BALTIMORE, Feb. 21,
2023 /PRNewswire/ -- Medifast (NYSE: MED), the global
company behind one of the fastest-growing health and wellness
communities, OPTAVIA®, today reported
results for the fourth quarter ended December 31, 2022.
Fourth Quarter 2022
- Revenue of $337.2 million, with
revenue per active earning coach of $5,538
- Independent active earning OPTAVIA Coaches of
60,900
- Net income of $26.5 million
(non-GAAP adjusted net income of $40.6
million)
- Earnings per diluted share ("EPS") of $2.41 (non-GAAP adjusted EPS of $3.70)
Full Year 2022 Highlights
- Revenue increased 4.8% to $1.6
billion
- Net income of $143.6 million
(non-GAAP adjusted net income of $163.5
million)
- EPS of $12.73 (non-GAAP adjusted
EPS of $14.50)
- Cash, cash equivalents and investment securities of
$87.7 million and the Company remains
free of interest-bearing debt as of December
31, 2022
"We've placed a substantial focus on driving stability in
customer retention rates, and with customer satisfaction metrics at
all-time highs, we've seen retention return to and hold at normal
levels," said Dan Chard, Medifast's
Chairman & Chief Executive Officer. "Our attention is now on
driving productivity and Coach growth which were both disrupted in
the second half of last year. Additionally, we continue to take
steps to mitigate cost pressures, drive efficiency and build
financial resilience into our model. We're already seeing some of
the impact of that work begin to play out, and while it will take
some time to work through our business cadence, we remain highly
confident in both the long-term efficacy of our model and our
prospects for stable and sustainable growth."
Fourth Quarter 2022 Results
Fourth quarter 2022 revenue decreased 10.7% to $337.2 million from $377.8
million for the fourth quarter of 2021, reflecting lower
revenue and Coach productivity. The average revenue per active
earning OPTAVIA Coach was $5,538, compared to $6,321 for the fourth quarter last year, a
decline of 12.4% driven by continued pressure on customer
acquisition. The total number of independent active earning
OPTAVIA Coaches increased 1.8% to 60,900 compared to 59,800
for the fourth quarter of 2021.
Gross profit decreased 16.1% to $233.6
million from $278.3 million
for the fourth quarter of 2021 and gross profit margin was 69.3%
compared to 73.7% in the fourth quarter of 2021. These decreases
were mainly due to $12.2 million of
one time expenses in connection with the restructuring of certain
external manufacturing agreements to optimize our supply chain for
2023 and inflation outpacing pricing adjustments, partially offset
by lower shipping costs due to reduced express shipping compared to
the prior year. Excluding these one-time expenses related to the
restructuring of certain external manufacturing agreements, on a
non-GAAP adjusted basis, gross profit decreased 11.7% to
$245.8 million and gross profit
margin decreased 80 basis points to 72.9%.
Selling, general, and administrative expenses ("SG&A")
decreased 13.1% to $200.9 million
compared to $231.4 million for the
fourth quarter of 2021. As a percentage of revenue, SG&A
decreased 170 basis points year-over-year to 59.6% of revenue, as
compared to 61.3% for the fourth quarter of 2021. The decrease in
SG&A was primarily due to lower OPTAVIA Coach
compensation expense, lower internal labor expense and greater
field operation efficiencies, partially offset by one-time expenses
of $8.5 million related to donations
made to support the Ukrainian relief effort ("Donations"). On a
non-GAAP adjusted basis, which excludes Donations, SG&A
decreased 16.8% to $192.5 million and
as a percentage of revenue decreased 420 basis points
year-over-year to 57.1%.
Income from operations decreased 30.4% to $32.6 million from $46.8
million in the prior-year period. As a percentage of
revenue, income from operations was 9.7% for the fourth quarter of
2022 compared to 12.4% in the prior-year period. On a non-GAAP
adjusted basis, which excludes one-time expenses described in the
gross profit and SG&A sections, income from operations
increased 13.7% to $53.3 million. As
a percentage of revenue, non-GAAP adjusted income from operations
was 15.8%, an increase of 340 basis points from the year-ago
period.
The effective tax rate was 18.2% for the fourth quarter of 2022
compared to 27.2% in the prior-year period. The decrease in the
effective tax rate was primarily driven by an increase in the
charitable contribution benefit and a reduction in the limitation
for executive compensation, partially offset by a decrease in the
stock compensation benefit. On a non-GAAP adjusted basis, the
effective tax rate in the fourth quarter was 23.5%.
In the fourth quarter of 2022, net income was $26.5 million, or $2.41 per diluted share, based on approximately
11.0 million shares of common stock outstanding. In the fourth
quarter of 2021, net income was $34.0
million, or $2.91 per diluted
share, based on approximately 11.7 million shares of common stock
outstanding. On a non-GAAP adjusted basis, net income in the fourth
quarter of 2022 was $40.6 million, or
$3.70 per diluted share.
Full Year Fiscal 2022 Results
For the fiscal year ended December 31,
2022, revenue increased 4.8% to $1.6
billion compared to revenue of $1.5
billion in 2021.
Net income for 2022 was $143.6
million, or $12.73 per diluted
share, based on approximately 11.3 million shares outstanding. This
compares to 2021 net income of $164.0
million, or $13.89 per diluted
share, based on approximately 11.8 million shares outstanding. On a
non-GAAP adjusted basis, net income decreased 0.3% to $163.5 million and EPS increased 4.4% to
$14.50 compared to the prior year
period.
Capital Allocation and Balance Sheet
The company announced a quarterly cash dividend of $17.9 million, or $1.64 per share, which was paid on February 7, 2023, to stockholders of record as of
the close of business on December 20, 2022.
The company's balance sheet remains strong with $87.7 million in cash, cash equivalents and
investment securities and no interest-bearing debt as of
December 31, 2022, compared to
$109.5 million in cash, cash
equivalents and investment securities and no debt at December 31, 2021.
Outlook
The company expects first quarter 2023 revenue to be in the
range of $300 million to $320 million and first quarter 2023 diluted EPS
to be in the range of $1.75 to
$2.40. The first quarter 2023
earnings guidance assumes a 26% to 27% effective tax rate.
Conference Call Information
The conference call is scheduled for today, Tuesday, February 21, 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/L31bk8pkVE4 and will be archived online and
available through March 7, 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, February 21,
2023, through February 28,
2023. Participants can dial (877) 344-7529 and enter
passcode 3443014 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 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
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, 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.
MEDIFAST, INC. AND
SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
|
(U.S. dollars in
thousands, except per share amounts & dividend
data)
|
|
|
Three months ended
December 31,
|
|
Years ended December
31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
|
|
|
|
|
|
Revenue
|
$337,245
|
|
$377,834
|
|
$1,598,577
|
|
$1,526,087
|
Cost of
sales
|
103,649
|
|
99,548
|
|
458,163
|
|
398,490
|
Gross
profit
|
233,596
|
|
278,286
|
|
1,140,414
|
|
1,127,597
|
|
|
|
|
|
|
|
|
Selling, general, and
administrative
|
200,998
|
|
231,449
|
|
955,608
|
|
911,356
|
|
|
|
|
|
|
|
|
Income from
operations
|
32,598
|
|
46,837
|
|
184,806
|
|
216,241
|
|
|
|
|
|
|
|
|
Other
expense
|
|
|
|
|
|
|
|
Interest
expense
|
(181)
|
|
(93)
|
|
(701)
|
|
(231)
|
Other (expense)
income
|
(9)
|
|
7
|
|
(46)
|
|
119
|
|
(190)
|
|
(86)
|
|
(747)
|
|
(112)
|
|
|
|
|
|
|
|
|
Income before
provision for income taxes
|
32,408
|
|
46,751
|
|
184,059
|
|
216,129
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
5,890
|
|
12,728
|
|
40,491
|
|
52,098
|
|
|
|
|
|
|
|
|
Net
income
|
$
26,518
|
|
$
34,023
|
|
$
143,568
|
|
$
164,031
|
|
|
|
|
|
|
|
|
Earnings per share -
basic
|
$ 2.43
|
|
$ 2.93
|
|
$
12.82
|
|
$
14.01
|
|
|
|
|
|
|
|
|
Earnings per share -
diluted
|
$ 2.41
|
|
$ 2.91
|
|
$
12.73
|
|
$
13.89
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
|
|
|
|
|
|
|
Basic
|
10,913
|
|
11,605
|
|
11,195
|
|
11,705
|
Diluted
|
10,993
|
|
11,699
|
|
11,276
|
|
11,813
|
|
|
|
|
|
|
|
|
Cash dividends declared
per share
|
$ 1.64
|
|
$ 1.42
|
|
$
6.56
|
|
$
5.68
|
MEDIFAST, INC. AND
SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
|
(U.S. dollars in
thousands, except par value)
|
|
|
|
|
|
2022
|
|
2021
|
|
|
|
|
ASSETS
|
Current
Assets
|
|
|
|
Cash and cash
equivalents
|
$
87,691
|
|
$104,183
|
Inventories
|
118,856
|
|
180,043
|
Investment
securities
|
—
|
|
5,361
|
Income taxes,
prepaid
|
—
|
|
945
|
Prepaid expenses and
other current assets
|
16,237
|
|
16,334
|
Total current
assets
|
222,784
|
|
306,866
|
|
|
|
|
Property, plant and
equipment - net of accumulated depreciation
|
57,185
|
|
56,131
|
Right-of-use
assets
|
18,460
|
|
24,457
|
Other assets
|
12,456
|
|
6,468
|
Deferred tax
assets
|
5,328
|
|
4,404
|
|
|
|
|
TOTAL
ASSETS
|
$316,213
|
|
$398,326
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
Liabilities
|
|
|
|
Accounts
payable and accrued expenses
|
$134,690
|
|
$163,309
|
Income
taxes payable
|
428
|
|
—
|
Current
lease obligations
|
5,776
|
|
6,523
|
Total current
liabilities
|
140,894
|
|
169,832
|
|
|
|
|
Lease
obligations, net of current lease obligations
|
20,275
|
|
26,020
|
Total
liabilities
|
161,169
|
|
195,852
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
Common stock, par value
$.001 per share: 20,000 shares authorized;
|
|
|
|
10,928 and 11,594
issued and 10,873 and 11,593 outstanding
|
|
|
|
at December 31, 2022
and December 31, 2021, respectively
|
11
|
|
12
|
Additional paid-in
capital
|
21,555
|
|
12,018
|
Accumulated other
comprehensive income
|
24
|
|
111
|
Retained
earnings
|
139,852
|
|
190,333
|
Less: treasury stock at
cost, 54 and 0 shares at December 31, 2022 and December 31, 2021,
respectively
|
(6,398)
|
|
—
|
Total stockholders'
equity
|
155,044
|
|
202,474
|
|
|
|
|
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY
|
$316,213
|
|
$398,326
|
Non-GAAP Financial Measures
In an effort to provide investors with additional information
regarding our results as determined by GAAP, we disclose various
non-GAAP financial measures in this quarterly earnings press
release, our annual report, and other public disclosures. The
following GAAP financial measures have been presented on an as
adjusted basis: cost of sales, gross profit, SG&A expenses,
income from operations, other expense, provision for income taxes,
net income, and diluted earnings per share. Each of these as
adjusted financial measures excludes the impact of certain amounts
related to our donations to support the Ukrainian relief effort and
costs of restructuring of certain external manufacturing
agreements, as further identified below and have not been
calculated in accordance with GAAP. 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
December 31, 2022
|
|
Three months ended
December 31, 2021
|
|
GAAP
|
|
Donations
Adjustments
|
|
Restructuring of
External
Manufacturing
Agreements
|
|
Non-GAAP
|
|
GAAP
|
|
Donations
Adjustments
|
|
Restructuring of
External
Manufacturing
Agreements
|
|
Non-GAAP
|
Cost of
sales
|
$ 103,649
|
|
$
—
|
|
$
(12,195)
|
|
$
91,454
|
|
$
99,548
|
|
$
—
|
|
$
—
|
|
$
99,548
|
Gross profit
|
233,596
|
|
—
|
|
12,195
|
|
245,791
|
|
278,286
|
|
—
|
|
—
|
|
278,286
|
Selling, general, and
administrative
|
200,998
|
|
(8,473)
|
|
—
|
|
192,525
|
|
231,449
|
|
—
|
|
—
|
|
231,449
|
Income from
operations
|
32,598
|
|
8,473
|
|
12,195
|
|
53,266
|
|
46,837
|
|
—
|
|
—
|
|
46,837
|
Other
expense
|
(190)
|
|
—
|
|
—
|
|
(190)
|
|
(86)
|
|
—
|
|
—
|
|
(86)
|
Provision for income
taxes
|
5,890
|
|
3,813
|
|
2,744
|
|
12,447
|
|
12,728
|
|
—
|
|
—
|
|
12,728
|
Net income
|
26,518
|
|
4,660
|
|
9,451
|
|
40,629
|
|
34,023
|
|
—
|
|
—
|
|
34,023
|
Diluted earnings per
share (1)
|
2.41
|
|
0.42
|
|
0.86
|
|
3.70
|
|
2.91
|
|
—
|
|
—
|
|
2.91
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December
31, 2022
|
|
Year ended December
31, 2021
|
|
GAAP
|
|
Donations
Adjustments
|
|
Restructuring of
External
Manufacturing
Agreements
|
|
Non-GAAP
|
|
GAAP
|
|
Donations
Adjustments
|
|
Restructuring of
External
Manufacturing
Agreements
|
|
Non-GAAP
|
Cost of
sales
|
$ 458,163
|
|
$
—
|
|
$
(12,195)
|
|
$
445,968
|
|
$ 398,490
|
|
$
—
|
|
$
—
|
|
$ 398,490
|
Gross profit
|
1,140,414
|
|
—
|
|
12,195
|
|
1,152,609
|
|
1,127,597
|
|
—
|
|
—
|
|
1,127,597
|
Selling, general, and
administrative
|
955,608
|
|
(18,986)
|
|
—
|
|
936,622
|
|
911,356
|
|
—
|
|
—
|
|
911,356
|
Income from
operations
|
184,806
|
|
18,986
|
|
12,195
|
|
215,987
|
|
216,241
|
|
—
|
|
—
|
|
216,241
|
Other
expense
|
(747)
|
|
—
|
|
—
|
|
(747)
|
|
(112)
|
|
—
|
|
—
|
|
(112)
|
Provision for income
taxes
|
40,491
|
|
8,544
|
|
2,744
|
|
51,779
|
|
52,098
|
|
—
|
|
—
|
|
52,098
|
Net income
|
143,568
|
|
10,442
|
|
9,451
|
|
163,461
|
|
164,031
|
|
—
|
|
—
|
|
164,031
|
Diluted earnings per
share (1)
|
12.73
|
|
0.93
|
|
0.84
|
|
14.50
|
|
13.89
|
|
—
|
|
—
|
|
13.89
|
|
(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.
|
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SOURCE Medifast, Inc.