BALTIMORE, March 6, 2018 /PRNewswire/ -- Medifast, Inc.
(NYSE: MED), a leading manufacturer and distributor of clinically
proven, healthy living products and programs, today reported
financial results for the fourth quarter and full year ended
December 31, 2017.
Fourth Quarter and Full Year Highlights:
- Medifast revenue of $78.0 million
for the quarter and $301.6 million
for the year
- OPTAVIA revenue of $68.6
million for the quarter and $256.6
million for the year
- Net income of $7.3 million for
the quarter and $27.7 million for the
year
- Earnings per diluted share of $0.60 for the quarter and $2.29 for the year
"Our financial results exceeded our expectations and we are
pleased to report a strong finish to the year with revenue through
our OPTAVIA Coaches model generating record growth," said
Dan Chard, Medifast's Chief
Executive Officer. "Looking ahead, our OPTAVIA coach
community is now stronger than ever and very well-positioned to
build upon the current business momentum as they share our mission
of offering the world lifelong transformation, one healthy habit at
a time."
Fourth Quarter 2017 Results
For the fourth quarter of 2017, Medifast revenue increased 24.8%
to $78.0 million from revenue of
$62.5 million for the fourth quarter
last year.
OPTAVIA revenue increased 32.4% to $68.6 million in the fourth quarter of 2017,
compared to $51.8 million for the
fourth quarter last year. This is the ninth consecutive quarter of
growth. The total number of active earning OPTAVIA Coaches
for the fourth quarter of 2017 increased to 15,000, compared to
12,500 for the fourth quarter of 2016. The average revenue per
active earning OPTAVIA Coach for the fourth quarter of 2017
increased 9.7% to $4,562 compared to
$4,158 for the fourth quarter last
year.
Medifast Direct revenue decreased 2.9% to $6.6 million in the fourth quarter of 2017,
compared to $6.8 million for the
fourth quarter of 2016. Fourth quarter advertising spend decreased
$0.1 million from $1.6 million for the fourth quarter last
year.
Revenue in the Franchise Medifast Weight Control Centers
decreased to $2.6 million from
$3.6 million for the fourth 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 16 franchise centers and 18
reseller locations in operation compared to 37 franchise centers
and 19 reseller locations at the end of the same period last
year.
In the fourth quarter, the Wholesale business unit revenue was
consistent with the prior year period at $0.2 million. This business model was integrated
into the OPTAVIA coach model at year end.
Gross profit for the fourth quarter of 2017 increased to
$59.1 million compared to
$47.1 million for the fourth quarter
of 2016. The Company's gross profit as a percentage of revenue
increased 40 basis points to 75.8% from 75.4% for the fourth
quarter last year. The increase in gross margin percentage
was a result of a continued favorability in shipping costs and more
accurate product forecasting in the quarter.
Selling, general and administrative expenses ("SG&A")
increased $9.1 million to
$49.6 million compared to
$40.5 million for the fourth quarter
of 2016, primarily as a result of higher OPTAVIA commission
expense. SG&A as a percentage of revenue decreased to 63.6%
compared to 64.8% in the fourth quarter last year.
The fourth quarter 2017 effective tax rate was 25.4%, compared
to 38.2% for the fourth quarter of 2016, primarily as a result of a
discrete change in accounting for taxes associated with share-based
compensation which vested in the fourth quarter along with the
impact of the Tax Cuts and Jobs Act.
Net income for the fourth quarter of 2017 was $7.3 million, or $0.60 per diluted share, based on approximately
12.1 million shares outstanding. Fourth quarter 2016 net income was
$4.1 million, or $0.34 per diluted share based on approximately
12.0 million shares outstanding.
Fiscal 2017 Results
For the fiscal year ended December 31,
2017, Medifast revenue was $301.6
million as compared to revenue of $274.5 million in 2016. As a percentage of
revenue, OPTAVIA represented approximately 85.1%, Medifast
Direct represented 10.6%, Franchise Medifast Weight Control Centers
represented 4.0%, and Medifast Wholesale represented 0.3%.
Net income for 2017 increased $9.9
million to $27.7 million, or
$2.29 per diluted share based on
approximately 12.1 million shares, compared to $17.8 million, or $1.49 per diluted share for the comparable period
last year based on approximately 11.9 million shares outstanding.
For the fiscal year ended December 31,
2016, adjusted net income, excluding the asset impairment
charge and restructuring charges, was $22.6
million, or $1.89 per diluted
share.
Balance Sheet
The Company's balance sheet remains strong with stockholders'
equity of $108.6 million and working
capital of $88.1 million as of
December 31, 2017. Cash, cash
equivalents, and investment securities increased $22.0 million to $98.8
million as of December 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 $5.8 million, or $0.48 per share, during the fourth quarter of
2017. The Company did not repurchase any shares during the
fourth quarter of 2017, and has approximately 850,000 shares
remaining on its repurchase authorization as of December 31, 2017.
Outlook
The Company expects first quarter revenue to be in the range of
$88.5 million to $91.5 million and earnings per diluted share to
be in the range of $0.84 to
$0.87. For the full year 2018,
the Company expects revenue of $350
million to $360 million and
earnings per diluted share of $3.15
to $3.25. The full year 2018 earnings
guidance assumes a 22% to 23% effective tax rate.
Board of Director Changes
Medifast also today announced upcoming changes to its Board of
Directors, including the nomination of Michael Hoer as Board Director.
Other changes to the Board include the resignation of
Glenn Welling, Founder and Chief
Investment Officer of Engaged Capital effective as of today. Mr.
Welling joined the Medifast Board in June
2015. He has made significant contributions to the company's
strategic focus, restructuring of the Medifast Board of Directors,
and enhancing the Company's capital allocation process.
"Medifast's management has successfully refocused the business,
returned the Company to significant growth and created
extraordinary shareholder value in the process," said Mr.
Welling. "Engaged Capital has been honored to be a part of
Medifast's turn around. We believe Medifast's dedicated
Board and strong management team has positioned the Company to
continue to drive material value for shareholders for years to
come."
Additionally, Board Director and Audit Committee Chair
Charles Connolly will not stand for
reelection during the annual Medifast meeting of the stockholders
in June. Mr. Connolly joined the company as a Director in
2006. Jeffrey Brown will succeed Mr. Connolly as Audit
Committee Chair, effective on June 13,
2018, in addition to his role as Lead Director.
Medifast also announced the nomination to the Board of Directors
of Michael Hoer, who will appear on
the proxy slate as a candidate during the June shareholder meeting.
Mr. Hoer has extensive business experience within the Asian market,
having lived in Asia for nearly
three decades, including Hong Kong
and Singapore, two markets that
will be core to Medifast's international expansion.
Previously, Mr. Hoer spent 18 years working for Continental Grain
Company, where he held the position of President and Managing
Director of Continental Grain Asia.
"On behalf of the entire Board, we thank Glenn and Charley for
their service and many contributions to Medifast," said
Dan Chard, Chief Executive Officer
of Medifast. "The Medifast team remains committed to the
further successful execution of our strategic plan and we look
forward to working collaboratively with the Board of Directors to
advance Medifast's international footprint and to continue to
generate strong returns for the Company's shareholders."
Conference Call Information
The conference call is scheduled for today, Tuesday, March 6, 2018 at 4:30 p.m. ET. The call will be broadcast live
over the Internet hosted at the Investor Relations section of
Medifast's website at www.MedifastInc.com, and will be archived
online through March 20, 2018. In
addition, listeners may dial (855) 560-2579.
A telephonic playback will be available from 6:30 p.m. ET, March 6,
2018, through March 13, 2018.
Participants can dial (877) 344-7529 to hear the playback and enter
passcode 10117271.
About Medifast®
Medifast (NYSE: MED) is a leading manufacturer and distributor
of clinically proven healthy living products and programs. The
brand has been recommended by more than 20,000 Doctors since its
founding. In 2016, the company announced OPTAVIA®, an
exclusive brand and product line sold through its community of
independent Coaches who offer support and guidance to their
Clients. In partnership with OPTAVIA Coaches, franchise
partners, and its Scientific Advisory Board, Medifast offers
comprehensive wellness products and programs that focus on creating
sustainable change by helping people learn to incorporate healthy
habits into their lives. Medifast is traded on the New York Stock
Exchange and was named to Forbes' 100 Most Trustworthy Companies in
America List in 2016 and 2017. For
more information, visit www.MedifastInc.com or www.OPTAVIA.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.
Non-GAAP Financial Measures
Our Non-GAAP financial measures include adjusted selling,
general and administrative expenses, adjusted income from
operations, 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.
MEDIFAST, INC. AND
SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS (UNAUDITED)
|
December 31, 2017
and 2016
|
(in thousands,
except par value)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
Current
Assets
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
$
|
75,077
|
|
$
|
52,436
|
|
Accounts
receivable-net of allowance for sales returns and doubtful
accounts
|
|
|
|
|
|
|
|
|
of $597 and $449 at
December 31, 2017 and 2016, respectively
|
|
|
|
576
|
|
|
1,387
|
|
Inventory
|
|
|
|
19,328
|
|
|
18,311
|
|
Investment
securities
|
|
|
|
23,757
|
|
|
24,412
|
|
Income taxes,
prepaid
|
|
|
|
2,272
|
|
|
1,249
|
|
Prepaid expenses and
other current assets
|
|
|
|
4,188
|
|
|
3,502
|
|
Total current
assets
|
|
|
|
125,198
|
|
|
101,297
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment - net
|
|
|
|
18,611
|
|
|
19,753
|
|
Other
assets
|
|
|
|
2,120
|
|
|
162
|
|
Long-term assets of
discontinued operations
|
|
|
|
-
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
|
$
|
145,929
|
|
$
|
121,216
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
Current
Liabilities
|
|
|
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
|
|
$
|
37,140
|
|
$
|
24,300
|
|
Current liabilities
of discontinued operations
|
|
|
|
-
|
|
|
121
|
|
Total current
liabilities
|
|
|
|
37,140
|
|
|
24,421
|
|
|
|
|
|
|
|
|
|
|
Deferred tax
liabilities
|
|
|
|
208
|
|
|
779
|
|
Total
liabilities
|
|
|
|
37,348
|
|
|
25,200
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
|
|
|
|
Common stock, par
value $.001 per share: 20,000 shares authorized;
|
|
|
|
|
|
|
|
|
12,103 and 12,027
issued and 11,971 and 11,871 outstanding
|
|
|
|
|
|
|
|
|
at December 31, 2017
and 2016, respectively
|
|
|
|
12
|
|
|
12
|
|
Additional paid-in
capital
|
|
|
|
4,967
|
|
|
2,672
|
|
Accumulated other
comprehensive loss
|
|
|
|
(160)
|
|
|
(165)
|
|
Retained
earnings
|
|
|
|
103,762
|
|
|
93,497
|
|
Total
stockholders' equity
|
|
|
|
108,581
|
|
|
96,016
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
$
|
145,929
|
|
$
|
121,216
|
|
|
|
|
|
|
|
|
|
|
MEDIFAST, INC. AND
SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF INCOME (UNAUDITED)
|
Quarters and Years
Ended December 31, 2017 and 2016
|
(in thousands,
except per share amounts & dividend data)
|
|
|
|
Three months ended
December 31,
|
|
Years ended
December 31,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
78,007
|
|
$
|
62,467
|
|
$
|
301,563
|
|
$
|
274,534
|
Cost of
sales
|
|
|
18,881
|
|
|
15,385
|
|
|
73,751
|
|
|
68,870
|
Gross
profit
|
|
|
59,126
|
|
|
47,082
|
|
|
227,812
|
|
|
205,664
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general, and
administrative
|
|
|
49,640
|
|
|
40,468
|
|
|
188,180
|
|
|
178,805
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
|
9,486
|
|
|
6,614
|
|
|
39,632
|
|
|
26,859
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income,
net
|
|
|
206
|
|
|
43
|
|
|
558
|
|
|
283
|
Other income
(expense)
|
|
|
104
|
|
|
3
|
|
|
136
|
|
|
(20)
|
|
|
|
310
|
|
|
46
|
|
|
694
|
|
|
263
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations before income taxes
|
|
|
9,796
|
|
|
6,660
|
|
|
40,326
|
|
|
27,122
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
|
2,490
|
|
|
2,547
|
|
|
12,605
|
|
|
9,287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
7,306
|
|
$
|
4,113
|
|
$
|
27,721
|
|
$
|
17,835
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
- basic
|
|
$
|
0.61
|
|
$
|
0.35
|
|
$
|
2.32
|
|
$
|
1.51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
- diluted
|
|
$
|
0.60
|
|
$
|
0.34
|
|
$
|
2.29
|
|
$
|
1.49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding -
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
11,941
|
|
|
11,849
|
|
|
11,924
|
|
|
11,842
|
Diluted
|
|
|
12,148
|
|
|
12,004
|
|
|
12,088
|
|
|
11,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends
declared per share
|
|
$
|
0.48
|
|
$
|
0.32
|
|
$
|
1.44
|
|
$
|
1.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MEDIFAST, INC. AND
SUBSIDIARIES
|
NON-GAAP FINANCIAL
MEASURES (UNAUDITED)
|
Quarters and Years
Ended December 31, 2017 and 2016
|
(in thousands,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31,
|
|
Years ended
December 31,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general, and
administrative
|
|
$
|
49,640
|
|
$
|
40,468
|
|
$
|
188,180
|
|
$
|
178,805
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of
assets
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
6,083
|
Restructuring
charges
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,166
|
Adjusted selling,
general, and administrative
|
|
$
|
49,640
|
|
$
|
40,468
|
|
$
|
188,180
|
|
$
|
171,556
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
$
|
9,486
|
|
$
|
6,614
|
|
$
|
39,632
|
|
$
|
26,859
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of
assets
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
6,083
|
Restructuring
charges
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,166
|
Adjusted income from
operations
|
|
$
|
9,486
|
|
$
|
6,614
|
|
$
|
39,632
|
|
$
|
34,108
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
7,306
|
|
$
|
4,113
|
|
$
|
27,721
|
|
$
|
17,835
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of
assets
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
4,000
|
Restructuring
charges
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
767
|
Adjusted net
income
|
|
$
|
7,306
|
|
$
|
4,113
|
|
$
|
27,721
|
|
$
|
22,602
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share(1)
|
|
$
|
0.60
|
|
$
|
0.34
|
|
$
|
2.29
|
|
$
|
1.49
|
Impact for
adjustments(1)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
0.40
|
Adjusted diluted
earnings per share(1)
|
|
$
|
0.60
|
|
$
|
0.34
|
|
$
|
2.29
|
|
$
|
1.89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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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View original content with
multimedia:http://www.prnewswire.com/news-releases/medifast-inc-announces-fourth-quarter-and-full-year-2017-financial-results-300609246.html
SOURCE Medifast, Inc.