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Medifast Reports Record Sales and Net Income for Fiscal Year 2008

Record 2008 Revenues: $105.4 million -- Increase of 26%

2008 Diluted EPS: $0.38 vs. $0.28 -- Increase of 36%

Revenue Trending Continuing YTD 2009

OWINGS MILLS, Md., March 12 /PRNewswire-FirstCall/ -- Medifast, Inc. (NYSE: MED) announced today fourth quarter and fiscal year-end financial results for the period ended December 31, 2008.

Fourth Quarter highlights included:

  • Fourth quarter revenues increased 29% compared to 2007;
  • Diluted EPS for the quarter increased 75% to $0.07 versus $0.04 year-over-year;
  • Direct sales segment, Take Shape for Life, increased sales 76% year-over-year for the quarter;
  • Medifast Weight Control Centers quarterly revenues increased 55%

For the fourth quarter ended December 31, 2008, Medifast reported revenue of $25.5 million, a 29% increase from $19.8 million in the fourth quarter of 2007. The Company reported net income of $949,000, or $0.07 per basic and fully diluted share, compared with $601,000, or $0.05 per basic share - $0.04 per diluted share in the fourth quarter of 2007, a diluted EPS increase of 75%.

Fiscal Year highlights included:

  • Fiscal year 2008 Diluted EPS of $0.38 versus $0.28, an increase of 36%;
  • Revenues increase to $105.4 million, an increase of 26%;
  • Take Shape for Life and Medifast Weight Control Centers both experience strong revenue growth; 79% and 68% respectively

For the fiscal year ended December 31, 2008, Medifast reported revenue of $105.4 million, an increase of 26% from $83.8 million for the fiscal year ended December 31, 2007. The Company reported net income of $5.4 million, or $0.41 per basic share and $0.38 per fully diluted share, versus $3.8 million, or $0.30 per basis share and $0.28 per fully diluted share, in 2007. Revenues and net income represent record results for the company.

"Our results for the quarter and the year continue to show validation of our business model and product offerings," commented Michael S. McDevitt, Chief Executive Officer of Medifast, Inc. "We saw strong growth in our Take Shape for Life direct sales segment, as well as our Medifast Weight Control Centers. Additionally, we experienced consistency in our ability to manage the effectiveness of our advertising spend in our direct response segment. All said, 2008 was an extremely successful year for Medifast and we look to build upon that success in 2009."

Mr. McDevitt continued, "Revenues in our direct sales segment, Take Shape for Life, grew 76% for the quarter and represented 56% of fourth quarter revenues. For fiscal year 2008, revenues increased 79% to $49.5 million versus $27.6 million. Growth in revenues for the segment was driven by increased product sales as a result of an increase in the number of clients supported by active health coaches. The number of active health coaches during the fourth quarter increased to 3,400 compared to 1,850 at the end of 2007, an increase of 84%. We continue to believe that the clinically-proven Medifast meal replacements are one of the premier product offerings on the market, and when coupled with providing that product and clinically proven programs while educating clients through the support of a network of health coaches, you have a business model for success."

"We also saw strong growth during the year in our Medifast Weight Control Centers," continued Mr. McDevitt. "Sales for the segment increased by 68% for the year to $8.4 million. For the year, average monthly store sales increased to $38,000 versus $36,000 in 2007. This growth is extremely impressive given the fact that we opened 10 new corporate centers during the year end which tend to have a drag on average store sales as they begin their ramp up. We are also pleased that during the quarter our franchisees opened the initial five centers. Looking ahead to 2009, we intend to expand the number of franchise centers, open strategic corporate centers and look to improve upon our same store sales growth."

"We saw tremendous consistency in our ability to control advertising spend for our direct response segment throughout 2008. For the year, we consistently generated revenues of approximately $2.50 for every dollar in advertising spent. Revenues were $44.3 million for the year, a decrease of 6% as a result of a reduction in advertising dollars spent. Looking to 2009, we will continue to remain flexible in where we allocate our spend to provide the greatest return on our investment in these uncertain times of advertising effectiveness."

Gross margins increased to a record 75.9% in 2008 from 74.4% a year ago. The gross margins improved due to efficiencies gained from new machinery purchases, changes in shipping rules, and a price adjustment during the month of July.

The Company's balance sheet remains strong with stockholders' equity of $38.2 million and working capital of $12.7 million as of December 31, 2008. The current ratio was 2.5 to 1.

Colonel Brad MacDonald, USMC (Ret.), chairman of the Board of Directors of Medifast, Inc. commented, "The Board of Directors of Medifast is pleased with the performance of our executive team and the entire Medifast organization for their superb execution of the 2008 business plan in a very tough economic environment. The year was filled with dramatic challenges in the macro environment, yet the company stayed focused on the opportunities that ultimately contributed significantly to shareholder value. Medifast, 'Your physicians answer to weight control'(TM) has helped over a million obese or overweight individuals and has been recommended by over 15,000 physicians since 1980. With this strong medical tradition, the company continues using internet technology, an expanded network of health coaches led by a physician, and our Medifast Weight Control Centers that meet the consumers need based on the level of support they desire. While consumers are struggling with many economic issues in these tough times, it appears that they are investing in the improvement of their health and wellbeing. Our Medifast team is capitalizing on this trend, thus 2009 appears to be shaping up to be a positive year for Medifast."

Mr. McDevitt concluded, "We are pleased that our business model of providing varied levels of support through multiple distribution channels has shown the company's general resiliency to turns in the overall economic environment. As mentioned, we witnessed 26% year over year growth in 2008, and we are pleased to announce that year to date in 2009, we are continuing to experience approximately that same growth rate in 2009 first quarter revenue versus the first quarter of 2008."

2009 Sales Trending

Medifast witnessed 26% year over year growth in 2008, and we are pleased to announce that year to date in 2009, we are continuing to experience approximately that same growth rate in 2009 first quarter revenue versus the first quarter of 2008

Fourth Quarter and Fiscal Year End 2008 Conference Call

The Company will hold a conference call and web cast to discuss the results on Thursday, March 12, 2009 at 11:00 a.m. ET.

Interested parties can access the call by dialing (877) 407-0782 or (201) 689-8567, or can listen via a live Internet webcast, which can be found at in the section marked "Investor Relations." A replay of the call is available via web cast at until May 12, 2009 or by playback at (877) 660-6853 or (201) 612-7415 through April 12, 2009. Please use account #286 and conference #315350 for the replay.

About Medifast:

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. Medifast 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

Safe Harbor:

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 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. MED-F

    Contact:    Brendan Connors               Lytham Partners, LLC
                Vice President - Finance      Joe Diaz
               Robert Blum
                                              Joe Dorame

                        Financial tables to follow:

                      MEDIFAST, INC. AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS
                      As of December 31, 2008 and 2007

                                             2008            2007
    Current assets:
    Cash and cash equivalents            $1,841,000      $2,195,000
    Accounts receivable-net of
     allowance for doubtful
     accounts of $100,000                   448,000         493,000
    Inventory                            13,856,000       9,181,000
    Investment securities                 1,099,000       1,439,000
     Deferred compensation                  531,000         814,000
    Prepaid expenses and other
     current assets                       2,034,000       2,727,000
    Prepaid income tax                    1,131,000               -
    Note receivable - current               180,000         180,000
    Current portion of deferred
     tax asset                              100,000         100,000
      Total current assets               21,220,000      17,129,000

    Property, plant and
     equipment - net                     21,709,000      17,031,000
    Trademarks and intangibles -
     net                                  5,547,000       7,356,000
    Deferred tax asset, net of
     current portion                      1,131,000         897,000
    Note receivable, net of
     current assets                       1,080,000       1,212,000
    Other assets                            350,000          99,000

      TOTAL ASSETS                      $51,037,000     $43,724,000

    Current liabilities:
    Accounts payable and accrued
     expenses                            $5,130,000      $4,279,000
    Income taxes payable                          -         592,000
    Line of credit                        3,164,000       1,599,000
    Current maturities of
     long-term debt                         257,000         264,000
      Total current liabilities           8,551,000       6,734,000

    Other liabilities
    Long-term debt, net of
     current portion                      4,313,000       4,570,000
      Total liabilities                  12,864,000      11,304,000

    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; 14,585,960 and
     13,709,098 shares issued and
     outstanding                             15,000          14,000
    Additional paid-in capital           30,787,000      26,953,000
     Accumulated other comprehensive
     income (loss)                         (389,000)        321,000
    Retained earnings                    15,253,000       9,818,000
                                         45,666,000      37,106,000

    Less: cost of 272,192 and 270,534
     shares of common stock in
     treasury                            (1,956,000)     (1,971,000)
    Less: Unearned compensation          (5,537,000)     (2,715,000)
    Total stockholders' equity           38,173,000      32,420,000

       STOCKHOLDERS' EQUITY             $51,037,000     $43,724,000

                        MEDIFAST, INC. AND SUBSIDIARIES

                                           Years Ended December 31,
                                              2008           2007

    Revenue                               $105,445,000    $83,779,000
    Cost of sales                          (25,332,000)   (21,464,000)
    Gross profit                            80,113,000     62,315,000

    Selling, general, and administration   (71,914,000)   (56,600,000)

    Income from operations                   8,199,000      5,715,000

    Other income (expense):
        Interest expense                      (366,000)      (387,000)
        Interest income                        149,000        105,000
        Other income (expense)                (132,000)       110,000
                                              (349,000)      (172,000)

    Income before provision for income
     taxes                                   7,850,000      5,543,000
    Provision for income taxes              (2,415,000)    (1,706,000)

    Net income attributable to common
     shareholders                           $5,435,000     $3,837,000

    Basic earnings per share                     $0.41          $0.30
    Diluted earnings per share                   $0.38          $0.28

    Weighted average shares outstanding -
        Basic                               13,126,534     12,960,930
        Diluted                             14,329,525     13,644,149

SOURCE Medifast, Inc.
Copyright©2009 PR Newswire.
All rights reserved

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