Medifast Announces Year-end 2007 Financi...(DirectResponse marketing division contin...),Health

Date:3/12/2008

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
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SOURCE Medifast, Inc. Copyright©2008 PR Newswire. All rights reserved

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