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Medifast, Inc. announced today fourth quarter and year-end financial results for the period ended December 31, 2005. For the full-year ended December 31, 2005, Medifast reported revenue of $40.1 million, a 47% increase from $27.3 million in 2004. The Company reported pre-tax income of $3,930,000, a 35% increase compared to $2,906,000 for the year ended December 31, 2004. The company reported net income of $2,436,000, or $0.20 per basic share ($0.19 per diluted share), versus $1,729,000 or $0.16 per basic share ($0.14 per diluted share) in 2004. In 2005, earnings per share were affected 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 year ended December 31, 2005. As of December 31, 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 preferred stock dividend payments.
The company reported fourth quarter revenue of $10.2 million, compared to revenue of $5.8 million for the same period in 2004, an increase of 76%. The company reported pre-tax income of $685,000, or $.06 per basic share ($.05 per diluted share), compared to $566,000, or $.05 per basic share ($.04 per diluted share) for the fourth quarter of 2004. The fourth quarter of 2005 represented the Company’s 25th consecutive quarter of profitability.
The Company had stockholders’ equity of $23.2 million and working capital of $10 million at December 31, 2005, compared to $19.7 million and $7.5 million at December 31, 2004, respectively.
“We are pleased with the year-end results, which were driven by our multi- channel customer acquisition strategies in the Medifast direct business and the growth of our dynamic direct sales network, Take Shape for Life. Our increased advertising is driving brand recognition and we are uniquely positioned in the marketplace by providing customers a menu of options for program support. In 2006, we will place even more emphasis on attracting and retaining customers with improved service standards and support services,” said Michael S. McDevitt, Medifast President and Chief Financial Officer.
2006 Revised Financial Guidance
Previously, the company expected to generate revenue of $48 to $50 million for the year with an after-tax profit of $0.22 – $0.24 per diluted share. The company now expects to generate revenue of $58 to $60 million for the year with after-tax earnings of $0.29 to $0.32 per diluted share.
Fourth Quarter and Year-End Conference Call
The company’s executives will hold a conference call to discuss 2005 year- end financial results. The Company will hold a conference call and webcast at 5:00 PM EST on March 15, 2006.
Interested participants should call (866) 383-7989 when calling within the United States or (617) 597-5328 when calling internationally. Please refer to pass code 11897049. 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 64509096 for the replay. The replay will be available until June 15, 2006.
The webcast may be accessed via the Company’s web site 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 June 15, 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 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.
Tables to follow:
MEDIFAST, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of December 31, 2005 and 2004
2005 2004
ASSETS
Current assets:
Cash $1,484,000 $612,000
Accounts receivable-net of allowance
for doubtful accounts of $100,000
and $87,000 985,000 1,063,000
Inventory 5,475,000 4,251,000
Investment securities 2,700,000 2,626,000
Deferred compensation 525,000 321,000
Prepaid expenses and other current assets 3,273,000 1,079,000
Current portion of deferred tax asset - 19,000
Total current assets 14,442,000 9,971,000
Property, plant and equipment - net 9,535,000 8,698,000
Trademarks and intangibles - net 6,508,000 7,138,000
Deferred tax asset, net of current portion - 91,000
Other assets 60,000 70,000
TOTAL ASSETS $30,545,000 $25,968,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $2,263,000 $940,000
Income taxes payable 899,000 674,000
Dividends payable - 65,000
Line of credit 633,000 369,000
Current maturities of long-term debt 561,000 458,000
Deferred tax liability - current 90,000 -
Total current liabilities 4,446,000 2,506,000
Other liabilities and deferred credits
Long-term debt, net of current portion 3,977,000 4,256,000
Deferred tax liability - non-current 101,000 -
Total liabilities 8,524,000 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; 0 and 200,000 shares issued
and outstanding - 200,000
Common stock; par value $.001 per share;
20,000,000 shares authorized; 12,782,791
and 11,001,070 shares issued and outstanding 13,000 11,000
Additional paid-in capital 21,759,000 20,556,000
Accumulated other comprehensive income (loss) 282,000 (39,000)
Retained earnings (deficit) 1,149,000 (1,287,000)
23,203,000 19,742,000
Less: cost of 210,902 and 78,160 shares
of common stock in treasury (1,075,000) (536,000)
Less: Unearned compensation (107,000) -
Total stockholders' equity 22,021,000 19,206,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $30,545,000 $25,968,000
The accompanying notes are an integral part of these consolidated financial
statements
MEDIFAST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31,
2005 2004 2003
Revenue $40,129,000 $27,340,000 $25,379,000
Cost of sales (10,161,000) (6,746,000) (6,825,000)
Gross profit 29,968,000 20,594,000 18,554,000
Selling, general, and
administration (25,894,000) (17,590,000) (14,956,000)
Income from operations 4,074,000 3,004,000 3,598,000
Other income (expense):
Interest expense (317,000) (245,000) (150,000)
Interest income 158,000 154,000 110,000
Other income (expense) 15,000 (7,000) -
(144,000) (98,000) (40,000)
Net income before provision
for income taxes 3,930,000 2,906,000 3,558,000
Provision for income taxes (1,203,000) (1,159,000) (1,148,000)
Net income 2,727,000 1,747,000 2,410,000
Less: Preferred stock
dividend requirement (291,000) (18,000) (58,000)
Net income attributable
to common shareholders $2,436,000 $1,729,000 $2,352,000
Basic earnings per share $0.20 $0.16 $0.25
Diluted earnings per share $0.19 $0.14 $0.22
Weighted average shares
outstanding -
Basic 12,258,734 10,832,360 9,305,731
Diluted 12,780,959 12,413,424 10,952,367
The accompanying notes are an integral part of these consolidated financial
statements
SOURCE: Medifast, Inc.
CONTACT: Investor Relations: Medifast, Inc., +1-410-504-8196,
ir@medifastdiet.com
Web site: http://www.medifastdiet.com/
