OWINGS MILLS, Md., Aug. 8, 2017 /PRNewswire/ -- Medifast, Inc.
(NYSE: MED), a leading provider of clinically studied healthy
living products and programs, today reported financial results for
the second quarter ended June 30,
2017.
"Our second quarter financial results reflect the successful
execution of our strategic growth initiatives as our efforts have
continued to position our business for an accelerated rate of
growth. We are very pleased to generate revenues and
profitability above our expectations for the quarter," said
Daniel R. Chard, Medifast's Chief
Executive Officer. "We have positive business momentum with
our recently rebranded OPTAVIA coach community, and when
combined with our scalable infrastructure and strong balance sheet,
we believe we are well positioned for future growth and to create
value for our shareholders."
Second Quarter 2017 Results
Net income in the second quarter of 2017 was $7.6 million, or $0.63 per diluted share, based on approximately
12.1 million shares outstanding. Second quarter 2016 net income was
$3.4 million, or $0.29 per diluted share based on approximately
11.9 million shares outstanding. Adjusted net income in the
second quarter of 2016 was $7.5
million, or $0.63 per diluted
share, excluding impairment costs.
For the second quarter of 2017, Medifast revenue increased 6.4%
to $75.7 million from revenue of
$71.1 million in the second quarter
of 2016.
Revenue in OPTAVIA™, formerly known as Take Shape For
Life®, was up 10.6% to $63.5 million in the second quarter of 2017,
compared to $57.4 million in the
second quarter of the prior year. This is the seventh consecutive
quarter of growth. The total number of active earning
OPTAVIA™ Coaches in the second quarter of 2017 increased to
13,500, compared to 12,800 in the second quarter of 2016. The
average revenue per active earning OPTAVIA™ Coach for the
second quarter of 2017 was $4,713 as
compared to $4,479 in second quarter
of 2016.
Medifast Direct revenue decreased to $8.6
million in the second quarter of 2017, compared to
$9.3 million in the second quarter of
2016. Second quarter advertising spend increased to $1.9 million from $1.6
million in the second quarter of 2016.
Revenue in the Franchise Medifast Weight Control Centers
decreased to $3.4 million from
$4.1 million in the second 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 and a decrease in resellers.
The Company ended the quarter with 36 franchise centers and 2
reseller locations in operation compared to 57 franchise centers at
the end of the same period last year.
Second quarter 2017 Wholesale revenue decreased to $0.2 million compared to the prior year period at
$0.3 million.
Gross profit for the second quarter of 2017 increased to
$57.6 million compared $53.2 million in the second quarter of 2016. The
Company's gross profit as a percentage of revenue increased 130
basis points to 76.1% from 74.8% in the second quarter of
2016. The increase as a percentage of revenue was primarily
driven by a change in product mix with higher prices and
efficiencies realized within the Company's supply chain.
Selling, general and administrative expenses ("SG&A")
decreased $1.9 million to
$46.3 million compared to
$48.2 million in the second quarter
of 2016. SG&A as a percentage of revenue decreased to 61.1%
compared to 67.8% in the second quarter of 2016. The decrease in
SG&A was primarily a result of the $6.1
million asset impairment costs incurred during the second
quarter of 2016, partially offset by increased commission expenses
and increased personnel costs. Excluding the impairment costs,
SG&A increased $4.2 million to
$46.3 million in the second quarter
of 2017 compared to $42.1 million in
the second quarter of 2016. Adjusted SG&A as a percentage
of revenue were 61.1% and 59.2% for the second quarter of 2017 and
2016, respectively.
Sales and marketing expense increased $0.4 million in the second quarter of 2017
compared to the second quarter of 2016.
The second quarter 2017 effective tax rate was 33.8%, compared
to 33.3% in the second quarter of 2016.
Balance Sheet
The Company's balance sheet remains strong with stockholders'
equity of $104.2 million and working
capital of approximately $85.6
million as of June 30,
2017. Cash, cash equivalents, and investment securities
increased $11.8 million to
$88.6 million as of June 30, 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 $4.1 million, or $0.32 per share, during the second 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 June 30, 2017.
Outlook
The Company expects third 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 $0.48 to $0.51 per diluted share. The
Company reiterated its guidance for full year 2017 revenue of
$290.0 million to $300.0 million and
raised its full year 2017 earnings per diluted share of
$2.05 to $2.15. The fiscal year
2017 guidance assumes a 33% to 34% effective tax rate.
Non-GAAP Financial Measures
Our Non-GAAP financial measures include adjusted selling,
general and administrative expenses, adjusted net income, and
adjusted earnings 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 August 8,
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
August 22, 2017. In addition,
listeners may dial (855) 560-2579.
A telephonic playback will be available from 6:30 p.m. ET, August 8,
2017, through August 15, 2017.
Participants can dial (877) 344-7529 to hear the playback and enter
passcode 10110807.
About Medifast®:
Medifast (NYSE: MED) is a leading provider of clinically studied
healthy living products and programs. It partners with OPTAVIA™
Coaches to help its clients achieve Optimal Health™ and Wellbeing
through a comprehensive approach to Lifelong Transformation, One
Healthy Habit at a Time™, with personal support and scientifically
proven plans and Fuelings. Medifast was founded in 1980 in
Owings Mills, Maryland and is the
brand recommended by more than 20,000 Doctors since 1980. The
company was named to Forbes' 100 Most Trustworthy Companies in
America List in 2017 and 2016. For
more information, visit 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 OPTAVIA™
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)
|
|
|
|
|
|
|
June
30,
|
|
|
December
31,
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
ASSETS
|
Current
Assets
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
|
$
|
63,532
|
|
$
|
52,436
|
Accounts
receivable-net of allowance for sales returns and doubtful
accounts
|
|
|
|
|
|
|
|
|
of $456 and
$449 at June 30, 2017 and December 31, 2016,
respectively
|
|
|
|
|
914
|
|
|
1,387
|
Inventory
|
|
|
|
|
18,048
|
|
|
18,311
|
Investment
securities
|
|
|
|
|
25,020
|
|
|
24,412
|
Income taxes,
prepaid
|
|
|
|
|
-
|
|
|
1,249
|
Prepaid expenses and
other current assets
|
|
|
|
|
3,210
|
|
|
3,502
|
Total current
assets
|
|
|
|
|
110,724
|
|
|
101,297
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment - net
|
|
|
|
|
18,505
|
|
|
19,753
|
Other
assets
|
|
|
|
|
286
|
|
|
162
|
Long-term assets of
discontinued operations
|
|
|
|
|
-
|
|
|
4
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
|
|
$
|
129,515
|
|
$
|
121,216
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
Current
Liabilities
|
|
|
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
|
|
|
$
|
25,144
|
|
$
|
24,300
|
Current liabilities
of discontinued operations
|
|
|
|
|
-
|
|
|
121
|
Total current
liabilities
|
|
|
|
|
25,144
|
|
|
24,421
|
|
|
|
|
|
|
|
|
|
Deferred tax
liabilities
|
|
|
|
|
196
|
|
|
779
|
Total
liabilities
|
|
|
|
|
25,340
|
|
|
25,200
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
|
|
|
|
Common stock; par
value $.001 per share; 20,000 shares authorized;
|
|
|
|
|
|
|
|
|
12,124 and 12,027
issued and 11,930 and 11,871 outstanding
|
|
|
|
|
|
|
|
|
at June 30, 2017 and
December 31, 2016, respectively
|
|
|
|
|
12
|
|
|
12
|
Additional paid-in
capital
|
|
|
|
|
4,630
|
|
|
2,672
|
Accumulated other
comprehensive income (loss)
|
|
|
|
|
14
|
|
|
(165)
|
Retained
earnings
|
|
|
|
|
99,519
|
|
|
93,497
|
Total
stockholders' equity
|
|
|
|
|
104,175
|
|
|
96,016
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
$
|
129,515
|
|
$
|
121,216
|
|
|
|
|
|
|
|
|
|
MEDIFAST, INC. AND
SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
|
(in thousands,
except per share amounts & dividend data)
|
|
|
|
|
|
Three months ended
June 30,
|
|
|
Six months ended
June 30,
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
75,729
|
|
$
|
71,144
|
|
$
|
146,351
|
|
$
|
143,489
|
|
Cost of
sales
|
|
|
18,118
|
|
|
17,919
|
|
|
35,848
|
|
|
37,070
|
|
Gross
profit
|
|
|
57,611
|
|
|
53,225
|
|
|
110,503
|
|
|
106,419
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general, and
administrative
|
|
|
46,301
|
|
|
48,201
|
|
|
90,584
|
|
|
95,127
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
|
11,310
|
|
|
5,024
|
|
|
19,919
|
|
|
11,292
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and dividend
income, net
|
|
|
141
|
|
|
65
|
|
|
204
|
|
|
180
|
|
Other income
(expense)
|
|
|
(3)
|
|
|
3
|
|
|
36
|
|
|
(21)
|
|
|
|
|
138
|
|
|
68
|
|
|
240
|
|
|
159
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations before income taxes
|
|
|
11,448
|
|
|
5,092
|
|
|
20,159
|
|
|
11,451
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
|
3,864
|
|
|
1,695
|
|
|
6,430
|
|
|
3,794
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
7,584
|
|
$
|
3,397
|
|
$
|
13,729
|
|
$
|
7,657
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share -
basic
|
|
$
|
0.64
|
|
$
|
0.29
|
|
$
|
1.15
|
|
$
|
0.65
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share -
diluted
|
|
$
|
0.63
|
|
$
|
0.29
|
|
$
|
1.14
|
|
$
|
0.64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
11,929
|
|
|
11,811
|
|
|
11,915
|
|
|
11,817
|
|
Diluted
|
|
|
12,056
|
|
|
11,884
|
|
|
12,044
|
|
|
11,891
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends
declared per share
|
|
$
|
0.32
|
|
$
|
0.25
|
|
$
|
0.64
|
|
$
|
0.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MEDIFAST, INC. AND
SUBSIDIARIES
|
NON-GAAP FINANCIAL
MEASURES (UNAUDITED)
|
(in thousands,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general, and
administrative
|
|
$
|
46,301
|
|
$
|
48,201
|
|
$
|
90,584
|
|
$
|
95,127
|
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of
assets
|
|
|
-
|
|
|
6,083
|
|
|
-
|
|
|
6,083
|
|
Restructuring
charges
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,166
|
|
Adjusted selling,
general, and administrative
|
|
$
|
46,301
|
|
$
|
42,118
|
|
$
|
90,584
|
|
$
|
87,878
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
|
|
2017
|
|
2016
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
7,584
|
|
$
|
3,397
|
|
$
|
13,729
|
|
$
|
7,657
|
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of
assets
|
|
|
-
|
|
|
4,058
|
|
|
-
|
|
|
4,067
|
|
Restructuring
charges
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
780
|
|
Adjusted net
income
|
|
$
|
7,584
|
|
$
|
7,455
|
|
$
|
13,729
|
|
$
|
12,504
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share (1)
|
|
$
|
0.63
|
|
$
|
0.29
|
|
$
|
1.14
|
|
$
|
0.64
|
|
Impact for
adjustments (1)
|
|
|
-
|
|
|
0.34
|
|
|
-
|
|
|
0.41
|
|
Adjusted diluted
earnings per share (1)
|
|
$
|
0.63
|
|
$
|
0.63
|
|
$
|
1.14
|
|
$
|
1.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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.
|
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SOURCE Medifast, Inc.