BALTIMORE, May 1, 2019 /PRNewswire/ -- Medifast, Inc. (NYSE:
MED), a leading manufacturer and distributor of healthy living
products and programs, today reported financial results for the
first quarter ended March 31,
2019.
First Quarter 2019 Highlights:
- Revenue of $165.9 million, an
increase of 68.2% year-over-year
- Active earning OPTAVIA Coaches of 27,200, an increase of
62.9% year-over-year
- Net income of $20.8 million, an
increase of 69.8% year-over-year
- Earnings per diluted share ("EPS") of $1.70, an increase of 68.3% year-over-year
- Cash, cash equivalents, and investment securities of
$120.4 million and debt-free
- Quarterly cash dividend of $9.1
million, or $0.75 per share,
declared March 13, 2019 and payable
in the second quarter of 2019
"Our strong start to the year was fueled by a record number of
active earning OPTAVIA Coaches and increased coach
productivity," commented Dan Chard,
Medifast's Chief Executive Officer. "These achievements helped
generate first quarter revenue and earnings above our expectations
and gives us confidence to raise our outlook for the full year
2019. Going forward, we believe Medifast remains well
positioned to deliver long-term sustainable growth and value for
our stockholders as well as meaningful improvements to the lives of
OPTAVIA clients through our growing community of
OPTAVIA Coaches who join us in helping clients achieve
optimal health and wellbeing."
First Quarter 2019 Results
For the first quarter of 2019, revenue increased 68.2% to
$165.9 million from revenue of
$98.6 million for the first quarter
of 2018. OPTAVIA-branded products represented 73% of
consumable units sold for the first quarter of 2019 compared to 58%
for the first quarter of last year. The total number of active
earning OPTAVIA Coaches for the first quarter of 2019
increased to 27,200, compared to 16,700 for the first quarter of
2018. The average revenue per active earning OPTAVIA Coach
for the first quarter of 2019 increased 10.2% to $5,817 compared to $5,278 for the first quarter last year.
Gross profit for the first quarter of 2019 increased to
$125.1 million from $74.8 million for the first quarter of 2018. The
Company's gross profit as a percentage of revenue decreased 50
basis points to 75.4% from 75.9% for the first quarter last year.
The decrease in gross margin percentage was a result of higher
obsolescence and shipping costs.
Selling, general and administrative expenses ("SG&A") for
the first quarter of 2019 increased $40.3
million to $100.4 million
compared to $60.1 million for the
first quarter of 2018, primarily as a result of higher
OPTAVIA commissions expense, increased salaries and
benefits, increased consulting costs related to information
technology projects, and increased credit card fees resulting from
higher sales. SG&A as a percentage of sales decreased 50
basis points to 60.5% of revenue compared to 61.0% in the first
quarter of 2018.
Operating income increased $10.0
million to $24.7 million from
$14.7 million for the first quarter
of 2018 primarily as a result of increased gross profit, partially
offset by increased SG&A expenses. Operating income as a
percentage of revenue was 14.9% for the first quarter of 2019 and
2018, respectively.
The first quarter 2019 effective tax rate was 17.1%, compared to
18.1% for the first quarter of 2018. This decrease was
primarily a result of a 2.4% decrease relating to the discrete
accounting for taxes associated with share-based compensation
offset by a 3.5% benefit from the net operating loss due to state
apportionment.
Net income for the first quarter of 2019 was $20.8 million, or $1.70 per diluted share, based on approximately
12.2 million shares outstanding. First quarter 2018 net income was
$12.2 million, or $1.01 per diluted share based on approximately
12.1 million shares outstanding.
Balance Sheet
The Company's balance sheet remains strong with stockholders'
equity of $122.1 million and working
capital of $92.4 million as of
March 31, 2019. Cash, cash
equivalents, and investment securities increased $19.4 million to $120.4
million as of March 31, 2019
compared to $101.0 million at
December 31, 2018. The Company
remains free of interest bearing debt. Inventory increased
$4.4 million to $43.3 million at March 31,
2019 compared to $38.9 million
at December 31, 2018 as the Company
increased inventory levels to meet current and anticipated customer
demand. The Company declared a quarterly cash dividend of
$9.1 million, or $0.75 per share, during the first quarter of
2019.
Outlook
The Company expects second quarter revenue to be in the range of
$180 million to $185 million and EPS to be in the range of
$1.67 to $1.72. For the full year 2019, the Company
now expects revenue of $720 million
to $740 million and EPS of
$6.70 to $6.90, compared to the Company's previous
guidance for revenue of $700 million
to $720 million and EPS of
$6.45 to $6.65. The full year 2019 earnings guidance
assumes a 21.5% to 22.5% effective tax rate. The Company
expects the 2019 cadence of spending to be similar to 2018 with its
annual convention spend occurring in the third quarter of the year
and the cost of a 2020 Leadership Advancement event to be incurred
in the third and fourth quarters of the year.
Conference Call Information
The conference call is scheduled for today, Wednesday, May 1, 2019 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, and will be archived
online through May 15, 2019. In
addition, listeners may dial (855) 560-2579.
A telephonic playback will be available from 6:30 p.m. ET, May 1,
2019, through May 8, 2019.
Participants can dial (877) 344-7529 to hear the playback and enter
passcode 10130924.
About Medifast®:
Medifast (NYSE: MED) is a leading manufacturer and distributor
of clinically proven, healthy living products and programs. The
brand has been recommended by more than 20,000 doctors since its
founding. Its integrated coach model leverages nearly 40 years of
experience from medical, franchise, e-commerce, and direct selling
channels. Medifast and its community of independent OPTAVIA Coaches
embrace the future of wellness with a shared vision to offer the
world lifelong transformation, one healthy habit at a time™.
OPTAVIA® is represented by a community of OPTAVIA Coaches who teach
Clients healthy habits, while offering support and guidance on
their transformation journey. In 2018, Medifast announced it will
expand into the Asia-Pacific
markets of Hong Kong and
Singapore in 2019 with its
integrated coach model. Medifast is traded on the New York Stock
Exchange and was named to Forbes' 100 Most Trustworthy Companies in
America List in 2016 and 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. Medifast believes this release should
be read in conjunction with all of its filings with the United
States Securities and Exchange Commission and cautions its readers
that these forward-looking statements are subject to certain
events, risks, uncertainties, and other factors. Some of these
factors include, among others, Medifast's inability to attract and
retain independent OPTAVIA Coaches and clients, increases in
competition, litigation, regulatory changes, and its planned growth
into new domestic and international markets and new channels of
distribution. 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 latest Annual Report on
Form 10-K and Quarterly Report on Form 10-Q, 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)
|
(in thousands,
except per share amounts & dividend data)
|
|
|
|
Three months ended
March 31,
|
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
165,876
|
|
$
|
98,596
|
Cost of
sales
|
|
|
40,729
|
|
|
23,788
|
Gross
profit
|
|
|
125,147
|
|
|
74,808
|
|
|
|
|
|
|
|
Selling, general, and
administrative
|
|
|
100,432
|
|
|
60,125
|
|
|
|
|
|
|
|
Income from
operations
|
|
|
24,715
|
|
|
14,683
|
|
|
|
|
|
|
|
Other income
(expense)
|
|
|
|
|
|
|
Interest income,
net
|
|
|
312
|
|
|
249
|
Other income
(expense)
|
|
|
(6)
|
|
|
(1)
|
|
|
|
306
|
|
|
248
|
|
|
|
|
|
|
|
Income from
operations before income taxes
|
|
|
25,021
|
|
|
14,931
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
|
4,271
|
|
|
2,709
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
20,750
|
|
$
|
12,222
|
|
|
|
|
|
|
|
Earnings per share -
basic
|
|
$
|
1.75
|
|
$
|
1.02
|
|
|
|
|
|
|
|
Earnings per share -
diluted
|
|
$
|
1.70
|
|
$
|
1.01
|
|
|
|
|
|
|
|
Weighted average
shares outstanding -
|
|
|
|
|
|
|
Basic
|
|
|
11,880
|
|
|
12,030
|
Diluted
|
|
|
12,240
|
|
|
12,139
|
|
|
|
|
|
|
|
Cash dividends
declared per share
|
|
$
|
0.75
|
|
$
|
0.48
|
|
|
|
|
|
|
|
MEDIFAST, INC. AND
SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
|
(in thousands,
except par value)
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
|
December
31,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
ASSETS
|
Current
Assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
$
|
101,842
|
|
$
|
81,364
|
Accounts
receivable-net of doubtful accounts of $270 and $394 at
|
|
|
|
|
|
March 31, 2019 and
December 31, 2018, respectively
|
|
|
|
631
|
|
|
1,011
|
Inventory
|
|
|
|
43,257
|
|
|
38,888
|
Investment
securities
|
|
|
|
18,585
|
|
|
19,670
|
Prepaid expenses and
other current assets
|
|
|
|
4,995
|
|
|
4,586
|
Total current
assets
|
|
|
|
169,310
|
|
|
145,519
|
|
|
|
|
|
|
|
|
Property, plant and
equipment - net
|
|
|
|
23,343
|
|
|
19,747
|
Right-of-use
asset
|
|
|
|
12,864
|
|
|
-
|
Other
assets
|
|
|
|
941
|
|
|
1,183
|
Deferred tax
assets
|
|
|
|
3,612
|
|
|
2,980
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
|
$
|
210,070
|
|
$
|
169,429
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
Current
Liabilities
|
|
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
|
|
$
|
74,452
|
|
$
|
60,323
|
Current lease
obligation
|
|
|
|
2,443
|
|
|
-
|
Total current
liabilities
|
|
|
|
76,895
|
|
|
60,323
|
|
|
|
|
|
|
|
|
Lease obligation, less
current lease obligation
|
|
|
|
11,107
|
|
|
-
|
Total
liabilities
|
|
|
|
88,002
|
|
|
60,323
|
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
|
|
|
Common stock, par
value $.001 per share: 20,000 shares authorized;
|
|
|
|
|
|
12,126 and 12,117
issued and 11,898 and 11,868 outstanding
|
|
|
|
|
|
at March 31, 2019 and
December 31, 2018, respectively
|
|
12
|
|
|
12
|
Additional paid-in
capital
|
|
|
|
9,805
|
|
|
8,802
|
Accumulated other
comprehensive loss
|
|
|
|
(46)
|
|
|
(173)
|
Retained
earnings
|
|
|
|
143,176
|
|
|
131,344
|
Less: Treasury stock
at cost, 193 shares at March 31, 2019 and
December 31, 2018, respectively
|
|
(30,879)
|
|
|
(30,879)
|
Total stockholders'
equity
|
|
|
|
122,068
|
|
|
109,106
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
$
|
210,070
|
|
$
|
169,429
|
|
|
|
|
|
|
|
|
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SOURCE Medifast, Inc.