BALTIMORE, May 4, 2021 /PRNewswire/ -- Medifast, Inc. (NYSE:
MED), the global company behind one of the fastest-growing health
and wellness communities, OPTAVIA®, today reported
results for the first quarter ended March
31, 2021.
First Quarter 2021 Highlights Compared to the Prior-Year
Period
- Revenue increased 90.9% to $340.7
million
- 61.0% growth in active earning OPTAVIA Coaches to a
record level of 52,500
- Revenue per active earning OPTAVIA Coach increased 21.0%
to $6,454
- Net income increased 122.2% to $41.1
million
- Earnings per diluted share ("EPS") of $3.46, an increase of 121.8%
"This has been an exceptional quarter of growth and
productivity, reflecting the outstanding abilities of both our
independent OPTAVIA Coaches and our employees," said
Dan Chard, Chairman and Chief
Executive Officer of Medifast. "We now have a record
52,500 OPTAVIA Coaches who are achieving new
productivity highs by leveraging technology to support Clients and
support new OPTAVIA Coaches. These technologies include our
own app-based platforms as well as social media channels and
field-led training platforms. Consumer interest in health and
wellness remains high, and the strength of the OPTAVIA
coach-based model and its role in transforming lives has continued
to attract robust numbers of new Clients. By harnessing demand and
leveraging our organizational capabilities, we have amplified
revenue and earnings growth to record levels. We're continuing
to build infrastructure to capitalize further on future growth
opportunities, while also maintaining a strong balance sheet and
prioritizing capital allocation to drive long-term stockholder
value."
First Quarter 2021 Results
First quarter revenue increased 90.9% to $340.7 million from revenue of $178.5 million for the first quarter of 2020.
OPTAVIA-branded products represented 88.9% of
consumable units sold for the first quarter compared to 79.0% for
the same period a year ago. Consistent with business and
brand strategy, the company decided to sunset the Medifast-branded
product line by the end of the second quarter of 2021.
The total number of active earning OPTAVIA Coaches
increased 61.0% to 52,500 compared to 32,600 for the first quarter
of 2020. The average revenue per active earning OPTAVIA
Coach was $6,454 compared to
$5,333 for the first quarter last
year, an increase of 21.0%.
Gross profit increased 83.8% to $248.5
million from $135.2 million
for the first quarter of 2020. The company's gross profit as a
percentage of revenue was 73.0% compared to 75.8% in the first
quarter of 2020. The decrease in gross profit as a percentage
of revenue was due to the acceleration of demand in
OPTAVIA-branded products that led to the increase in
the company's use of co-manufacturers and the increased need to
provide expedited shipments of our products to keep customer
experience at acceptable levels in advance of our fulfillment
capacity being fully on-line, both of these items increased costs.
Additionally, gross profit as a percentage of revenue decreased due
to inventory write-offs related to the sunset of Medifast-branded
product line.
Selling, general, and administrative expenses ("SG&A")
increased 75.2% to $195.7 million
compared to $111.7 million for the
first quarter of 2020, primarily due to higher OPTAVIA
commission expense, increased salaries and benefits related
expenses for employees and increased credit card fees stemming from
higher sales. SG&A as a percentage of revenue decreased 510
basis points year-over-year to 57.5% of revenue.
Income from operations increased $29.3
million to $52.8 million from
$23.5 million in the prior-year
period reflecting higher sales and gross profit and a reduction in
the SG&A expense as a percentage of revenue. Income from
operations as a percentage of revenue was 15.5% for the quarter, an
increase of 230 basis points from the year-ago period.
The effective tax rate was 22.3% for the first quarter of 2021
compared to 21.8% in the prior-year period. The slight
increase in the effective tax rate was primarily driven by an
increase in the state income tax rate and limitations on the
deductibility of officer compensation offset by an increase in the
tax benefit of stock compensation.
First quarter net income was $41.1
million, or $3.46 per diluted
share, based on approximately 11.9 million shares of common stock
outstanding. In the first quarter of 2020, net income was
$18.5 million, or $1.56 per diluted share, based on approximately
11.8 million shares of common stock outstanding.
Balance Sheet
The company's balance sheet remains strong with cash, cash
equivalents and investment securities of $212.9 million as of March
31, 2021 compared to $174.5
million at December 31,
2020. As of March 31, 2021, the
company remained free of interest-bearing debt. On April 13, 2021, the company entered into a credit
agreement that provides for a $125.0
million senior secured revolving credit facility with a
$20.0 million letter of credit
sublimit. The credit agreement also provides for an uncommitted
incremental facility that permits the company, subject to certain
conditions, to increase the senior secured revolving credit
facility by up to $100.0
million. As of May 4,
2021, no amounts have been borrowed under the credit
agreement.
The company declared and paid a quarterly cash dividend
of $13.4 million, or $1.13 per share,
on February 5, 2021. On March 18,
2021, the Company declared an approximately 26.0% increase
in the quarterly dividend to $1.42
per share payable on May 6, 2021.
Also during the first quarter of 2021, the company used
$7.5 million to repurchase shares of
common stock and there are approximately 2.3 million shares
remaining under the company's stock repurchase program.
Outlook
The Company expects full-year 2021 revenue to be in the range of
$1.4 billion to $1.475 billion and full-year 2021 EPS to be in
the range of $12.69 to $14.14. The full-year 2021 earnings guidance
assumes a 23.0% to 24.0% effective tax rate.
Conference Call Information
The conference call is scheduled for today, Tuesday, May 4, 2021 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 or directly at
https://www.webcaster4.com/Webcast/Page/1029/40898, and will be
archived online through May 18, 2021.
In addition, listeners may dial (855) 560-2579.
A telephonic playback will be available from 6:30 p.m. ET, May 4,
2021, through May 11, 2021.
Participants can dial (877) 344-7529 to hear the playback and enter
passcode 10155280.
About Medifast®:
Medifast (NYSE: MED) is the global company behind one of the
fastest-growing health and wellness
communities, OPTAVIA®, which offers scientifically
developed products, clinically proven plans and the support of
Coaches and a Community to help Clients achieve Lifelong
Transformation, One Healthy Habit at a Time®. Based on nearly 40
years of experience, Medifast has redefined direct selling by
combining the best aspects of the model. Its community of thousands
of independent OPTAVIA Coaches teach Clients how to
develop holistic healthy habits through the proprietary Habits of
Health® Transformational System. Medifast is traded on the New York
Stock Exchange and ranked second on FORTUNE's 100
Fastest-Growing Companies list in 2020. The company was also named
to Forbes' 100 Most Trustworthy Companies in America list in
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," "anticipate," "expects"
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. These statements are based on the
current expectations of the management of Medifast and are subject
to certain events, risks, uncertainties and other factors. Some of
these factors include, among others, risks associated with
Medifast's direct-to-consumer business model, the impact of rapid
growth on Medifast's systems, disruptions in Medifast's supply
chain, Medifast's inability to continue to develop new services and
products, effectiveness of Medifast's advertising and marketing
programs, including use of social media by independent
OPTAVIA Coaches, Medifast's inability to maintain and grow
the network of independent OPTAVIA Coaches, the departure of
one or more key personnel, Medifast's inability to protect against
online security risks, to protect its brand, to protect against
product liability claims, Medifast's planned growth into domestic
and international markets, adverse publicity associated with
Medifast's products or business units, Medifast's inability to
continue declaring dividends, fluctuations of Medifast's common
stock market price, the impact of the COVID-19 pandemic on
Medifast's results, the severity, length and ultimate impact of the
COVID-19 pandemic on people and economies, increases in
competition, litigation, consequences of other geopolitical events,
natural disasters, acts of war, or climate change, activist
investors, regulatory changes, market conditions and resulting
impact on consumer spending, and a failure of internal control over
financial reporting. 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 Annual Report on
Form 10-K for the fiscal year ended December
31, 2020, 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 STATEMENTS OF INCOME
(UNAUDITED) (U.S. dollars in thousands, except per share
amounts & dividend data)
|
|
|
|
Three months ended
March 31,
|
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
340,669
|
|
$
|
178,461
|
Cost of
sales
|
|
|
92,122
|
|
|
43,221
|
Gross
profit
|
|
|
248,547
|
|
|
135,240
|
|
|
|
|
|
|
|
Selling, general, and
administrative
|
|
|
195,748
|
|
|
111,707
|
|
|
|
|
|
|
|
Income from
operations
|
|
|
52,799
|
|
|
23,533
|
|
|
|
|
|
|
|
Other
income
|
|
|
|
|
|
|
Interest income,
net
|
|
|
23
|
|
|
110
|
Other income
(expense)
|
|
|
19
|
|
|
(19)
|
|
|
|
42
|
|
|
91
|
|
|
|
|
|
|
|
Income from
operations before income taxes
|
|
|
52,841
|
|
|
23,624
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
|
11,778
|
|
|
5,147
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
41,063
|
|
$
|
18,477
|
|
|
|
|
|
|
|
Earnings per share -
basic
|
|
$
|
3.49
|
|
$
|
1.57
|
|
|
|
|
|
|
|
Earnings per share -
diluted
|
|
$
|
3.46
|
|
$
|
1.56
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
|
|
|
|
|
|
Basic
|
|
|
11,772
|
|
|
11,772
|
Diluted
|
|
|
11,881
|
|
|
11,824
|
|
|
|
|
|
|
|
Cash dividends
declared per share
|
|
$
|
1.42
|
|
$
|
1.13
|
MEDIFAST, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED) (U.S. dollars in thousands, except par
value)
|
|
|
|
|
|
March
31,
|
|
|
December
31,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
ASSETS
|
Current
Assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
$
|
206,031
|
|
$
|
163,723
|
Accounts
receivable-net of doubtful accounts of $383 and $219
at
|
|
|
|
|
|
|
|
March 31, 2021 and
December 31, 2020, respectively
|
|
|
|
88
|
|
|
584
|
Inventories
|
|
|
|
62,234
|
|
|
53,392
|
Investment
securities
|
|
|
|
6,883
|
|
|
10,752
|
Prepaid expenses and
other current assets
|
|
|
|
6,625
|
|
|
5,863
|
Total current
assets
|
|
|
|
281,861
|
|
|
234,314
|
|
|
|
|
|
|
|
|
Property, plant and
equipment - net of accumulated depreciation
|
|
|
|
31,107
|
|
|
27,633
|
Right-of-use
assets
|
|
|
|
9,623
|
|
|
10,508
|
Other
assets
|
|
|
|
3,112
|
|
|
2,937
|
Deferred tax
assets
|
|
|
|
692
|
|
|
692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
|
$
|
326,395
|
|
$
|
276,084
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
Current
Liabilities
|
|
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
|
|
$
|
141,250
|
|
$
|
107,677
|
Current lease
obligations
|
|
|
|
3,651
|
|
|
3,673
|
Total current
liabilities
|
|
|
|
144,901
|
|
|
111,350
|
|
|
|
|
|
|
|
|
Lease obligations,
net of current lease obligations
|
|
|
|
6,603
|
|
|
7,488
|
Total
liabilities
|
|
|
|
151,504
|
|
|
118,838
|
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
|
|
|
Common stock, par
value $.001 per share: 20,000 shares authorized;
|
|
|
|
|
|
|
|
11,839 and 11,822
issued and 11,761 and 11,772 outstanding
|
|
|
|
|
|
|
|
at March 31, 2021 and
December 31, 2020, respectively
|
|
|
|
12
|
|
|
12
|
Additional paid-in
capital
|
|
|
|
8,714
|
|
|
7,842
|
Accumulated other
comprehensive income
|
|
|
|
103
|
|
|
41
|
Retained
earnings
|
|
|
|
178,562
|
|
|
154,351
|
Less: treasury stock
at cost, 76 and 46 shares at March 31, 2021 and
December 31, 2020, respectively
|
|
|
|
(12,500)
|
|
|
(5,000)
|
Total
stockholders' equity
|
|
|
|
174,891
|
|
|
157,246
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
$
|
326,395
|
|
$
|
276,084
|
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SOURCE Medifast, Inc.