Is Medifast Stock Halal?
Key Points
- After examining Medifast’s source of revenue, the ratio of interest expense to total operating expense, and ESG impact we are uncomfortable investing in Medifast from a Halal perspective.
Company Overview
Medifast, Inc. is an American nutrition and weight loss company based in Baltimore, Maryland. Medifast produces, distributes, and sells weight loss and health-related products through websites, multi-level marketing, telemarketing, and franchised weight loss clinics.
How much of Medifast’s revenue comes from haram?
All of Medifast’s revenue comes from their Optavia Program in which Optavia Coaches sell Products and Plans to their clients. As of 31st December 2021 Medifast has 59,800 coaches of whom 90% were previously clients. Medifast’s business model relies on a multi-level marketing strategy.
Practical Islamic finance concludes
Questionable. Medifast’s business model relies on multi-level marketing which tends to focus on recruiting to generate revenue as opposed to selling actual products.
Does Medifast rely on interest to operate?
| Recent Quarter ended 3/31/2022 | Fiscal Year ended 12/31/2021 | Fiscal Year ended 12/31/2020 | |
| Interest Expense | 95 | 231 | 0 |
| Total Operating Expense | 247,199 | 911,356 | 563,656 |
| Interest Expense / Total Operating Expense | 0.04% | 0.03% | 0.00% |
*Numbers in thousands, of U.S. dollars
Practical Islamic finance concludes:
Riba is used but not relied upon in Medifast Inc.’s operations.
What is Medifast’s Environmental, Social, and Governance (ESG) impact?
Environment
No notable environmental highlights.
Social
Medifast, Inc. has a Glassdoor rating of 4.4 out of 5. Glassdoor is a trusted website where current and former employees can review and rate their companies.
Governance
No notable governance highlights.
Practical Islamic finance concludes:
It’s unclear to Practical Islamic Finance whether Medifast has a net positive or net negative ESG impact considering its classification as a multi-level marketing company.
Comfort Rating
From Medifast, Inc. business, financial, and ESG reviews, Practical Islamic Finance rate Medifast, Inc. stock as
Uncomfortable to invest in from a halal perspective.
Justification
While we don’t like to generalize, Multi-level marketing companies have a very bad reputation for taking advantage of their workers and their money. This makes Practical Islamic Finance incredibly uncomfortable investing in any company that is based on Multi-Level Marketing.
Sources