BALTIMORE, Nov. 3, 2022
/PRNewswire/ -- Medifast (NYSE: MED), the global company behind one
of the fastest-growing health and wellness
communities, OPTAVIA®, today reported
results for the third quarter ended September 30, 2022.
Third Quarter 2022
- Revenue of $390.4 million, with revenue per active
earning coach of $5,897
- Independent active earning OPTAVIA Coaches of
66,200
- Net income of $36.2 million
(non-GAAP adjusted net income of $36.8
million)
- Earnings per diluted share of $3.27 (non-GAAP adjusted EPS of $3.32)
- Completion of the $100 million
Accelerated Share Repurchase Program
- Cash and Cash Equivalents of $69.7
million with zero debt
"We've seen faster than anticipated improvement in customer
retention rates back to quarterly historical norms, as we focus on
delivering a high quality experience for all customers," said
Dan Chard, Chairman & Chief
Executive Officer. "At the same time, the world is in a period of
economic disruption right now, and that is impacting spending
levels and customer acquisition at consumer-facing companies. We're
going to see the residual effect of that on Coach productivity and
top line revenue as we move through the fourth quarter. However,
our highly variable cost structure enables us to maintain solid
earnings and cash flow, strengthen our resiliency, and invest in
important growth initiatives for the future. We continue to foster
a deep connection between customers, OPTAVIA Coaches and the
broader OPTAVIA Community, and that's reflected in
Euromonitor naming OPTAVIA as the leading weight loss
program by revenue in the U.S. for 2021*. We're excited by the
opportunity that lies ahead, and we remain confident in our ability
to drive consistent growth for many years to come."
Third Quarter 2022 Results
Third quarter 2022 revenue decreased 5.6% to $390.4 million from $413.4
million for the third quarter of 2021, reflecting lower
Coach productivity. The average revenue per active earning
OPTAVIA Coach was $5,897,
compared to $6,773 for the third
quarter last year, a decline of 12.9% driven by a decrease in the
number of customers supported by each Coach. The total number of
active earning OPTAVIA Coaches increased 8.5% to 66,200
compared to 61,000 for the third quarter of 2021.
Gross profit decreased 7.9% to $282.8
million from $307.1 million
for the third quarter of 2021. The decrease in gross profit
reflected the reduction in the number of customers supported by
each Coach as well as increased product costs stemming from higher
raw ingredient costs, shipping costs, and labor costs. The
company's gross profit as a percentage of revenue was 72.5%
compared to 74.3% in the third quarter of 2021.
Selling, general, and administrative expenses ("SG&A")
decreased 6.8% to $234.7 million
compared to $251.9 million for the
third quarter of 2021. As a percentage of revenue, SG&A
decreased 80 basis points year-over-year to 60.1% of revenue, as
compared to 60.9% for the third quarter of 2021. The decrease in
SG&A was primarily due to lower OPTAVIA Coach
compensation expense partially offset by donations made to support
the Ukrainian relief effort ("Donations"). Non-GAAP adjusted
SG&A decreased 7.3% to $233.6
million and non-GAAP adjusted SG&A as a percentage of
revenue decreased 110 basis points year-over-year to 59.8%.
Non-GAAP adjusted SG&A excludes expenses related to
Donations.
Income from operations decreased 12.7% to $48.2 million from $55.2
million in the prior-year period. As a percentage of
revenue, income from operations was 12.3% for the third quarter of
2022 compared to 13.3% in the prior-year period. Non-GAAP adjusted
income from operations decreased 10.7% to $49.2 million. Non-GAAP adjusted income from
operations as a percentage of revenue was 12.6%, a decrease of 70
basis points from the year-ago period. Non-GAAP adjusted income
from operations excludes expenses related to Donations.
The effective tax rate was 24.5% for the third quarter of 2022
compared to 23.9% in the prior-year period. The increase in the
effective tax rate was primarily driven by an increase in state
income taxes partially offset by increased tax benefits for
Donations made in the quarter and research and development tax
credits. Non-GAAP effective tax rate was 24.9% as compared to 23.9%
in the prior year period.
In the third quarter of 2022, net income was $36.2 million, or $3.27 per diluted share, based on approximately
11.0 million shares of common stock outstanding. In the third
quarter of 2021, net income was $42.0
million, or $3.56 per diluted
share, based on approximately 11.8 million shares of common stock
outstanding. In the third quarter 2022, non-GAAP adjusted net
income was $36.8 million, or
$3.32 per diluted share.
Capital Allocation and Balance Sheet
The company announced a quarterly cash dividend of $18.2 million, or $1.64 per share, payable on November 8, 2022, to stockholders of record as of
the close of business on September 20, 2022.
The company's balance sheet remains strong with $69.7 million in cash, cash equivalents and
investment securities and no interest-bearing debt as of
September 30, 2022 compared to
$109.5 million in cash, cash
equivalents and investment securities and no debt at December 31, 2021.
Outlook
The following guidance reflects the company's updated
expectations for the full-year 2022 and is provided on a non-GAAP
basis, which excludes expenses related to Donations. Since the
company is continuing to work with third-party nonprofit partners,
the company cannot predict, without unreasonable effort, the amount
of Donations that will be given in the fourth quarter of 2022 that
will be included in GAAP results.
The company now anticipates that full-year 2022 revenue to be in
the range of $1.51 billion to
$1.59 billion, down from the
previously announced range of $1.58
billion to $1.66 billion that
was previously disclosed. The company expects full-year 2022
non-GAAP diluted EPS to be in the range of $11.61 to $13.05,
down from the previously announced range of $12.70 to $14.10.
This change in outlook has been prompted by the impact of high
inflation and macroeconomic uncertainties on new customer
acquisition. The revised full-year 2022 earnings guidance assumes a
24.00% to 25.00% effective tax rate.
Conference Call Information
The conference call is scheduled for today, Thursday, November 3, 2022 at 4:30 p.m. ET. The call will be broadcast live
over the Internet, hosted on the Investor Relations section of
Medifast's website at www.MedifastInc.com or directly at
https://app.webinar.net/DJnZ9Kw9ry8 and will be archived online and
available through November 17, 2022.
In addition, listeners may dial (855) 560-2579 to join via
telephone.
A telephonic playback will be available from 6:30 p.m. ET, November 3,
2022, through November 10,
2022. Participants can dial (877) 344-7529 to hear the
playback and enter passcode 5231199.
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 independent
OPTAVIA Coaches and a Community to help Customers achieve
Lifelong Transformation, One Healthy Habit at a Time®.
As the publicly traded market leader by revenue in the U.S.
$7 billion weight management
industry, the company has impacted more than 2 million lives
through its Community of OPTAVIA Coaches, who teach
Customers how to develop holistic healthy habits through the
proprietary Habits of Health® Transformational System.
Medifast was recognized in 2022 as one of America's Best
Mid-Sized Companies by Forbes, in 2020 and 2021 as one of FORTUNE's
100 Fastest-Growing Companies and was named to Forbes' 100
Most Trustworthy Companies in America list in 2017. For more
information, visit MedifastInc.com or OPTAVIA.com and follow
@Medifast on Twitter.
MED-F
*Source Euromonitor International Limited; based on custom
research conducted in Q2/2022; value sales for structured weight
loss and meal replacement programs in 2021.
Forward Looking Statements
Please Note: This release contains "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995, Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.
These forward-looking statements generally can be identified by use
of phrases or terminology such as "intend," "anticipate," "expect"
or other similar words or the negative of such terminology.
Similarly, descriptions of Medifast's objectives, strategies,
plans, goals, outlook 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 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 and cyberattacks; to protect its brand and
intellectual property, or to protect against product liability
claims; Medifast's planned growth into domestic and international
markets; adverse publicity associated with Medifast's products;
Medifast's inability to continue declaring dividends; fluctuations
of Medifast's common stock market price; the prolonged effects of
COVID-19 on consumer spending and disruptions to our distribution
network, supply chains and operations; increases in competition or
litigation; the consequences of other geopolitical events,
including natural disasters, global health crises, acts of
war (including the war in Ukraine), changes in trade policies and
tariffs, climate change, regulatory changes, increases in costs of
raw materials, fuel, or other energy, transportation, or utility
costs and in the costs of labor and employment, labor shortages,
supply chain issues and the resulting impact on market conditions
and consumer sentiment and spending; and Medifast's ability to
prevent or detect 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,
2021, and other filings filed with the United States
Securities and Exchange Commission, including its quarterly reports
on Form 10-Q and 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
September 30,
|
|
Nine months ended
September 30,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
|
|
|
|
|
|
Revenue
|
$
390,398
|
|
$
413,395
|
|
$
1,261,332
|
|
$
1,148,253
|
Cost of
sales
|
107,549
|
|
106,338
|
|
354,515
|
|
298,942
|
Gross
profit
|
282,849
|
|
307,057
|
|
906,817
|
|
849,311
|
|
|
|
|
|
|
|
|
Selling, general, and
administrative
|
234,693
|
|
251,886
|
|
754,610
|
|
679,907
|
|
|
|
|
|
|
|
|
Income from
operations
|
48,156
|
|
55,171
|
|
152,207
|
|
169,404
|
|
|
|
|
|
|
|
|
Other
expense
|
|
|
|
|
|
|
|
Interest
expense
|
(261)
|
|
(94)
|
|
(519)
|
|
(138)
|
Other income
(expense)
|
(17)
|
|
115
|
|
(37)
|
|
112
|
|
(278)
|
|
21
|
|
(556)
|
|
(26)
|
|
|
|
|
|
|
|
|
Income from
operations before income taxes
|
47,878
|
|
55,192
|
|
151,651
|
|
169,378
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
11,723
|
|
13,210
|
|
34,601
|
|
39,370
|
|
|
|
|
|
|
|
|
Net
income
|
$
36,155
|
|
$
41,982
|
|
$
117,050
|
|
$
130,008
|
|
|
|
|
|
|
|
|
Earnings per share -
basic
|
$
3.30
|
|
$
3.59
|
|
$
10.37
|
|
$
11.07
|
|
|
|
|
|
|
|
|
Earnings per share -
diluted
|
$
3.27
|
|
$
3.56
|
|
$
10.30
|
|
$
10.98
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
|
|
|
|
|
|
|
Basic
|
10,964
|
|
11,692
|
|
11,290
|
|
11,739
|
Diluted
|
11,042
|
|
11,785
|
|
11,369
|
|
11,840
|
|
|
|
|
|
|
|
|
Cash dividends declared
per share
|
$
1.64
|
|
$
1.42
|
|
$
4.92
|
|
$
4.26
|
|
|
|
|
|
|
|
|
MEDIFAST, INC. AND
SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
|
(U.S. dollars in
thousands, except par value)
|
|
|
|
|
|
|
|
|
|
September 30,
2022
|
|
December 31,
2021
|
|
|
|
|
ASSETS
|
Current
Assets
|
|
|
|
Cash and cash
equivalents
|
$
69,710
|
|
$104,183
|
Inventories
|
145,279
|
|
180,043
|
Investment
securities
|
—
|
|
5,361
|
Income taxes,
prepaid
|
150
|
|
945
|
Prepaid expenses and
other current assets
|
14,445
|
|
16,334
|
Total current
assets
|
229,584
|
|
306,866
|
|
|
|
|
Property, plant and
equipment - net of accumulated depreciation
|
58,107
|
|
56,131
|
Right-of-use
assets
|
19,819
|
|
24,457
|
Other assets
|
12,691
|
|
6,468
|
Deferred tax
assets
|
6,150
|
|
4,404
|
|
|
|
|
TOTAL
ASSETS
|
$
326,351
|
|
$
398,326
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
Liabilities
|
|
|
|
Accounts
payable and accrued expenses
|
$
148,129
|
|
$163,309
|
Revolving
credit facility
|
—
|
|
—
|
Current
lease obligations
|
6,126
|
|
6,523
|
Total current
liabilities
|
154,255
|
|
169,832
|
|
|
|
|
Lease
obligations, net of current lease obligations
|
21,574
|
|
26,020
|
Total
liabilities
|
175,829
|
|
195,852
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
Common stock, par value
$.001 per share: 20,000 shares authorized;
|
|
|
|
10,929 and 11,594
issued and 10,928 and 11,593 outstanding
|
|
|
|
at September 30, 2022
and December 31, 2021, respectively
|
11
|
|
12
|
Additional paid-in
capital
|
18,617
|
|
12,018
|
Accumulated other
comprehensive income
|
391
|
|
111
|
Retained
earnings
|
131,503
|
|
190,333
|
Total stockholders'
equity
|
150,522
|
|
202,474
|
|
|
|
|
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY
|
$
326,351
|
|
$398,326
|
|
|
|
|
Non-GAAP Financial Measures
In an effort to provide investors with additional information
regarding our results, we disclose various non-GAAP financial
measures in our quarterly earnings press release and other public
disclosures. The following GAAP financial measures have been
presented on an as adjusted basis: SG&A expenses, income from
operations, net income, diluted EPS and effective tax rate. Each of
these non-GAAP financial measures excludes the impact of certain
amounts as further identified below that the company believes are
not indicative of its core ongoing operational performance. A
reconciliation of each of these non-GAAP financial measures to its
most comparable GAAP financial measure is included below. These
non-GAAP financial measures are not intended to replace GAAP
financial measures.
We use these non-GAAP financial measures internally to evaluate
and manage the company's operations because we believe they provide
useful supplemental information regarding the company's on-going
economic performance. We have chosen to provide this information to
investors to enable them to perform more meaningful comparisons of
operating results and as a means to emphasize the results of
on-going operations.
The following tables reconcile the non-GAAP financial measures
included in this release:
MEDIFAST, INC. AND
SUBSIDIARIES
|
CONDENSED
CONSOLIDATED NON-GAAP (UNAUDITED)
|
(U.S. dollars in
thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, 2022
|
|
Three Months Ended
September 30, 2021
|
|
GAAP
|
|
Donations
Adjustments
|
|
Non-GAAP
|
|
GAAP
|
|
Donations
Adjustments
|
|
Non-GAAP
|
Selling, general, and
administrative
|
$
234,693
|
|
$
(1,087)
|
|
$
233,606
|
|
$
251,886
|
|
$
—
|
|
$
251,886
|
Income from
operations
|
48,156
|
|
1,087
|
|
49,243
|
|
55,171
|
|
-
|
|
55,171
|
Provision for income
taxes
|
11,723
|
|
491
|
|
12,214
|
|
13,210
|
|
-
|
|
13,210
|
Net income
|
36,155
|
|
596
|
|
36,751
|
|
41,982
|
|
-
|
|
41,982
|
Diluted earnings per
share (1)
|
3.27
|
|
0.05
|
|
3.32
|
|
3.56
|
|
-
|
|
3.56
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30, 2022
|
|
Nine Months Ended
September 30, 2021
|
|
GAAP
|
|
Donations
Adjustments
|
|
Non-GAAP
|
|
GAAP
|
|
Donations
Adjustments
|
|
Non-GAAP
|
Selling, general, and
administrative
|
$
754,610
|
|
$
(10,513)
|
|
$
744,097
|
|
$
679,907
|
|
$
—
|
|
$
679,907
|
Income from
operations
|
152,207
|
|
10,513
|
|
162,720
|
|
169,404
|
|
-
|
|
169,404
|
Provision for income
taxes
|
34,601
|
|
4,752
|
|
39,353
|
|
39,370
|
|
-
|
|
39,370
|
Net income
|
117,050
|
|
5,761
|
|
122,811
|
|
130,008
|
|
-
|
|
130,008
|
Diluted earnings per
share (1)
|
10.30
|
|
0.51
|
|
10.81
|
|
10.98
|
|
-
|
|
10.98
|
|
|
|
|
|
|
|
|
|
|
|
|
(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.
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/medifast-announces-third-quarter-2022-financial-results-301668264.html
SOURCE Medifast, Inc.