does not believe that these proceedings and claims will have a material adverse effect on its results of operations, financial position or liquidity. However, the results of legal actions cannot be predicted with certainty. Therefore, it is possible that the Company’s results of operations, financial condition or cash flows could be materially adversely affected in any particular period by the unfavorable resolution of one or more legal actions.

Advertising Expense - The costs of advertising efforts are expensed as incurred. They are recorded in selling, general, and administrative expense in the accompanying Unaudited Condensed Consolidated Statements of Operations. Advertising expense, excluding agency fees, for the three months ended June 30, 2025 and 2024 amounted to $1.6 million and $2.8 million, respectively. Advertising expense, excluding agency fees, for the six months ended June 30, 2025 and 2024 amounted to $6.2 million and $5.3 million, respectively.

Provision for Income Taxes - For the three months ended June 30, 2025, the Company recorded $0.4 million in income tax expense, an effective tax rate of 13.7%, as compared to an income tax benefit of $2.5 million, an effective tax rate of 23.4%, for the three months ended June 30, 2024. The decrease in the effective tax rate for the three months ended June 30, 2025 was primarily driven by the increase in the limitation for executive compensation, which was magnified by the near break-even pre-tax position in the current year. For the six months ended June 30, 2025, the Company recorded $1.7 million in income tax expense, an effective tax rate of 49.8%, as compared to $0.8 million, an effective tax rate of 82.6%, for the six months ended June 30, 2024. The decrease in the effective tax rate for the six months ended June 30, 2025 was primarily driven by the change in a tax shortfall for stock compensation which represented 75.2% of the change and the change in the limitation for executive compensation, which represented 7.2% of the change partially offset by the aggregation of several smaller items, totaling 49.7%. These changes were magnified by the near break-even pre-tax position in both periods.

Accounting Pronouncements - Adopted in 2025

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2023-07—Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”) to improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities to

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enable investors to develop more decision-useful financial analyses. ASU 2023-07 was effective for public business entities for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption was permitted. The Company adopted the standard for annual period during the quarter ended December 31, 2024, and for interim period during the quarter ended March 31, 2025. The Company's segment disclosures are reported in Footnote 9.

Recently Issued Accounting Pronouncements - Pending Adoption

In December 2023, the FASB issued Accounting Standards Update 2023-09—Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”) to enhance the transparency and decision usefulness of income tax disclosures, including jurisdictional information, by requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disclosures. ASU 2023-09 is effective for public business entities for annual periods beginning after December 15, 2024, and for all other entities for annual periods beginning after December 15, 2025. Prospective application is required, though retrospective application is permitted. Entities are permitted to early adopt the standard. The Company has not early adopted the standard. The Company is currently evaluating the impact of adopting ASU 2023-09 on its consolidated financial statements.

In November 2024, the FASB issued Accounting Standards Update 2024-03—Disaggregation of Income Statement Expenses (“ASU 2024-03”) to improve the disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses in commonly presented expense captions. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2024-03 on its consolidated financial statements.

2. INVENTORIES, NET

Inventories consist principally of raw materials, packaging, non-food finished goods and packaged meal replacements, protein powder, and supplements held in the Company’s warehouses and outsourced distribution centers. Inventories are stated at the lower of cost or net realizable value, utilizing the first-in, first-out method. The cost of finished goods includes the cost of raw materials, packaging supplies, direct and indirect labor, and other indirect manufacturing costs. On a quarterly basis, management reviews inventories for unsalable or obsolete inventories.

Inventories consisted of the following (in thousands):


	June 30, 2025		December 31, 2024

Raw materials	$	7,700	$	6,704
Packaging	1,150		1,429
Non-food finished goods	1,459		2,031
Finished goods	22,199		33,702
Allowance for obsolete inventory	(2,307)		(1,445)
Total	$	30,201	$	42,421

3. EARNINGS PER SHARE

Basic earnings per share (“EPS”) computations are calculated utilizing the weighted average number of shares of the Company’s common stock outstanding during the periods presented. Diluted EPS is calculated utilizing the weighted average number of shares of the Company’s common stock outstanding adjusted for the effect of dilutive common stock equivalents.

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The following table sets forth the computation of basic and diluted EPS (in thousands, except per share data):


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024

Numerator:
Net income (loss)	$	2,480	$	(8,154)	$	1,708	$	163

Denominator:
Weighted average shares of common stock outstanding	10,991		10,937		10,970		10,923
Effect of dilutive common stock equivalents	69		—		75		44
Weighted average shares of common stock outstanding	11,060		10,937		11,045		10,967

Earnings (loss) per share - basic	$	0.23	$	(0.75)	$	0.16	$	0.01

Earnings (loss) per share - diluted	$	0.22	$	(0.75)	$	0.15	$	0.01

The calculation of diluted EPS excluded 402 thousand and 326 thousand antidilutive restricted stock awards for the three months ended June 30, 2025 and 2024, respectively, and 375 thousand and 142 thousand antidilutive restricted stock awards for the six months ended June 30, 2025 and 2024, respectively. EPS is computed independently for each of the periods presented above, and accordingly, the sum of the quarterly earnings per share may not equal the year-to-date total computed.

4. SHARE-BASED COMPENSATION

Stock Options

The Company has granted non-qualified and incentive stock options to employees and non-employee directors under the Amended and Restated 2012 Share Incentive Program. The fair values of these options were estimated on the grant dates using the Black-Scholes option pricing model, which required estimates of the expected term of the option, the risk-free interest rate, the expected volatility of the price of the Company’s common stock, and dividend yield. Options outstanding as of June 30, 2025, generally vested over a period of 3 years and expire 10 years from the date of grant. The exercise price of these options is $66.68. Due to the Company’s lack of option exercise history on the date of grant, the expected term was calculated using the simplified method defined as the midpoint between the vesting period and the contractual term of each option. The risk-free interest rate was based on the U.S. Treasury yield curve in effect on the date of grant that most closely corresponded to the expected term of the option. The expected volatility was based on the historical volatility of the Company’s common stock over the period of time equivalent to the expected term for each award. The dividend yield was computed as the annualized dividend rate at the grant date divided by the strike price of the stock option. For the six months ended June 30, 2025 and 2024, the Company did not grant stock options.

The following table is a summary of our stock option activity (in thousands, except per share data):


	Six months ended June 30,
	2025			2024
	Awards	Weighted-Average Exercise Price		Awards	Weighted-Average Exercise Price

Outstanding at beginning of period	22	$	66.68	26	$	62.20
Exercised	—	—		(1)	27.18
Forfeited	—	—		(2)	26.52
Outstanding at end of the period	22	$	66.68	23	$	66.68
Exercisable at end of the period	22	$	66.68	23	$	66.68

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As of June 30, 2025, the weighted-average remaining contractual life for both the outstanding stock options and exercisable stock options was 2.6 years with an aggregate intrinsic value of $0. There was no unrecognized compensation on the awards for the period ended June 30, 2025. There were no stock options exercised for the six months ended June 30, 2025. For the six months ended June 30, 2024, the Company received $36 thousand in cash proceeds from the exercise of stock options. The total intrinsic value for stock options exercised during the six months ended June 30, 2024 was $15 thousand.

Restricted Stock

The Company has granted restricted stock under the Amended and Restated 2012 Share Incentive Plan to employees and non-employee directors generally with vesting terms up to 3 years after the date of grant. The fair value of the restricted stock is equal to the market price of the Company’s common stock on the date of grant. Expense for restricted stock is amortized ratably over the vesting period.

The following table summarizes our restricted stock activity (in thousands, except per share data):


	Six months ended June 30,
	2025			2024
	Shares	Weighted-Average Grant Date Fair Value		Shares	Weighted-Average Grant Date Fair Value

Outstanding at beginning of period	279	$	57.21	114	$	127.87
Granted	533	13.75		210	32.23
Vested	(80)	67.29		(34)	138.80
Forfeited	(10)	19.42		(4)	52.06
Outstanding at end of the period	722	$	24.53	286	$	57.21

The Company withheld approximately 27 thousand shares and 11 thousand shares of the Company’s common stock to cover minimum tax liability withholding obligations upon the vesting of shares of restricted stock for the six months ended June 30, 2025 and 2024, respectively. The total fair value of restricted stock awards vested during the six months ended June 30, 2025 and 2024 was $1.1 million and $1.3 million, respectively.

Market and Performance-based Share Awards

The Company has granted market and performance-based share awards in 2022, 2023, and 2025, and performance-based share awards in 2021 and 2024 under the Amended and Restated 2012 Share Incentive Plan to certain key executives who were granted deferred shares and may earn between 0% and 229% of the target number depending upon both the Company’s total stockholder return (“TSR”), for those with market conditions, and the Company’s performance against predetermined performance goals over a three-year performance period after the date of grant. Market and performance-based share awards that are tied to the Company’s TSR are valued using the Monte Carlo method and are recognized ratably as expense over the award’s performance period. The fair value of the performance-based share awards is equal to the market price of the Company’s common stock on the date of grant adjusted by expected level of achievement over the performance period. Expense for performance-based share awards is amortized ratably over the performance period. In the event that management determines that the Company will not reach the lower threshold of the predetermined performance goals established in the grant agreement, any previously recognized expense is reversed in the period in which such a determination is made.

No market and performance-based share awards were issued during the six months ended June 30, 2025, as a result of the market and performance-based share awards granted in March of 2022 not reaching the lower threshold of the predetermined performance goals. The total fair value of market and performance-based share awards issued during the six months ended June 30, 2024 was $1.3 million. The Company withheld 0 thousand and approximately 8 thousand shares for the quarters ended June 30, 2025 and 2024, respectively to cover minimum tax liability withholding obligations upon the vesting of shares of market and performance-based share awards.

Share-based compensation expense is recorded in selling, general, and administrative expense in the accompanying Condensed Consolidated Statements of Operations. The total expense during the three months ended June 30, 2025 and 2024 was as follows (in thousands):

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	Three months ended June 30,
	2025			2024
	Shares	Share-Based Compensation Expense		Shares	Share-Based Compensation Expense
Options and restricted stock	744	$	1,644	309	$	1,717
Market and performance-based share awards granted in 2025	319	434		—	—
Performance-based share awards granted in 2024	117	371		117	371
Market and performance-based share awards granted in 2023	47	178		47	482
Market and performance-based share awards granted in 2022	—	—		24	—
Performance-based share awards granted in 2021	—	—		1	(116)
Total share-based compensation	1,227	$	2,627	498	$	2,454

The total expense during the six months ended June 30, 2025 and 2024 was as follows (in thousands):


	Six months ended June 30,
	2025			2024
	Shares	Share-Based Compensation Expense		Shares	Share-Based Compensation Expense
Options and restricted stock	744	$	2,998	309	$	3,317
Market and performance-based share awards granted in 2025	319	$	468	—	$	—
Performance-based share awards granted in 2024	117	737		117	448
Market and performance-based share awards granted in 2023	47	354		47	964
Market and performance-based share awards granted in 2022	—	—		24	—
Performance-based share awards granted in 2021	—	—		1	(104)
Total share-based compensation	1,227	$	4,557	498	$	4,625

The total income tax benefit recognized in the accompanying Condensed Consolidated Statements of Operations for restricted stock awards was $0.3 million and $0.1 million for the three months ended June 30, 2025 and 2024, respectively, and the income tax expense of $0.1 million and $0.4 million for the six months ended June 30, 2025 and 2024, respectively.

There was $11.1 million of total unrecognized compensation expense related to restricted stock awards as of June 30, 2025, which is expected to be recognized over a weighted-average period of 2.0 years. There was $7.0 million of unrecognized compensation expense related to the 366 thousand market and performance-based shares and 117 thousand performance-based shares presented in the table above as of June 30, 2025, which is expected to be recognized over a weighted-average period of 2.0 years.

5. LEASES

Operating Leases

The Company has operating leases for office and warehouse space and certain equipment. In certain of the Company’s lease agreements, the rental payments are adjusted periodically based on defined terms within the lease. The Company did not have any finance leases for the six months ended June 30, 2025 and 2024.

Our leases relating to office and warehouse space have lease terms of 65 months to 102 months. Our leases relating to equipment have lease terms of 36 months, with certain of them having automatic renewal clauses.

The Company’s warehouse agreements also contain non-lease components, in the form of payments towards variable logistics services and labor charges, which the Company is obligated to pay based on the services consumed by it. Such amounts are not included in the measurement of the lease liability but are recognized as expenses when they are incurred.

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The operating lease expense was $1.2 million and $1.2 million for the three months ended June 30, 2025 and 2024, respectively, and $2.5 million and $2.5 million for the six months ended June 30, 2025 and 2024, respectively.

Supplemental cash flow information related to the Company’s operating leases was as follows (in thousands):


	Six months ended June 30,
	2025		2024

Cash paid for amounts included in the measurements of lease liabilities
Operating cash flow used in operating leases	$	3,215	$	3,141

As of June 30, 2025, the weighted average remaining lease term was 2.75 years and the weighted average discount rate was 2.20%.

The following table presents the maturity of the Company’s operating lease liabilities as of June 30, 2025 (in thousands):


2025 (excluding the six months ended June 30, 2025)	$	3,246
2026	4,783
2027	2,553
2028	2,618
2029	240

Total lease payments	$	13,440
Less: Imputed interest	(372)
Total	$	13,068

6. ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table sets forth the components of accumulated other comprehensive income, net of tax where applicable (in thousands):


	June 30, 2025		December 31, 2024

Foreign currency translation	$	(1)	$	(1)
Unrealized net gains on investment securities	180		181
Accumulated other comprehensive income	$	179	$	180

7. INVESTMENTS

Certain financial assets and liabilities are accounted for at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following fair value hierarchy prioritizes the inputs used to measure fair value:

Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an on-going basis.

Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies.

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Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value from the perspective of a market participant.

The following tables present the Company’s cash and financial assets that are measured at fair value on a recurring basis for each of the hierarchy levels (in thousands):


	June 30, 2025
	Cost		Unrealized Gains		Accrued Interest		Estimated Fair Value		Cash & Cash Equivalents		Investment Securities

Cash and cash equivalents, excluding money market accounts	$	72,772	$	—	$	—	$	72,772	$	72,772	$	—

Level 1:
Money market accounts	28,922		—		—		28,922		28,922		—
Government & agency securities	20,047		42		78		20,167		—		20,167

	48,969		42		78		49,089		28,922		20,167

Level 2:
Corporate bonds	40,164		199		449		40,812		—		40,812

Total	$	161,905	$	241	$	527	$	162,673	$	101,694	$	60,979


	December 31, 2024
	Cost		Unrealized Gains (Losses)		Accrued Interest		Estimated Fair Value		Cash & Cash Equivalents	Investment Securities

Cash and cash equivalents, excluding money market accounts	$	77,551	$	—	$	—	$	77,551

SEC Form 10-Q filed by MEDIFAST INC