Press Releases
Every day, more lives are transformed all over the world – one healthy habit at a time. Read the latest about how Medifast and the OPTAVIA® movement is impacting people’s lives.
Medifast, Inc.
For the six months ended June 30, 2004, Medifast had revenue of $14.2 million, representing an 11% increase compared to $12.8 million reported for the six-month period ending June 30, 2003. Domestic sales increased 26% to $14.2 million. Income from Operations was $1,901,000 a decrease of 21% compared to $2,415,000 for the 2003 six-month period, due to increased sales costs and declines in international revenue. The company reported net income of $1,321,000, or $0.12 per basic share ($0.11 per diluted share), versus $1,455,000, or $0.17 per basic share ($0.14 per diluted share). Net income was impacted by a higher share count as a result of the conversion of preferred stock into common stock, as well as the sale of common stock in the capital raising completed in July of 2003. The Company did not owe Federal income taxes during the period.
Medifast ended the second quarter with $3.8 million in cash and cash equivalents. The Company had stockholders' equity of $18.4 million and working capital of $10.5 million on June 30, 2004, compared with $8.2 million and $3.0 million at June 30, 2003, respectively. During the second quarter, the Company purchased 1,500 shares of its common stock in the open market, per its Board of Directors authorization. The second quarter marked the Company's 19th consecutive quarter of profitability.
"We continue to see strong growth in our domestic business," said Brad MacDonald, Medifast's Chairman and Chief Executive Officer. "Our Take Shape for Life Network demonstrated another quarter of solid increases in the number of Health Advisors and sales. Our `Tasting Party Plans' have generated a great deal of enthusiasm from both our Health Advisors and new customers. Our Hi- Energy Clinics once again contributed significantly to our results, as we have now increased our licensed clinics to over 100 nationally. We continue to refine our advertising programs, as we seek to optimize the mix of national television advertising with direct mail and marketing programs. Despite the strong growth we have experienced in the U.S., our international sales have been disappointing. The conflict in Iraq has delayed key product launches in the Middle East and Far East, resulting in a decline of nearly $1.5 million in revenue during the first six months of the year from international sales."
"During the second quarter we invested aggressively in developing the infrastructure necessary to support a much larger business," continued MacDonald. "As a result, we now have the capacity to produce $200 million of product at our plants, which will support growth in our Take Shape for Life division as well as continued expansion of our Hi-Energy Clinics. We recently opened four corporate clinics in the Orlando market, and are excited about the licensee potential we believe these corporately run clinics will attract. Many of the new products that were delayed in the first half of the year have now been launched. The initial response to our new Maintain by Medifast™ product line was so strong on a national television retailer that we will appear again in October. As we further expand distribution over the coming quarters we expect the national television retailer relationship will be an important contributor to revenue. The combination of a strong balance sheet, significant infrastructure improvements which continue to reduce costs, promising new product launches and a rapidly growing clinic business should ensure that the future is bright for Medifast."
Some of the highlights of the second quarter include:
-- Johns Hopkins Study. The Company initiated a clinical study with
Johns Hopkins Bloomberg School of Public Health to test the efficacy
of Medifast meal replacements versus a standard reference diet. The
18-month study will consist of 80 overweight or obese boys and girls
between the ages of 8 and 15 along with 40 of their parents. The
clinical study will examine whether a joint parent-child approach
using Medifast's engineered foods will result in greater weight loss
than children dieting alone.
-- Key patent awarded. The Company was granted an official patent
(patent number 6,706,697) from the United States Patent and Trademark
Office for its Medifast Plus for Diabetics Shakes.
-- Launch of Take Shape for Life Business Opportunity video. Medifast
launched a new video designed to attract new Health Advisors and
customers to the company's innovative weight loss products. The
video will emphasize the lucrative business opportunity available to
potential Health Advisors. This recruitment tool will help stimulate
the growth of the Take Shape for Life network.
Subsequent to the end of the second quarter, the Company launched Maintain by Medifast™, a line of low-calorie, low-carbohydrate, diabetic friendly products. The line of low-glycemic shakes, bars and soups is backed by an ongoing clinical study in which participants achieved a weight loss of up to 2 pounds per week by incorporating the products into a 1,200 to 1,500 calorie per day meal plan. The Company will continue to rollout and expand the sale of Maintain by Medifast™ throughout the balance of the year.
2004 Financial Guidance
For the third quarter, the Company expects to report revenue of $7.5 to $8.5 million and to generate pre-tax profit of $950,000 to $1.2 million, or $.08 to $.10 per diluted share. Medifast reiterated its full-year financial guidance previously announced on July 2, 2004. The company expects to generate revenue of $30 million to $31 million with a pretax profit of $4.2 to $4.4 million, or $0.32 to $0.35 per diluted share. Medifast does not expect to owe Federal income taxes this year. The company expects to generate strong domestic revenue growth for the second half of the year, and expects limited revenue from international activities, due to uncertainty created by geopolitical events. The Company expects significant growth in both revenue and profits in the second half of its calendar year. This growth will be produced by the addition of the Hi-Energy corporate clinic model, newly opened in the Orlando market, and soon to be opening in additional southeastern markets. Growth is also expected in the Company's Take Shape for Life division due to the release of the business opportunity video, which will be used to recruit additional health advisors in new markets. Additional revenue is also expected from the expanded distribution of the Company's Maintain by Medifast™ product line through the national television retailer relationship.
The company's executives will hold a conference call to discuss second quarter financial results and the 2004 outlook. The call will take place at 4:15 pm eastern time today. 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 9378237. There will be a playback available for two weeks. 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 9378237 for the replay. The Company will also webcast the event. Investors may access the webcast live at http://www.medifastdiet.com/, in the section marked "For Investors." The webcast will be available on the Company's Website for two weeks.
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.
Jeremy Hunt, Investor Relations Specialist, Medifast,
+1-410-504-8196, or Ken Sgro, CEOcast, Inc. for Medifast, +1-212-732-4300
MEDIFAST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 2004 December 31, 2003
(Unaudited) (Audited)
ASSETS
Current assets:
Cash $396,000 $2,524,000
Accounts receivable-net of
allowance for doubtful accounts
of $55,000 1,058,000 641,000
Inventory 4,227,000 2,988,000
Investment securities 3,040,000 3,983,000
Deferred compensation 450,000 321,000
Prepaid expenses and other
current assets 3,169,000 936,000
Deferred tax asset 97,000 596,000
Total Current Assets 12,437,000 11,989,000
Property, plant and equipment - net 7,938,000 7,449,000
Trademarks and intangibles 4,664,000 4,419,000
Other assets 72,000 375,000
TOTAL ASSETS $25,111,000 $24,232,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
expenses $1,146,000 $1,714,000
Dividends payable 58,000 58,000
Line of credit - 55,000
Current maturities of long-term
debt 750,000 764,000
Total current liabilities 1,954,000 2,591,000
Long-term debt, net of current
portion 4,752,000 4,564,000
Total Liabilities 6,706,000 7,155,000
Stockholders' Equity:
Series B Convertible Preferred
Stock; par value $1.00;
600,000 shares authorized;
300,614 and 403,734 shares
issued and outstanding, respectively 301,000 404,000
Series C Convertible Preferred
Stock; stated value $1.00;
1,015,000 shares authorized;
200,000 and 267,000 shares
issued and outstanding, respectively 200,000 267,000
Common stock; par value $.001 per
share; 15,000,000 authorized;
10,965,569 and 10,482,609 shares
issued and outstanding,
respectively 11,000 10,000
Additional paid-in capital 20,381,000 20,120,000
Accumulated comprehensive loss (88,000) (25,000)
Accumulated deficit (1,713,000) (3,016,000)
19,092,000 17,760,000
Less cost of common stock treasury;
102,142 and 83,863
shares, respectively (687,000) (683,000)
Total Stockholders' Equity 18,405,000 17,077,000
TOTAL LIABILITIES & STOCKHOLDERS'
EQUITY $25,111,000 $24,232,000
MEDIFAST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three months Ended Six months Ended
June 30, June 30,
2004 2003 2004 2003
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenue 7,357,000 $6,417,000 14,174,000 $12,764,000
Cost of sales 1,946,000 1,628,000 3,296,000 3,311,000
Gross Profit 5,411,000 4,789,000 10,878,000 9,453,000
Selling, general, and
administration 4,429,000 3,818,000 8,977,000 7,038,000
Income from operations 982,000 971,000 1,901,000 2,415,000
Other income/(expense)
Interest expense (52,000) (31,000) (75,000) (64,000)
Other income
(expense) (5,000) 19,000 (7,000) 9,000
Income before provision
for income taxes 925,000 959,000 1,819,000 2,360,000
Provision for income
tax benefit (expense) (251,000) (368,000) (498,000) (905,000)
Net income 674,000 591,000 1,321,000 1,455,000
Less: Stock dividend
on preferred stock 18,000 (11,000) 18,000 (30,000)
Net income attributable
to common shareholders $656,000 $602,000 $1,303,000 $1,485,000
Basic earnings per
share $0.06 $0.06 $0.12 $0.17
Diluted earnings per
share $0.06 $0.05 $0.11 $0.14
Weighted average share
outstanding -
Basic 10,731,021 9,207,119 10,670,706 8,486,681
Diluted 12,176,819 11,112,458 12,014,833 10,676,714
SOURCE: Medifast, Inc.
CONTACT: Jeremy Hunt, Investor Relations Specialist of Medifast,
+1-410-504-8196, or Ken Sgro of CEOcast, Inc., +1-212-732-4300, for Medifast
Web site: http://www.medifastdiet.com/