BALTIMORE, May 1, 2023
/PRNewswire/ -- Medifast (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,
2023.
First Quarter 2023
- Revenue of $349.0 million, with
revenue per active earning coach of $5,945
- Independent active earning OPTAVIA Coaches of
58,700
- Net income of $40.0 million
- Earnings per diluted share ("EPS") of $3.67
- Cash and cash equivalents of $123.7
million and no interest bearing debt
"We're pleased to see revenue and operating income both ahead of
expectations in the quarter, as we continue to adjust to the
changing dynamics of the business environment," said Dan Chard, Medifast's Chairman & Chief
Executive Officer. "Sustainable long-term growth is at the core of
our focus, and we are undertaking a number of initiatives to return
the business to a growth trajectory. In addition to working to
increase customer acquisition, we are implementing strategies that
will expand our addressable market, as we target new demographic
segments, geographies, and adjacent categories."
First Quarter 2023 Results
First quarter 2023 revenue
decreased 16.4% to $349.0 million
from $417.6 million for the first
quarter of 2022, primarily driven by a lower number of active
earning OPTAVIA Coaches and lower Coach productivity
compared to the prior year, partially offset by a $9.1 million impact from a timing difference
related to changes in the Company's sales order terms and
conditions with its customers. The change reflects revenue
recognition upon delivery to the shipping carrier versus customer
receipt. The average revenue per active earning OPTAVIA
Coach was $5,945, compared to
$6,536 for the first quarter last
year, a decline of 9.0%, as continued pressure on customer
acquisition more than offset a price increase implemented in
November 2022. The total number of
independent active earning OPTAVIA Coaches decreased 8.1% to
58,700 compared to 63,900 for the first quarter of 2022.
Gross profit decreased 18.5% to $246.4
million from $302.3 million
for the first quarter of 2022, driven by lower revenue as well as
cost inflation from raw ingredients, shipping and labor. Gross
profit margin was 70.6% compared to 72.4% in the first quarter of
2022, reflecting de-leverage of fixed costs due to lower sales
volumes, the impact of a program in January aimed at driving
customer acquisition, and product cost inflation.
Selling, general, and administrative expenses ("SG&A")
decreased 22.0% to $192.9 million
compared to $247.2 million for the
first quarter of 2022. As a percentage of revenue, SG&A
decreased 390 basis points to 55.3% of revenue, as compared to
59.2% for the first quarter of 2022. The decrease in SG&A
expenses reflected progress on several cost reduction and
optimization initiatives as well as decreased Coach compensation
due to lower sales volumes and fewer active earning Coaches.
Income from operations decreased 2.9% to $53.5 million from $55.1
million in the prior-year period. As a percentage of
revenue, income from operations was 15.3% for the first quarter of
2023 compared to 13.2% in the prior-year period.
The effective tax rate was 25.1% for the first quarter of 2023
compared to 24.0% in the prior-year period. The increase in the
effective tax rate was primarily driven by an increase in the
limitations on executive compensation and meal and entertainment
costs, partially offset by an increase in a tax benefit for
research and development.
In the first quarter of 2023, net income was $40.0 million, or $3.67 per diluted share, based on approximately
10.9 million shares of common stock outstanding. In the first
quarter of 2022, net income was $41.8
million, or $3.59 per diluted
share, based on approximately 11.6 million shares of common stock
outstanding.
Capital Allocation and Balance Sheet
The company announced a quarterly cash dividend of $1.65 per share, or $18.0
million, which is payable on May 9,
2023, to stockholders of record as of the close of business
on March 28, 2023.
The company's balance sheet remains strong with $123.7 million in cash and cash equivalents and
no interest-bearing debt as of March 31,
2023, compared to $87.7
million in cash and cash equivalents and no debt at
December 31, 2022.
Outlook
The company expects second quarter 2023 revenue to be in the
range of $250 million to $270 million and second quarter 2023 diluted EPS
to be in the range of $1.32 to
$1.44. The second quarter 2023
earnings guidance assumes a 24.50% to 26.25% effective tax rate.
The guidance includes the impact of investments being made for
future growth initiatives, which are expected to continue
throughout the year, impacting profitability.
Conference Call Information
A conference call is scheduled for today, Monday, May 1, 2023 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/zdVDP4z5KvR and will be archived online and
available through August 1, 2023. In
addition, listeners may dial (855) 560-2579 to join via
telephone.
A telephonic playback will be available from 6:30 p.m. ET, May 1,
2023, through May 8, 2023.
Participants can dial (877) 344-7529 and enter passcode 9944720 to
hear the playback.
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 three
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
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 Medifast's
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,
2022, 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.
Investor Contact:
Medifast, Inc.
Steven Zenker
InvestorRelations@medifastinc.com
(443) 379-5256
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,
|
|
2023
|
|
2022
|
|
|
|
|
Revenue
|
$
348,983
|
|
$
417,600
|
Cost of
sales
|
102,593
|
|
115,314
|
Gross
profit
|
246,390
|
|
302,286
|
|
|
|
|
Selling, general, and
administrative
|
192,879
|
|
247,199
|
|
|
|
|
Income from
operations
|
53,511
|
|
55,087
|
|
|
|
|
Other
expense
|
|
|
|
Interest
expense
|
(181)
|
|
(95)
|
Other
expense
|
(1)
|
|
(16)
|
|
(182)
|
|
(111)
|
|
|
|
|
Income from
operations before income taxes
|
53,329
|
|
54,976
|
|
|
|
|
Provision for income
taxes
|
13,361
|
|
13,195
|
|
|
|
|
Net
income
|
$
39,968
|
|
$
41,781
|
|
|
|
|
Earnings per share -
basic
|
$
3.68
|
|
$
3.62
|
|
|
|
|
Earnings per share -
diluted
|
$
3.67
|
|
$
3.59
|
|
|
|
|
Weighted average
shares outstanding
|
|
|
|
Basic
|
10,864
|
|
11,557
|
Diluted
|
10,899
|
|
11,638
|
|
|
|
|
Cash dividends declared
per share
|
$
1.65
|
|
$
1.64
|
MEDIFAST, INC. AND
SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(U.S. dollars in
thousands, except par value)
|
|
|
|
|
|
March 31,
2023
|
|
December 31,
2022
|
|
|
|
|
ASSETS
|
|
|
|
Current
Assets
|
|
|
|
Cash and cash
equivalents
|
$
123,748
|
|
$
87,691
|
Inventories
|
96,896
|
|
118,856
|
Prepaid expenses and
other current assets
|
9,674
|
|
16,237
|
Total current
assets
|
230,318
|
|
222,784
|
|
|
|
|
Property, plant and
equipment - net of accumulated depreciation
|
55,960
|
|
57,185
|
Right-of-use
assets
|
17,091
|
|
18,460
|
Other assets
|
13,709
|
|
12,456
|
Deferred tax
assets
|
4,528
|
|
5,328
|
|
|
|
|
TOTAL
ASSETS
|
$
321,606
|
|
$
316,213
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
Liabilities
|
|
|
|
Accounts payable
and accrued expenses
|
$
113,300
|
|
$
134,690
|
Income taxes
payable
|
13,031
|
|
428
|
Current lease
obligations
|
5,411
|
|
5,776
|
Total current
liabilities
|
131,742
|
|
140,894
|
|
|
|
|
Lease
obligations, net of current lease obligations
|
18,964
|
|
20,275
|
Total
liabilities
|
150,706
|
|
161,169
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
Common stock, par
value $0.001 per share: 20,000 shares authorized;
|
|
|
|
10,887
and 10,928 issued and 10,887 and 10,873
outstanding
|
|
|
|
at March 31, 2023
and December 31, 2022, respectively
|
11
|
|
11
|
Additional paid-in
capital
|
19,030
|
|
21,555
|
Accumulated other
comprehensive income
|
33
|
|
24
|
Retained
earnings
|
151,826
|
|
139,852
|
Less: treasury stock
at cost, 0 and 54 shares at March 31, 2023 and
December 31, 2022, respectively
|
—
|
|
(6,398)
|
Total stockholders'
equity
|
170,900
|
|
155,044
|
|
|
|
|
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY
|
$
321,606
|
|
$
316,213
|
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SOURCE Medifast, Inc.