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Medifast, Inc. announced today fourth quarter and year-end results for the period ended December 31, 2004. The Company reported fourth quarter revenue of $5,898,000, compared to revenue of $5,840,000 for the same period in 2003. Medifast reported income from operations of $576,000 compared to $482,000 for the same period in 2003. The Company reported pre-tax net income of $566,000, or $0.05 per share (0.04 per diluted share), compared to $511,000, or $0.05 per share ($0.04 per diluted share) for the fiscal 2003 fourth quarter. Medifast generated net income attributable to common shareholders of $35,000, or $0.00 per share ($0.00 per diluted share), compared to $416,000 or $0.05 per share ($0.04 per diluted share). The decrease in net income was due to the elimination of the deferred tax asset and the net operating loss for income tax purposes. The Company did not have a comparable expense in the 2003 fourth quarter. The fourth quarter marked the Company’s 21st consecutive quarter of profitability.
For the full-year ended December 31, 2004, Medifast reported revenue of $27,340,000, compared to 2003 revenue of $25,379,000. The Company generated income from operations for the 2004 fiscal year of $3,004,000 compared to fiscal year 2003 income from operations of $3,598,000. Medifast generated net income attributable to common stockholders of $1,729,000 in 2004, or $0.16 per basic share ($0.14 per diluted share) compared to net income attributable to common stockholders of $2,352,000, or $0.25 per basic share ($0.22 per diluted share) for the 2003 fiscal year. Fiscal 2004 was the Company’s second most profitable year in its history.
“Although we were not able to match the record results we generated in 2003, Medifast implemented many key initiatives that have positioned the Company for growth in 2005,” said Brad MacDonald, Medifast’s Chairman and Chief Executive Officer. “We continue to successfully grow our Take Shape for Life division, having enhanced a replicating website option for Health Advisors and an Internet distribution program for their customers. Our Tasting Party Program has been a rousing success, helping us recruit new Health Advisors and expanding our Network significantly. After making numerous adjustments, we have now refined our advertising campaigns, and believe we have reached the right combination of print, TV, radio, and web marketing. The Company has seen increased success with its web marketing throughout 2004. The Company will continue to ramp up its advertising initiatives while monitoring the effectiveness to help determine the most effective campaign strategy. Finally, the acquisition of Hi-Energy Weight Control Centers has provided us with an important distribution vehicle in many important demographic markets.”
Some of the highlights of fiscal 2004 included:
-- Development of Internet marketing programs. The Company launched a
revamped website at http://www.medifastdiet.com/, which has
contributed to increased sales and improved margins.
-- Increased operating efficiencies. Gross margins increased to 75% in
2004 from 73% in 2003 due to the acquisition of a 119,000-square-foot
distribution facility in Ridgley, Maryland, which reduced production
and distribution costs.
-- Johns Hopkins Study. The Company initiated a clinical study with
Johns Hopkins Bloomberg School of Public Health to test the efficacy
of Medifast meal replacements versus a standard reference diet. The
18-month study will consist of 80 overweight or obese boys and girls
between the ages of 8 and 15 along with 40 of their parents. The
clinical study will examine whether a joint parent-child approach
using Medifast's engineered foods will result in greater weight loss
than children dieting alone.
-- New Product development. The Company launched the new "Maintain by
Medifast" product line, a low-calorie, soy-based, low glycemic
formula patented by Medifast that is incorporated into a low
carbohydrate diet that has provided significant weight loss results
and overall health improvements in clinical studies. "Maintain by
Medifast" offers consumers a special 28-day program that will provide
immediate results on the journey to long-term health improvement.
“Our year has begun in a solid manner,” said Michael McDevitt, Medifast’s President. “Our Web Marketing and Advertising programs continue to gain traction. We continue to track improvement with our Hi-Energy corporately owned clinics after the initial weather-related set backs. Recently, we signed an agreement with a regional drug chain to place four full service Hi-Energy Weight Control Centers in their stores as part of a pilot program. Three of the Hi-Energy Weight Control Centers will be fully operational with the clinical pharmacy program by mid-April 2005. These activities, along with a more effective advertising program and awareness for our products created by the Johns Hopkins Bloomberg School of Public Health clinical study, should position Medifast well for growth in 2005.”
2005 Financial Guidance
For 2005, the Company expects to report revenue of $32 to $34 million with a pre-tax profit of $0.24 to $0.29 per diluted share. For the first quarter ended March 31, 2005, Medifast expects to report revenue of $7.4 million to $8 million, compared to $6.8 million for the same period in 2004. For the first quarter, the Company expects to generate pre-tax profit of between $0.06 and $0.07, per diluted share, compared to $0.07 in the fiscal 2004 first quarter.
The Company’s executives will host a conference call today to discuss these results. The conference call will begin at 4:30 p.m. eastern time. Interested participants should call (877) 740-8078 when calling within the United States or (706) 679-8404 when calling internationally. Please refer to conference code 4619783. There will be a playback available as well. To listen to the playback, please call (800) 642-1687 when calling within the United States or (706) 645-9291 when calling internationally. The replay will be available until April 14, 2005.
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 April 14, 2005.
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
CONSOLIDATED BALANCE SHEETS
December 31, 2004 December 31, 2003
ASSETS
Current assets:
Cash $612,000 $2,524,000
Accounts receivable-net of allowance
for doubtful accounts of $87,000
and $55,000 1,063,000 641,000
Inventory 4,251,000 2,988,000
Investment securities 2,626,000 3,983,000
Deferred compensation 321,000 321,000
Prepaid expenses and other current
assets 1,079,000 936,000
Current portion of deferred tax asset 19,000 596,000
Total Current Assets 9,971,000 11,989,000
Property, plant and equipment - net 8,698,000 7,449,000
Trademarks and intangibles - net 7,138,000 4,419,000
Deferred tax asset, net of current portion 91,000 -
Other assets 70,000 375,000
TOTAL ASSETS $25,968,000 $24,232,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $940,000 $1,714,000
Income taxes payable 674,000 -
Dividends payable 65,000 58,000
Line of credit 369,000 55,000
Current maturities of long-term debt 458,000 764,000
Total current liabilities 2,506,000 2,591,000
Long-term debt, net of current portion 4,256,000 4,564,000
Total Liabilities 6,762,000 7,155,000
Stockholders' Equity:
Series B Convertible Preferred Stock;
par value $1.00; 600,000 shares
authorized; 300,614 and 403,734 shares
issued and outstanding 301,000 404,000
Series C Convertible Preferred Stock;
stated value $1.00; 1,015,000 shares
authorized; 200,000 and 267,000 shares
issued and outstanding 200,000 267,000
Common stock; par value $.001 per
share; 15,000,000 shares authorized;
11,001,070 and 10,482,609 shares
issued and outstanding 11,000 10,000
Additional paid-in capital 20,556,000 20,120,000
Accumulated comprehensive loss (39,000) (25,000)
Accumulated deficit (1,287,000) (3,016,000)
19,742,000 17,760,000
Less: cost of 78,160 and 83,863
shares of common stock in treasury (536,000) (683,000)
Total Stockholders' Equity 19,206,000 17,077,000
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $25,968,000 $24,232,000
MEDIFAST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31,
2004 2003
Revenue $27,340,000 $25,379,000
Cost of sales (6,746,000) (6,825,000)
Gross profit 20,594,000 18,554,000
Selling, general, and administration (17,590,000) (14,956,000)
Income from operations 3,004,000 3,598,000
Other income (expense):
Interest expense (245,000) (150,000)
Interest income 154,000 110,000
Other expense (7,000) -
(98,000) (40,000)
Net income before provision for
income taxes 2,906,000 3,558,000
Provision for income taxes (1,159,000) (1,148,000)
Net income 1,747,000 2,410,000
Less: Preferred stock dividend requirement (18,000) (58,000)
Net income attributable to
common shareholders $1,729,000 $2,352,000
Basic earnings per share $0.16 $0.25
Diluted earnings per share $0.14 $0.22
Weighted average shares outstanding -
Basic 10,832,360 9,305,731
Diluted 12,413,424 10,952,367
SOURCE: Medifast, Inc.
CONTACT: Jeremy Hunt of Medifast, +1-410-504-8196
Web site: http://www.medifastdiet.com/
