LifeMD and Medifast to create weight-management program that includes GLP-1 drugs

By Ciara Linnane

Medifast's stock slides 8% after company says it will scrap quarterly dividend to invest in program

LifeMD Inc., a virtual primary care provider, said Wednesday it's teaming up with Medifast Inc. (MED) to create a clinically supported weight management program that will include the new class of weight-loss drugs called GLP-1 receptor agonists.

Baltimore-based Medifast is a wellness company known for its habit-based and coach-guided lifestyle service Optavia.

The news sent both stocks sharply higher in premarket trade, but they quickly erased those gains to trade lower after Medifast disclosed that it will scrap its quarterly dividend to free up funds to invest in the program and in other growth and technology initiatives.

The GLP-1 drugs developed by Eli Lilly & Co. (LLY) and Denmark's Novo Nordisk (NVO) (DK:NOVO.B) are named after a gut hormone that they mimic to control appetite and blood sugar. They have become highly popular in the U.S. and have even seen shortages in the past year.

For more, read: Eli Lilly's Mounjaro three times more effective than Ozempic for weight loss, real-world study finds

LifeMD (LFMD) said the move will give it access to a market that's expected to reach $100 billion by 2030.

The partners will offer a program that includes one-on-one Optavia Coach support, proven plans and scientifically developed products, a proprietary Habits of Health (R) Transformational System, as well as community support.

Medifast has agreed to invest $20 million in LifeMD, including buying $10 million of its stock and will stop paying its quarterly dividend.

"This is intended to improve customer acquisition and customer experience, which the company expects will generate higher long-term stockholder returns, as well as allow for stock repurchases when management and the Board deem it appropriate," Medifast said in a statement.

The companies will hold a conference call at 10 a.m. Eastern to discuss the agreement.

LifeMD's stock was last down 5%, while Medifast was down 10%. The S&P 500 was up 0.1%.

-Ciara Linnane

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

12-13-23 1028ET

Copyright (c) 2023 Dow Jones & Company, Inc.