Press Releases
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Medifast, Inc.
The 2002 fourth quarter results included a $32,000 charge against the tax asset. Excluding the charge and a stock dividend on Preferred Stock, the company earned $178,000, or $0.03 per share ($0.02 per share on a fully- diluted basis) versus the 2001 fourth quarter earnings of $6,000. During the fourth quarter of 2002, the company incurred one-time expenses of $350,000 related to the acquisition and transition costs of assets that is now the Take Shape for Life Network (TSFLN) and subsidiary. The company also paid approximately $100,000 in one-time legal and administrative costs associated with its listing on the American Stock Exchange. The company incurred an additional $100,000 expenses in connection with the recently announced $1 million shipment to Elken International. Medifast only recognized $155,000 in revenues from this shipment in the fourth quarter, and will realize the balance in the first quarter.
For its fiscal year ended December 31, 2002, Medifast generated revenue of $12,300,000, an increase of 144% versus $5,021,768 for the year-earlier period. The company also reported earnings of $2,522,000, or $0.36 per share ($0.30 per share on a fully-diluted basis), including the tax benefit. Excluding the gain from the tax benefit, the company earned $1,699,000 or $0.25 per share ($0.19 per share on a fully-diluted basis). This compares to net income of $588,000 or $0.08 per share ($0.07 per share on a fully-diluted basis) for the 2001 fiscal year, including a $22,000 gain from tax benefits. The company reported 2002 operating margins of 70% versus 56% for the year earlier period. Medifast also ended the year with approximately $1.3 million in cash and cash equivalents and increased its inventory position to $1.2 million to accommodate the increased customer demand.
"We believe that these results demonstrate the rapidly growing demand for our medical meal replacement products," said Bradley T. MacDonald, Medifast's President and Chief Executive Officer. "The growth during 2002 was dramatic. However, we feel that we have only begun to penetrate the $26 billion a year U.S. Meal Replacement Market. This year, we plan to increase our distribution, invest more aggressively in advertising, capitalizing on our relationship with Dick Vitale and further expand our product line. Medifast has never been in a better position to do so, as our financial position is the strongest in its history. Growth opportunities have never been better for our company."
Some of the highlights of the year included:
-- Increased advertising spending leads to rapid customer growth. The
company's increased advertising in national magazines and newspapers
such as Parade, Newsweek, US News & World Report, People and Readers
Digest expanded its customer base significantly.
-- Launch of new subsidiary to expand market share. The recent launch of
the Take Shape for Life, Inc., its health network subsidiary, will
provide supervised weight and disease management and fitness programs
to major clinics, corporations, and individuals.
-- International expansion through joint ventures should substantially
increase revenues. The company entered into a joint venture with Elken
International of Malaysia for the sales of the Company's Take
Shape™/Dr. Diet weight management products for the Asian Market.
-- Improved balance sheet. The company improved its capital structure by
paying off its short debt, redeeming its Series "A" Preferred Notes,
purchasing its building and grounds and restructuring the long-term
debt on more favorable terms.
-- The Company increased its stockholders' equity to $6,378,000 on
December 31, 2002 compared with $2,538,000 for the year-earlier
period.
"The opportunities for growth in our industry are unprecedented and we are actively developing solutions to enter new markets," added Mr. MacDonald. "We have recently expanded our core programs and products to include disease management and sports performance products. Diabetes is one of the fastest growing problems in North America, and our Low Glycemic products have earned the coveted Seal of Approval from the Glycemic Research Institute. Our Take Shape for Life™ Program, although just five months old, has already generated a substantial response. We are also excited to participate in The Johns Hopkins Health Nutrition and Health Research Clinic clinical study to evaluate the efficacy of Medifast Plus for Diabetics compared to a standard American Diabetes Association weight loss treatment program for those who are overweight and have type II diabetes. The results are to be presented showing the cost savings of using the Medifast program. Finally, we have great expectations for the launch of our adolescent weight management product, Fit!™ and many of the other new products we expect to unveil this year."
Guidance
The company expects to generate revenues of between $5.0 and $5.5 million for its first quarter of 2003 ended March 31, versus $1.7 million for the same period in 2002. The company expects to report net income from operations of $750,000 to $850,000, or $0.09 to $0.10 per diluted share, versus $0.03 per diluted share for the first quarter of 2002. These results assume a significantly higher level of advertising and sales development of its TSFL Network, which is expected to generate revenue and earnings growth during the balance of the year. For the full year, the company anticipates revenues of $21 to $23 million. It expects income from operations of approximately $3.2 million to $3.9 million, or approximately $0.37 to $0.45 per diluted share. This excludes the provision for tax benefits, as the company becomes a tax payer under GAAP in 2003. However, the company expects that it will be able to offset its 2003 corporate tax liability by utilizing its Net Operating Loss Carryforward.
The Company will hold a conference call and webcast at 4:30 p.m. ET today to discuss its results and outlook for 2003. Mr. MacDonald will host the call. The conference call will be open to the public. The telephone number for the conference call is (877) 253-7748 from the United States or Canada and (706) 679-0129 for international participants. The conference I.D. is 8788631. Interested parties will also be able to listen to the call live and access the call for 30 days, 24 hours after the call is completed via the Internet at: mms://winaudio.mshow.com/92250.asf. The call will also be available for up to 48 hours after it is completed by dialing (800) 642-1687 from the United States or Canada and (706) 645-9291 for international participants. The Conference ID is 8788631. In addition, a recording of the conference call will be posted at www.medifast.net. Investors may e-mail questions in advance of the conference call to
Medifast is a leader in innovative, great-tasting, soy-based medical meal replacement products used by qualified medical practitioners and their patients for over twenty years. The Company recently expanded its health and wellness spectrum to include disease management products and healthcare accessories. In mid-October, Medifast launched Medifast Plus for Women's Health and Medifast Plus for Joint Health in addition to Medifast Plus for Diabetics. The Company continues to market and sell Medifast Weight Management products throughout the United States and recently, in the Asian Market. The launch of the new Medifast Plus products in addition to an aggressive advertising campaign has helped facilitate the increase in sales and margins.
Forward-looking statements made in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that all forward-looking statements involve risk and uncertainties which may cause actual results to differ from anticipated results, including risks associated with the timing and development of the company's reserves and projects as well as risks of downturns in economic conditions generally, and other risks detailed from time to time in the company's filings with the Securities and Exchange Commission.
CONTACT: Casey Seward, Public & Investor Relations Specialist of Medifast, +1-410-504-8154; or Mathew Henderson, CEOcast, +1-212-732-4300, for Medifast.
MEDIFAST, INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Operations
Year Ended December 31,
2002 2001
(Unaudited)
Revenue $12,345,000 $5,022,000
Cost of sales 3,687,000 2,211,000
Gross Profit 8,658,000 2,811,000
Selling, general, and administration 6,906,000 2,066,000
Income from operations 1,752,000 745,000
Other income/(expenses) (54,000) (178,000)
Net income before income taxes 1,698,000 567,000
Provision for income tax benefit 925,000 22,000
Net Income 2,623,000 588,000
Less:
Stock dividend/Accretion 218,000 62,000
Net income attributable
to common shareholders $2,405,000 $526,000
Basic earnings per share $0.36 $.08
Diluted earnings per share $0.30 $.07
Weighted average common shares outstanding-
Basic 6,722,505 6,524,969
Diluted 8,737,292 8,069,646
MEDIFAST, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
Year Ended December 31,
2002 2001
ASSETS
Current assets:
Cash $837,000 $270,000
Certificates of Deposit 418,000 312,000
Accounts receivable, net of allowance 284,000 283,000
Merchandise inventory 1,259,000 640,000
Prepaid expenses and other current assets 249,000 76,000
Deferred tax asset 1,079,000 355,000
Total Current Assets 4,126,000 1,936,000
Property, plant and equipment - net 4,498,000 767,000
Trademarks and Intangibles 608,000
Other assets 1,000 200,000
Deferred tax asset 655,000 454,000
TOTAL ASSETS $9,888,000 $3,357,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses 1,189,000 315,000
Dividends Payable 25,000 22,000
Line of Credit 91,000 0
Current Maturities of Long-term debt 304,000 75,000
Current Maturities of
obligations under capital lease 0 23,000
Total Current liabilities 1,609,000 435,000
Long-term debt less S/T 2,701,000 234,000
Total Liabilities 4,310,000 669,000
Stockholders' equity 5,578,000 2,538,000
TOTAL LIABILITIES & STOCKHOLDER EQUITY $9,888,000 $3,357,000
SOURCE: Medifast, Inc.
CONTACT: Casey Seward, Public & Investor Relations Specialist of
Medifast, +1-410-504-8154; or Mathew Henderson, CEOcast, +1-212-732-4300, for
Medifast
Web site: http://www.medifast.net/