What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-02-17 compared with 2025-02-18 · 179 added, 119 removed, 626 unchanged (32% of the section changed)

5 unchanged sentences

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Balance Sheets

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using an e‑commerce platform and a direct selling network of OPTA VIA coaches.

The Company’s provision for income taxes is impacted based on interpretations of U.S.

federal and various state and local income tax laws.

Management prepared the Company’s provision for income taxes using significant judgment when interpreting the provisions of federal, state and local tax regulations and assessed the positions taken as a result of these considerations as to whether or not the amount of benefit recorded would be more likely than not to be sustained upon examination.

Management prepared the Company’s provision for income taxes using significant judgment when interpreting the provisions of federal, state and local tax regulations.

Significant judgment is placed on both the assessment of whether it is more likely than not that some or all the Company's deferred tax assets will be realized and whether the amount of benefit recorded would more likely than not be sustained upon examination.

As disclosed in Note 11 of the financial statements, the Company recorded a valuation allowance of $12.1 million during the year ended December 31, 2025 and as of December 31, 2025, the Company had $5.6 million of gross unrecognized tax benefits.

We identified the evaluation of the Company’s provision for income taxes as a critical audit matter due to the significant judgments made by management when assessing the complex provisions of the tax laws and regulations.

Auditing the matter required significant auditor judgment and increased audit effort, including use of our tax specialists, in evaluating the recorded results of management’s tax positions and their assessment of the sustainability of these tax positions.

Auditing the matter

required significant auditor judgment and increased audit effort, including use of our tax specialists, in evaluating the recorded results of management’s tax positions and their assessment of the sustainability of these tax positions.

Our audit procedures related to the Company’s provision for income taxes included the following, among others:

• We obtained an understanding of the relevant controls related to the determination of current and deferred taxes and tested such controls for design and operating effectiveness, including controls related to the interpretation and application of tax laws.

• We involved our specialized tax professionals to assist in evaluating the application of federal regulations and state and local tax positions.

Our specialists considered the interpretations of federal regulations, state and local tax positions, and other tax positions requiring significant judgment, made an independent assessment of such positions and related calculations and then compared them to the Company’s recorded positions.

• We tested the accuracy and completeness of the data and inputs used to calculate the effective federal and state tax rates, current provision calculations and deferred tax assets/liabilities.

• We evaluated the reasonableness of management's estimates in regard to the ability to realize deferred tax assets by testing management's assessment of the ability to generate sufficient taxable income and the timing of future reversals of temporary differences.

• We utilized personnel with specialized knowledge and skill in income taxes and accounting for income taxes:

◦ to assist in the evaluation of management's assessment of positive and negative evidence and their conclusion that it is more likely than not that the Company will not realize the benefit of its deferred tax assets.

◦ to assist in evaluating the application and sustainability of federal regulations and state and local tax positions.

• We tested the accuracy and completeness of the data and inputs used to calculate the effective federal and state tax rates, current provision calculations and deferred tax assets and liabilities.

/s/ RSM US LLP

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Selling, general, and administrative 289,400 441,745 649,448

Income from operations 2,878 126,402 184,806

Income (loss) from operations

( 14,213 ) 2,878 126,402

Interest income

5,516 4,804 2,490

Other income (expense)

Interest income (expense)

3,058 ( 3,895 ) ( 95 )

Other expense

8,574 909 2,395

Income (loss) before provision for income taxes

( 5,639 ) 3,787 128,797

Income before provision for income taxes 3,787 128,797 184,059

Provision for income taxes 13,033 1,696 29,382

Net income $ 2,091 $ 99,415 $ 143,568

Earnings per share - basic $ 0.19 $ 9.13 $ 12.82

Earnings per share - diluted $ 0.19 $ 9.10 $ 12.73

Net income (loss)

$ ( 18,672 ) $ 2,091 $ 99,415

Earnings (loss) per share - basic

$ ( 1.70 ) $ 0.19 $ 9.13

Earnings (loss) per share - diluted

$ ( 1.70 ) $ 0.19 $ 9.10

Weighted average shares outstanding

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AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Years Ended December 31, 2025, 2024 and 2023

1 unchanged sentence

2025 2024 2023

Net income $ 2,091 $ 99,415 $ 143,568

Other comprehensive (loss) income, net of tax:

Net income (loss)

$ ( 18,672 ) $ 2,091 $ 99,415

Other comprehensive income (loss), net of tax:

Foreign currency translation 4 47 ( 72 )

Unrealized (losses) gains on investment securities

Unrealized gains (losses) on investment securities, net of tax

50 ( 115 ) 296

Other comprehensive (loss) income

Other comprehensive income (loss)

54 ( 68 ) 224

Comprehensive income $ 2,023 $ 99,639 $ 143,481

Comprehensive income (loss)

$ ( 18,618 ) $ 2,023 $ 99,639

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

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Operating Activities

Net income $ 2,091 $ 99,415 $ 143,568

Net income (loss)

$ ( 18,672 ) $ 2,091 $ 99,415

Adjustments to reconcile net income to cash provided by operating activities

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Realized gain on sale of investment securities ( 3,310 ) ( 95 ) —

Amortization of (discount) premium on investment securities

Amortization of discount on investment securities

( 671 ) ( 799 ) ( 169 )

Deferred income taxes 11,460 ( 7,403 ) 1,211

Unrealized loss (gain) on equity investment securities

Unrealized (gain) loss on equity investment securities

( 17 ) 4,089 ( 150 )

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Options exercised by executives and directors — 36 188

Net shares repurchased for taxes ( 836 ) ( 3,358 ) ( 1,516 )

Net shares repurchased for employee taxes

( 369 ) ( 836 ) ( 3,358 )

Cash dividends paid to stockholders ( 195 ) ( 715 ) ( 73,017 )

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Share-based compensation 76 — 8,188 — — — 8,188

Options exercised by executives and directors 7 — 188 — — — 188

Net shares repurchased for taxes ( 31 ) — ( 3,358 ) — — — ( 3,358 )

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Net shares repurchased for taxes ( 19 ) — ( 836 ) — — — ( 836 )

Treasury stock from stock repurchases — — — — — ( 3,602 ) ( 3,602 )

Treasury stock retired from stock repurchases ( 84 ) — — — ( 10,000 ) 10,000 —

Other comprehensive income — — — ( 68 ) — — ( 68 )

Cash dividends declared to stockholders — — — — ( 54,618 ) — ( 54,618 )

Forfeiture of dividends on unvested awards — — — — 42 — 42

Balance, December 31, 2024

10,938 $ 11 $ 33,136 $ 180 $ 176,782 $ — $ 210,109

Net income — — — — 2,091 — 2,091

Share-based compensation 60 — 7,363 — — — 7,363

Options exercised by directors

— — — — ( 18,672 ) — ( 18,672 )

Share-based compensation 80 — 7,639 — — — 7,639

Net shares repurchased for taxes ( 27 ) — ( 369 ) — — — ( 369 )

2 unchanged sentences

Forfeiture of dividends on unvested awards

— — — — 159 — 159

Balance, December 31, 2025

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The Company has one modern, United States Food and Drug Administration (the “FDA”) approved manufacturing facility located in Owings Mills, Maryland.

Medifast sells a variety of weight loss, weight management and healthy living products all based on our proprietary formulas under the OPTA VIA, OPTA VIA ACTIVE, and Optimal Health brands.

The Company’s product line includes approximately 79 consumable options, including, but not limited to, bars, puffs, cereal, crunchers, drinks, hearty choices, oatmeal, pancakes, pudding, soft serve, shakes, smoothies, soft bakes, and soups.

Medifast sells a variety of weight loss, weight management and healthy living products all based on our proprietary formulas under the Essential Fuelings, OPTA VIA ASCEND, and OPTA VIA ACTIVE categories.

The Company’s product line includes approximately 74 consumable options, including, but not limited to, bars, cereal, snack straws, hot chocolate, hearty choices, oatmeal, pancakes, pudding, soft serve, shakes, smoothies, soft bakes, and soups.

Medifast’s nutritional products are formulated with high-quality ingredients.

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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.

Cash and Cash Equivalents - Cash and cash equivalents consist of cash on deposit in financial institutions, institutional money funds and other short-term investments with a maturity of 90 days or less at the time of purchase.

Cash and Cash Equivalents - Cash and cash equivalents consist of cash on deposit in financial institutions, institutional money market funds and other short-term investments with a maturity of 90 days or less at the time of purchase.

All credit card and debit card transactions that process in less than seven days are classified as cash and cash equivalents.

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(1) The depreciation life for leasehold improvements is the lesser of the estimated useful life or the term of the related lease.

(2) Capitalized costs of cloud software are reported in Other assets on the balance sheet and are amortized over an estimated useful life of 2 to 5 years.

(2) Capitalized costs of cloud software are reported in Other assets on the consolidated balance sheet and are amortized over an estimated useful life of 2 to 5 years.

Long-lived Asset Impairment - Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

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The Company accounts for sales rewards that provide the customer with a material right as a separate performance obligation of the transactions, and therefore allocates consideration between the initial sale of products and the customer reward program and incentive offering.

The Company discontinued its reward program in July 2025.

Shipping and handling costs

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Contract costs

We expense OPTA VIA coach compensation and credit card fees during the period in which the corresponding revenue is earned.

We expense coach compensation and credit card fees during the period in which the corresponding revenue is earned.

These costs are recorded in selling, general and administrative expense in the accompanying Consolidated Statements of Operations.

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Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Deferred income tax assets represent amounts available to reduce income taxes payable on taxable income in future years.

Such assets arise because of temporary differences between the financial reporting and tax bases of assets and liabilities, as well as from net operating losses, capital losses, and tax credit carryforwards.

We evaluate the realizability of our deferred tax assets on a quarterly basis to determine whether a valuation allowance is necessary and reduce such assets to the amount that is more likely than not to be realized.

This evaluation requires significant judgment and involves the consideration of all available positive and negative evidence, including our historical operating results, the existence of cumulative losses in recent years, ongoing prudent and feasible tax planning strategies, and projections of future taxable income.

The benefit of a tax position is recognized in the consolidated financial statements in the period during which, based on all available evidence, management believes it is more-likely-than-not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any.

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Our policy is to recognize interest and penalties accrued on uncertain tax positions as part of income tax expense.

For 2025, the Company recorded $ 13.0 million in income tax expense, an effective tax rate of negative 231.1 %, as compared to $ 1.7 million in income tax expense and an effective tax rate of 44.8 %, for 2024.

The decrease in the effective tax rate for 2025 as compared to 2024 was primarily driven by the 214.0 % impact of the valuation allowance on the net deferred tax asset balance, the 34.5 % impact of the tax shortfall from stock compensation, and the 23.5 % impact of state taxes, partially offset by the 26.2 % increase from the impact of research and development tax credits, all of which were magnified by the loss position in the current period versus the near breakeven income position in the prior year.

On July 4, 2025, the tax legislation commonly referred to as the One Big Beautiful Bill Act (“OBBBA”) was signed into law, to provide for reconciliation pursuant to title II of H.

The provisions of the OBBBA do not significantly impact the Company’s effective tax rate but do impact timing items such as deductibility of research and development (“R&D”) costs and deductibility of newly acquired fixed assets.

Earnings Per Share - Basic earnings per share (“EPS”) computations are calculated utilizing the weighted average number of shares of common stock outstanding during the periods presented.

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Accounting Pronouncements - Adopted in 2025

In June 2022, the FASB issued Accounting Standards Update ("ASU") 2022-03—Fair Value Measurement (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions to (1) to clarify the guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security, (2) to amend a related illustrative example, and (3) to introduce new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820.

For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years.

Early adoption was permitted for both interim and annual financial statements that have not yet been issued or made available for issuance.

The Company adopted the standard during the quarter ended March 31, 2024.

The adoption of the standard had no material impact on the Company’s consolidated financial statements.

In November 2023, the 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 enable investors to develop more decision-useful financial analyses.

ASU 2023-07 is 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 is permitted.

The Company adopted the standard during the quarter ended December 31, 2024.

The Company's segment disclosures are reported in Footnote 15.

Recently Issued Accounting Pronouncements - Pending Adoption

In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09—Income Taxes (Topic 740):

Improvements to Income Tax Disclosures 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.

The ASU 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.

The ASU is effective for public business entities for annual periods beginning after December 15, 2024.

Prospective application is required, though retrospective application is permitted.

permitted to early adopt the standard.

The Company adopted the standard during the period ended December 31, 2025 using the retrospective method.

The Company's income tax disclosures are reported in Footnote 11.

Recently Issued Accounting Pronouncements - Pending Adoption

In November 2024, the FASB issued ASU 2024-03 Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses (“DISE”) 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.

The ASU is effective for public business entities for annual periods beginning after December 15, 2026.

Prospective application is required, though retrospective application is permitted.

Entities are permitted to early adopt the standard.

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The Company is currently evaluating the impact of adopting the ASU on its consolidated financial statements.

In September 2025, the FASB issued ASU 2025-06 Internal-Use Software (Subtopic 250-40):

Targeted Improvements to the Accounting for Internal-Use Software to increase the operability of the recognition guidance considering different methods of software development.

The ASU is effective for public business entities for annual periods beginning after December 15, 2026.

The amendments can be adopted on a prospective, modified, or retrospective basis.

Entities are permitted to early adopt the standard.

The Company did not early adopt for the 2025 reporting period.

The Company is currently evaluating the impact of adopting the ASU on its consolidated financial statements.

Inventories consisted of the following (in thousands):

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Depreciation expense for the years ended December 31, 2025, 2024 and 2023 was $ 10.5 million, $ 17.4 million and $ 10.0 million, respectively.

Refer to Footnote 16.

Supply Chain Optimization for information on assets held for sale and accelerated depreciation charges.

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

3 unchanged sentences

Accrued payroll and related taxes 8,703 9,953

OPTA VIA coach compensation payable

Coach compensation payable

Gross unrecognized tax liability, including interest and penalties

7 unchanged sentences

2025 2024 2023

Net income $ 2,091 $ 99,415 $ 143,568

Net income (loss)

$ ( 18,672 ) $ 2,091 $ 99,415

Weighted average shares of common stock outstanding 10,981 10,930 10,884

1 unchanged sentence

Weighted average shares of common stock outstanding 10,981 10,963 10,921

Earnings per share - basic $ 0.19 $ 9.13 $ 12.82

Earnings per share - diluted $ 0.19 $ 9.10 $ 12.73

The calculation of diluted earnings per share for the years ended December 31, 2024, 2023 and 2022 excluded 223 thousand, 24 thousand and no antidilutive restricted stock awards, respectively.

Earnings (loss) per share - basic

$ ( 1.70 ) $ 0.19 $ 9.13

Earnings (loss) per share - diluted

$ ( 1.70 ) $ 0.19 $ 9.10

The Company was in loss position as of December 31, 2025, and as such all awards were anti-dilutive.

If the Company was not in a loss position, the calculation of diluted EPS would have included the effect of dilutive common stock equivalents of 121 thousand and would have excluded 217 thousand antidilutive restricted stock awards for the year ended December 31, 2025.

The calculation of diluted EPS for the years ended December 31, 2024 and 2023 excluded 223 thousand and 24 thousand antidilutive restricted stock awards, respectively.

Authorized Shares

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(i) 20.0 million shares of common stock having a par value of $ 0.001 per share and (ii) 1.5 million shares of preferred stock having a par value $ 0.001 per share.

As of December 31, 2024, there were approximately 10.9 million and 0 shares of common stock and preferred stock issued, respectively.

As of December 31, 2025, there were approximately 11.0 million an d 0 shares of common stock and preferred stock issued, respectively.

Issuance of Additional Common Stock

On June 19, 2024, the stockholders of the Company approved the Medifast, Inc.

The stockholders of the Company approved the Medifast, Inc.

Amended and Restated 2012 Share Incentive Plan (the “Amended and Restated 2012 Plan”) that increased the number of shares of the Company’s common stock that may be awarded under the Amended and Restated 2012 Plan by 0.6 million and 0.5 million on June 18, 2025 and June 19, 2024, respectively, resulting in an aggregate of 2.7 million and 2.1 million shares available for issuance under the Amended and Restated 2012 Plan as of these dates.

Stock Repurchase Plan

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On September 12, 2019, the Company's Board of Directors authorized an additional 2.0 million shares for repurchase under the Stock Repurchase Plan.

The Company repurchased approximately 0 and 31 thousand shares during the years ended December 31, 2024 and 2023, respectively.

The Company did not repurchase any shares during the years ended December 31, 2025 and 2024, respectively.

As of December 31, 2025, there were approximately 1.3 million shares of common stock remaining under the Company’s Stock Repurchase Plan.

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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.

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.

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Restricted Stock:

The Company has issued restricted stock to employees and non-employee directors generally with vesting terms up to 3 years after the date of grant.

The Company has granted restricted stock under the 2012 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.

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Market and Performance-based Share Awards:

The Company has issued market and performance-based share awards in 2022 and 2023 and performance-based share awards in 2020, 2021, and 2024 to certain key executives who were granted deferred shares and may earn between 0 % and 250 % 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.

The Company has granted market and performance-based share awards in 2022, 2023 and 2025 and performance-based share awards in 2020, 2021, and 2024 under the 2012 Plan to certain key executives who were granted deferred shares and may earn between 0 % and 211 % 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 recognized ratably as expense over the award's performance period.

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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 previously estimated achievement 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.

Management determined that the market and performance-based share awards granted in March of 2022 would not reach the previously estimated achievement of the predetermined performance goals resulting in a reversal of previously recorded share-based compensation expense of $ 1.4 million for the year ended December 31, 2023.

Management also determined that the market and performance-based share awards granted in March of 2023 would not reach the previously estimated achievement of the predetermined performance goals.

The Company reversed $ 1.4 million of previously recorded share-based compensation expense during the quarter ended September 30, 2024.

The Company continues to record stock-based compensation expense on the performance-based share awards granted in March of 2023 at the revised performance factor over the life of the awards.

The Company withheld approximately 8 thousand, 22 thousand, and 0 thousand shares of the Company’s common stock to cover minimum tax liability withholding obligations upon the vesting of shares of performance-based share awards for the years ended December 31, 2024, 2023, and 2022, respectively.

The total fair value of performance-based share awards issued for the years ended December 31, 2024, 2023, and 2022 was $ 1.3 million, $ 5.7 million, and $ 0.0 million respectively.

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.

Management reversed previously recorded share-based compensation expenses after determining that market and performance-based share awards grants in March 2022, 2023, and 2024 would not meet predetermined performance goals.

Specifically, $ 1.4 million was reversed for 2022 awards in December 2023, $ 1.4 million for 2023 awards in September 2024, and $ 1.2 million for 2024 awards in September 2025.

The Company continues to record stock-based compensation expense on the performance-based share awards granted in March of 2023 and March of 2024 at the revised performance factor over the life of the awards.

No market and performance-based share awards were issued during the year ended December 31, 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 year ended December 31, 2024 and 2023 was $ 1.3 million and $ 5.7 million, respectively.

The Company withheld approximately 8 thousand and 22 thousand shares of the Company’s common stock to cover minimum tax liability withholding obligations upon the vesting of shares of performance-based share awards for the years ended December 31, 2024 and 2023, respectively.

Share-based compensation expense for all types of awards is recorded in selling, general, and administrative expense in the accompanying Consolidated Statements of Operations.

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Options and restricted stock 699 $ 6,013 301 $ 6,521 139 $ 5,926

Market and performance-based share awards granted in 2025 308 1,299 — — — —

Performance-based share awards granted in 2024 38 ( 321 ) 117 1,198 — —

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Cost Unrealized

Gains (Losses)

Interest Estimated

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Government & agency securities 23,247 111 80 23,438 — 23,438

Equity securities

62,363 111 80 62,554 39,116 23,438

52,297 ( 3,924 ) 96 48,469 13,377 35,092

Corporate bonds

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Total $ 165,619 $ ( 3,697 ) $ 422 $ 162,344 $ 90,928 $ 71,416

The Company had $ 95 thousand in realized gains for the year ended December 31, 2024, and no realized gains or losses for the years ended December 31, 2023, and 2022.

The Company had $ 3.3 million and $ 95 thousand in realized gains for the years ended December 31, 2025, and 2024.

The Company had no realized gains or losses for the year ended December 31, 2023.

During the fourth quarter of 2023, the Company entered into an agreement with LifeMD (Nasdaq:

1 unchanged sentence

The 180-day lock-up period expired on June 8, 2024, and the registration process was completed, effective July 18, 2024.

The fair value of the investment is recorded within the investment securities of the accompanying Consolidated Balance Sheets.

The losses related to the Company’s LifeMD investment for the year ended December 31, 2024, 2023, and 2022 are summarized in the table below (in thousands):

During the second quarter of 2025, the Company sold all of its holdings in LifeMD common stock.

Prior to the sale, the fair value of the investment was recorded within the investment securities.

The net proceeds received from the sale were recorded within cash and cash equivalents of the

Consolidated Balance Sheets.

The gains and losses related to the Company’s LifeMD investment for the year ended December 31, 2025, 2024, and 2023 are summarized in the table below (in thousands):

Twelve months ended December 31,

2025 2024 2023

Net (losses) gains recognized during the period on equity securities

Net gains (losses) recognized during the period on equity securities

$ 3,222 $ ( 4,089 ) $ 150

Net gains (losses) recognized on equity securities sold

Unrealized (losses) gains recognized during the reporting period on equity securities still held at the reporting date

Unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date

$ — $ ( 4,089 ) $ 150

The Company concurrently entered into an agreement in which LifeMD would provide services to stand-up the collaboration between LifeMD and the Company.

The Company made payments of $ 5 million in each of the years ended December 31, 2024 and 2023.

This amount was included in the Company's selling, general, and administrative expenses on the accompanying Consolidated Statements of Operations for the years ended December 31, 2024 and 2023, respectively.

During the fourth quarter of 2023, the Company concurrently entered into an agreement in which LifeMD would provide services to stand-up the collaboration between LifeMD and the Company.

The Company recognized $ 0.0 million , $ 5.0 million , and $ 5.0 million within selling, general, and administrative expenses for services performed by LifeMD for the twelve months ended December 31, 2025, 2024, and 2023.

Pretax income (loss) for the years ended December 31, 2025, 2024, and 2023 consisted of the following (in thousands):

2025 2024 2023

US $ ( 5,639 ) $ 3,664 $ 125,230

Foreign — 123 3,567

Total $ ( 5,639 ) $ 3,787 $ 128,797

Income tax expense for the years ended December 31, 2025, 2024, and 2023 consisted of the following (in thousands):

2025 2024 2023

Federal $ 7,059 $ 25,170 $ 35,857

State 2,040 3,001 5,558

Total current 9,099 28,171 41,415

Federal ( 6,325 ) 1,523 ( 738 )

State ( 1,078 ) ( 312 ) ( 186 )

Total deferred ( 7,403 ) 1,211 ( 924 )

Provision for income taxes $ 1,696 $ 29,382 $ 40,491

Current tax expense (benefit)

$ 195 $ 7,059 $ 25,170

1,378 2,040 3,001

Total current tax expense

1,573 9,099 28,171

Deferred tax expense (benefit)

7,973 ( 6,325 ) 1,523

3,487 ( 1,078 ) ( 312 )

Foreign — — —

Total deferred tax expense (benefit)

11,460 ( 7,403 ) 1,211

Total provision for income taxes

$ 13,033 $ 1,696 $ 29,382

The total provision for income taxes for the years ended December 31, 2025, 2024, and 2023 was $ 13.1 million, $ 1.6 million, and $ 29.5 million, respectively.

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Total provision for income taxes $ 13,050 $ 1,644 $ 29,494

The total income tax paid or refunded for the tax years ended December 31, 2025, 2024, and 2023 was a $ 10.5 million payment, a $ 1.6 million refund, and a $ 34.3 million payment, respectively (in thousands):

2025 2024 2023

Income tax paid (refunded), net

US Federal $ 2,704 $ ( 2,946 ) $ 30,750

US state and local

Texas * 565 *

California 7,350 * *

Other 411 764 3,505

Total US state and local 7,761 1,329 3,505

Foreign — — —

Total income tax paid (refunded), net $ 10,465 $ ( 1,617 ) $ 34,255

*Jurisdiction below the threshold for the period presented

The reconciliation of the United States federal statutory tax provision to the Company’s provision for income taxes for the years ended December 31, 2025, 2024, and 2023 (in thousands, except percentages):

2 unchanged sentences

State income taxes, net of federal benefit 3,284 ( 58.3 ) % 486 12.8 % 1,693 1.3 %

Foreign taxes

Foreign tax effects

Hong Kong — — % ( 22 ) ( 0.6 ) % 296 0.2 %

Singapore — — % — — % — — %

Share-based compensation

Valuation allowance — — % ( 3 ) ( 0.1 ) % ( 846 ) ( 0.7 ) %

— — % ( 1 ) — % ( 199 ) ( 0.1 ) %

Research and development and jobs credits ( 602 ) 10.7 % ( 589 ) ( 15.5 ) % ( 1,170 ) ( 0.9 ) %

Changes to valuation allowances, federal only 9,383 ( 166.4 ) % — — % — — %

Unrecognized tax benefit 590 ( 10.4 ) % 269 7.1 % 440 0.3 %

Nontaxable or nondeductible items

Executive compensation 543 ( 9.7 ) % 52 1.4 % 1,895 1.5 %

Charitable donations — — % ( 236 ) ( 6.2 ) % ( 1,094 ) ( 0.8 ) %

Valuation allowance ( 20 ) ( 0.5 ) % ( 613 ) ( 0.5 ) % 396 0.2 %

Intercompany loan restructuring — — % — — % 1,167 0.9 %

Other permanent differences 176 4.9 % 106 0.1 % 427 0.2 %

Share-based compensation 626 ( 11.1 ) % 889 23.4 % 143 0.1 %

Meals and entertainment 210 ( 3.7 ) % 314 8.3 % 255 0.2 %

Other adjustments 183 ( 3.2 ) % ( 258 ) ( 6.8 ) % ( 246 ) ( 0.2 ) %

Provision for income taxes $ 13,033 ( 231.1 ) % $ 1,696 44.8 % $ 29,382 22.8 %

The makeup of the majority of the state income tax expense is comprised of state income taxes in Maryland, California, New York, Pennsylvania, Illinois, and Texas for the year ended December 31, 2025;

Texas for the year ended December 31, 2024;

and Texas, Pennsylvania, and Maryland for the year ended December 31, 2023.

Significant components of the Company’s deferred tax assets (liabilities) consisted of the following (in thousands):

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Net deferred tax assets $ — $ 11,460

On August 12, 2022, the President of the United States signed into law the Inflation Reduction Act.

The two primary tax implications for corporations are a 15% alternative minimum tax (“AMT”) that applies to corporations with at least one billion of pretax income and a one percent surtax on share buybacks.

The AMT will not apply to the Company for the years ended December 31, 2024 and 2023 since the Company’s pretax income does not exceed the threshold.

The share buyback surtax will not apply to the Company as its share issuances exceed its share buybacks for the years ended December 31, 2024 and 2023.

The Inflation Reduction Act did not have a material impact on the Company’s tax provision for the years ended December 31, 2024 and 2023.

On July 4, 2025, tax legislation entitled an Act to provide for reconciliation pursuant to title II of H.

14 (“the “Act”) and commonly referred to as the One Big Beautiful Bill Act (“OBBBA”).

The primary provisions of the Act do not impact the Company’s effective tax rate but do impact the timing of tax deductions related to research and development costs and fixed asset expenditures after January 19, 2025.

Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to utilize our existing deferred tax assets.

A significant piece of objective negative evidence evaluated is our current year loss, declining financial performance in recent years, and our projections of short-term future losses.

Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth.

We have determined that the reversal of future taxable temporary differences corresponding to our deferred tax liabilities will provide a sufficient source of income for realization of a portion of our deferred tax assets.

In 2025, we recorded an additional valuation allowance of $ 12.1 million.

We file income tax returns in the United States and various states and foreign jurisdictions.

The Company has separate state and foreign net operating loss carry forwards totaling $ 26.4 million that start expiring in 2029.

The Company has recorded a valuation allowance for the portion of the net operating loss carry forwards which are not expected to be realized.

The Company has separate federal, state, and foreign net operating loss ("NOL") carry forwards totaling $ 49.2 million with $ 13.3 million of the state NOLs that start expiring in 2029.

The federal NOLs do not have an expiration as do a significant portion of the state NOLs.

The Company has recorded a valuation allowance for the net operating loss carry forwards which are not expected to be realized.

As of December 31, 2025, the Company had $ 5.6 million of gross unrecognized tax benefits, which would have a net $ 4.5 million impact on the effective tax rate, if recognized.

As of December 31, 2024, the Company had $ 7.4 million of gross unrecognized tax benefits, which would have a net $ 6.2 million impact on the effective tax rate, if recognized.

The change for both 2024 and 2023 primarily relates to additional gross unrecognized benefits for current tax positions and reductions of gross unrecognized benefits for prior year tax positions and lapses in statute of limitations.

The change for 2025 primarily relates to a settlement of tax examination and for 2024 primarily relates to additional gross unrecognized benefits for current tax positions and reductions of gross unrecognized benefits for prior year tax positions and lapses in statute of limitations.

The amounts of unrecognized tax benefits were as follows (in thousands):

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(Decrease) increase for prior period tax positions

Settlement with tax authorities

Reduction due to lapse in statute of limitations ( 126 ) ( 135 )

4 unchanged sentences

For 2025 and 2024, the Company recorded expenses related to interest and penalties of $ 0.6 million and $ 0.4 million, respectively.

As of December 31, 2024, the current year reduction primarily relates to the expiration of federal, state, and foreign statutes of limitation.

The Company cannot reasonably project the change in its uncertain tax positions over the next twelve months.

As of December 31, 2025, the current year reduction primarily relates to the settlement of a tax examination.

Our tax returns are subject to examination by various federal, state, and local tax authorities.

1 unchanged sentence

however, amounts asserted by taxing authorities could be greater than our accrued position.

Pending the resolution of one examination, and specific to jurisdictions where the Company has filed tax returns and examination of such returns is constrained by a statute of limitations, we are no longer subject to United States federal, state, and local income tax examinations by tax authorities for years prior to 2021.

Pending the resolution of two examinations, and specific to jurisdictions where the Company has filed tax returns and examination of such returns is constrained by a statute of limitations, we are no longer subject to United States federal, state, and local income tax examinations by tax authorities for years prior to 2022.

Unconditional purchase obligations:

At December 31, 2024, the Company had $ 10.8 million in unconditional purchase obligations with a remaining term in excess of one year primarily for inventories and outsourced information technology.

At December 31, 2025, the Company had $ 3.5 million in unconditional purchase obligations with a remaining term in excess of one year primarily for outsourced information technology.

Operating Leases:

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Operating leases $ 701 $ — $ 1,785

As of December 31, 2024, the weighted average remaining lease term was 3 years, 1 month and the weighted average discount rate was 2.2 %.

As of December 31, 2025, the weighted average remaining lease term was 3 years and the weighted average discount rate was 2.3 %.

The following table presents the maturity of the Company’s operating lease liabilities as of December 31, 2025 (in thousands):

2 unchanged sentences

Total $ 10,694

During the three months ended September 30, 2025 , the Company entered into a lease agreement for new headquarters office space in 1501 South Clinton Street, Baltimore, Maryland 21224, with a lease term of 8 years and 7 months.

The lease is expected to commence in March 2026, at which time the Company will record a right-of-use asset and corresponding lease liability.

The Company will not renew its office space lease in 100 International Drive, Baltimore, Maryland 201202, when it expires in February 2026.

As of December 31, 2025, the future minimum lease commitments related to this lease are not included in the tables above as the lease has not yet commenced.

Credit Agreement

4 unchanged sentences

The Credit Agreement otherwise would have matured on April 13, 2026.

The Company had no borrowings under the Amended Credit Agreement as of December 31, 2023.

On October 30, 2024, the Company terminated its Amended Credit Agreement with Citibank, N.A.

1 unchanged sentence

SEGMENT REPORTING

The Company's OPTA VIA segment derives revenues from customers through the sale of OPTA VIA products which are shipped directly to customers.

Our OPTA VIA coaches help customers adopt healthy habits and learn the benefits of our products.

The Company's OPTA VIA segment derives revenues from customers through the sale of our products which are shipped directly to customers.

Our coaches help customers adopt healthy habits and learn the benefits of our products.

The accounting policies of the Company's single segment are the same as those described in the Company's Significant Accounting Policies.

9 unchanged sentences

The OPTA VIA segment recognizes revenue when control of the products is transferred to the customer.

The segment pays commissions on the sale of products to OPTA VIA coaches.

The segment pays commissions on the sale of products to coaches.

The Company derives all of its revenue from sales within the United States and manages the business activities on a consolidated basis.

11 unchanged sentences

7,639 7,363 8,188

Other (income) expense (1)

Other income (1)

( 8,574 ) ( 909 ) ( 2,395 )

1 unchanged sentence

13,033 1,696 29,382

Segment net income

Segment net income (loss)

$ ( 18,672 ) $ 2,091 $ 99,415

1 unchanged sentence

Adjustments and reconciling items

Consolidated net income

Consolidated net income (loss)

$ ( 18,672 ) $ 2,091 $ 99,415

(1) Other (income) expense included within Segment net income includes interest income, interest expense, and unrealized gains and losses on LifeMD common stock .

(1) Other income included within Segment net income includes interest income, interest expense, and realized and unrealized gains and losses on LifeMD common stock .

Segment depreciation expense for the years ended December 31, 2025, 2024, and 2023 was $ 10.5 million, $ 17.4 million and $ 10.0 million, respectively.

5 unchanged sentences

The Company identified certain other supply chain assets at other locations within its distribution network that will no longer be utilized and are no longer useful to the Company’s operations, and adjusted their respective useful lives accordingly, with the impact reflected below in the accelerated depreciation charges.

For the year ended December 31, 2024, the components of the Company’s supply chain optimization charges were as follows:

The components of the Company’s supply chain optimization charges were as follows:

Twelve Months Ended December 31, 2024

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Total supply chain optimization $ 12,502

For the year ended December 31, 2024, the supply chain optimization charges were recorded in the Company’s accompanying Consolidated Statements of Operations as follows:

The supply chain optimization charges were recorded in the Company’s accompanying Consolidated Statements of Operations as follows:

Twelve Months Ended December 31, 2024

2 unchanged sentences

During the three months ended December 31, 2024 , the Company readied and listed the Maryland Distribution Center building and land for sale.

The Company expects to sell the land and building in 2025.

The building and land remain held for sale through December 31, 2025.

The net book value of the building and land is $ 1.4 million.

1 unchanged sentence

The assets are recorded within prepaid expenses and other current assets on the Consolidated Balance Sheets.

The Company closed on the sale of the land and building in February 2026.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data