Fourth quarter revenue up 29%; fourth quarter profit up 138%
2008 EPS guidance forecasts 30% to 35% growth
OWINGS MILLS, Md., March 12 /PRNewswire-FirstCall/ -- Medifast, Inc.
(NYSE: MED) announced today financial results for the fourth quarter and
the year ended December 31, 2007.
Financial highlights included:
-- Annual revenues increased 13%;
-- Fourth quarter consolidated revenues increased 29% compared to the
previous year's fourth quarter;
-- The direct sales segment of Take Shape for Life experienced sales
increase of 23% year-over-year;
-- Active Take Shape for Life Health Coaches up 54% on a year-over-year
-- Medifast Weight Control Centers annual revenues increased 37%;
For the full-year ended December 31, 2007, Medifast reported revenue of $83.8 million, an increase of 13% from the $74.1 million reported for full-year 2006. The Company reported net income of $3.8 million, or $0.30 per basic share ($0.28 per diluted share), versus $5.2 million or $0.41 per basic share ($0.38 per diluted share) in full-year 2006.
For the fourth quarter Medifast reported revenue of $19.8 million, a 29% increase from $15.3 million in the fourth quarter of 2006. The Company reported net income of $601,000, an increase of 138% from the same time period in 2006 or $0.05 per basic share -- $0.04 per diluted share versus $252,000, or $0.02 per basic share -- $0.02 per diluted share in 2006.
The Company's balance sheet remains strong with stockholders' equity of $32.4 million and working capital of $10.4 million at December 31, 2007, compared to $27.9 million and $9.6 million at December 31, 2006, respectively. At December 31, 2007, the current ratio was 2.5 to 1.
"We are pleased with the progress that was achieved in full-year 2007," commented Michael S. McDevitt, Chief Executive Officer of Medifast, Inc. "Throughout the year we made strategic infrastructure and operational investments that will better position the company for consistent future growth. We believe that a number of those investments have already begun producing results, which positively impacted revenues during the fourth quarter of 2007 and will continue to yield results in 2008 and beyond."
"Our multi-channel distribution model, that is designed to properly align the consumer's needs for success, with the proper level of program support is gaining traction and we are beginning to see improved operating results in a number of our distribution channels. We are particularly pleased with the strong performance of our direct sales segment, Take Shape for Life; which posted a 23% revenue increase on a year-over-year basis. That growth was driven by the dedicated support of our 1,850 active health coaches; which represents a 54% increase in the number of active health coaches compared to the end of 2006."
"We also experienced significant growth in our Medifast Weight Control Centers, where annual revenues increased by 37% and same-store sales for centers that have been open for 12 months or longer were up 37% in the fourth quarter of 2007 versus the fourth quarter of 2006. In December 2007, Medifast Franchise Systems received approval to sell Medifast Weight Control Center franchises and the opportunity is now available in 43 states nationwide. On February 18, 2008 the Company announced it sold the rights to open four clinics in the Greater Baltimore Metropolitan Area. The franchisee also has the rights to open four additional Medifast Weight Control Centers in the Baltimore area over the next two years, bringing the total to eight locations."
"During the quarter," Mr. McDevitt continued, "The Medifast Direct Response marketing division continued to focus on improving advertising effectiveness as it strives to constantly improve upon the return on each advertising dollar that is spent. In order to do so, we have focused on continuing to generate revenue from our ever-growing client base through remarketing efforts such as direct mail and e-mail campaigns. The Company also continues to increase new customer acquisitions through new advertising campaigns launched on the web, print, and TV. In addition, the Company has successfully launched several new products and product lines, to include new meal replacements and supplement offerings. The Company believes that these new product offerings will assist in increasing customer retention rates, further extending the value of each customer acquired. In doing so, the Company continues to move toward its goal of being a life-long solution for customers to achieve optimal health."
Gross Margins for the year were 75%; the same level as the previous year. Gross margins for the fourth quarter were 72% compared to 75% in the immediately preceding quarter as a result of an annual inventory revaluation of its finished goods. The efficiencies gained due to the purchase of new machinery have led to decreased labor costs and scrap that have led to a decrease in cost of goods sold. The revaluation effected fourth quarter cost of goods sold negatively, however it will be a benefit moving forward as cost of goods sold will be lower.
Mr. McDevitt concluded, "The Company believes, that due to the knowledge that was acquired through the advertising spend in 2007, that in 2008 we will devote a higher percentage of our marketing spend on higher returning advertising venues. These campaigns will include a mix of web, print, TV, radio, direct mail and other remarketing efforts, positioning us to achieve a superior return as we continue to more fully develop our multi-channel distribution model. With obesity rates soaring, there's never been a better time for a clinically-proven program for safe and sustained weight loss. Time after time when we look at our quantitative results next to those of other products and programs, we're seeing Medifast emerge with clear advantages, especially with regard to support, simplicity and fast, lasting results. 2008 promises even better products, better marketing, and more clinical data supporting our efforts -- and we look forward to the year ahead with great anticipation."
2008 Full-Year Guidance
Management expects revenue growth for full-year 2008 in the range of 8-10%; and diluted earnings per share growth in the range of 30-35% for the year ended December 31, 2008.
Year-end Conference Call
The Company will hold a conference call and webcast to discuss the financial results of the just concluded fourth quarter and year on Thursday, March 13, 2008 at 11:00 a.m. EASTERN. Interested parties can access the call by dialing (877) 407-0782 or (201) 689-8567, or can listen via a live Internet web cast, which can be found at http://www.choosemedifast.com. A replay of the call is available via webcast at http://www.choosemedifast.com until June 14, 2008 or by playback at (877) 660-6853 or (201) 612-7415 through April 13, 2008. Please use account # 286 and conference id #277571 for the replay.
Medifast (NYSE: MED) is the leading easy-to-use, clinically proven portion-controlled weight loss program. Medifast has been recommended by 15,000 physicians and used by over one million customers. It is committed to enriching lives by providing innovative choices for lasting health. Medifast programs have been proven effective through studies by major university teaching hospitals. The company sells its products and programs via four unique distribution channels: 1) the web and national call centers, 2) national network of physicians, 3) medically supervised Medifast Weight Control Centers, and 4) the Take Shape For Life direct-selling division, a network of health coaches. Medifast was founded in 1980 and is located in Owings Mills, Maryland. For more information, log onto http://www.ChooseMedifast.com.
Please Note: This release contains "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as amended,
Section 21E of the Securities Exchange Act of 1934, as amended, and the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements generally can be identified by use of phrases or terminology
such as "intend" or other similar words or the negative of such
terminology. Similarly, descriptions of Medifast's objectives, strategies,
plans, goals or targets contained herein are also considered
forward-looking statements. Medifast believes this release should be read
in conjunction with all of its filings with the United States Securities
and Exchange Commission and cautions its readers that these forward-looking
statements are subject to certain events, risks, uncertainties, and other
factors. Some of these factors include, among others, Medifast's inability
to attract and retain independent Associates and Members, stability in the
pricing of print, TV and Direct Mail marketing initiatives affecting the
cost to acquire customers, increases in competition, litigation, regulatory
changes, and its planned growth into new domestic and international markets
and new channels of distribution. Although Medifast's believes that the
expectations, statements, and assumptions reflected in these
forward-looking statements are reasonable, it cautions readers to always
consider all of the risk factors and any other cautionary statements
carefully in evaluating each forward-looking statement in this release, as
well as those set forth in its latest Annual Report on Form 10-K and
Quarterly Report on Form 10-Q, and other filings filed with the United
States Securities and Exchange Commission, including its current reports on
Form 8-K. All of the forward-looking statements contained herein speak only
as of the date of this release.
MEDIFAST, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of December 31, 2007 and 2006
Cash and cash equivalents $2,195,000 $1,085,000
Accounts receivable-net of allowance
for doubtful accounts
of $100,000 493,000 448,000
Inventory 9,181,000 8,255,000
Investment securities 1,439,000 1,540,000
Deferred compensation 814,000 673,000
Prepaid expenses and other current assets 2,727,000 2,599,000
Note receivable - current 180,000 174,000
Current portion of deferred tax asset 100,000 90,000
Total current assets 17,129,000 14,864,000
Property, plant and equipment - net 17,031,000 14,020,000
Trademarks and intangibles - net 7,356,000 5,874,000
Deferred tax asset, net of current portion 897,000 517,000
Note receivable, net of current assets 1,212,000 1,355,000
Other assets 99,000 47,000
TOTAL ASSETS $43,724,000 $36,677,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $4,279,000 $2,913,000
Income taxes payable 592,000 535,000
Line of credit 1,599,000 1,256,000
Current maturities of long-term debt 264,000 548,000
Total current liabilities 6,734,000 5,252,000
Long-term debt, net of current portion 4,570,000 3,509,000
Total liabilities 11,304,000 8,761,000
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;
13,709,098 and 13,631,898 shares issued
and outstanding 14,000 14,000
Additional paid-in capital 26,953,000 26,629,000
Accumulated other comprehensive income 321,000 334,000
Retained earnings 9,818,000 5,981,000
Less: cost of 270,534 and 249,184
shares of common stock in treasury (1,971,000) (1,686,000)
Less: Unearned compensation (2,715,000) (3,356,000)
Total stockholders' equity 32,420,000 27,916,000
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $43,724,000 $36,677,000
MEDIFAST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31,
2007 2006 2005
Revenue $83,779,000 $74,086,000 $40,129,000
Cost of sales (21,464,000) (18,237,000) (10,161,000)
Gross profit 62,315,000 55,849,000 29,968,000
Selling, general, and
administration (56,600,000) (48,468,000) (26,419,000)
Income from operations 5,715,000 7,381,000 3,549,000
Other income (expense):
Interest expense (387,000) (369,000) (317,000)
Interest income 105,000 175,000 158,000
Other income 110,000 276,000 15,000
(172,000) 82,000 (144,000)
Income before provision for income
taxes 5,543,000 7,463,000 3,405,000
Provision for income taxes (1,706,000) (2,307,000) (1,002,000)
Net income 3,837,000 5,156,000 2,403,000
Less: Preferred stock dividend
requirement - - (291,000)
Net income attributable to common
shareholders $3,837,000 $5,156,000 $2,112,000
Basic earnings per share $0.30 $0.41 $0.17
Diluted earnings per share $0.28 $0.38 $0.17
Weighted average shares outstanding -
Basic 12,960,930 12,699,066 12,258,734
Diluted 13,644,149 13,482,894 12,780,959
Contact: Brendan Connors Lytham Partners, LLC
Vice President - Finance Joe Diaz
410-581-8042 Joe Dorame
firstname.lastname@example.org Robert Blum
|SOURCE Medifast, Inc.|
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