Press Releases
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Medifast, Inc.
"Our results continue to reflect the strong demand for our dosage controlled medical meal replacement products," said Bradley T. MacDonald, Medifast's President and Chief Executive Officer. "Our rapid and recurring revenue growth demonstrates the rapid payback of our advertising programs, and the actions we have taken to further build distribution. These agreements, such as the joint venture with Elken International of Malaysia, are already providing significant revenues. While we continue to focus on international growth, the relationships we have formed in the U.S. with leading companies such as NovaCare Rehabilitation and Hi Tech Pharmacal should enable us to grow even faster. We also believe that the trends we have seen in our Take Shape for Life Division will continue, and that the combination of new product offerings and distribution vehicles will enable us to grow rapidly for many years to come."
Some of the highlights of the first quarter included:
-- The company further improved its balance sheet, ending the quarter with
$2,333,000 in cash and cash equivalents, a 93% improvement versus
$1,206,000 for the same period last year. During the quarter, its Jason
Pharmaceuticals subsidiary was granted a five-year, $200,000
development loan at a 3% interest rate on favorable terms from
Baltimore County. The Company had working capital of $3,943,000 on
March 31, 2003 compared with $1,869,000 at March 31, 2002.
-- Medifast recently began shipping its Take Shape/Dr. Diet products to
Asia with a successful launch in March.
-- The company's increased advertising in national print media such as
Parade, AARP Magazine, Today's Health and Wellness and an array of
other major national magazines, has expanded its customer base
considerably and significantly increased revenues.
-- The company shifted its product mix to higher margin-products, focusing
on disease management products, such as Medifast Plus for Diabetics,
Joint Health, and Women's Health.
-- Jason Enterprises, Inc., a wholly owned subsidiary of Medifast, Inc.,
and Health Care Products, a division of Hi Tech Pharmacal, signed a
joint venture and distribution agreement to develop and produce retail
diabetic meal replacement products for their extensive quality line of
Diabetic products under the DiabetiTrim brand. This agreement is
expected to expand the reach to diabetic customers nationwide with its
clinically tested line of diabetic products.
-- The company's wholly owned subsidiary, Take Shape for Life™, signed
an initial 18-month marketing agreement with NovaCare Rehabilitation.
The agreement will allow Medifast to market its products through custom
created retail kiosks in 200 of NovaCare's eastern region clinics.
Medifast expects the pact to generate significant revenues.
"The opportunities for growth in our industry have never been better and we are actively investing in new products 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 we are excited by our relationship with Hi Tech Pharmacal. Our Take Shape for Life™ Program continues to dramatically exceed our expectations. We are also excited to participate in The Johns Hopkins Bloomberg School of Public Health Study, which compares Medifast Plus for Diabetics to a standard ADA meal plan using whole foods. Finally, we are excited about many of the new products we expect to launch this year, which we believe will further enhance the growing relationships with our physicians and their trained health advisors."
Outlook
The company expects to generate revenues of between $6.1 and $6.6 million for its second quarter ended June 30, versus $4.8 million for the same period in 2002. The company expects to report net income from operations of $1.2 to $1.6 million, or $0.10 to $0.14 per diluted share, versus $0.08 per diluted share for the second quarter of 2002. For the full year, the company anticipates revenues of $23.5 to $26 million, versus its previous estimates of $21 to $23 million. It expects income from operations of approximately $4.3 million to $4.8 million, or approximately $0.37 to $0.45 per diluted share. The Company does not expect to be a Federal taxpayer until 2004, but expects to pay taxes at an effective rate of 38.3% for GAAP calculations.
The Company will hold a conference call and webcast at 4:30 p.m. ET today to discuss its results and outlook for the balance of 2003. Mr. MacDonald will host the call. The conference call will be open to the public. The telephone number for the conference call is (800) 861-5314. The conference I.D. is 27127#. Interested parties will also be able to listen to the call live and access the call for 30 days, via the Internet at http://event.on24.com/eventRegistration/eventRegistrationServlet?eventid=1920& sessionid=1&key=99ACAC0DA007D1AE6B521DD9303C1D60. In addition, a recording of the conference call will be posted at www.medifast.net.
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.
Tables to Follow: Income statement and balance sheet for the first quarter versus comparable quarter in 2002:
Medifast, Inc.
Condensed Consolidated Balance Sheets
March 31, 2003 December 31, 2002
(Unaudited)
ASSETS
Current assets:
Cash $1,914,000 $837,000
Certificates of Deposit 419,000 418,000
Accounts receivable, net of allowance 224,000 284,000
Merchandise inventory 1,056,000 1,259,000
Prepaid expenses and other current assets 342,000 249,000
Deferred tax asset 1,197,000 1,079,000
Total Current Assets 5,152,000 4,126,000
Property, plant and equipment - net 4,669,000 4,498,000
Trademarks and Intangibles 677,000 608,000
Other assets 90,000 1,000
Deferred tax asset 0 655,000
TOTAL ASSETS $10,588,000 $9,888,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term
obligations $293,000 $304,000
Line of Credit 122,000 91,000
Dividends payable 32,000 25,000
Accounts payable and accrued expenses 762,000 1,189,000
Total Current Liabilities 1,209,000 1,609,000
Long-term obligations less current
maturities 2,790,000 2,701,000
Total Liabilities 3,999,000 4,310,000
Stockholders' Equity:
Series B Redeemable Convertible Preferred
Stock; stated value $1.00; 600,000 shares
authorized; 478,734 and 521,290 shares issued
and outstanding, respectively 479,000 521,000
Series C Convertible Preferred Stock;
stated value $1.00; 1,015,000 shares
authorized; 427,000 and 985,000 shares
issued and outstanding, respectively. 427,000 985,000
Common stock; par value $.001 per share;
15,000,000 authorized; 8,904,644 and
7,204,693 shares issued and outstanding,
respectively 9,000 7,000
Additional paid-in capital 10,471,000 9,613,000
Accumulated deficit (4,536,000) (5,381,000)
6,850,000 5,745,000
Less Cost of Common Stock in treasury;
45,713 and 30,178 shares, respectively (261,000) (167,000)
Total Stockholder's Equity 6,589,000 5,578,000
TOTAL LIABILITIES & STOCKHOLDER EQUITY $10,588,000 $9,888,000
Medifast, Inc.
Condensed Consolidated Statement of Operations
Three Months Ended March 31,
2003 2002
(Unaudited)
Revenue $6,347,000 $1,772,000
Cost of sales 1,683,000 659,000
Gross Profit 4,664,000 1,113,000
Selling, general, and administration 3,220,000 811,000
Income from operations 1,444,000 302,000
Other income/(expenses)
Interest expense (33,000) (41,000)
Other income (expense) (10,000) 1,000
Income before provision for income taxes 1,401,000 262,000
Provision for income tax benefit
(expense) (537,000) 0
Net income 864,000 262,000
Less: Stock dividend on preferred stock 19,000 24,000
Net income attributable to
common shareholders $845,000 $238,000
Basic earnings per share $.11 $.04
Diluted earnings per share $.08 $.03
Weighted average shares outstanding -
Basic 7,940,238 6,564,531
Diluted 10,240,712 8,463,185
SOURCE: Medifast, Inc.
CONTACT: Casey Seward, Public & Investor Relations Specialist, Medifast,
+1-410-504-8154; or Mathew Henderson, CEOcast, Inc. for Medifast,
+1-212-732-4300 x225
Web site: http://www.medifast.net/