BALTIMORE, Nov. 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 third quarter ended September 30, 2021.
Third Quarter 2021 Highlights Compared to the Prior-Year
Period
- Revenue increased 52.3% to $413.4
million
- 44.9% growth in active earning OPTAVIA Coaches to a
record level of 61,000
- Revenue per active earning OPTAVIA Coach increased 7.0%
to new high of $6,773
- Net income increased 21.9% to $42.0
million
- Earnings per diluted share ("EPS") of $3.56, an increase of 22.3%
"We saw continued strong momentum during the third quarter,
reflecting our ongoing success in offering a differentiated and
personalized health and wellness program to a growing community of
clients across the United States
and Asia Pacific." said
Dan Chard, Chairman & Chief
Executive Officer of Medifast. "We have more active earning
OPTAVIA Coaches than at any point in our history and they
continue to support more clients than ever before. Our business
remains on track to take advantage of the growth opportunity that
lies ahead, as we develop unique digital tools to support our
Coach-driven program that guides OPTAVIA clients on their
health and wellness journey. Our clinically proven plans and
scientifically designed products remain in high demand, and the
powerful platform we have built puts us in a strong position for
sustained long-term success."
Third Quarter 2021 Results
Third quarter revenue increased 52.3% to $413.4 million from revenue of $271.5 million for the third quarter of
2020. The total number of active earning OPTAVIA
Coaches increased 44.9% to 61,000 compared to 42,100 for the third
quarter of 2020. The average revenue per active earning
OPTAVIA Coach was $6,773
compared to $6,329 for the third
quarter last year, an increase of 7.0%.
Gross profit increased 50.5% to $307.1
million from $204.0 million
for the third quarter of 2020. The increase in gross profit was
primarily attributable to higher revenue partially offset by
increased cost of sales. The Company's gross profit as a percentage
of revenue was 74.3% compared to 75.2% in the third quarter of
2020. The decrease in gross profit as a percentage of revenue was
primarily attributable to promotional activity and higher product
and shipping costs resulting from inflation in raw ingredient,
freight and labor costs.
Selling, general, and administrative expenses ("SG&A")
increased 57.9% to $251.9 million
compared to $159.5 million for the
third quarter of 2020, primarily due to higher OPTAVIA
commission expense, increased salaries and benefit costs,
incremental consulting costs related to information technology,
increased credit card fees due to higher sales, as well as costs
for the annual convention. As the OPTAVIA convention in
July 2020 was a virtual event in
response to the COVID-19 pandemic, the costs were significantly
lower. SG&A as a percentage of revenue increased 220 basis
points year-over-year to 60.9% of revenue, as compared to 58.7% for
the third quarter of 2020.
Income from operations increased 23.8% to $55.2 million from $44.6
million in the prior-year period. As a percentage of
revenue, income from operations was 13.3% for the third quarter
compared to 16.4% in the prior-year period.
The effective tax rate was 23.9% for the third quarter of 2021
compared to 22.8% in the prior-year period. The 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 along with the tax benefit of stock
compensation.
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 of 2020, net income was $34.5
million, or $2.91 per diluted
share, based on approximately 11.9 million shares of common stock
outstanding.
Balance Sheet
The Company's balance sheet remains strong with cash, cash
equivalents and investment securities of $159.9 million as of September 30, 2021 compared to $174.5 million at December
31, 2020.
On September 9, 2021, the Company
declared a quarterly cash dividend of $16.6 million,
or $1.42 per share, to be paid on November 8, 2021 to stockholders of record as of
September 21, 2021. Also during the
third quarter of 2021, the Company used $26.3 million to repurchase shares of common
stock. There are approximately 2.1 million shares remaining under
the Company's stock repurchase program as of September 30, 2021.
Outlook
The Company expects full-year 2021 revenue to be in the range of
$1.51 billion to $1.53 billion and full-year 2021 EPS to be in the
range of $13.27 to $13.96. The full-year 2021 earnings guidance
assumes a 23.25% to 24.25% effective tax rate.
Conference Call Information
The conference call is scheduled for today, Thursday, November 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/1029/42930, and will be
archived online through November 11,
2021. In addition, listeners may dial (855) 560-2579.
A telephonic playback will be available from 6:30 p.m. ET, November 4,
2021, through November 11,
2021. Participants can dial (877) 344-7529 to hear the
playback and enter passcode 10160327.
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 more than 40 years of experience, Medifast has redefined
direct selling by combining the best aspects of the model. Its
community of independent OPTAVIA Coaches has impacted 2
million lives and teaches 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 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 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, 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
September 30,
|
|
Nine months ended
September 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
413,395
|
|
$
|
271,470
|
|
$
|
1,148,253
|
|
$
|
669,930
|
Cost of
sales
|
|
106,338
|
|
|
67,434
|
|
|
298,942
|
|
|
171,354
|
Gross
profit
|
|
307,057
|
|
|
204,036
|
|
|
849,311
|
|
|
498,576
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general, and
administrative
|
|
251,886
|
|
|
159,477
|
|
|
679,907
|
|
|
402,385
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
55,171
|
|
|
44,559
|
|
|
169,404
|
|
|
96,191
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense)
|
|
|
|
|
|
|
|
|
|
|
|
Interest (expense)
income
|
|
(94)
|
|
|
44
|
|
|
(138)
|
|
|
212
|
Other
income
|
|
115
|
|
|
30
|
|
|
112
|
|
|
12
|
|
|
21
|
|
|
74
|
|
(26)
|
|
|
224
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations before income taxes
|
|
55,192
|
|
|
44,633
|
|
|
169,378
|
|
|
96,415
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
13,210
|
|
|
10,180
|
|
|
39,370
|
|
|
21,550
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
$
|
41,982
|
|
$
|
34,453
|
|
$
|
130,008
|
|
$
|
74,865
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share -
basic
|
$
|
3.59
|
|
$
|
2.93
|
|
$
|
11.07
|
|
$
|
6.36
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share -
diluted
|
$
|
3.56
|
|
$
|
2.91
|
|
$
|
10.98
|
|
$
|
6.32
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
11,692
|
|
|
11,766
|
|
|
11,739
|
|
|
11,772
|
Diluted
|
|
11,785
|
|
|
11,857
|
|
|
11,840
|
|
|
11,840
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends
declared per share
|
$
|
1.42
|
|
$
|
1.13
|
|
$
|
4.26
|
|
$
|
3.39
|
MEDIFAST, INC. AND
SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
|
(U.S. dollars in
thousands, except par value)
|
|
|
|
|
|
|
|
September
30,
|
|
December
31,
|
|
2021
|
|
2020
|
|
|
|
|
|
|
ASSETS
|
Current
Assets
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
154,516
|
|
$
|
163,723
|
Inventories
|
|
129,614
|
|
|
53,392
|
Investment
securities
|
|
5,379
|
|
|
10,752
|
Prepaid expenses and
other current assets
|
|
11,541
|
|
|
6,447
|
Total current
assets
|
|
301,050
|
|
|
234,314
|
|
|
|
|
|
|
Property, plant and
equipment - net of accumulated depreciation
|
|
46,451
|
|
|
27,633
|
Right-of-use
assets
|
|
16,736
|
|
|
10,508
|
Other
assets
|
|
6,439
|
|
|
2,937
|
Deferred tax
assets
|
|
692
|
|
|
692
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
$
|
371,368
|
|
$
|
276,084
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
Current
Liabilities
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
$
|
155,506
|
|
$
|
107,677
|
Current lease
obligations
|
|
5,402
|
|
|
3,673
|
Total current
liabilities
|
|
160,908
|
|
|
111,350
|
|
|
|
|
|
|
Lease obligations,
net of current lease obligations
|
|
14,221
|
|
|
7,488
|
Total
liabilities
|
|
175,129
|
|
|
118,838
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
|
Common stock, par
value $.001 per share: 20,000 shares authorized;
|
|
|
|
|
11,618 and 11,822
issued and 11,616 and 11,772 outstanding
|
|
|
|
|
|
at September 30, 2021
and December 31, 2020, respectively
|
|
12
|
|
|
12
|
Additional paid-in
capital
|
|
12,950
|
|
|
7,842
|
Accumulated other
comprehensive income
|
|
122
|
|
|
41
|
Retained
earnings
|
|
183,155
|
|
|
154,351
|
Less: treasury stock
at cost, 0 and 46 shares at September 30, 2021 and December 31,
2020, respectively
|
-
|
|
|
(5,000)
|
Total
stockholders' equity
|
|
196,239
|
|
|
157,246
|
|
|
|
|
|
|
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY
|
$
|
371,368
|
|
$
|
276,084
|
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SOURCE Medifast, Inc.