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Medifast Forms Strategic Alliance With XLHealth, Inc.
Medifast Plus for Diabetics Named Exclusive Nutritional Intervention Program in Health and Human Services Pilot Program for Treating Medicare Diabetics

Medifast, Inc. announced today that it has signed a joint venture agreement with XLHealth, Inc., one of the leading diabetes management companies in the United States. The Company's clinically tested Medifast Plus for Diabetics line will be the exclusive nutritional program offering for XLHealth's CMS Medicare Demonstration Project to provide Diabetes, Congestive Heart Failure (CHF) and Coronary Artery Disease (CAD) disease management and pharmacy benefits to over 10,000 Medicare Fee-For-Service patients in Texas. The Demonstration Project is the largest of its kind ever conducted by CMS. Medifast has also obtained the exclusive rights to secure and implement a similar program to manage dependent diabetics in the Department of Defense as part of the partnership with XLHealth.

The recent ground breaking Johns Hopkins clinical study results on Medifast Plus for Diabetics showed that patients on the Medifast Plus for Diabetics lost twice as much weight as compared to those following basic nutrition recommendations from the American Diabetes Association (ADA), and that almost twice as many people on the Medifast program were able to complete the weight loss portion of the study. "These results have established Medifast as the clear leader in nutritional intervention in support of disease management," said Patrick Hervy, XLHealth's Chairman and CEO. "We selected Medifast as a partner for our CMS Demonstration because we believe that the Hopkins study results can be replicated in our populations and produce significantly improved outcomes for patients."

The XLHealth Demonstration Project is expected to produce dramatically improved clinical outcomes and reduce the cost of diabetic and cardiac care, and shape the future of care models for providing service to Medicare fee-for- service chronically ill population, estimated to contain more than 10 million people with diabetes or heart failure.

The Demonstration Project will use Medifast Plus for Diabetics as the exclusive nutritional intervention program offering to assist patients with weight reduction and nutrition, and help to prove the cost effectiveness of disease management programs for Medicare beneficiaries. Furthermore, the program will use the Medifast Plus for Coronary Health and Medifast Plus for Joint Health products as part of the program protocol in patients who have related medical disorders.

Leo V. Williams III, Executive Vice President of Medifast says, "This joint venture will result in significant opportunities for our Company over the next five years, as Medifast becomes the 'point of the spear' in combating Diabetes, Coronary Disease and Arthritis, especially in the African American and Hispanic community. This initiative as well as our Coppin State Urban Obesity study will add significant value to our nation's efforts to improve the health of all Americans."

XLHealth, Inc. was selected by CMS to conduct the Demonstration Project in a competitive bid, and has for the past three years been recognized by the Disease Management Purchasing Consortium and the US Health Industry Research Council, as a "Best of Class" vendor and one of the "Top-Ten Disease Management Companies in America."

XLHealth provides disease management and support services to chronically ill patients enrolled with various health plans and physician groups, including Humana, PacifiCare and Wellmed. Patients supported by the programs, enjoy dramatic health improvement outcomes when compared to historical base line results. XLHealth and Medifast expect that Medifast Plus for Diabetics will make significant contributions by reducing or eliminating the need for certain medications and treatments associated with Diabetes.

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.

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,
Inc., or Ken Sgro of CEOcast, Inc., +1-212-732-4300, for Medifast