Navigation Links Announces Q4 2008 Results

FORT LAUDERDALE, Fla., March 16 /PRNewswire-FirstCall/ --, Inc. (Nasdaq: DIET), a leading provider of convenient at-home diet, fitness and healthy lifestyle solutions, today announced results for the fourth quarter and twelve months ended December 31, 2008.

Revenues for the fourth quarter of 2008 were $4.0 million, compared to $6.9 million in the prior year period. Net loss was $(8.4) million, or $(0.33) per diluted share, for the fourth quarter of 2008 compared to $(4.2) million, or $(0.17) per diluted share, for the fourth quarter of 2007. Results for the fourth quarter of 2008 include a non-cash, impairment charge of $5.2 million related to the goodwill of the Company's business-to-consumer segment, while results for the fourth quarter of 2007 include a non-cash goodwill impairment charge of $2.3 million related to the Company's European segment. The non-cash impairment charge does not affect the Company's cash balances, liquidity or operating cash flows.

Adjusted EBITDA*, defined as net loss before interest, taxes, depreciation, amortization, stock-based compensation, severance charges, bad debt expense and impairment of goodwill and intangible assets, for the quarter ended December 31, 2008 was $(1.2) million compared to $(0.4) million in the prior year period.

For the twelve months ended December 31, 2008, the Company recorded revenues of $23.9 million, compared to $29.7 million for the same period last year. Net loss was $(19.8) million, or $(0.79) per share in fiscal 2008, compared to $(9.4) million, or $(0.38) per share, in fiscal 2007. Results for 2008 include a non-cash goodwill impairment charge of $5.2 million, while results for 2007 include a non-cash goodwill impairment charge of $2.3 million. Adjusted EBITDA for the twelve months ended December 31, 2008 totaled $(7.5) million, compared to $(2.3) million in the comparable year period.

Fourth Quarter and Recent Operating Highlights:

  • Improved margins on meal delivery program to 24% (excluding revenue share and promotional costs) from breakeven in Q3
  • Identified $1.5 million of additional annual cost savings initiatives to be implemented in Q1 2009
  • Ended 2008 with 7 channel partner programs and 23 corporate services license programs, up from a total of 20 at the end of 2007
  • Signed third strategic marketing alliance for meal delivery program
  • Appointed Kevin McGrath as President and Chief Executive Officer of in December 2008

"While we continue to make progress on the principal elements of our transformation strategy, pressures from the broader economy prevented many of the improvements from being realized in our financial performance," said Kevin McGrath, President and Chief Executive Officer of "During the fourth quarter, we focused on driving operational efficiencies and controlling expenses across our core digital, meal delivery and B2B businesses. We are very encouraged by the initial results of our margin initiatives, which resulted in margin expansion from zero to 24% since the third quarter. Going forward, we plan to focus more aggressively on promotional activity and innovative marketing in order to stimulate meal delivery sales and help consumers overcome price concerns while maintaining our margin improvements. While much work remains, we believe that we are on-track to positioning to return to positive cash flow."

Conference Call

The company will host a conference call to discuss the fourth quarter and year end 2008 results at 8:30 a.m. Eastern Time on Tuesday, March 17, 2009. Participants may access the call by dialing 800.510.9834 (domestic) or 617.614.3669 (international), passcode 40569062. In addition, the call will be webcast via the Investor Relations section of the company's web site at, where it will also be archived. A telephone replay will be available through Tuesday, March 31, 2009. To access the replay, please dial 888-286-8010 (domestic) or 617-801-6888 (international), passcode 64476403.

About eDiets, Inc. is a leading provider of personalized nutrition, fitness and weight-loss programs. eDiets currently features its award-winning, fresh-prepared diet meal delivery service as one of the more than 20 popular diet plans sold directly to members on its flagship site, . The company also provides a broad range of customized wellness and weight management solutions for Fortune 500 clients.'s unique infrastructure offers businesses, as well as individuals, an end-to-end solution strategically tailored to meet its customers' specific goals of achieving a healthy lifestyle. For more information, please call 310-954-1105 or visit

* Use of Non-GAAP Financial Measures

In its earnings releases, conference calls, slide presentations or webcasts, the Company may use or discuss adjusted EBITDA, which is a non-GAAP financial measure as defined by SEC Regulation G. Management regularly reviews adjusted EBITDA as an analytical indicator of the Company's financial performance and believes that it is useful to investors in evaluating operating performance. In addition, the Company uses adjusted EBITDA as a measure of performance for its business segments and for incentive compensation purposes. The Company does not intend for adjusted EBITDA to be considered in isolation or as a substitute for any GAAP measure. Adjusted EBITDA, as presented, may not be comparable to similarly titled measures of other companies.

                                  Three Months Ended     Twelve Months Ended
                                      December 31,          December 31,
                                    2008       2007       2008        2007

    Net loss                     $(8,396)   $(4,212)    $(19,848)   $(9,408)

    Interest income, net             (10)      (108)           2       (256)
    Interest expense on
    secured notes                    626        382        2,008        508
    Amortization of secured
     notes                           402        187        1,238        249
    Income tax provision             (12)       (28)           6        171
    Depreciation                     624        260        1,751      1,020
    Amortization of
     intangibles                     176        305          882      1,213
    Impairment of goodwill
     & intangibles                 5,191      2,296        5,191      2,296
    Stock-based compensation         (76)       537          969      1,705
    Loss on disposition of
     fixed assets                      5          -            5        176
    Bad debt expense                 140        (41)         222        (31)
    Severance charges                 83         14          122         88
    Adjusted EBITDA              $(1,247)     $(406)     $(7,452)   $(2,270)

Safe Harbor Statement

Statements which are not historical in nature are forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties which could cause the actual results, performance or achievements to be materially different from those which may be expressed or implied by such statements. These risks and uncertainties include, among others, that we will not be able to obtain sufficient and/or acceptable outside financing (when and if required);, changes in general economic and business conditions; changes in product acceptance by consumers; a decline in the effectiveness of sales and marketing efforts; loss of market share and pressure on prices resulting from competition; significant investments in our technology platform, marketing plans, and product development to remain competitive with other online providers of healthy living and weight loss plans, many of which may be found to offer superior and more varied features than our plans and may also be offered for free; volatility in the advertising markets; any delay, disruption, or suspension of our supply of prepared meals from our vendor; changes in consumer preferences and discretionary spending; product liability and other risks from the sale of ingested products; regulatory actions affecting our marketing activities; and the outcome of litigation pending against us. For additional information regarding these and other risks and uncertainties associated with's business, reference is made to our Annual Report on Form 10-K for the year ended December 31, 2007, and other reports filed from time to time with the Securities and Exchange Commission. All forward-looking statements are current only as of the date on which such statements are made. We do not undertake any obligation to publicly update any forward- looking statements.

-- Financial Tables Follow --

                            , Inc.
                      Summary of Consolidated Financial Information
                           (In thousands, except per share amounts)

                                      Three Months Ended     Year Ended
                                         December 31,        December 31,
                                        2008      2007      2008      2007
      Digital plans                   $1,531    $3,858    $9,345   $19,482
      Meal delivery                    1,165     1,567     9,405     3,994
      Other                            1,271     1,475     5,185     6,253
    Total revenues                     3,967     6,900    23,935    29,729

    Cost and expenses:
      Cost of revenue
         Digital plans                   772       665     2,610     3,112
         Meal delivery                   828     1,432     9,358     3,665
         Other                           140        39       457       445
      Total cost of revenue            1,740     2,136    12,425     7,222
      Technology and development       1,241       949     4,297     3,723
      Sales, marketing and support     1,979     3,242    11,664    17,029
      General and administrative       1,030     1,751     6,070     6,984
      Amortization of intangibles        176       305       882     1,213
      Impairment of goodwill
       and intangibles                 5,191     2,296     5,191     2,296
    Total cost and expenses           11,357    10,679    40,529    38,467
    Loss from operations              (7,390)   (3,779)  (16,594)   (8,738)
      Interest income                     14       115       109       282
      Interest expense                (1,032)     (574)   (3,357)     (781)
      Income tax provision                12        26        (6)     (171)
    Net loss                         $(8,396)  $(4,212) $(19,848)  $(9,408)

    Loss per common share:
       Basic and diluted              $(0.33)   $(0.17)   $(0.79)   $(0.38)

    Weighted average common
     and common equivalent
     shares outstanding:
       Basic and diluted              25,154    24,942    25,115    24,811

                                    Three Months Ended     Year Ended
                                       December 31,        December 31,
                                      2008      2007      2008      2007
    Net cash provided by
     (used in):
      Operations                    $(1,879)  $(1,927)  $(8,202)  $(4,774)
      Investing                         337    (1,150)   (1,148)   (4,062)
      Financing                       2,475        95     4,652    10,009

                                               December 31,     December 31,
                                                   2008             2007
      Cash and cash equivalents                  $2,523            $7,132
      Total assets                               15,671            27,691
      Deferred Revenue                            3,336             3,664
      Long-term debt (excluding
       capital leases)                           11,808             6,247
      Stockholders' equity                       (2,781)           12,862

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