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Medifast Announces Record Second Quarter Results; 23rd Consecutive Quarter of Profitability
Revenues Increase 43%; Company Increases Full Year Guidance

Medifast, Inc. announced today second quarter financial results for the period ended June 30, 2005. The company reported revenue of $10.5 million, a 43% increase versus $7.4 million in the year-earlier period. Income from Operations was $1,154,000, a 17% increase compared to $982,000 in the same period in 2004. The company reported pre-tax income of $1,164,000 compared to $925,000 in the second quarter of 2004. The company reported net income of $753,000, or $0.06 per basic share ($0.06 per diluted share), versus $656,000, or $0.06 per basic share ($0.06 per diluted share) in the 2004 second quarter. Earnings per share were effected by the dilution associated with the conversion of Series "B" preferred stock into common stock during the first quarter of 2005.

For the six months ended June 30, 2005, Medifast had revenue of $18.8 million, representing a 33% increase compared to $14.2 million reported for the six-month period ending June 30, 2004. Income from Operations was $2,066,000, an increase of 9% compared to $1,901,000 for the 2004 six-month period. The company reported net income of $1,260,000, or $0.10 per basic share ($0.10 per diluted share), versus $1,321,000, or $0.12 per basic share ($0.11 per diluted share).

The Company had stockholders' equity of $20.6 million and working capital of $8.9 million on June 30, 2005, compared with $18.4 million and $10.5 million at June 30, 2004, respectively. The second quarter marked the Company's 23rd consecutive quarter of profitability.

"Our significant second quarter results are primarily attributable to our direct marketing campaign consisting of print, radio, mail, web, and television advertising driving new customers to our website and call center. The continued revenue growth in our Take Shape for Life Health Advisor Programs and the significant progress in developing our Hi-Energy Clinic model also contributed to this quarter's success," said Bradley T. MacDonald, Medifast Executive Chairman.

"During the first half of 2005 Medifast has taken several initiatives that assisted in both lowering customer acquisition costs and improving customer retention. We have improved our ability to better support our customers which has proven valuable to a customer's weight loss process and improved retention rates," said Michael S. McDevitt, Medifast's President.

  Other highlights of the second quarter include:

  -- Final study results from the Johns Hopkins Bloomberg School of Public
     Health 86-week diabetic weight loss study were released on June 13.
     The study found that participants using Medifast's portion-controlled,
     meal replacement program lost twice as much weight and were twice as
     likely to complete the study as participants following a standard food
     diet based on the dietary guidelines of the American Diabetes
     Association (ADA).  Additionally 24% of the Medifast users decreased
     or eliminated their diabetes medication, compared to 0% on the
     standard food diet.

  -- Medifast announced that it had entered into an agreement with DrugMax,
     Inc. , a specialty pharmacy and drug distribution
     provider to open five Hi-Energy Weight Control Centers within its
     Familymeds and Arrow Specialty Pharmacies.  Patients will work with a
     weight counselor and a DrugMax Clinical Pharmacist to design
     customized programs using Hi-Energy portion controlled meal
     replacements and nutritional supplements.

  -- Medifast signed a License and Distribution Agreement on May 19, 2005
     with Game Time, LLC to launch a complete line of Take Shape America
     Nutrition products for Sports Performance, Weight Management and
     Healthy Living.

  -- The Company's retail diabetic line of products for pharmacy called
     "Medifast Maintain" is scheduled to ship to its first major retail
     customers in the fourth quarter of 2005.

  2005 Financial Guidance

For the third quarter, the Company expects to report revenue of $9.7 to $10.0 million and to generate pre-tax profit of $900,000 to $1.0 million, or $0.07 to $0.08 per diluted share. The company expects to generate revenue of $34.5 million to $36.5 million for the year with a pretax profit of $0.26 to $0.30 per diluted share.

The company's executives will hold a conference call to discuss second quarter financial results. The call will take place at 5:00 pm, Eastern Time today. Interested participants should call (800) 638-5439 when calling within the United States or (617) 614-3945 when calling internationally. Please refer to pass code 83796445. There will be a playback available. To listen to the playback, please call 888-286-8010 when calling within the United States or 617-801-6888 when calling internationally. Please use pass code 88602134 for the replay. The replay will be available until November 9, 2005.

The webcast may be accessed via the Company's website at Interested parties should go to the section marked "Investor Relations" to listen to the call. The webcast can be accessed until November 9, 2005.

About Medifast: (

Medifast has been helping people lose weight and achieve better health for 25 years. Its meal replacement foods have been proven effective at Johns Hopkins University, recommended by over 15,000 physicians and used by more than 1,000,000 customers. Medifast offers its customers world-class customer service, nutrition and medical support.

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. AND SUBSIDIARIES

                                         June 30, 2005   December 31, 2004
                                          (Unaudited)        (Audited)
  Current assets:
    Cash                                   $1,229,000         $612,000
    Accounts receivable - net of
     allowance for doubtful
     accounts of $55,000                    1,137,000        1,063,000
    Inventory                               4,490,000        4,251,000
    Investment securities                   3,050,000        2,626,000
    Deferred compensation                     486,000          321,000
    Prepaid expenses and other
     current assets                         1,480,000        1,079,000
    Deferred tax asset                         24,000           19,000
       Total Current Assets                11,896,000        9,971,000

  Property, plant and equipment - net       8,893,000        8,698,000
  Trademarks and intangibles, net           6,733,000        7,138,000
  Deferred tax asset, net of current
   position                                   158,000           91,000
  Other assets                                 59,000           70,000

       TOTAL ASSETS                       $27,739,000      $25,968,000

  Current liabilities:
    Accounts payable and accrued expenses  $1,382,000         $940,000
    Income taxes payable                      221,000          674,000
    Dividends payable                          65,000           65,000
    Line of credit                            651,000          369,000
    Current maturities of long-term debt      586,000          458,000
       Total current liabilities            2,905,000        2,506,000

    Long-term debt, net of current
     portion                                4,232,000        4,256,000
       Total Liabilities                    7,137,000        6,762,000

  Stockholders' Equity:

  Series B Convertible Preferred Stock;
   par value $1.00; 600,000 shares
   authorized; 0 and 300,614 shares
   issued and outstanding                           -          301,000
  Series C Convertible Preferred Stock;
   stated value $1.00; 1,015,000 shares
   authorized; 200,000 shares issued
   and outstanding, respectively              200,000          200,000
  Common stock; par value $.001 per share;
   15,000,000 authorized; 12,174,345 and
   11,001,070 shares issued and
   outstanding respectively                    12,000           11,000
  Additional paid-in capital               21,229,000       20,556,000
  Accumulated comprehensive loss                4,000          (39,000)
  Accumulated deficit                        (307,000)      (1,287,000)
                                           21,138,000       19,742,000
  Less cost of common stock treasury;
   88,500 and 83,863 shares, respectively    (536,000)        (536,000)
  Total Stockholders' Equity               20,602,000       19,206,000

   STOCKHOLDERS' EQUITY                   $27,739,000      $25,968,000

                     MEDIFAST, INC. AND SUBSIDIARIES

                            Six Months Ended         Three Months Ended
                                June 30,                  June 30,
                            2005         2004         2005         2004
                        (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)

  Revenue               $18,881,000  $14,174,000  $10,555,000   $7,357,000
  Cost of sales           4,696,000    3,296,000    2,623,000    1,946,000
  Gross Profit           14,185,000   10,878,000    7,932,000    5,411,000

  Selling, general,
   and administration    12,119,000    8,977,000    6,778,000    4,429,000

  Income from operations  2,066,000    1,901,000    1,154,000      982,000

  Other income/(expense)
    Interest expense       (148,000)     (75,000)     (83,000)     (52,000)
    Interest income          97,000                    69,000
    Other income (expense)    3,000       (7,000)      24,000       (5,000)

  Income before provision
   for income taxes       2,018,000    1,819,000    1,164,000      925,000
  Provision for income tax
   benefit (expense)       (758,000)    (498,000)    (411,000)    (251,000)

  Net income              1,260,000    1,321,000      753,000      674,000

  Less: Stock dividend
   on preferred stock             -       18,000            -       18,000

  Net income attributable
   to common
   shareholders           1,260,000   $1,303,000      753,000     $656,000

  Basic earnings per share    $0.10        $0.12        $0.06        $0.06
  Diluted earnings per share  $0.10        $0.11        $0.06        $0.06

  Weighted average shares
   outstanding -
     Basic               12,173,456   10,670,706   12,173,456   10,731,021
     Diluted             12,858,777   12,014,833   12,994,764   12,176,819

SOURCE: Medifast, Inc.

CONTACT: Jeremy Hunt, Investor Relations Specialist, Medifast, Inc.,