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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 nine months ended September 30, 2005, Medifast had revenue of $29.9 million, representing a 39% increase compared to $21.4 million reported for the nine-month period ending September 30, 2004. Pre-tax income was $3,245,000, an increase of 39% compared to $2,340,000 for the 2004 nine-month period. The company reported net income of $1,587,000, or $0.13 per basic share ($0.13 per diluted share), versus $1,694,000 or $0.16 per basic share ($0.14 per diluted share). Earnings per share were effected by the interest associated with the conversion of the Series "B" preferred stock. This included a $260,000 stock dividend on Series "B" preferred stock and a $19,000 stock dividend on Series "C" preferred stock. The Series "B" and Series "C" dividends decreased basic and diluted earnings per share by $.02 for the first nine months of 2005. As of September 30, 2005 all Series "B" and Series "C" preferred stock have been converted to common stock and included in the weighted average diluted shares. There will be no additional stock dividend payments. In addition, tax expense as a percentage of profit increased for the first nine months of 2005 compared to 2004 as the Company no longer has a net operating loss carry forward in 2005.
The Company had stockholders' equity of $21.3 million and working capital of $9.6 million on September 30, 2005, compared with $18.8 million and $10.6 million at September 30, 2004, respectively. The third quarter marked the Company's 24th consecutive quarter of profitability.
"The third quarter results are exciting as our direct marketing campaign continues to drive new customers to our medifastdiet.com website and call center. During 2005, Medifast's TV, radio, print and direct mail marketing have dramatically increased Medifast's brand recognition in the marketplace. Consumers have responded favorably to Medifast's simple and clinically proven weight management plan, which fits well into today's busy lifestyles and which yields quick results. In addition, I am extremely excited with the growth in our Take Shape for Life division which continues to expand across the United States," said Bradley T. MacDonald, Medifast Executive Chairman.
"During the first nine months of 2005 Medifast focused on both attracting new customers and improving customer retention by making significant improvements to customer communication and support services. We are pleased with the results of our advertising campaigns and look forward to continued growth throughout 2006. The Take Shape for Life health advisor network had significant month-to-month increases in both revenue and recruitment which contributed to the positive third quarter results. Due to our current growth rate and our expected future growth rates, we made a strategic decision to implement a new Enterprise Resource Planning (ERP) solution to upgrade our technology infrastructure and improve manufacturing and business processes. We expect to see immediate impact on our operations and believe it will drive additional business growth and improve the efficiencies across our business platform. The implementation process is expected to be completed within 8-10 months," said Michael S. McDevitt, Medifast's President.
2005 Revised Financial Guidance
Previously, the company expected to generate revenue of $34.5 -- $36.5 million for the year with a pretax profit of $.26 -- .30 per diluted share. The company now expects to generate revenue of $36 million to $38 million for the year with a pretax profit of $0.30 to $0.32 per diluted share.
The company's executives will hold a conference call to discuss third quarter financial results. The call will take place at 5:00 pm, Eastern Time today. Interested participants should call (866) 825-3354 when calling within the United States or (617) 213-8063 when calling internationally. Please refer to pass code 95635868. 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 97991858 for the replay. The replay will be available until February 9, 2006.
The webcast may be accessed via the Company's website at http://www.medifastdiet.com/. Interested parties should go to the section marked "Investor Relations" to listen to the call. The webcast can be accessed until February 9, 2006.
About Medifast: (http://www.medifastdiet.com/)
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 million 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
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2005 December 31, 2004
(Unaudited) (Audited)
ASSETS
Current assets:
Cash $2,641,000 $612,000
Accounts receivable-net
of allowance for doubtful
accounts of $100,00 1,517,000 1,063,000
Inventory 4,858,000 4,251,000
Investment securities 2,762,000 2,626,000
Deferred compensation 506,000 321,000
Prepaid expenses and other current
assets 2,004,000 1,079,000
Deferred tax asset 24,000 19,000
Total Current Assets 14,312,000 9,971,000
Property, plant and equipment - net 8,984,000 8,698,000
Trademarks and intangibles, net 6,519,000 7,138,000
Deferred tax asset, net of current
position 190,000 91,000
Other assets 58,000 70,000
TOTAL ASSETS $30,063,000 $25,968,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
expenses $2,091,000 $1,005,000
Income taxes payable 1,396,000 674,000
Line of credit 642,000 369,000
Current maturities of long-term
debt 556,000 458,000
Total current liabilities 4,685,000 2,506,000
Long-term debt, net of current
portion 4,120,000 4,256,000
Total Liabilities 8,805,000 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
Common stock; par value $.001 per
share; 20,000,000 authorized;
12,771,791 and 11,001,070 shares
issued and outstanding
respectively 13,000 11,000
Additional paid-in capital 21,750,000 20,556,000
Accumulated comprehensive loss (22,000) (39,000)
Accumulated deficit 300,000 (1,287,000)
22,041,000 19,742,000
Less cost of common stock treasury;
111,902 and 78,160
shares, respectively (661,000) (536,000)
Less: Unearned compensation (122,000) -
Total Stockholders' Equity 21,258,000 19,206,000
TOTAL LIABILITIES & STOCKHOLDERS'
EQUITY $30,063,000 $25,968,000
MEDIFAST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Nine months Ended Three months Ended
September 30, September 30,
2005 2004 2005 2004
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenue 29,865,000 21,442,000 10,985,000 7,268,000
Cost of sales 7,370,000 5,182,000 2,675,000 1,886,000
Gross Profit 22,495,000 16,260,000 8,310,000 5,382,000
Selling, general, and
administration 19,163,000 13,832,000 7,044,000 4,855,000
Income from operations 3,332,000 2,428,000 1,266,000 527,000
Other income/(expense)
Interest expense (97,000) (79,000) (47,000) (4,000)
Other income
(expense) 10,000 (9,000) 7,000 (2,000)
Income before provision
for income taxes 3,245,000 2,340,000 1,226,000 521,000
Provision for income tax
benefit (expense) (1,367,000) (628,000) (609,000) (130,000)
Net income 1,878,000 1,712,000 617,000 391,000
Less: Stock dividend on
preferred stock 291,000 18,000 10,000 -
Net income attributable
to common shareholders $1,587,000 $1,694,000 $607,000 $391,000
Basic earnings per share $0.13 $0.16 $0.05 $0.04
Diluted earnings per
share $0.13 $0.14 $0.05 $0.03
Weighted average shares
outstanding -
Basic 12,235,475 10,774,663 12,595,175 10,982,578
Diluted 12,438,531 12,118,790 12,989,147 12,412,265
SOURCE: Medifast, Inc.
CONTACT: Investor Relations, Medifast, Inc., +1-410-504-8196,
Web site: http://www.medifastdiet.com/