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Medifast, Inc. announced today second quarter results for the period ended June 30, 2007. For quarter-ended June 30, 2007, Medifast reported revenue of $22 million, a 10% increase from $20 million in the second quarter of 2006. The Company reported net income of $909,000, or $0.07 per basic share ($0.07 per diluted share), versus $1,448,000 or $0.11 per basic share ($0.11 per diluted share) in 2006. The second quarter of 2007 represented the Company’s 31st consecutive quarter of profitability.
For the six months ended June 30, 2007, Medifast reported revenue of $42.1 million, an increase of 8% from $39.1 million for the six months ended June 30, 2006. The Company reported net income of $2.3 million, or $.18 per basic share ($.17 per diluted share), versus $3.5 million or $.27 per basis share ($.25 per diluted share) in 2006.
“The second quarter of 2007 was one largely spent on setting the stage for the near future and long term growth of the Medifast Business. The Company made significant strategic investments in the business’ revenue drivers, as well as its internal capabilities to best capitalize on future growth. We believe that the near future impact of these investments will drive a momentous shift by increasing Medifast brand awareness and revenue growth,” said Michael S. McDevitt, Chief Executive Officer.
“The most prominent of these investments was the development of the future Medifast marketing campaign utilizing two new celebrity spokespeople. The campaign is scheduled for release in mid-August; however the public awareness of the campaign has already begun. Starting in July, we began to receive extensive media coverage of our new celebrity campaign which we believe will strongly assist in driving immediate revenues upon the campaign’s release, as it has already successfully heightened the Medifast brand awareness, while reawakening loyal customers from the Company’s 26 year medical history. We are very excited about the rollout of our comprehensive marketing strategy including television, print, and online advertising complimented by significant upcoming media coverage of Daytime Emmy® award winning actress Genie Francis and movie star and new mom, Kristy Swanson on the Medifast program. Both women are having great success on the program, having lost a combined total of 31 pounds in only a little more than a month,” continued McDevitt.
“This campaign provides an umbrella of branded support to all of our other channels of distribution which are already experiencing organic growth. We believe that the new campaign, along with additional recent investments to enhance the campaign’s effectiveness such as a newly built in-house call center and the launch of the consumer Auto ship program will be driving forces to propel Medifast into strong future growth patterns. In late July, Take Shape for Life exceeded direct sales industry benchmarks with its highest attended national convention in company history, and the Medifast Weight Control Centers business model, with its recently completed franchise documentation, is primed for expansion into new markets in the coming months. We believe the Medifast business has a tremendous future in a growing industry, as we establish our brand as the leader in fast, safe and convenient weight loss and long term health with clinically proven products and the most extensive offering of choices for customer support in our industry.”
2007 Full-Year Guidance
The company believes that all of the preparation, research, consumer awareness building, and high quality of production will allow the new direct response advertising campaign, which launches on TV August 17th, and print in late September, to be significantly more effective than the current and past advertising campaigns. However to what extent this effectiveness will occur is unknown. It is because of this unknown, yet very close approaching launch date, that the company is currently maintaining its full year guidance of $85 to $88 million, with after-tax profit of $0.45 to $0.46 per diluted share. The company will closely monitor the early impact of the advertising campaign and will update the market on the 2007 full year guidance in mid September.
Second Quarter Conference Call
The Company will hold a conference call and webcast at 5:00 PM EDT on August 9, 2007 to discuss second quarter results.
Interested participants should call (800) 706-7748 when calling within the United States or (617) 614-3473 when calling internationally. Please refer to pass code 62898461. 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 39976345 for the replay. The replay will be available until November 8, 2007.
The webcast may be accessed via the Company’s web site at www.choosemedifast.com. Interested parties should go to the section marked “Investor Relations” to listen to the call. The webcast can be accessed until November 8, 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.
For questions please contact:
ir@choosemedifast.com
Investor relations
MEDIFAST, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited) (Audited)
(Restated)
June 30, 2007 December 31, 2006
ASSETS
Current assets:
Cash and cash equivalents $2,923,000 $1,085,000
Accounts receivable-net of allowance
for doubtful accounts of $100,000 416,000 448,000
Inventory 8,483,000 8,255,000
Investment securities 1,571,000 1,540,000
Deferred compensation 837,000 673,000
Prepaid expenses and other current
assets 3,301,000 2,599,000
Note receivable - current 174,000 174,000
Current portion of deferred tax asset 101,000 90,000
Total current assets 17,806,000 14,864,000
Property, plant and equipment - net 14,862,000 14,020,000
Trademarks and intangibles - net 5,516,000 5,874,000
Deferred tax asset, net of current
portion 681,000 517,000
Note receivable, net of current
assets 1,282,000 1,355,000
Other assets 79,000 47,000
TOTAL ASSETS $40,226,000 $36,677,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $4,185,000 $2,913,000
Income taxes payable - 535,000
Line of credit 407,000 1,256,000
Current maturities of long-term debt 790,000 548,000
Total current liabilities 5,382,000 5,252,000
Other liabilities and deferred
credits
Long-term debt, net of current
portion 4,452,000 3,509,000
Deferred tax liability - non-current - -
Total liabilities 9,834,000 8,761,000
Stockholders' Equity:
Preferred stock, $.001 par value
(1,500,000 authorized, no shares
issued and outstanding) - -
Common stock; par value $.001 per
share; 20,000,000 shares authorized;
13,669,098 and 12,782,791
shares issued and outstanding 14,000 14,000
Additional paid-in capital 26,728,000 26,629,000
Accumulated other comprehensive
income 386,000 334,000
Retained earnings 8,263,000 5,981,000
35,391,000 32,958,000
Less: cost of 249,184 and 210,902
shares of common stock in treasury (1,971,000) (1,686,000)
Less: Unearned compensation (3,028,000) (3,356,000)
Total stockholders' equity 30,392,000 27,916,000
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $40,226,000 $36,677,000
MEDIFAST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
(Restated) (Restated)
Revenue $22,041,000 $19,954,000 $42,130,000 $39,137,000
Cost of sales 5,363,000 4,853,000 10,421,000 9,631,000
Gross Profit 16,678,000 15,101,000 31,709,000 29,506,000
Selling, general, and
administration 15,233,000 12,751,000 28,350,000 24,196,000
Income from operations 1,445,000 2,350,000 3,359,000 5,310,000
Other income/(expense)
Interest expense (102,000) (92,000) (197,000) (181,000)
Interest income 39,000 56,000 72,000 89,000
Other expense 37,000 18,000 88,000 161,000
(26,000) (18,000) (37,000) 69,000
Net income before
provision for income
taxes 1,419,000 2,332,000 3,322,000 5,379,000
Provision for income
tax (expense) (510,000) (884,000) (1,040,000) (1,921,000)
Net income 909,000 1,448,000 2,282,000 3,458,000
Basic earnings per
share $0.07 $0.11 $0.18 $0.27
Diluted earnings per
share $0.07 $0.11 $0.17 $0.25
Weighted average
shares outstanding -
Basic 12,933,559 12,618,379 12,917,400 12,603,903
Diluted 13,699,721 13,615,708 13,683,562 13,601,232
First Call Analyst:
FCMN Contact: bconnors@medifastdiet.com
SOURCE: Medifast, Inc.
CONTACT: Brad Porterfield of Medifast, Inc., +1-410-504-8166,
ir@choosemedifast.com
Web site: http://www.choosemedifast.com/
