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 3/31/2022Fiscal Year ended 12/31/2021Fiscal Year ended 12/31/2020
Interest Expense952310
Total Operating Expense247,199911,356563,656
Interest Expense / Total Operating Expense0.04%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

10Q March 2022

10K December 2021

Reuters article on Medifast false ad claim settlement

Glassdoor Rating

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