Press Releases
Every day, more lives are transformed all over the world – one healthy habit at a time. Read the latest about how Medifast and the OPTAVIA® movement is impacting people’s lives.
Medifast, Inc. reported today record first quarter revenue for the period ended March 31, 2005. The Company reported revenue of $8.33 million, versus $6.82 million for the same period in 2004, representing an increase of $1.51 million or 22% from the first quarter of 2004. Medifast generated pre-tax Income from Operations of $854,000 versus $894,000 in the 2004 first quarter.
The Company reported net income of $507,000, or $0.04 per share ($0.04 per share on a fully diluted basis) in the first quarter of 2005, versus $647,000, or $0.06 per share ($0.05 per share on a fully diluted basis) for the 2004 first quarter. Earnings per share were affected by the dilution caused by the conversion of the remaining Series “B” Preferred Stock during the first quarter. Selling, General and Administrative expenses increased from $4.5 million in the year earlier period to $5.3 million in the 2005 first quarter. This was partially a result of increased commissions from increased revenues as well as overall corporate infrastructure improvements. SG&A also increased due to initial expenses related to the opening of corporately owned Hi-Energy Weight Control Clinics in the Dallas/Ft. Worth, Texas area.
The Company improved Stockholders’ Equity at the end of the first quarter of 2005 to $19.7 million, versus $19.2 million at December 31, 2004. The Company ended the quarter with $916,000 in cash and cash equivalents, along with $2.6 million in investment securities. The first quarter of 2005 represented the Company’s twenty-second consecutive quarter of profitability.
At the close of the first quarter of 2004, the Company’s fully diluted shares outstanding were 12,157,860 versus 12,729,459 at the end of the first quarter 2005. The Company does not anticipate significant dilution in the near future from the conversion of Preferred Stock, because the conversion of the remaining 200,000 shares of Series “C” Preferred stock has been accounted for in the fully diluted shares outstanding.
“We are happy with our first quarter results,” stated Michael S. McDevitt, Medifast’s President. “All of our divisions have made great strides this quarter, and the proof is in the results.”
Throughout the first quarter, Medifast continued to increase its advertising campaign which assisted in generating increased revenues and brand awareness. The campaign consisted of print, TV, Internet and radio advertising. The Medifast website, http://www.medifastdiet.com/, is an increasingly powerful sales channel, which now includes message boards so that Medifast’s customers can share their dieting experiences and successes with others.
The Take Shape for Life Health Network continues to grow its network of Certified Health Advisors and increase sales through multiple recruiting initiatives. During the quarter, Take Shape for Life introduced the “Blueprint for Success” training program. The program assisted in increasing revenues and helped to add new Health Advisors to the TSFL network. This extensive training is comprised of two manuals, one for new Health Advisors and another for existing Health Advisors. The program is designed to educate Health Advisors on customer acquisition, selling, retention, recruiting and business building techniques.
The Company’s Hi-Energy Weight Control Centers also continued to expand. The Company entered into a partnership with Kerr Drug Stores to place four full-service Hi-Energy Weight Control Centers within the drug stores. It is part of a “store within a store” program under Kerr Drug’s clinical pharmacy program. This program has received widespread publicity in the pharmaceutical industry. “We are very excited about our new partnership with Kerr Drug,” said Brad MacDonald, Medifast’s Executive Chairman. “Our clinically proven products and programs will provide another solution for the clinical pharmacist to improve the overall health and weight of their customers.”
In addition, in January 2005, the Company opened four corporately owned Hi-Energy Weight Control Centers in the Dallas/Ft. Worth, Texas area. These centers will also serve as business models for recruitment of Licensee owned centers.
The Company, well known for its clinically proven programs, is citing one more study proving the efficacy of its programs. In January 2005, the Johns Hopkins Bloomberg School of Public Health concluded an 86-week study of Type 2 Diabetics using Medifast Plus for Diabetics compared to an American Diabetic Association (ADA) recommended diet. The preliminary results of the first 34 weeks of the study showed that those study volunteers on Medifast Plus for Diabetics lost twice as much weight and were twice as compliant as compared to those following the basic nutrition recommendations from the ADA. The final study results are scheduled to be presented at the American Diabetes Association Annual Sessions on June 10, 2005 in San Diego, CA.
2005 Financial Guidance
The Company expects to report full-year revenue of $32 to $34 million with a pretax profit of $0.24 to $0.29 per diluted share. For the second quarter ending June 30, 2005, Medifast expects to report revenue of $8.4 to $8.6 million, and pretax profit of $850,000 to $1.0 million or $0.07 to $0.08 per diluted share.
The Company will hold a conference call and webcast today at 4:30 pm. Interested participants should call (800) 706-7745 when calling within the United States or (617) 614-3472 when calling internationally. Please refer to passcode 44728898. 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 passcode 99025639 for the replay. The replay will be available until July 5, 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 July 5, 2005.
About Medifast: (http://www.medifastdiet.com/)
Medifast has been helping people lose weight and achieve better health for almost 25 years. Its meal replacement foods have been proven effective at Johns Hopkins University, recommended by over 15,000 physicians and used by more than 1,000,000 customers. Medifast offers its customers world-class customer service, technical and medical support.
Forward-Looking Statement Disclaimer
This release contains forward-looking statements that 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 expectations or beliefs on this date.
MEDIFAST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, 2005 December 31, 2004
(Unaudited) (Audited)
ASSETS
Current assets:
Cash $916,000 $612,000
Accounts receivable-net of
allowance for doubtful
accounts of $100,000
and $87,000, respectively 1,159,000 1,063,000
Inventory 4,462,000 4,251,000
Investment securities 2,635,000 2,626,000
Deferred compensation 321,000 321,000
Prepaid expenses and other current
assets 1,293,000 1,079,000
Deferred tax asset 24,000 19,000
Total Current Assets 10,810,000 9,971,000
Property, plant and equipment - net 8,981,000 8,698,000
Trademarks and intangibles - net 6,937,000 7,138,000
Deferred tax asset, net of current
portion 121,000 91,000
Other assets 70,000 70,000
TOTAL ASSETS $26,919,000 $25,968,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
expenses $1,136,000 $940,000
Income taxes payable 357,000 674,000
Dividends payable 65,000 65,000
Line of credit 660,000 369,000
Current maturities of
long-term debt 555,000 458,000
Total current liabilities 2,773,000 2,506,000
Long-term debt, net of current
portion 4,398,000 4,256,000
Total Liabilities 7,171,000 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;
200,000 shares issued and
outstanding 200,000 200,000
Common stock; par value $.001 per
share; 15,000,000 authorized;
12,173,456 and 11,001,070 shares
issued and outstanding,
respectively 12,000 11,000
Additional paid-in capital 21,229,000 20,556,000
Accumulated comprehensive loss (96,000) (39,000)
Accumulated deficit (1,061,000) (1,287,000)
20,284,000 19,742,000
Less cost of 78,160 shares of common
stock in treasury (536,000) (536,000)
Total Stockholders' Equity 19,748,000 19,206,000
TOTAL LIABILITIES & STOCKHOLDERS'
EQUITY $26,919,000 $25,968,000
MEDIFAST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three months Ended March 31,
2005 2004
(Unaudited) (Unaudited)
Revenue $8,326,000 $6,817,000
Cost of sales 2,073,000 1,350,000
Gross Profit 6,253,000 5,467,000
Selling, general, and
administration 5,341,000 4,548,000
Income from operations 912,000 919,000
Other income/(expense)
Interest expense (65,000) (23,000)
Interest income 28,000 -
Other expense (21,000) (2,000)
Income before provision for income
taxes 854,000 894,000
Provision for income tax (expense) (347,000) (247,000)
Net income $507,000 $647,000
Basic earnings per share $0.04 $0.06
Diluted earnings per share $0.04 $0.05
Weighted average shares outstanding -
Basic 11,916,241 10,610,391
Diluted 12,729,459 12,157,860
SOURCE: Medifast, Inc.
CONTACT: Jeremy Hunt, Investor Relations Specialist, Medifast, Inc.,
+1-410-504-8196
Web site: http://www.medifastdiet.com/
