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Medifast Announces Second Quarter Results; 19th Consecutive Quarter of Profitability
Revenues Increase 16% while Domestic Sales Grow 24%; Company Affirms Full-year Forecast as Domestic Sales Remain Strong

Medifast, Inc. announced today second quarter financial results for the period ended June 30, 2004. The company reported revenue of $7.4 million, a 16% increase versus $6.4 million in the year-earlier period and $200,000 above its previously announced estimate on July 2, 2004. Domestic sales increased 24% to $7.4 million. Income from Operations was $982,000, a 1.1% increase compared to $971,000 in the same period in 2003. The company reported pre-tax income of $925,000 compared to $959,000 in the second quarter of 2003. The company reported net income of $674,000, or $0.06 per basic share ($0.06 per diluted share), versus $591,000, or $0.06 per basic share ($0.05 per diluted share) in the 2003 second quarter. Net income was impacted by a higher share count as a result of the conversion of preferred stock into common stock. The Company did not owe Federal income taxes during the period.

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, 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

                                           June 30, 2004   December 31, 2003
                                            (Unaudited)        (Audited)
    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

    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

     EQUITY                                  $25,111,000       $24,232,000

                        MEDIFAST, INC. AND SUBSIDIARIES

                             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