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Medifast Announces Second-Quarter 2006 Results; Company Reports All-Time Record Revenues and Profits; Company Increases 2006 Full-Year Guidance

Medifast, Inc. announced today second quarter results for the period ended June 30, 2006. For quarter-ended June 30, 2006, Medifast reported revenue of $20 million, an 89% increase from $10.6 million in the second quarter of 2005. The Company reported net income of $1,475,000, or $0.12 per basic share ($0.11 per diluted share), versus $753,000 or $0.06 per basic share ($0.06 per diluted share) in 2005. The second quarter of 2006 represented the Company's 27th consecutive quarter of profitability.

For the six months ended June 30, 2006, Medifast reported revenue of $39.1 million, an increase of 107% from $18.9 million for the six months ended June 30, 2005. The Company reported net income of $3.2 million, or $.25 per basic share ($.23 per diluted share), versus $1.3 million or $.10 per basis share ($.10 per diluted share) in 2005.

The Company had stockholders' equity of $25.5 million and working capital of $12 million at June 30, 2006, compared to $20.6 million and $9 million at June 30, 2005, respectively.

"The menu of options available to Medifast customers through our multi- channel distribution model continues to grow revenues and we are very pleased with second quarter results. Our advertising and PR campaigns are effective, our direct sales network has experienced consistent growth and our doctors and clinical business is gaining momentum. In the second quarter, we launched MyMedifast, an online weight loss tool and community which is being used by thousands of customers every day and our new Medifast book, "The Secret is Out," which further validates the clinical heritage and efficacy of our Medifast products. We also held the highest attended national convention in the history of our Take Shape for Life division. We feel the company, with its' 25 years of industry knowledge and clinically proven products and programs, has a very strong position in a business sector that has tremendous upside potential. We continue to explore new venues to promote our products and services, and look forward to serving even more types of consumers as we continue to grow our business," said Michael S. McDevitt, Medifast President and Chief Financial Officer.

"This is the Company's 27th consecutive quarter of profit since our restructuring in 1999. Our management team has demonstrated again that we have the financial discipline to control our costs, improve operations and modernize our IT platform while experiencing phenomenal growth. In this growth mode, we continue to conduct our research and development with new clinical studies, and test our advertising strategies and tactics to ensure our success. Our mission to combat obesity and associated health conditions using Medifast clinically proven products and programs is being supported by our growing network of doctors, qualified medical practitioners, health coaches and satisfied customers," stated Bradley T. MacDonald, Chairman of the Board and Chief Executive Officer.

2006 Revised Financial Guidance

Previously, the company expected to generate revenue of $66 - $68 million for the year with an after-tax profit of $.38 - $.40 per diluted share. The company now expects to generate revenue of $70 to $72 million for the year with after-tax earnings of $0.38 to $0.40 per diluted share.

Second Quarter Conference Call

The Company will hold a conference call and webcast at 5:00 PM EDT on August 14, 2006 to discuss second quarter results.

Interested participants should call (866) 362-4831 when calling within the United States or (617) 597-5347 when calling internationally. Please refer to pass code 85834615. There will be a playback available as well. 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 55176089 for the replay. The replay will be available until November 14, 2006.

The webcast may be accessed via the Company's web site at Interested parties should go to the section marked "Investor Relations" to listen to the call. The webcast can be accessed until November 14, 2006.

Medifast has been helping people lose weight and achieve better health for 25 years. Its meal replacement foods have been proven effective in multiple clinical studies, recommended by over 15,000 physicians and used by more than 1 million customers. Medifast offers its customers world-class customer service and nutrition 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, 2006   December 31, 2005
                                          (Unaudited)          (Audited)
  Current assets:
    Cash                                   $2,491,000         $1,484,000
    Accounts receivable-net of allowance
     for doubtful accounts of $100,000        717,000            985,000
    Inventory                               6,698,000          5,475,000
    Investment securities                   2,773,000          2,700,000
    Deferred compensation                     567,000            525,000
    Prepaid expenses and other
     current assets                         2,776,000          3,273,000
    Prepaid taxes                             311,000                  -
    Note receivable - current                 230,000                  -
    Deferred tax asset                         90,000                  -
      Total Current Assets                 16,653,000         14,442,000

  Property, plant and equipment - net      10,822,000          9,535,000
  Trademarks and intangibles - net          4,768,000          6,508,000
  Deferred tax asset, net of current portion  256,000                  -
  Note receivable, net of current portion   1,351,000                  -
  Other assets                                 37,000             60,000

      TOTAL ASSETS                        $33,887,000        $30,545,000

  Current liabilities:
    Accounts payable and accrued expenses  $3,480,000         $2,263,000
    Income taxes payable                            -            899,000
    Line of credit                            615,000            633,000
    Current maturities of long-term debt      533,000            561,000
    Deferred tax liability - current                -             90,000
      Total current liabilities             4,628,000          4,446,000

    Long-term debt, net of current portion  3,729,000          3,977,000
    Deferred tax liability - non-current            -            101,000
      Total Liabilities                     8,357,000          8,524,000

  Stockholders' Equity:

  Common stock; par value $.001 per share;
   20,000,000 authorized; 13,422,914 and
   12,782,791 shares issued and outstanding,
   respectively                                14,000             13,000
  Additional paid-in capital               25,897,000         21,759,000
  Accumulated other comprehensive income      139,000            282,000
  Retained Earnings                         4,300,000          1,149,000
                                           30,350,000         23,203,000

  Less: cost of 215,061 and 210,902 shares
   of common stock in treasury             (1,135,000)        (1,075,000)
  Less: unearned compensation              (3,685,000)          (107,000)
  Total Stockholders' Equity               25,530,000         22,021,000

   EQUITY                                 $33,887,000        $30,545,000

                     MEDIFAST, INC. AND SUBSIDIARIES

                      Six Months Ended June 30, Three Months Ended June 30,
                          2006         2005        2006         2005
                      (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)

  Revenue             $39,137,000  $18,881,000  $19,954,000  $10,555,000
  Cost of sales         9,629,000    4,696,000    4,853,000    2,623,000
  Gross Profit         29,508,000   14,185,000   15,101,000    7,932,000
  Selling, general,
   and administration  23,913,000   12,119,000   12,560,000    6,778,000

  Income from
   operations           5,595,000    2,066,000    2,541,000    1,154,000

  Other income/(expense)
    Interest expense     (181,000)    (148,000)     (92,000)     (83,000)
    Loss on sale of
     Consumer Choice
     Systems             (323,000)
    Stock compensation
     expense             (181,000)           -     (164,000)
    Interest income        89,000       97,000       56,000       69,000
    Other income
     (expense)            161,000        3,000       18,000       24,000

  Income before provision
   for income taxes     5,160,000    2,018,000    2,359,000    1,164,000
  Provision for income
   tax (expense)       (2,009,000)    (758,000)    (884,000)    (411,000)

  Net income            3,151,000    1,260,000    1,475,000      753,000

  Less: Preferred
   stock dividend
   requirement                  -            -            -            -

  Net income           $3,151,000   $1,260,000   $1,475,000     $753,000

  Basic earnings
   per share                $0.25        $0.10        $0.12        $0.06
  Diluted earnings
   per share                $0.23        $0.10        $0.11        $0.06

  Weighted average
   shares outstanding -
    Basic              12,603,903   12,173,456   12,618,379   12,173,456
    Diluted            13,601,232   12,858,777   13,615,708   12,994,764

SOURCE: Medifast, Inc.

CONTACT: Investor Relations, Kellie Pizzico of Medifast, Inc.,
+1-410-504-8162, or; or Media Contact, Erin Grecu of
Warschawski, +1-410-367-2700, or, for Medifast