OWINGS MILLS, Md., March 9, 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 fourth quarter and full year
ended December 31, 2016.
"2016 was a year of strong execution reflecting our continued
disciplined approach to effectively managing our business. We grew
our revenue for the first time since 2013, increased our
profitability year-over-year, and raised our quarterly dividend for
2017, all of which supported a strong return for shareholders in
2016," said Daniel R. Chard,
Medifast's Chief Executive Officer. "At the same time, we embarked
on an exciting business evolution process to more aggressively
pursue growth strategies. Going forward, we believe we are well
positioned to achieve our operational and financial
objectives."
Fourth Quarter 2016 Results
Results from Continuing Operations
Income from continuing operations in the fourth quarter of 2016
was $4.1 million, or $0.34 per diluted share, based on approximately
12.0 million shares outstanding. Fourth quarter 2015 income from
continuing operations was $3.9
million, or $0.33 per diluted
share based on approximately 11.9 million shares
outstanding.
For the fourth quarter, Medifast net revenue from continuing
operations increased 2% to $62.5
million from revenue of $61.3
million in the fourth quarter of 2015.
Revenue in Take Shape For Life, was up 8% to $51.8 million in the fourth quarter of 2016,
compared to $48.0 million in the
fourth quarter of the prior year. This is the fifth consecutive
quarter of year-over-year growth.
The total number of active earning Health Coaches in the fourth
quarter was 12,500, compared to 11,900 in the fourth quarter of
2015. The average revenue per active earning Health Coach for the
quarter was $4,158 as compared to
$4,039 in fourth quarter of 2015.
The Company's Medifast Direct business unit revenue decreased to
$6.8 million, compared to
$9.3 million in the fourth quarter of
2015. Fourth quarter advertising spending for this business unit
decreased to $1.6 million from
$2.2 million in the fourth quarter of
2015.
Revenue in the Franchise Medifast Weight Control Centers
business unit decreased modestly to $3.6
million from $3.7 million in
the fourth quarter of last year. The decrease in revenue was
primarily driven by fewer franchise centers in operation during the
period. The Company ended the quarter with 37 franchise centers and
19 reseller locations in operation compared to 61 franchise centers
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 $0.3 million.
Gross profit for the fourth quarter of 2016 increased
$1.9 million to $47.1 million compared to the fourth quarter of
2015. The Company's gross profit as a percentage of revenue
increased 160 basis points to 75.4% from 73.8% in the fourth
quarter of 2015, primarily driven by price increases and
efficiencies in the Company's supply chain operations.
Selling, general and administrative expenses ("SG&A")
increased $0.8 million to
$40.5 million compared to
$39.7 million in the fourth quarter
of 2015. SG&A as a percentage of net revenue increased 10 basis
points to 64.8%, compared to 64.7% in the fourth quarter of 2015.
The increase in SG&A was a result of Take Shape For Life
commission expense which was a result of the 8% Take Shape For Life
revenue growth for the quarter.
Sales and marketing expense decreased $1.1 million in the fourth quarter of 2016
compared to the fourth quarter of 2015.
The fourth quarter 2016 effective tax rate was 38.2%, compared
to 34.3% in the fourth quarter of 2015. The increase in the
effective tax rate was due to an increase in the effective state
tax rate and a reduction in research and development credits.
Fiscal 2016 Results
Results from Continuing Operations
For the fiscal year ended December 31,
2016, Medifast net revenue was $274.5
million as compared to net revenue of $272.8 million in 2015. As a percentage of
net revenue, Take Shape For Life represented approximately 81.0%,
Medifast Direct represented 12.8%, Medifast Franchise Weight
Control Centers represented 5.7%, and Medifast Wholesale Physicians
represented 0.5%.
Income from continuing operations for 2016 decreased
$1.8 million to $17.8 million, or $1.49 per diluted share based on approximately
11.9 million shares, compared to $19.6
million, or $1.62 per diluted
share for the comparable period last year based on approximately
12.1 million shares outstanding. For the fiscal year ended
December 31, 2016, adjusted income
from continuing operations, excluding the asset impairment charge
and restructuring charges, was $22.6
million, or $1.89 per diluted
share. Excluding the extraordinary legal and advisory expenses
resulting from 13D filers in 2015, adjusted income from continuing
operations would have been $20.9
million or $1.73 per diluted
share in 2015.
Discontinued Operations
As previously disclosed, the Company exited the Medifast Weight
Control Center corporate model with the sale of 41 centers to
existing franchise partners and the closure of the remaining 34
corporate centers. For fiscal 2016, the Company had no activity
from discontinued operations compared to income from discontinued
operations, net of tax, of $0.5
million for fiscal 2015.
Balance Sheet
The Company's balance sheet remains strong with stockholders'
equity of $96.0 million and working
capital of approximately $76.9
million as of December 31,
2016. Cash, cash equivalents, and investment securities
increased $9.7 million to
$76.8 million as of December 31, 2016 compared to $67.1 million at December
31, 2015. 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 fourth quarter of
2016, a 28% increase over the previous quarter's cash
dividend. The Company did not repurchase any shares during
the fourth quarter of 2016, and has approximately 850,000 shares
remaining on its repurchase authorization as of December 31, 2016.
Outlook
The Company expects first quarter net revenue from continuing
operations to be in the range of $69.0
million to $73.0 million and earnings per diluted share from
continuing operations to be in the range of $0.45 to $0.48 per diluted share. 2017 full
year revenue from continuing operations is expected to be in the
range of $290.0 million to $300.0
million and full year earnings per diluted share from
continuing operations to be in the range of $2.00 to $2.10 per diluted share. The
fiscal year 2017 guidance assumes a 34% to 35% 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 March 9,
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
March 23, 2017. In addition,
listeners may dial (855) 560-2579.
A telephonic playback will be available from 6:30 p.m. ET, March 9,
2017, through March 16, 2017.
Participants can dial (877) 344-7529 to hear the playback and enter
passcode 10102163.
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
|
CONSOLIDATED
BALANCE SHEETS
|
As of December 31,
2016 and 2015
|
(In thousands,
except per share amounts)
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
52,436
|
|
$
|
42,037
|
Accounts
receivable-net of allowance for sales returns and doubtful
accounts
|
|
|
|
|
|
of $449 and
$417
|
|
1,387
|
|
|
1,633
|
Inventory
|
|
18,311
|
|
|
13,335
|
Investment
securities
|
|
24,412
|
|
|
25,072
|
Income taxes,
prepaid
|
|
1,249
|
|
|
1,549
|
Prepaid expenses and
other current assets
|
|
3,502
|
|
|
2,886
|
Current assets of
discontinued operations
|
|
-
|
|
|
353
|
Total current
assets
|
|
101,297
|
|
|
86,865
|
|
|
|
|
|
|
Property, plant and
equipment - net
|
|
19,753
|
|
|
29,029
|
Other
assets
|
|
162
|
|
|
205
|
Long-term assets of
discontinued operations
|
|
4
|
|
|
19
|
|
|
|
|
|
|
TOTAL
ASSETS
|
$
|
121,216
|
|
$
|
116,118
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
$
|
24,300
|
|
$
|
22,504
|
Current maturities of
capital leases
|
|
-
|
|
|
219
|
Current liabilities
of discontinued operations
|
|
121
|
|
|
841
|
Total current
liabilities
|
|
24,421
|
|
|
23,564
|
|
|
|
|
|
|
Other
liabilities:
|
|
|
|
|
|
Long-term debt, net
of current portion
|
|
779
|
|
|
3,682
|
Long-term liabilities
of discontinued operations
|
|
-
|
|
|
288
|
Total
liabilities
|
|
25,200
|
|
|
27,534
|
|
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
|
|
Common stock; par
value $.001 per share; 20,000 shares authorized;
|
|
|
|
|
|
12,027 and 12,014
issued at December 31, 2016 and 2015, respectively
|
|
|
|
|
|
11,871 and 11,797
outstanding at December 31, 2016 and 2015, respectively
|
|
12
|
|
|
12
|
Additional paid-in
capital
|
|
2,672
|
|
|
-
|
Accumulated other
comprehensive loss
|
|
(165)
|
|
|
(62)
|
Retained
earnings
|
|
93,497
|
|
|
88,634
|
Total
stockholders' equity
|
|
96,016
|
|
|
88,584
|
|
|
|
|
|
|
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY
|
$
|
121,216
|
|
$
|
116,118
|
MEDIFAST, INC. AND
SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF INCOME
|
(In thousands,
except per share amounts & dividend data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
62,467
|
|
$
|
61,312
|
|
$
|
274,534
|
|
$
|
272,773
|
Cost of
sales
|
|
|
15,385
|
|
|
16,094
|
|
|
68,870
|
|
|
71,458
|
Gross
profit
|
|
|
47,082
|
|
|
45,218
|
|
|
205,664
|
|
|
201,315
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general, and
administrative
|
|
|
40,468
|
|
|
39,684
|
|
|
178,805
|
|
|
172,631
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
|
6,614
|
|
|
5,534
|
|
|
26,859
|
|
|
28,684
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and dividend
income, net
|
|
|
43
|
|
|
211
|
|
|
283
|
|
|
661
|
Other income
(expense)
|
|
|
3
|
|
|
197
|
|
|
(20)
|
|
|
326
|
|
|
|
46
|
|
|
408
|
|
|
263
|
|
|
987
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations before income taxes
|
|
|
6,660
|
|
|
5,942
|
|
|
27,122
|
|
|
29,671
|
Provision for income
taxes
|
|
|
2,547
|
|
|
2,040
|
|
|
9,287
|
|
|
10,104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
|
|
4,113
|
|
|
3,902
|
|
|
17,835
|
|
|
19,567
|
Income from
discontinued operations, net of tax
|
|
|
-
|
|
|
(42)
|
|
|
-
|
|
|
491
|
Net
income
|
|
$
|
4,113
|
|
$
|
3,860
|
|
$
|
17,835
|
|
$
|
20,058
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
from continuing operations
|
|
$
|
0.35
|
|
$
|
0.33
|
|
$
|
1.51
|
|
$
|
1.64
|
Earnings per share
from discontinued operations
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
0.04
|
Earnings per
share
|
|
$
|
0.35
|
|
$
|
0.33
|
|
$
|
1.51
|
|
$
|
1.68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
from continuing operations
|
|
$
|
0.34
|
|
$
|
0.33
|
|
$
|
1.49
|
|
$
|
1.62
|
Earnings per share
from discontinued operations
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
0.04
|
Earnings per
share
|
|
$
|
0.34
|
|
$
|
0.33
|
|
$
|
1.49
|
|
$
|
1.66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding -
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
11,849
|
|
|
11,766
|
|
|
11,842
|
|
|
11,959
|
Diluted
|
|
|
12,004
|
|
|
11,903
|
|
|
11,947
|
|
|
12,071
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends
declared per share
|
|
$
|
0.32
|
|
$
|
0.25
|
|
$
|
1.07
|
|
$
|
0.25
|
MEDIFAST, INC. AND
SUBSIDIARIES
|
NON-GAAP FINANCIAL
MEASURES(1)
|
(In thousands,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general, and
administrative
|
|
$
|
40,468
|
|
$
|
39,684
|
|
$
|
178,805
|
|
$
|
172,631
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of
assets
|
|
|
-
|
|
|
-
|
|
|
6,083
|
|
|
-
|
Restructuring
charges
|
|
|
-
|
|
|
-
|
|
|
1,166
|
|
|
-
|
Legal expenses-
13D
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2,084
|
Franchise loan
guarantee accrual
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
Adjusted selling,
general, and administrative
|
|
$
|
40,468
|
|
$
|
39,684
|
|
$
|
171,556
|
|
$
|
170,547
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
$
|
6,614
|
|
$
|
5,534
|
|
$
|
26,859
|
|
$
|
28,684
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of
assets
|
|
|
-
|
|
|
-
|
|
|
6,083
|
|
|
-
|
Restructuring
charges
|
|
|
-
|
|
|
-
|
|
|
1,166
|
|
|
-
|
Legal expenses-
13D
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2,084
|
Franchise loan
guarantee accrual
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
Adjusted income from
operations
|
|
$
|
6,614
|
|
$
|
5,534
|
|
$
|
34,108
|
|
$
|
30,768
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
|
$
|
4,113
|
|
$
|
3,902
|
|
$
|
17,835
|
|
$
|
19,567
|
Adjustments
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of
assets
|
|
|
-
|
|
|
-
|
|
|
4,000
|
|
|
-
|
Restructuring
charges
|
|
|
-
|
|
|
-
|
|
|
767
|
|
|
-
|
Legal expenses-
13D
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,374
|
Franchise loan
guarantee accrual
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
Adjusted income from
continuing operations
|
|
$
|
4,113
|
|
$
|
3,902
|
|
$
|
22,602
|
|
$
|
20,941
|
Loss on discontinued
operations, net of tax
|
|
|
-
|
|
|
(42)
|
|
|
-
|
|
|
491
|
Adjusted net
income
|
|
$
|
4,113
|
|
$
|
3,860
|
|
$
|
22,602
|
|
$
|
21,432
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share from continuing operations (3)
|
|
$
|
0.34
|
|
$
|
0.33
|
|
$
|
1.49
|
|
$
|
1.62
|
Impact for
adjustments (3)
|
|
|
-
|
|
|
-
|
|
|
0.40
|
|
|
0.11
|
Adjusted diluted
earnings per share from continuing operations (3)
|
|
$
|
0.34
|
|
$
|
0.33
|
|
$
|
1.89
|
|
$
|
1.73
|
Diluted loss per
share from discontinued operations (3)
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
0.04
|
Adjusted diluted
earnings per share (3)
|
|
$
|
0.34
|
|
$
|
0.33
|
|
$
|
1.89
|
|
$
|
1.77
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) In regards to the
restructuring charges, these non-GAAP measures are being provided
as pro-forma statements to provide information regarding expected
future performance. The departed executives included in the
restructuring were employed in 2015; and therefore, the 2016
results excluding these charges are not comparative to the 2015
results.
|
(2) The tax effected
impact of adjustments is calculated utilizing the effective tax
rate for the period presented, which may differ for quarterly and
year-to-date periods.
|
(3) 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-fourth-quarter-and-full-year-2016-financial-results-300421374.html
SOURCE Medifast, Inc.