OWINGS MILLS, Md., May 4, 2017 /PRNewswire/ -- Medifast, Inc.
(NYSE: MED), a leading United
States manufacturer and provider of clinically proven
weight-loss and healthy living products and programs, today
reported financial results for the first quarter ended March 31, 2017.
"We are pleased with our start to 2017. Revenue was in-line with
our expectations and when combined with our solid gross profit and
expense management it fueled profitability above our guidance for
the first quarter," said Daniel R.
Chard, Medifast's Chief Executive Officer. "Going forward,
our focus will continue to be on acceleration of our top-line
growth with continued improvement in profitability. We believe we
are well positioned with our significant cash generation and the
strength of our balance sheet to continue to enhance stockholder
value."
First Quarter 2017 Results
Net income in the first quarter of 2017 was $6.1 million, or $0.51 per diluted share, based on approximately
12.0 million shares outstanding. First quarter 2016 net income was
$4.3 million, or $0.36 per diluted share based on approximately
11.9 million shares outstanding. Net income in the first
quarter of 2016 would have been $5.0
million, or $0.42 per diluted
share, excluding the $0.8 million
first quarter 2016 restructuring costs net of taxes.
For the first quarter of 2017, Medifast revenue decreased 2.4%
to $70.6 million from revenue of
$72.3 million in the first quarter of
2016.
Revenue in Take Shape For Life, was up 2.3% to $58.0 million in the first quarter of 2017,
compared to $56.7 million in the
first quarter of the prior year. This is the sixth consecutive
quarter of growth. The total number of active earning Health
Coaches in the first quarter of 2017 increased to 13,000, compared
to 12,600 in the first quarter of 2016. The average revenue per
active earning Health Coach for the first quarter of 2017 was
$4,463 as compared to $4,490 in first quarter of 2016.
Medifast Direct revenue decreased to $8.9
million in the first quarter of 2017, compared to
$10.9 million in the first quarter of
2016. First quarter advertising spend decreased to $2.3 million from $4.1
million in the first quarter of 2016.
Revenue in the Franchise Medifast Weight Control Centers
decreased to $3.5 million from
$4.2 million in the first quarter of
last year. The decrease in revenue was primarily driven by fewer
franchise centers in operation during the period combined with a
decline in activity within the centers. The Company ended the
quarter with 37 franchise centers and 19 reseller locations in
operation compared to 58 franchise centers at the end of the same
period last year.
First quarter 2017 Wholesale revenue decreased to $0.3 million compared to the prior year period at
$0.5 million.
Gross profit for the first quarter of 2017 decreased modestly to
$52.9 million compared $53.2 million in the first quarter of 2016. The
Company's gross profit as a percentage of revenue increased 140
basis points to 74.9% from 73.5% in the first quarter of
2016. The increase as a percentage of revenue was primarily
driven by price increases and efficiencies in the Company's supply
chain operations.
Selling, general and administrative expenses ("SG&A")
decreased $2.6 million to
$44.3 million compared to
$46.9 million in the first quarter of
2016. SG&A as a percentage of revenue decreased 220 basis
points to 62.7%, compared to 64.9% in the first quarter of 2016.
The decrease in SG&A was primarily a result of reduced and more
effective advertising spend in Medifast Direct. In addition, the
first quarter of 2016 included $1.2
million in restructuring costs. Excluding restructuring
costs, SG&A decreased $1.5
million to $44.3 million in
the first quarter of 2017 compared to $45.8
million in the first quarter of 2016. Adjusted
selling, general expenses as a percentage of revenue were 62.7% and
63.3% for the first quarter of 2017 and 2016, respectively.
Sales and marketing expense decreased $1.4 million in the first quarter of 2017
compared to the first quarter of 2016.
The first quarter 2017 effective tax rate was 29.5%, compared to
33.0% in the first quarter of 2016. The decrease in the
effective tax rate was due to the change in accounting for taxes
associated with share based compensation.
Balance Sheet
The Company's balance sheet remains strong with stockholders'
equity of $99.2 million and working
capital of approximately $80.5
million as of March 31,
2017. Cash, cash equivalents, and investment securities
increased $2.2 million to
$79.0 million as of March 31, 2017 compared to $76.8 million at December
31, 2016. The Company remains free of interest bearing
debt.
The Company declared a quarterly cash dividend of $3.9 million, or $0.32 per share, during the first quarter of
2017. The Company did not repurchase any shares during the
first quarter of 2017, and has approximately 850,000 shares
remaining on its repurchase authorization as of March 31, 2017.
Outlook
The Company expects second quarter revenue from continuing
operations to be in the range of $72.0
million to $75.0 million and earnings per diluted share from
continuing operations to be in the range of $0.51 to $0.54 per diluted share. The
Company reiterated its guidance for full year 2017 revenue of
$290.0 million to $300.0 million and
earnings per diluted share of $2.00 to
$2.10. The fiscal year 2017 guidance assumes a 33% to
34% effective tax rate.
Non-GAAP Financial Measures
Our Non-GAAP financial measures include adjusted income from
continuing operations and adjusted income per diluted share.
The Company believes these non-GAAP financial measures are useful
to investors because it provides for a more direct comparison of
the results for these periods. The non-GAAP financial information
is provided in addition to, and not as an alternative to, the
Company's reported results prepared in accordance with GAAP. Please
refer to the tables in today's press release for a reconciliation
of all non-GAAP financial measures.
Conference Call Information
The conference call is scheduled to begin at 4:30 p.m. ET on May 4,
2017. The call will be broadcast live over the Internet
hosted at the Investor Relations section of Medifast's website at
www.MedifastNow.com, and will be archived online through
May 18, 2017. In addition, listeners
may dial (855) 560-2579.
A telephonic playback will be available from 6:30 p.m. ET, May 4,
2017, through May 11, 2017.
Participants can dial (877) 344-7529 to hear the playback and enter
passcode 10104793.
About Medifast®:
Medifast (NYSE: MED) is the leading easy-to-use provider of
clinically proven weight-loss and healthy living products and
programs. Medifast aims to help customers lead a healthier
lifestyle through a holistic approach to weight-loss and weight
management. Medifast's proven results are based on the use of
structured meal plans featuring Medifast Meals, which are
nutritionally designed to assist customers with successful
weight-loss and weight management. Medifast was founded
in 1980 and is located in Owings Mills, Maryland. For more
information, log onto www.MedifastNow.com.
MED-F
Forward Looking Statements
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 Health
Coaches 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.
MEDIFAST, INC. AND
SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
|
(in thousands,
except par value)
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
|
December
31,
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
Current
Assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
53,970
|
|
$
|
52,436
|
Accounts
receivable-net of allowance for sales returns and doubtful
accounts
|
|
|
|
|
|
|
of $422 and
$449 at March 31, 2017 and December 31, 2016
|
|
|
1,493
|
|
|
1,387
|
Inventory
|
|
|
19,883
|
|
|
18,311
|
Investment
securities
|
|
|
24,989
|
|
|
24,412
|
Income taxes,
prepaid
|
|
|
384
|
|
|
1,249
|
Prepaid expenses and
other current assets
|
|
|
2,925
|
|
|
3,502
|
Total current
assets
|
|
|
103,644
|
|
|
101,297
|
|
|
|
|
|
|
|
Property, plant and
equipment - net
|
|
|
19,137
|
|
|
19,753
|
Other
assets
|
|
|
166
|
|
|
162
|
Long-term assets of
discontinued operations
|
|
|
-
|
|
|
4
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
$
|
122,947
|
|
$
|
121,216
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
Current
Liabilities
|
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
|
$
|
23,150
|
|
$
|
24,300
|
Current liabilities
of discontinued operations
|
|
|
-
|
|
|
121
|
Total current
liabilities
|
|
|
23,150
|
|
|
24,421
|
|
|
|
|
|
|
|
Deferred tax
liabilities
|
|
|
629
|
|
|
779
|
Total
liabilities
|
|
|
23,779
|
|
|
25,200
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
|
|
Common stock; par
value $.001 per share; 20,000 shares authorized;
|
|
|
|
|
|
|
12,132 and 12,027
issued and 11,927 and 11,871 outstanding
|
|
|
|
|
|
|
at March 31, 2017 and
December 31, 2016, respectively
|
|
|
12
|
|
|
12
|
Additional paid-in
capital
|
|
|
3,372
|
|
|
2,672
|
Accumulated other
comprehensive loss
|
|
|
(29)
|
|
|
(165)
|
Retained
earnings
|
|
|
95,813
|
|
|
93,497
|
Total
stockholders' equity
|
|
|
99,168
|
|
|
96,016
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
$
|
122,947
|
|
$
|
121,216
|
MEDIFAST, INC. AND
SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
|
(in thousands,
except per share amounts & dividend data)
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
70,622
|
|
$
|
72,345
|
Cost of
sales
|
|
|
17,730
|
|
|
19,151
|
Gross
profit
|
|
|
52,892
|
|
|
53,194
|
|
|
|
|
|
|
|
Selling, general, and
administrative
|
|
|
44,283
|
|
|
46,926
|
|
|
|
|
|
|
|
Income from
operations
|
|
|
8,609
|
|
|
6,268
|
|
|
|
|
|
|
|
Other income
(expense)
|
|
|
|
|
|
|
Interest and dividend
income, net
|
|
|
63
|
|
|
115
|
Other income
(expense)
|
|
|
39
|
|
|
(24)
|
|
|
|
102
|
|
|
91
|
|
|
|
|
|
|
|
Income from
operations before income taxes
|
|
|
8,711
|
|
|
6,359
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
|
2,566
|
|
|
2,099
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
6,145
|
|
$
|
4,260
|
|
|
|
|
|
|
|
Earnings per share
-basic
|
|
$
|
0.52
|
|
$
|
0.36
|
|
|
|
|
|
|
|
Earnings per share
-diluted
|
|
$
|
0.51
|
|
$
|
0.36
|
|
|
|
|
|
|
|
Weighted average
shares outstanding -
|
|
|
|
|
|
|
Basic
|
|
|
11,901
|
|
|
11,862
|
Diluted
|
|
|
12,009
|
|
|
11,922
|
|
|
|
|
|
|
|
Cash dividends
declared per share
|
|
$
|
0.32
|
|
$
|
0.25
|
MEDIFAST, INC. AND
SUBSIDIARIES
|
NON-GAAP FINANCIAL
MEASURES
|
(in thousands,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
Selling, general, and
administrative
|
|
$
|
44,283
|
|
$
|
46,926
|
Adjustments
|
|
|
|
|
|
|
Restructuring
charges
|
|
|
-
|
|
|
1,166
|
Adjusted selling,
general, and administrative
|
|
$
|
44,283
|
|
$
|
45,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
Income from
operations
|
|
$
|
8,609
|
|
$
|
6,268
|
Adjustments
|
|
|
|
|
|
|
Restructuring
charges
|
|
|
-
|
|
|
1,166
|
Adjusted income from
operations
|
|
$
|
8,609
|
|
$
|
7,434
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
Net income
|
|
$
|
6,145
|
|
$
|
4,260
|
Adjustments
|
|
|
|
|
|
|
Restructuring
charges
|
|
|
-
|
|
|
781
|
Adjusted net
income
|
|
$
|
6,145
|
|
$
|
5,041
|
|
|
|
|
|
|
|
Diluted earnings per
share (1)
|
|
$
|
0.51
|
|
$
|
0.36
|
Impact for
adjustments (1)
|
|
|
-
|
|
|
0.06
|
Adjusted diluted
earnings per share (1)
|
|
$
|
0.51
|
|
$
|
0.42
|
|
|
|
|
|
|
|
(1) The
weighted-average diluted shares outstanding used in the calculation
of these non-GAAP financial measures are the same as the
weighted-average shares outstanding used in the calculation of the
reported per share amounts.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/medifast-inc-announces-first-quarter-2017-financial-results-300451796.html
SOURCE Medifast, Inc.