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Medifast Announces Record Third-Quarter and YTD Revenues and Profits

Medifast, Inc. announced today third quarter results for the period ended September 30, 2006. For the quarter-ended September 30, 2006, Medifast reported revenue of $19.6 million, a 79% increase from $11 million in the third quarter of 2005. The Company reported net income of $1,490,000, or $0.12 per basic share ($0.11 per diluted share), versus $607,000 or $0.05 per basic share ($0.05 per diluted share) in 2005. Net income in the third quarter of 2006 was positively impacted by a tax benefit received as a result of the Company's investment in infrastructure in prior years. The third quarter of 2006 represented the Company's 28th consecutive quarter of profitability.

For the nine months ended September 30, 2006, Medifast reported revenue of $58.8 million, an increase of 97% from $29.9 million for the nine months ended September 30, 2005. The Company reported net income of $4.6 million, or $.37 per basic share ($.34 per diluted share), versus $1.6 million or $.13 per basis share ($.13 per diluted share) in 2005.

The Company had stockholders' equity of $27.2 million and working capital of $13 million at September 30, 2006, compared to $21.3 million and $9.6 million at September 30, 2005, respectively.

"We are pleased with the third quarter results, which were driven by our growing customer base within a multi-channeled business. Our customer acquisition strategy is driving brand awareness, which benefits our direct to consumer business and also drives customers and business opportunity leads into our direct sales network while fueling significant walk-ins to our new medically supervised clinics, which are now operational in test markets. We believe that our diverse infrastructure model, which does not rely on a single distribution method, will allow Medifast to benefit long term in the over $40 billion weight loss category. In a customer driven world, Medifast is positioned to handle the needs of all types of customers. Whether a person is looking to lose weight utilizing the advice of a nutritionist, the support of a health coach, share their experience with others in an online community or stay under medical supervision in a clinic or doctor's office, Medifast provides a program to cater to the individual needs of the customer," said Michael S. McDevitt, Medifast President and CFO.

"Medifast combines products and programs that have been clinically proven and trusted by physicians for over 25 years with a 21st century business model that recognizes that every consumer is an individual. Medifast is in the business of making people healthy in a time when we are experiencing an obesity epidemic in our country. Medifast is committed to providing a lasting solution for health and we are excited about expanding our programs to include broader recommendations for using Medifast for long term health as we move forward," stated Bradley T. MacDonald, Chairman and CEO.

2006 Financial Guidance

The company 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.

Third Quarter Conference Call

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

Interested participants should call (866) 700-6979 when calling within the United States or (617) 213-8836 when calling internationally. Please refer to pass code 61684562. 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 85452066 for the replay. The replay will be available until February 21, 2007.

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 February 21, 2007.

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

                                      September 30, 2006   December 31, 2005
                                         (Unaudited)            (Audited)
  Current assets:
    Cash                                    $1,114,000           $1,484,000
    Accounts receivable-net of
     allowance for doubtful accounts
     of $100,000                               764,000              985,000
    Income tax refund receivable             1,048,000                    -
    Inventory                                8,003,000            5,475,000
    Investment securities                    2,420,000            2,700,000
    Deferred compensation                      640,000              525,000
    Prepaid expenses and other
     current assets                          2,927,000            3,273,000
    Note receivable - current                  230,000                    -
    Deferred tax asset                          90,000                    -
      Total Current Assets                  17,236,000           14,442,000

  Property, plant and equipment - net       11,578,000            9,535,000
  Trademarks and intangibles - net           4,690,000            6,508,000
  Deferred tax asset, net of current
   portion                                     282,000                    -
  Note receivable, net of current
   portion                                   1,305,000                    -
  Other assets                                  37,000               60,000

      TOTAL ASSETS                         $35,128,000          $30,545,000

  Current liabilities:
    Accounts payable and accrued
     expenses                               $2,661,000           $2,263,000
    Income taxes payable                       501,000              899,000
    Line of credit                             612,000              633,000
    Current maturities of long-term debt       502,000              561,000
    Deferred tax liability - current                 -               90,000
      Total current liabilities              4,276,000            4,446,000

    Long-term debt, net of current
     portion                                 3,603,000            3,977,000
    Deferred tax liability - non-current             -              101,000
      Total Liabilities                      7,879,000            8,524,000

  Stockholders' Equity:

  Common stock; par value $.001 per
   share; 20,000,000 authorized;
   13,544,481 and 12,782,791 shares
   issued and outstanding, respectively         14,000               13,000
  Additional paid-in capital                26,326,000           21,759,000
  Accumulated other comprehensive income       208,000              282,000
  Retained Earnings                          5,787,000            1,149,000
                                            32,335,000           23,203,000

  Less: cost of 240,749 and 210,902
   shares of common stock in treasury       (1,565,000)          (1,075,000)
  Less: unearned compensation               (3,521,000)            (107,000)
  Total Stockholders' Equity                27,249,000           22,021,000

   EQUITY                                  $35,128,000          $30,545,000

                         MEDIFAST, INC. AND SUBSIDIARIES

                              Nine Months Ended       Three Months Ended
                                September 30,            September 30,
                             2006         2005         2006        2005
                          (Unaudited)  (Unaudited)  (Unaudited) (Unaudited)

  Revenue                 $58,779,000  $29,865,000  $19,642,000 $10,985,000
  Cost of sales            14,334,000    7,370,000    4,705,000   2,675,000
  Gross Profit             44,445,000   22,495,000   14,937,000   8,310,000

  Selling, general, and
   administration          36,880,000   19,163,000   12,967,000   7,044,000

  Income from operations    7,565,000    3,332,000    1,970,000   1,266,000

  Other income/(expense)
    Interest expense         (271,000)    ( 97,000)     (90,000)    (47,000)
    Loss on sale of
     Consumer Choice
     Systems                 (323,000)           -            -           -
    Stock compensation
     expense                 (346,000)           -     (164,000)          -
    Interest income           137,000            -       48,000           -
    Other income (expense)    184,000       10,000       24,000       7,000

  Income before provision
   for income taxes         6,946,000    3,245,000    1,788,000   1,226,000
  Provision for income
   tax (expense)           (2,307,000)  (1,367,000)    (298,000)   (609,000)

  Net income                4,639,000    1,878,000    1,490,000     617,000

  Less: Preferred stock
   dividend requirement             -     (291,000)           -     (10,000)

  Net income               $4,639,000   $1,587,000   $1,490,000    $607,000

  Basic earnings per
   share                        $0.37        $0.13        $0.12       $0.05
  Diluted earnings per
   share                        $0.34        $0.13        $0.11       $0.05

  Weighted average
   shares outstanding -
    Basic                  12,657,842   12,235,475   12,767,629  12,595,175
    Diluted                13,493,421   12,438,531   13,603,208  12,989,147

First Call Analyst:
FCMN Contact:

SOURCE: Medifast, Inc.

CONTACT: Investor Relations, Medifast,; or Media:
Kerry O'Neill, Warschawski, +1-410-367-2700,, for