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Medifast Reports Record Third Quarter Revenues, Increases in Stockholders Equity, Cash and Cash Equivalents
Medifast Year-to-Date Pretax Profits Increase 100%
Company Makes Significant Investment in Infrastructure and Advertising Programs to Prepare for 2004 National Television Advertising Campaign; 2004 Guidance to be Increased at Special Meeting on December 11th

Medifast, Inc. announced today third quarter and year to date results for the period ended September 30, 2003. The Company reported revenues of $6,775,000 for the third quarter, an increase of 121% versus $3,058,000 for the year- earlier period. Stockholders equity for the company increased 186% versus last year. Medifast generated year to date pre-tax profits of $3,047,000, an increase of 100% versus $1,522,000 last year. Cash and cash equivalents for the year were $7,965,000, an increase of 625% during the same nine months of 2002.

For the third quarter, the Company generated Income from Operations of $701,000, versus $774,000 for the year earlier period. Medifast reported Net Income Before Taxes of $687,000, or $0.07 per share ($0.06 per diluted share) versus Net Income Before Taxes of $734,000, or $0.11 per basic share ($0.08 per diluted share) in the year-earlier period. The Company had net income of $520,000 or $0.04 per diluted share, versus net income of $1,543,000, or $0.18 per diluted share. The fiscal 2003 results were affected by a change in the Provision for Income Taxes. During the third quarter, the GAAP effect for taxes reduced the Company's earnings by $167,000, while in the year-earlier period the Company realized a benefit of $809,000. Medifast is not currently a tax payer for Federal tax purposes, so there is no cash flow effect from the change.

The third quarter results were impacted by the Company's investment in a National Television Test Ad Campaign, which reduced net income by approximately $200,000. The company spent approximately $550,000 in print advertising, which was $400,000 greater than last year because of the value of testing the proper mix and results of each type of media in connection with the direct response TV commercial. Medifast also spent heavily to develop infrastructure, including increasing inventory and acquiring a new distribution center to support a significant increase in 2004 revenues. The results were also impacted by the reduction in inventory at its Consumer's Choice Division, as the Company elected to liquidate some of the older merchandise in preparation to launch a new Urinary Tract Infection Test product.

For the nine months ended September 30, 2003, Medifast reported revenues of $19,539,000, a 148% increase from $7,858,000 during the year earlier period. The Company had income from operations of $3,116,000, or $0.28 per diluted share, a 77% increase from $1,753,000, or $0.21 per diluted share during the same nine months in 2002. The company had net income of $1,975,000, or $0.18 per diluted share, a 20% decrease versus $2,479,000, or $0.29 per diluted share in the 2002 period, because of the tax asset benefits. Income before taxes was $3,047,000 or $0.27 per share fully diluted versus $1,522,000 $0.17 per fully diluted share. The 2003 per share calculations were based upon 11.9 million fully-diluted shares outstanding, versus 8.7 million fully- diluted shares outstanding for the previous year. The 36% increase in the share count is a result of conversions of preferred stock, employee and consultant stock options, a 550,000 share private placement and acquisitions.

"We continue to invest heavily in preparation for the launch of our 2004 advertising campaign," said Brad MacDonald, Medifast's Chairman and CEO. "The results from the test of our television advertising far exceeded our expectations. As a result, we decided that it would be prudent to now build inventory, systems and the infrastructure necessary to support the increased demand for our products. While we prepare for 2004, our current revenues continue to increase rapidly, as the strong growth in new associates for our Take Shape for Life division is now beginning to generate increased revenues. As a result of recent changes we made at our Consumer's Choice Division, we expect that this business will play an important role in our 2004 growth objectives. We now believe that we have the facilities, inventory, product and personnel to support the next stage of our growth, which should set the stage for a strong 2004."

  Some of the highlights of the third quarter include:

  -- Medifast conducted a two-week test campaign nationally on satellite and
     cable networks. The purpose of the test was to assist the company in
     developing a national rollout of the direct response program starting
     in January. The company's advertising agency said that the response
     was the strongest it had ever seen.

  -- Seven Crondall, LLC, a wholly owned subsidiary of Medifast, completed
     the purchase of a 119,000-square-foot distribution facility in
     Ridgley, Maryland.  The distribution facility is expected to help the
     Company, through its increased capacity, to produce up to $200 million
     per year in Medifast products.

  -- Growth in the Take Shape for Life Network.  The Company continues to
     sign new members for the program, which had approximately 5,251
     members at the end of the quarter, an increase of 30% since the
     beginning of the year. The Take Shape for Life health advisor network
     posted record revenues in September and increased the number of health
     advisor network distributors by over 15% during the month.

Subsequent to the end of the third quarter, Jason Properties, LLC, a wholly owned subsidiary of Medifast, acquired the assets of Hi-Energy Control Centers, a national company with weight loss centers in over 50 locations. The Company anticipates that the acquisition will generate $3 million in additional revenues in 2004 and be additive to earnings.


The Company expects to generate revenues of $25.2 to $25.5 million for the 2003 fiscal year ending December 31, 2003. It expects full year income from operations of approximately $3,700,000 to $3,800,000, or approximately $0.31 to $0.32 per diluted share. The Company expects to hire forty additional customer service people to handle the expected increase in new orders in the first quarter. This updated guidance includes the dilution from the recent capital raising activities, acquisitions and share conversions. 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's focus in the last quarter will be to build inventory and infrastructure to capture the significant sales increase expected during the first quarter of 2004. As a result, we will delay some of our year-end programs until January, at which time we expect to recognize the revenues. The Company announced that it would disclose its 2004 annual and quarterly forecast on December 11, 2003 at 4:30PM at the New York Athletic Club. The Company previously said that it expected to report 2004 revenues of $36 million next year. It expects to increase this guidance at the December meeting.

The Company will hold a conference call today at 4:30 p.m. EST. Interested participants should call (800) 861-5314 and use access code 27127#. There will be a playback available as well. The playback will be available for up to one week after it is completed by calling (800) 695-0507.

This call is also being webcast. Investors may go to to listen to the call.

This release contains forward-looking statements, which may involve known, and unknown risks, 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.

                              Medifast, Inc.
                  Condensed Consolidated Balance Sheets

                                                September 30,  December 31,
                                                     2003          2002
  Current assets:
    Cash                                          $4,163,000     $837,000
    Certificates of Deposit                          421,000      418,000
    Accounts receivable, net of allowance            568,000      284,000
    Merchandise inventory                          2,029,000    1,259,000
    Investment Securities Available for Sale -
     Cost of $3,750,000 ...                        3,802,000            -
    Prepaid expenses and other current assets        868,000      249,000
    Deferred tax asset                               683,000    1,079,000
      Total Current Assets                        12,534,000    4,126,000

  Property, plant and equipment - net              7,056,000    4,498,000
  Trademarks and Intangibles                       1,463,000      608,000
  Other assets                                        73,000        1,000
  Goodwill                                         1,439,000            -
  Deferred tax asset                                       -      655,000
      TOTAL ASSETS                               $22,565,000   $9,888,000

  Current liabilities:
    Dividends Payable                                 52,000       25,000
    Line of Credit                                   257,000       91,000
    Current maturities of long-term obligations      411,000      304,000
    Accounts payable and accrued expenses          2,400,000    1,189,000
    Total Current Liabilities                      3,120,000    1,609,000
    Deferred Compensation                             79,000            0
    Long-term obligations less current maturities  4,259,000    2,701,000
      Total Liabilities                            7,458,000    4,310,000

  Commitments and contingencies:

  Stockholders' Equity:

  Series B Redeemable Convertible Preferred Stock;
   stated value $1.00; 600,000 shares authorized;
   453,734 and 521,290 shares issued and
   outstanding, respectively                         454,000      521,000
  Series C Convertible Preferred Stock; stated
   value $1.00; 1,015,000 shares authorized; 317,000
   and 985,000 shares issued and outstanding,
   respectively                                      317,000      985,000
  Common stock; par value $.001 per share;
   15,000,000 authorized; 10,064,995 and 7,204,693
   shares issued and outstanding, respectively        10,000        7,000
  Additional paid-in capital                      18,169,000    9,613,000
  Accumulated deficit                             (3,445,000)  (5,381,000)
  Accumulated Comprehensive Income                    31,000            -

                                                  15,536,000    5,745,000
  Less Cost of Shares of Common Stock in
   Treasury of 66,195 and 30,178, respectively      (429,000)    (167,000)
  Total Stockholders' Equity                      15,107,000    5,578,000

  TOTAL LIABILITIES & STOCKHOLDERS' EQUITY       $22,565,000   $9,888,000

                              Medifast, Inc.
              Condensed Consolidated Statement of Operations

                             Three Months Ended       Nine Months Ended
                                  Sept. 30,               Sept. 30,
                              2003        2002         2003        2002
                                 (Unaudited)             (Unaudited)

  Revenue                  $6,775,000  $3,058,000 $19,539,000  $7,858,000
  Cost of sales             1,925,000     961,000   5,236,000   2,593,000
  Gross Profit              4,850,000   2,097,000  14,303,000   5,265,000
  Selling, general, and
   administration           4,149,000   1,323,000  11,187,000   3,512,000

  Income from operations      701,000     774,000   3,116,000   1,753,000
  Other income/(expenses)
    Interest expense          (31,000)    (26,000)    (95,000)    (80,000)
    Other income (expense)     17,000     (14,000)     26,000    (151,000)

  Income before provision
   for income taxes           687,000     734,000   3,047,000   1,522,000
  Provision for income tax
   (expense) benefit         (167,000)    809,000  (1,072,000)    957,000

  Net income                  520,000   1,543,000   1,975,000   2,479,000

  Less: Stock dividend on
   preferred stock              9,000      26,000      39,000      71,000

  Net income attributable
   to common shareholders    $511,000  $1,517,000  $1,936,000  $2,408,000

  Net Income                  520,000   1,543,000   1,975,000   2,479,000
  Other comprehensive income
    Unrealized gains on
     investment securities     51,000           -      51,000           -
    Less: Income tax effect   (20,000)          -     (20,000)          -

  Comprehensive Income       $551,000  $1,543,000  $2,006,000  $2,479,000

  Basic earnings per share       $.05        $.22        $.22        $.36

  Diluted earnings per share     $.04        $.18        $.18        $.29

  Weighted average shares
   outstanding -
    Basic                   9,872,120   6,765,849   8,953,569   6,650,571
    Diluted                11,863,185   8,713,582  11,076,550   8,506,814

SOURCE: Medifast, Inc.

CONTACT: Jeremy Hunt, Investor Relations Specialist, +1-410-504-8196 or
Casey Seward, Public Relations Manager, +1-410-504-8154, both of Medifast; or
Ken Sgro, CEOcast, Inc. for Medifast, +1-212-732-4300