MEDIFAST INC

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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 2025 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.

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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 of Medifast 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 2025 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.

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Medifast, Inc. (“Medifast,” the “Company,” “we” or “us”) is the 40+ year old metabolic health and wellness company known for its science-backed, coach-guided lifestyle system. In October 2025, Medifast announced its strategic transformation, unveiling its focus on holistic metabolic health. The Company started 2026 by moving from transformation to execution, leveraging its extensive experience in structured weight loss coupled with recent scientific research and enhanced product offerings to address the needs of a broader metabolic health market. Medifast’s approach focuses on addressing the root cause of metabolic dysfunction. This strategic shift targets a larger and what is believed to be a more sustainable market, focusing on a long-term growth strategy designed to guide the Company over the next decade by aligning science, products, and coaching with increasing demand for new solutions as awareness of metabolic dysfunction grows.

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Medifast, Inc. (“Medifast,” the “Company,” “we” or “us”) is the health and wellness company known for its science-backed, comprehensive metabolic health system. In October 2025, Medifast announced its strategic transformation, unveiling its focus on holistic metabolic health. The Company started 2026 by moving from transformation to execution, leveraging its extensive experience in structured weight loss coupled with recent scientific research and enhanced product offerings to address the needs of a broader metabolic health market. In July 2026, Medifast announced the launch of Trilivy, a comprehensive metabolic health system uniquely designed to support healthy lifestyle change. The transition from OPTAVIA® to a new brand with the launch of Trilivy represents an evolution of the company’s vision, platform, and purpose, expanding beyond traditional weight loss to address the broader metabolic health challenges impacting more than 90% of U.S. adults today. Medifast’s approach focuses on addressing the root cause of metabolic dysfunction. This strategic shift targets a larger and what is believed to be a more sustainable market, focusing on a long-term growth strategy intended to guide the Company over the next decade by aligning science, products, and coaching with increasing demand for new solutions as awareness of metabolic dysfunction grows.

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This growth strategy is fueled by improving coach productivity and expanding our coach network. We operate a well-capitalized business with strong effective leadership, a powerful lifestyle solution, and a business model that has impacted over 3 million lives and, for the quarter ended March 31, 2026, had a network of approximately 14,000 active earning independent coaches. Medifast stands at the forefront of evidence-based wellness solutions, and its coach-first model creates significant opportunities for coaches’ individual businesses. This is designed to create a “flywheel effect” as new clients join, driving coach productivity, which in turn attracts new active earning coaches, leading to even more new clients and further productivity.

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This growth strategy will initially be focused on improving coach productivity and expanding our coach network. We operate a well-capitalized business with a powerful lifestyle solution and a business model that has impacted over 3 million lives and, for the quarter ended June 30, 2026, had a network of approximately 11,700 active earning independent coaches. Medifast stands at the forefront of evidence-based wellness solutions, and its coach-first model creates significant opportunities for coaches’ individual businesses. This is designed to create a “flywheel effect” as new clients join, driving coach productivity, which in turn attracts new active earning coaches, leading to even more new clients and further productivity.

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Our scientifically developed products and habit creation framework, reinforced by coaches and community support, provide proven health benefits and serve as a promising foundation to develop a comprehensive metabolic health system. We continuously innovate and build upon our scientific and clinical heritage to fulfill our mission of Lifelong Transformation, Making a Healthy Lifestyle Second Nature®. Coaches provide unparalleled support along with community, nutrition, and healthy habits. In a world where health and well-being can often be a difficult and solitary journey, our comprehensive system offers intensely personalized support to individuals seeking to transform their health. The goal of this holistic approach is to empower people to master their metabolic health and improve body composition, beginning with a quality weight loss journey and offering the flexibility to achieve it on their own terms. The metabolic health system is designed for real life and built around four key components:

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Our scientifically developed products and habit creation framework, reinforced by coaches and community support, provide proven health benefits and serve as a promising foundation to develop a comprehensive metabolic health system. We continuously innovate and build upon our scientific and clinical heritage to fulfill our mission of lifelong transformation, through metabolic science and human connection TM. Coaches provide unparalleled support along with community, nutrition, and healthy habits. In a world where health and well-being can often be a difficult and solitary journey, our comprehensive system offers intensely personalized support to individuals seeking to transform their health. The goal of this holistic approach is to empower people to master their metabolic health and improve body composition, beginning with a quality weight loss journey and offering the flexibility to achieve it on their own terms. At the heart of the metabolic health system is a powerful three-part delivery model that helps individuals build healthier habits, unlock their potential and achieve optimal metabolic health:

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Independent Coaches: Coaches provide individualized support and guidance to clients on their path to optimal health and well-being.

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Independent Coaches & Community: Coaches provide individualized support and guidance to clients on their path to optimal metabolic health and well-being and a community of like-minded individuals offer real-time connection and support.

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Products & Plans: Clinically proven plans and scientifically developed products, backed by dietitians, scientists, and physicians.

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Science & Products: Clinically proven plans and scientifically developed products, backed by dietitians, scientists, and physicians.

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Science has always been integral to Medifast’s identity. Through ongoing research and compelling data that elevate the science behind the Company’s plans and innovative products, the Company is energizing its coach community to empower individuals to take control of their metabolic health. Looking ahead, Medifast plans to launch significant product innovations, incorporating next-generation ingredients for metabolic enhancement. We expect to bring an updated product line to market this year. These upcoming innovations are designed to further strengthen the Company’s offerings to help clients achieve optimal metabolic health.

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Science has always been integral to Medifast’s identity. Through ongoing research and compelling data that elevate the science behind the Company’s plans and innovative products, the Company is energizing its coach community to empower individuals to take control of their metabolic health. In July 2026, the company introduced the Trilivy Reset Fueling line, enhanced with MetaVantage Technology™, which further supports metabolic health by helping reduce waist circumference while also supporting normal fat metabolism and healthy insulin function.2 We expect to bring the updated product line fully to market this quarter. These upcoming innovations are expected to further strengthen the Company’s offerings to help clients achieve optimal metabolic health.

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While GLP-1 medication usage continues to accelerate, medication alone may not be adequate. Recent research indicates that approximately one-third of users discontinue the medication after six months, and up to 74% stop after a year.2 Furthermore, studies show 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.3 GLP-1 medications can be effective tools, but lasting results require more than just medication—they demand holistic behavior change.

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While GLP-1 medication usage continues to accelerate, medication alone may not be adequate for achieving sustainable, long-term health outcomes without the integration of comprehensive lifestyle modifications, nutritional guidance, and behavioral support. Recent research indicates that approximately one-third of users discontinue the medication after six months, and up to 74% stop after a year.3 Furthermore, studies show 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 GLP-1 medications can be effective tools, but lasting results require more than just medication—they demand holistic behavior change.

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The need for change extends beyond the obesity epidemic, as over 90% of Americans are metabolically unhealthy,4 impacting biomarkers of poor health, energy regulation, and weight management. Healthy quality weight loss that prioritizes burning fat while preserving muscle is essential for improving metabolic health but it demands commitment, consistency, and support. Given that GLP-1 medications are shown to be most effective when combined with lifestyle changes, we see strong alignment with our expertise in helping people create durable habits through coach-supported, behavior-based systems. Our experience in guiding individuals towards change through habit-based systems, supported by a coach, is highly compatible with the demonstrated effectiveness of these medications when paired with lifestyle modifications. Coaches remain central to everything we do, fostering a continuous cycle of growth by attracting and activating new clients, some of whom go on to become coaches themselves.

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The need for change extends beyond the obesity epidemic, as over 90% of Americans are metabolically unhealthy,5 impacting biomarkers of poor health, energy regulation, and weight management. Healthy, quality weight loss that prioritizes burning fat while preserving muscle is essential for improving metabolic health but it demands commitment, consistency, and support. Given that GLP-1 medications are shown to be most effective when combined with lifestyle changes, we see strong alignment with our expertise in helping people create durable habits through coach-supported, behavior-based systems. Our experience in guiding individuals towards change through habit-based systems, supported by a coach, is highly compatible with the demonstrated effectiveness of these medications when paired with lifestyle modifications.

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In all cases, the coaching model is anchored on clients’ needs, helping place them into supportive and energized health and wellness communities that share similar challenges and goals. With a coach, clients successfully lost 10 times more weight and 17 times more fat than those attempting to lose weight on their own.5 Coaches deliver highly tailored and personalized support and motivation, sharing their passion for healthy living and lifestyle transformation. Despite their diverse geographies and backgrounds, our coaches form a tight-knit community that supports, encourages, and inspires one another.

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Finding new clients and reactivating former clients remains an important area of focus for our business and our coaches. We believe our coach-based model is scalable, drives both client success and growth, and represents a key competitive advantage. The coaching model is anchored on clients’ needs, helping place them into supportive and energized health and wellness communities that share similar challenges and goals. With a coach, clients successfully lost 10 times more weight and 17 times more fat than those attempting to lose weight on their own.6 Coaches deliver highly tailored and personalized support and motivation, sharing their passion for healthy living and lifestyle transformation. Despite their diverse geographies and backgrounds, our coaches form a tight-knit community that supports, encourages, and inspires one another.

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Our coaches are independent contractors, not employees, who support clients and market our products and services to friends, family, and other people in their communities, primarily through word-of-mouth, email, and social media channels including Facebook, Instagram, TikTok, X (formerly known as Twitter), and video conferencing platforms. Products are shipped directly to clients; coaches do not handle or deliver products. This model enables our coaches to focus on client support and encouragement without having to manage inventory and allows them to maintain an arms-length transactional relationship. We provide economic incentives designed to support long-term coach success, which we believe contributes to their financial wellness, and offers the opportunity to improve their personal finances while elevating the health trajectories of those they support.6

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Our coaches are independent contractors, not employees, who support clients and market our products and services to friends, family, and other people in their communities, primarily through word-of-mouth, email, and social media channels including Facebook, Instagram, X (formerly known as Twitter), and video conferencing platforms. Products are shipped directly to clients; coaches do not handle or deliver products. This model enables our coaches to focus on client support and encouragement without having to manage inventory and allows them to maintain an arms-length transactional relationship. We provide economic incentives designed to support long-term coach success, which we believe contributes to their financial wellness, and offers the opportunity to improve their personal finances while elevating the health trajectories of those they support.7

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In 2025, the Company launched new programs that offer a clear roadmap, incentives, and recognition to help coaches grow their businesses. One such initiative is the new EDGE program that emphasizes progressive business building behaviors and rewards, designed to be easily adoptable by new and experienced coaches alike. It prioritizes leading indicators of success, not just outcomes or ranking. While the main goals of the program are to provide a structured approach for coaches to maximize their potential, improve their leadership skills, expand their reach, and achieve recognition for their progress, we also expect it to increase client acquisition and the conversion of clients into new coaches.

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In the third quarter of 2026, the Company launched a new compensation plan along with a new coach-developed Trilivy Coach Hub training platform for coaches. The new compensation plan and training platform are designed to develop and duplicate highly successful coaches, which has historically been a significant driver of growth. The new compensation plan emphasizes progressive business building behaviors and rewards, designed to be easily adoptable by new and experienced coaches alike. It prioritizes leading indicators of success, not just outcomes or ranking. The compensation plan and training platform together provide a structured approach for coaches to maximize their potential, improve their leadership skills, expand their reach, and achieve recognition for their progress. We expect that simplifying the fundamentals of our products and programs, and also the way we talk about them, will increase client acquisition and the conversion of clients into new coaches.

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Medifast continues to invest strategically in tools, programs, and digital resources to support our coaches - the Company’s most effective client acquisition engine. In July 2025, we rolled out Premier+, a refreshed auto-ship program that offers a new tiered pricing discount on monthly orders, reduces list pricing on several popular products, and provides a more reliable and predictable compensation structure for coaches. These enhancements were designed to make client acquisition and retention easier for our coaches. Medifast also remains focused on providing enhanced digital tools to support the business management of coaches, helping streamline administrative tasks, and allowing coaches to focus their efforts on what matters most: supporting their clients.

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Medifast continues to invest strategically in tools, programs, and educational resources to support our coaches - the Company’s most effective client acquisition engine. In July 2025, we rolled out Premier+, a refreshed auto-ship program that offers a new tiered pricing discount on monthly orders, reduces list pricing on several popular products, and provides a more reliable and

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

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

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

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

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4 O’Hearn M et al. Trends and Disparities in Cardiometabolic Health Among U.S. Adults, 1999-2018. J Am Coll Cardiol. 2022; 80(2):138-151. doi:10.1016/j.jacc.2022.04.046

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5 O’Hearn M et al. Trends and Disparities in Cardiometabolic Health Among U.S. Adults, 1999-2018. J Am Coll Cardiol. 2022; 80(2):138-151. doi:10.1016/j.jacc.2022.04.046

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5 In a clinical study, the group on the OPTAVIA 5 & 1 Plan using a coach lost 17x more fat than the self-directed control group

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6 In a clinical study, the group on the OPTAVIA 5 & 1 Plan using a coach lost 17x more fat than the self-directed control group

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6 OPTAVIA makes no guarantee of financial success. Success with OPTAVIA results from successful sales efforts, which require hard work, diligence, skill, persistence, competence, and leadership. Please see the OPTAVIA Income Disclosure Statement (http://bit.ly/4lFIPRP) for statistics on actual earnings of Coaches.

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7 OPTAVIA makes no guarantee of financial success. Success with OPTAVIA results from successful sales efforts, which require hard work, diligence, skill, persistence, competence, and leadership. Please see the OPTAVIA Income Disclosure Statement (http://bit.ly/4lFIPRP) for statistics on actual earnings of Coaches.

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Our variable cost structure can be utilized to adapt to changing market conditions with potential actions including adjustments to our manufacturing, distribution, and client 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.

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Our variable cost structure can be utilized to adapt to changing market conditions with potential actions including adjustments to our manufacturing, distribution, and client 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 further reduce demand for our products.

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The metabolic health and weight loss industry is very competitive and encompasses a multitude of metabolic health and weight loss products and programs. These include a wide variety of commercial metabolic health and weight loss programs, medications, 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 metabolic health and weight loss market is served by a diverse array of competitors. Potential clients seeking to manage their metabolic health or 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 acceptance 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 client 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 offerings, weight loss medications can be an important element that fits into the overall tailored lifestyle plans that also include coaching, community support, nutritionally balanced meals, and exercise.

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The metabolic health and weight loss industry is very competitive and encompasses a multitude of metabolic health and weight loss products and programs. These include a wide variety of commercial metabolic health and weight loss programs, medications, pharmaceutical products, surgical interventions, books, self-help diets, dietary meal replacements, protein-fortified consumables, and appetite suppressants as well as digital tools, app-based health and wellness monitoring solutions, and wearable trackers. The metabolic health and weight loss market is served by a diverse array of competitors. Potential clients seeking to manage their metabolic health or 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. 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 acceptance 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 client 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

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•Promotes a unified Habits of Health training system that aligns its coach leaders around a common mission of Lifelong Transformation, Making a Healthy Lifestyle Second Nature.

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•Promotes a unified Habits of Health training system that aligns its coach leaders around a common mission of lifelong transformation, through metabolic science and human connection.

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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.

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Medifast has perfected our model over the last 45 years, with habits, coaches, and community at the core, and we will continue to innovate as the industry evolves.

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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 2025 Form 10-K. There were no significant changes in our critical estimates or policies during the first three months of 2026.

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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 2025 Form 10-K. There were no significant changes in our critical estimates or policies during the first six months of 2026.

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Our product sales accounted for approximately 98% of our revenues for each of the three months ended March 31, 2026 and 2025.

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Our product sales accounted for approximately 96% of our revenues for the three months ended June 30, 2026 and 2025, respectively, and approximately 96% and 97% for the six months ended June 30, 2026 and 2025, respectively.

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Revenue: Revenue decreased $39.7 million, or 34.3%, to $76.0 million for the three months ended March 31, 2026 from $115.7 million for the three months ended March 31, 2025. The decline in revenue for the three months ended March 31, 2026 was primarily driven by a decrease in the number of active earning coaches to 14,000 as of March 31, 2026 from 25,400 as of March 31, 2025. The decrease in active earning coaches for the quarter, which has been trending downward year-over-year since the first quarter of 2023, was driven by continued pressure with client acquisition reflecting broader challenges in the operating environment, including rapid adoption of GLP-1 medications for weight loss. While the Company continues its transformation to focus on metabolic health, we expect the number of active earning coaches to continue to decline in 2026. The average revenue per active earning OPTAVIA coach was $5,432 for the three months ended March 31, 2026 compared to $4,556 for the three months ended March 31, 2025. The increase in revenue per active earning coach was driven by greater alignment of our network of coaches, prioritizing productive coaches and efficient coach network structures.

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Revenue: Revenue decreased $29.2 million, or 27.6%, to $76.4 million for the three months ended June 30, 2026 from $105.6 million for the three months ended June 30, 2025. The decline in revenue for the three months ended June 30, 2026 was primarily driven by a decrease in the number of active earning coaches to 11,700 for the three months ended June 30, 2026 from 22,800 for the three months ended June 30, 2025. Revenue decreased $68.9 million, or 31.1%, to $152.4 million for the six months ended June 30, 2026 from $221.3 million for the six months ended June 30, 2025. The decline in revenue for the six months ended June 30, 2026 was primarily driven by a decrease in the number of active earning coaches. The decrease in active earning coaches, which has been trending downward year-over-year since the first quarter of 2023, was driven by continued pressure with client acquisition reflecting broader challenges in the operating environment, including rapid and continued adoption of GLP-1 medications for weight loss, and prioritizing productive coaches and efficient coach network structures. While the Company continues its transformation to focus on metabolic health, we expect the number of active earning coaches to continue to decline in 2026. The average revenue per active earning coach was $6,529 for the three months ended June 30, 2026, a 41.0% increase compared to $4,630 for the three months ended June 30, 2025. We believe that the increase in revenue per active earning coach for the three months ended June 30, 2026 was driven by greater alignment of our network of coaches, prioritizing productive coaches and efficient coach network structures.

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Cost of sales: Cost of sales decreased $7.2 million, or 22.9%, to $24.3 million from $31.5 million for the three months ended March 31, 2026 from the corresponding period in 2025. The decrease in cost of sales for the three months ended March 31, 2026 was primarily due to $10.4 million of lower sales volumes, partially offset by $3.2 million of loss of leverage on fixed costs.

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Cost of sales: Cost of sales decreased $5.9 million, or 20.5%, to $23.0 million for the three months ended June 30, 2026 from $28.9 million for the three months ended June 30, 2025. The decrease in cost of sales for the three months ended June 30, 2026 was primarily driven by lower sales volumes. Cost of sales decreased $13.1 million, or 21.7%, to $47.3 million from $60.4 million for the six months ended June 30, 2026. The decrease in cost of sales for the six months ended June 30, 2026 was primarily driven by a $18.0 million decrease attributable to lower volumes, partially offset by $4.7 million attributable to loss of leverage on fixed costs.

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Selling, general, and administrative (“SG&A”): SG&A expenses were $55.1 million for the three months ended March 31, 2026, a decrease of $30.5 million, or 35.6%, as compared to $85.5 million from the corresponding period in 2025. The decrease in SG&A expenses for the three months ended March 31, 2026 was primarily due to a $16.2 million decrease in coach compensation on lower volume and fewer active earnings coaches, a $5.6 million decrease in company-led marketing related expenses, a one-time $2.2 million gain on the sale of our Maryland Distribution Center building and land previously classified as held for sale, and a $2.0 million decrease in employee compensation resulting from the realignment of the employee base to lower revenue levels. As a percentage of revenue, SG&A expenses were 72.4% for the three months ended March 31, 2026 as compared to 73.9% for the corresponding period in 2025. The decrease in SG&A expenses as a percentage of revenue for the three months ended March 31, 2026 was primarily due to approximately 470 basis points of decreased company-led marketing related expenses and 240 basis points of one-time gain on the sale of our Maryland Distribution Center building and land previously classified as held for sale, partially offset by 620 basis points of loss of leverage on fixed costs due to lower sales volume. SG&A expenses included research and development costs of$1.1 million for both the three months ended March 31, 2026 and 2025, in connection with the development of new products, programs and clinical research activities.

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Selling, general, and administrative (“SG&A”): SG&A expenses were $57.7 million for the three months ended June 30, 2026, a decrease of $20.0 million, or 25.7%, as compared to $77.7 million from the corresponding period in 2025. SG&A expenses decreased for the three months ended June 30, 2026 primarily due to a $12.6 million decrease in coach compensation on lower volume and fewer active earning coaches, a $2.3 million decrease in employee salary and benefit expenses, and a $2.0 million decrease in Company-led marketing costs. As a percentage of revenue, SG&A expenses were 75.6% for the three months ended June 30, 2026 as compared to 73.6% for the corresponding period in 2025. SG&A expenses as a percentage of revenue increased for the three months ended June 30, 2026 primarily reflecting approximately 290 basis points associated with loss of leverage on fixed costs and 60 basis points associated with the launch of our new Trilivy Reset product line, partially offset by a 190 basis point reduction related to Company-led marketing. SG&A expenses included research and development costs of $1.1 million for both the three months ended June 30, 2026 and 2025, in connection with the development of new products and plans, and clinical research activities. SG&A expenses were $112.8 million for the six months ended June 30, 2026, a decrease of $50.4 million, or 30.9%, as compared to $163.2 million from the corresponding period in 2025. SG&A expenses decreased for the six months ended June 30, 2026 primarily due to a $28.7 million decrease in coach compensation on lower volume and fewer active earning coaches, a $7.6 million decrease in Company-led marketing costs, a $4.3 million decrease in employee salary and benefit expenses, and a $2.2 million one-time gain on the sale of our Maryland Distribution Center building and land previously classified as held for sale. As a percentage of revenue, SG&A expenses were 74.0% for the six months ended June 30, 2026 as compared to 73.8% for the corresponding period in 2025 primarily reflecting 430 basis points associated to loss of leverage on fixed costs, partially offset by a 340 basis point reduction related to Company-led marketing costs. SG&A expenses included research and development costs of $2.1 million and $2.2 million for the six months ended June 30, 2026 and 2025, respectively, in connection with the development of new products and plans, and clinical research activities.

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Loss from operations: The Company’s loss from operations for the three months ended March 31, 2026 was $3.3 million, a decrease of $2.0 million as compared to loss from operations of $1.3 million for the corresponding period in 2025, 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, 2026 was 4.3% as compared to loss from operations as a percentage of revenue of 1.1% for the corresponding period in 2025 due to the factors described above impacting revenue and SG&A expenses.

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Loss from operations: For the three months ended June 30, 2026, the Company’s loss from operations was $4.3 million as compared to $1.1 million for the corresponding period in 2025, a change of $3.3 million, primarily as a result of decreased gross profit partially offset by decreased SG&A expenses. For the three months ended June 30, 2026 the Company’s loss from operations as a percentage of revenue was 5.7% as compared to 1.0% for the corresponding period in 2025, due to the factors described above impacting gross profit and the factors impacting SG&A expenses. For the six months ended June 30, 2026, the Company’s loss from operations was $7.6 million as compared to $2.3 million for the corresponding period in 2025, a change of $5.3 million, primarily as a result of decreased gross profit and the factors impacting SG&A expenses. Loss from operations as a percentage of revenue was 5.0% for the six months ended June 30, 2026 compared to 1.1% for the corresponding period in 2025 due to the factors above impacting gross profit and the factors impacting SG&A expenses.

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Other income: Other income for the three months ended March 31, 2026 was $1.4 million, a decrease of $0.4 million, or 24.3%, as compared to $1.8 million for the corresponding period in 2025. The decrease in other income for the three months ended March 31, 2026 was primarily due to unrealized gains on our investment in LifeMD common stock in the prior year period. The Company sold its investment in LifeMD during the quarter ended June 30, 2025.

Current wording

Other income: Other income for the three months ended June 30, 2026 was $1.3 million, a decrease of $2.6 million, or 66.1%, as compared to $3.9 million for the corresponding period in 2025. The decrease in other income for the three months ended June 30, 2026 was primarily due to a $2.6 million gain on our investment in LifeMD common stock that occurred during the corresponding period in 2025. The Company sold its investment in LifeMD during the second quarter of 2025. Other income for the six months ended June 30, 2026 was $2.7 million, a decrease of $3.0 million, or 53.1%, as compared to $5.7 million for the corresponding period in 2025. The decrease in other income for the six months ended June 30, 2026 was primarily due to a $3.2 million gain on our investment in LifeMD common stock that occurred during the corresponding period in 2025.

Previous wording

Provision for income taxes: The Company computes its income tax provision for interim periods in accordance with ASC 740. For interim periods during the year ended December 31, 2025, the Company calculated an annual effective tax rate and applied that rate to year-to-date ordinary income or loss to calculate its quarterly income tax provision (“AETR Approach”). Due to the existence of a full valuation allowance against its deferred tax assets recorded as of December 31, 2025, the Company did not apply the AETR Approach for the period ended March 31, 2026. Instead, the Company calculated income tax expense for the interim period based on actual results for the quarter. As a result, the Company’s income tax provision for the three months ended March 31, 2026 reflects discrete items, primarily state income taxes. Income tax expense for the three months ended March 31, 2026 was $0.2 million, an effective rate of negative 9.3%, as compared to $1.3 million for the three months ended March 31, 2025, an effective rate of 246.8%. The decrease in the effective tax rate was primarily driven by the increased loss incurred in the March 31, 2026 period and the valuation allowance on the net deferred tax assets. The Company will continue to assess the realizability of its deferred tax assets and the need for a valuation allowance on a quarterly basis. Should the valuation allowance be released in whole or in part, the Company expects to return to applying an estimated annual effective tax rate in future interim periods.

Current wording

Provision for income taxes: The Company calculates income tax expense for interim periods based on actual results for the quarter. Income tax expense for the three months ended June 30, 2026 was $0.1 million, an effective rate of negative 3.6%, as compared to $0.4 million for the three months ended June 30, 2025, an effective rate of 13.7%. The decrease in the effective tax rate was primarily driven by the increased loss incurred during thethree months ended June 30, 2026 and the valuation allowance on the net deferred tax assets. Income tax expense for the six months ended June 30, 2026 was $0.3 million, an effective rate of negative 5.9%, as compared to $1.7 million for the six months ended June 30, 2025, an effective rate of 49.8%. The decrease in the effective tax rate was primarily driven by the increased loss incurred during thesix months ended June 30, 2026 and the valuation allowance on the net deferred tax assets. The Company will continue to assess the realizability of its deferred tax assets and the need for a valuation allowance on a quarterly basis. Should the valuation allowance be released in whole or in part, the Company expects to return to applying an estimated annual effective tax rate in future interim periods.

Previous wording

Net loss: Net loss was $2.1 million, or $0.19 per share for the three months ended March 31, 2026 as compared to net loss of $0.8 million, or $0.07 per diluted share, for the three months ended March 31, 2025. The period-over-period changes were driven by the factors described above in the section titled “Loss from operations.”

Current wording

Net income (loss): Net loss was $3.1 million, or $0.28 loss per diluted share for the three months ended June 30, 2026 as compared to net income of $2.5 million, or $0.22 per diluted share, for the three months ended June 30, 2025. Net loss was $5.2 million, or $0.47 per diluted share for the six months ended June 30, 2026, as compared to net income of $1.7 million, or $0.15 per diluted share for the six months ended June 30, 2025. The period-over-period changes were driven by the factors described above.

Previous wording

The Company had stockholders’ equity of $197.7 million and working capital of $160.4 million at March 31, 2026 as compared with $198.9 million and $158.7 million at December 31, 2025, respectively. The $1.2 million net decrease in stockholders’ equity was primarily driven by a net loss of $2.1 million for the three months ended March 31, 2026 partially offset by $1.9 million for share-based compensation. The Company’s cash, cash equivalents, and investments increased from $167.3 million at December 31, 2025 to $168.9 million at March 31, 2026.

Current wording

The Company had stockholders’ equity of $196.4 million and working capital of $160.5 million at June 30, 2026 as compared with $198.9 million and $158.7 million at December 31, 2025, respectively. The $2.5 million net decrease in stockholders’ equity was primarily driven by a net loss of $5.2 million for the six months ended June 30, 2026, partially offset by $3.7 million for share-based compensation. The Company’s cash, cash equivalents and investment securities increased to $169.8 million at June 30, 2026 from $167.3 million at December 31, 2025.

Previous wording

Net cash provided by operating activities decreased by $3.1 million to $0.3 million for the three months ended March 31, 2026 from $3.4 million for the three months ended March 31, 2025 primarily driven by a $4.2 million decrease related to changes in inventory balances, a $2.2 million gain on sale of assets held for sale, and a $1.4 million decrease in net income, partially offset by a $4.5 million decrease in accounts payable and accrued expenses.

Current wording

Net cash provided by operating activities increased by $1.9 million to $2.0 million for the six months ended June 30, 2026 from less than $0.1 million for the six months ended June 30, 2025 primarily driven by a $14.9 million increase attributable to accounts payable and accrued expenses and a $5.9 million increase from income taxes, partially offset by a $13.2 million decrease related to changes in inventory balances and a $6.9 million decrease in net income.

Previous wording

Net cash used in investing activities was $17.1 million for the three months ended March 31, 2026 as compared to $2.1 million for the three months ended March 31, 2025. The increase in net cash used in investment activities was primarily driven by $19.1 million net increase in investments resulting from the use of proceeds from debt securities previously classified as cash to purchase debt securities classified as investments, partially offset by $3.6 million of proceeds from the sale of the Company’s Maryland Distribution Center building and land.

Current wording

Net cash used in investing activities was $18.4 million for the six months ended June 30, 2026 as compared to net cash provided by investing activities of $11.3 million for the six months ended June 30, 2025. The increase in net cash used in investment activities was primarily driven by $34.1 million net increase in investments resulting from the use of proceeds from debt securities previously classified as cash to purchase debt securities classified as investments, partially offset by $3.6 million of proceeds from the sale of the Company’s Maryland Distribution Center building and land.

Previous wording

Net cash used in financing activities increased by $0.3 million to $0.9 million for the three months ended March 31, 2026 from $0.6 million for the three months ended March 31, 2025. This increase was primarily due to a $0.4 million increase in net shares repurchased for employee taxes, partially offset by a $0.1 million decrease in cash dividends paid to stockholders.

Current wording

Net cash used in financing activities increased by $0.4 million to $1.0 million for the six months ended June 30, 2026 from $0.6 million for the six months ended June 30, 2025. This increase was primarily due to a $0.4 million increase in net shares repurchased for employee taxes.

Previous wording

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.

Current wording

In pursuing its business strategy, the Company may require additional cash for operating and investing activities. The Company expects future cash requirements in both the short term and the long term, if any, to be funded from operating cash flow, and financing activities as warranted by management’s investment and leverage strategies.