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Medifast Revenues Up 40%; Income From Operations Up 200%; Seven Consecutive Quarters of Profit

Medifast, Inc. (BULLETIN BOARD: MDFT) revenues have increased by 40% and margins by 4% YTD in June. The Medifast brand is a premium medical meal replacement and medically supervised weight management program for physicians and their patients. As a result of its teleweb strategy, income from operations increased to 523K YTD vs. 162K last year, and net income was 133K YTD vs. 222K last year, however, 468K in 2000 was an extraordinary item. The company has reported 2 cents a share for the quarter and 5 cents YTD. The company generated 528K in cash YTD in June and if current trends continue, the company will generate over 1 million in cash flow. The company has an 8 million net operating loss carrying forward which will have a positive impact on cash flow during the next 3 years. The company is currently trading at approximately 2.5x cash flow and 3x forecasted profits for 2001. The company launched 2 new soy-based products during the quarter that are being well-received in the medical marketplace.

Chairman MacDonald says, "Medifast has terrific operating leverage. Manufacturing can triple output without significant investment. Medifast-branded products are well known and have been used by over 700,000 patients since 1983 with an established network of physicians. IRS Pub. 502 may allow Medifast users to take a tax deduction for over 30 medical conditions including obesity. The company saves 39% of its cash flow as a result of the tax benefits of previous losses. Overall, the company is currently undervalued but that should change as it continues to make progress with increased revenues and profits as a result of its sales and marketing strategy and its talented management team."

The Medifast technology strategy was developed at Villanova University with the help of Fr. Don Reilly, OSA, Mr. Scott Zion and Mr. Mike MacDonald of the Medifast Board of Directors. The Medifast e-commerce site and the Physician Lifestyles Program, which supports the Medifast physician patient base, were responsible for the increase in sales and margins. Medifast has now achieved seven (7) consecutive profitable quarters. In 2000, Medifast earned $0.19 per share. Divesting of the unprofitable Montana Naturals operation and focusing on its core Medifast® business has returned the Company to long-term profitability.

This release contains forward-looking statements, which may involve known and unknown risks, and uncertainties and other factors that may cause Medifast's actual results and performance in future periods to be materially different from any future results or performance suggested by these statements. Medifast cautions investors not to place undue reliance on forward-looking statements, which speak only to management's expectation on this date.


SOURCE: Medifast, Inc.

Contact: Bradley T. MacDonald, Chairman & Chief Executive Officer of
Medifast, +1-410-581-8042, ext. 231