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Medifast Reports First Quarter Results
National Advertising Campaign Gains Traction
Company Records 18th Consecutive Quarter of Profitability

Medifast, Inc. reported today record first quarter revenue for the period ended March 31, 2004. The Company reported revenue of $6.82 million, versus $6.35 million for the same period in 2003. Domestic sales grew by $1.4 million, or 26% versus the year-earlier period. Medifast recorded $40,000 in international sales, compared to $1 million in the fiscal 2003 first quarter. The Company expects that international shipments that occurred in last year's first quarter will be shipped in the second, third and fourth quarters of its current fiscal year. Medifast generated pre-tax Income from Operations of $894,000 versus $1.4 million in the 2003 first quarter. The 2004 first quarter represented the Company's eighteenth consecutive quarter of profitability.

The Company reported net income of $647,000, or $0.06 per share ($0.05 per share on a fully diluted basis), versus $845,000, or $0.11 per share ($0.08 per share on a fully diluted basis) for the 2003 first quarter. Selling, General and Administrative expenses increased from $3.2 million in the year- earlier period to $4.5 million in the 2003 first quarter, as a result of improvements to the Company's customer service and information technology systems to support increased sales activity during the balance of the year, and increased legal and insurance fees relating to Sarbanes-Oxley. Net income was also impacted by the higher provision for income taxes under GAAP in the 2004 first quarter compared to the same period in 2003. Medifast did not pay Federal taxes for either the 2004 or 2003 first quarter.

The Company improved Shareholders' Equity at the end of the first quarter of 2004 to $17.8 million, versus $17.1 million at year-end. The Company ended the quarter with $1.5 million in cash and cash equivalents, along with $4 million in investment securities. Inventory increased from $3 million at the end of December to $4.1 million at the end of the first quarter, to support expected growth during the second quarter and throughout the year.

"We were pleased that we were able to implement many initiatives in the first quarter that we expect to drive significant revenue and earnings growth during the balance of the year," said Brad MacDonald, Medifast's Chairman and Chief Executive Officer. "We have increased our Hi-Energy clinic business significantly, and have already seen strong demand from diabetics for our branded Medifast Plus line. Our `Tasting Party Plan' has been enormously popular among our Health Advisors, supporting continued strong growth in our Take Shape for Life division. We also expect to make inroads into new international markets."

  Some of the highlights of the 2004 first quarter included:

  -- Expansion of Hi-Energy clinics. The Company increased the number of
     clinics to over 100 during the period. The clinics also expanded their
     product lines to include Medifast's disease management products. The
     Company expects to have over 125 clinics by the end of the year.

  -- Growth in Take Shape for Life division. Medifast added over 200 new
     Health Advisors during the quarter, which assisted in the success of
     launching the "Tasting Party Plan."
  -- Improvements to the Company's knowledge-based call center. Medifast
     invested in recruiting, training and technology to support its
     advertising initiatives during the second quarter. Such changes are
     expected to increase the closing rates from the Company's national
     advertising campaign. Medifast also created a new video that is sent
     to respondents to the Company's advertising programs. The video, among
     other changes, has improved response rates.
  -- Joint venture with XL Health. The Company entered into a joint venture
     with XL Health for its CMS Medicare Demonstration Project. The pilot
     project will use Medifast Plus for Diabetics as its exclusive
     nutritional intervention program.

"We are excited by our recently expanded national advertising campaign," continued Mr. MacDonald. "We have already increased the rate at which leads are generated, and improved our closing rates, as a result of the investments and changes we made during the first quarter. A substantial increase in the number of knowledge-based call center operators, combined with additional training is already yielding results. We expect May and June's closing rates to continue to increase significantly, thereby realizing the return on the investment of our television and print advertising throughout the second quarter, and the remainder of the year. Our advertising activities have also yielded many other benefits. For example, the interest in our clinical business, as a result of our improved visibility in the market, has never been greater. These initiatives give us confidence that we will meet our objectives for the year."

2004 Financial Guidance

Medifast reiterated its 2004 financial guidance. The Company expects to report full-year revenue of $38 to $39 million with a pretax profit of $0.55 to $0.58 per diluted share. The Company believes it will grow sequentially on a quarterly basis as a result of the initiatives outlined in this press release, with substantial growth in the third and fourth quarter of the year. For the second quarter ending June 30, 2004, Medifast believes it will report revenue of $9.0 to $9.2 million, and pretax profit of $1.53 million to $1.65 million or $0.13 to $0.14 per diluted share. The Company has met or exceeded its revenue guidance for each quarter since its recapitalization in 1999.

The Company will hold a conference call and webcast today at 4:30 pm. Interested participants should call (888) 632-0064 when calling within the United States or (706) 679-8133 when calling internationally. Please refer to pass code 7381292. There will be a playback available as well. To listen to the playback, please call (800) 642-1687 when calling within the United States or (706) 645-9291 when calling internationally. Please use pass code 7381292 for the replay. The replay will be available until May 26, 2004.

The webcast may be accessed via the Company's web site at Interested parties should go to the section marked "For Investors" to listen to the call. The webcast can be accessed until May 26, 2004.

This release contains forward-looking statements that 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 expectations or beliefs on this date.

                     Medifast, Inc. and Subsidiaries
                  Condensed Consolidated Balance Sheets

                                                March 31,    December 31,
                                                   2004           2003
  Current assets:
    Cash                                        $1,539,000     $2,524,000
    Accounts receivable-net of allowance
     for doubtful accounts of $55,000              788,000        641,000
    Inventory                                    4,083,000      2,988,000
    Investment Securities                        3,974,000      3,983,000
    Deferred Compensation                          321,000        321,000
    Prepaid expenses and other current assets    1,267,000        936,000
    Deferred tax asset                             350,000        596,000
      Total Current Assets                      12,322,000     11,989,000

  Property, plant and equipment - net            7,379,000      7,449,000
  Trademarks and Intangibles                     4,389,000      4,419,000
  Other assets                                     423,000        375,000
      TOTAL ASSETS                             $24,513,000    $24,232,000

  Current liabilities:
    Accounts payable and accrued expenses       $1,500,000     $1,714,000
    Dividends payable                               58,000         58,000
    Line of credit                                  86,000         55,000
    Current maturities of long term debt           745,000        764,000
      Total Current Liabilities                  2,389,000      2,591,000

    Long-term debt, net of current portion       4,342,000      4,564,000
      Total Liabilities                          6,731,000      7,155,000

  Stockholders' Equity:

  Series B Convertible Preferred Stock;
   par value $1.00; 600,000 shares authorized;
   353,734 and 403,734 shares issued and
   outstanding, respectively                       354,000        404,000
  Series C Convertible Preferred Stock;
   stated value $1.00; 1,015,000 shares authorized;
   267,000 and 267,000 shares issued and
   outstanding, respectively.                      267,000        267,000
  Common stock; par value $.001 per share;
   15,000,000 authorized; 10,650,142 and
   10,482,609 shares issued and outstanding,
   respectively                                     10,000         10,000

  Additional paid-in capital                    20,214,000     20,120,000
  Accumulated comprehensive loss                   (20,000)       (25,000)
  Accumulated deficit                           (2,369,000)    (3,016,000)
                                                18,456,000     17,760,000
  Less Cost of Common Stock in treasury;
   88,500 and 83,863 shares, respectively         (674,000)      (683,000)
  Total Stockholder's Equity                    17,782,000     17,077,000

  TOTAL LIABILITIES & STOCKHOLDER EQUITY       $24,513,000    $24,232,000

                     Medifast, Inc. and Subsidiaries
             Condensed Consolidated Statements of Operations

                                      Three Months Ended March 31,
                                         2004           2003
                                      (unaudited)    (unaudited)

  Revenue                             $6,817,000     $6,347,000
  Cost of sales                        1,350,000      1,683,000
  Gross Profit                         5,467,000      4,664,000
  Selling, general, and
   administration                      4,548,000      3,220,000

  Income from operations                 919,000      1,444,000
  Other income/(expense)
    Interest expense                     (23,000)       (33,000)
    Other income (expense)                (2,000)       (10,000)

  Income before provision
   for income taxes                      894,000      1,401,000
  Provision for income
   tax benefit (expense)                (247,000)      (537,000)

  Net income                             647,000        864,000
  Less: Stock dividend on
   preferred stock                             -         19,000

  Net income attributable
   to common shareholders               $647,000       $845,000

  Basic earnings per share                  $.06           $.11
  Diluted earnings per share                $.05           $.08

  Weighted average shares outstanding -
    Basic                             10,610,391      7,940,238
    Diluted                           12,157,860     10,240,712

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