Dec. 26 (Bloomberg) -- Medifast Inc., a seller of weight-loss meals and counseling, declined the most in 16 months after its acting chief financial officer said he would resign, six weeks after the company’s prior CFO stepped down.
Medifast fell 13 percent to $25.50 at the close in New York, for its biggest one-day decline since August 2011. The Owings Mills, Maryland-based company said today in a regulatory filing that Edward J. Powers would leave as acting CFO and principal accounting officer no later than Jan. 4.
The CFO turnover and attention on the weight-loss company Herbalife Ltd. unnerved Medifast investors, said Kurt Frederick, a Wedbush Securities Inc. analyst in Los Angeles. Hedge-fund manager Bill Ackman last week said he’s shorting shares of Herbalife, after his research convinced him the maker of nutritional supplements is a pyramid scheme. Frederick said the situation for the two companies isn’t the same.
Medifast is “set up very differently from Herbalife,” Frederick, who recommends buying Medifast shares, said in a telephone interview. “The coaches don’t hold any inventory. The compensation structure is different.”
While Powers’s departure was “unfortunate timing,” there is no sign of deeper financial problems at Medifast, Frederick said.
Medifast, which offers diet-plan meals and weight-loss counseling, said Powers was leaving for a “job opportunity in the construction tool industry,” in a statement released today. Powers took over Nov. 13 after Medifast said former CFO Brendan Connors had resigned “to pursue other interests.” The shares have risen 86 percent so far this year.
Powers previously worked in the construction group of Stanley Black & Decker Inc., the New Britain, Connecticut-based tool maker, according to Medifast’s Nov. 13 statement. A Medifast spokesman, Alecia Pulman, declined to say today where Powers was going.
Joseph Kelleman, the company’s director of finance-supply chain, will take over as CFO on an interim basis, the company said in its statement. Medifast said it’s continuing a national search for a permanent replacement.
Herbalife is based in the Cayman Islands.
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