BALTIMORE, Aug. 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 second quarter ended June 30, 2021.
Second Quarter 2021 Highlights Compared to the Prior-Year
Period
- Revenue increased 79.2% to $394.2
million
- 62.2% growth in active earning OPTAVIA Coaches to a
record level of 59,200
- Revenue per active earning OPTAVIA Coach increased 13.9%
to $6,662
- Net income increased 114.1% to $47.0
million
- Earnings per diluted share ("EPS") of $3.96, an increase of 112.9%
"This has been another outstanding quarter for Medifast, driven
in large part by our success in driving growth in independent
OPTAVIA Coaches to new highs, and empowering those Coaches
to be more productive than ever before." said Dan Chard, Chairman & Chief Executive
Officer of Medifast. "We are leveraging technology in new and
effective ways to deliver these results, building digital products,
channels and platforms that enable our Coaches to create deeper and
more effective connections with their Clients. At the same time,
we've accelerated our supply chain transformation to take full
advantage of increased demand, creating a manufacturing and
distribution engine that we expect will support $2 billion in revenue well ahead of schedule.
Together, this work has given us a solid foundation to further
enhance our competitive advantage, and drive sustainable growth for
the long term."
Second Quarter 2021 Results
Second quarter revenue
increased 79.2% to $394.2 million
from revenue of $220.0 million for
the second quarter of 2020. OPTAVIA-branded products
represented 94.1% of consumable units sold for the second
quarter compared to 83.0% for the same period a year ago.
Consistent with business and brand strategy, the Company has
completed the sunset of the Medifast-branded product line.
The total number of active earning OPTAVIA Coaches
increased 62.2% to 59,200 compared to 36,500 for the second quarter
of 2020. The average revenue per active earning OPTAVIA
Coach was $6,662 compared to
$5,851 for the second quarter last
year, an increase of 13.9%.
Gross profit increased 84.4% to $293.7
million from $159.3 million
for the second quarter of 2020. The Company's gross profit as a
percentage of revenue was 74.5% compared to 72.4% in the second
quarter of 2020. The increase in gross profit as a percentage
of revenue was attributable to promotional activity rolled out
during the second quarter of 2020 that did not occur in the second
quarter of 2021.
Selling, general, and administrative expenses ("SG&A")
increased 77.0% to $232.3 million
compared to $131.2 million for the
second quarter of 2020, primarily due to higher OPTAVIA
commission expense, increased labor related expenses, increased
consulting costs related to information technology projects, and
increased credit card fees stemming from higher sales. SG&A as
a percentage of revenue decreased 70 basis points year-over-year to
58.9% of revenue.
Income from operations increased $33.3
million to $61.4 million from
$28.1 million in the prior-year
period reflecting increased gross profit and a reduction in the
SG&A expense as a percentage of revenue. Income from
operations as a percentage of revenue was 15.6% for the quarter, an
increase of 280 basis points from the year-ago period.
The effective tax rate was 23.4% for the second quarter of 2021
compared to 22.1% 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 offset by an increase in the tax benefit of
stock compensation.
Second quarter net income was $47.0
million, or $3.96 per diluted
share, based on approximately 11.9 million shares of common stock
outstanding. In the second quarter of 2020, net income was
$21.9 million, or $1.86 per diluted share, based on approximately
11.8 million shares of common stock outstanding.
Balance Sheet
The Company's balance sheet remains strong with cash, cash
equivalents and investment securities of $197.4 million as of June
30, 2021 compared to $174.5
million at December 31,
2020. In April 2021, the
Company entered into a credit agreement that provides for a
$125.0 million senior secured
revolving credit facility. The credit agreement also provides for
an uncommitted incremental facility that permits the Company,
subject to certain conditions, to increase the senior secured
revolving credit facility by up to $100.0
million. As of August 4,
2021, no amounts have been borrowed under the credit
agreement.
On June 3, 2021, the Company
declared a quarterly cash dividend of $16.9 million,
or $1.42 per share, to be paid on August 6, 2021 to stockholders of record as of
June 22, 2021. Also during the second
quarter of 2021, the Company used $12.2
million to repurchase shares of common stock and there are
approximately 2.2 million shares remaining under the Company's
stock repurchase program.
Outlook
The Company expects full-year 2021 revenue to be in the range of
$1.425 billion to $1.525 billion and full-year 2021 EPS to be in
the range of $12.70 to $14.17. 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, Wednesday, August 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/1029/41954, and will be
archived online through August 18,
2021. In addition, listeners may dial (855) 560-2579.
A telephonic playback will be available from 6:30 p.m. ET, August 4,
2021, through August 11, 2021.
Participants can dial (877) 344-7529 to hear the playback and enter
passcode 10158283.
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
www.MedifastInc.com or www.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 or business units, 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
June 30,
|
|
Six months ended
June 30,
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
394,189
|
|
$
|
219,999
|
|
$
|
734,858
|
|
$
|
398,460
|
Cost of
sales
|
|
|
100,482
|
|
|
60,699
|
|
|
192,604
|
|
|
103,920
|
Gross
profit
|
|
|
293,707
|
|
|
159,300
|
|
|
542,254
|
|
|
294,540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general, and
administrative
|
|
|
232,273
|
|
|
131,201
|
|
|
428,021
|
|
|
242,908
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
|
61,434
|
|
|
28,099
|
|
|
114,233
|
|
|
51,632
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (expense)
income
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest (expense)
income
|
|
|
(67)
|
|
|
58
|
|
|
(44)
|
|
|
168
|
Other (expense)
income
|
|
|
(22)
|
|
|
1
|
|
|
(3)
|
|
|
(18)
|
|
|
|
(89)
|
|
|
59
|
|
|
(47)
|
|
|
150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations before income taxes
|
|
|
61,345
|
|
|
28,158
|
|
|
114,186
|
|
|
51,782
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
|
14,382
|
|
|
6,223
|
|
|
26,160
|
|
|
11,370
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
46,963
|
|
$
|
21,935
|
|
$
|
88,026
|
|
$
|
40,412
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share -
basic
|
|
$
|
4.00
|
|
$
|
1.86
|
|
$
|
7.48
|
|
$
|
3.43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share -
diluted
|
|
$
|
3.96
|
|
$
|
1.86
|
|
$
|
7.42
|
|
$
|
3.42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
11,753
|
|
|
11,777
|
|
|
11,762
|
|
|
11,774
|
Diluted
|
|
|
11,858
|
|
|
11,821
|
|
|
11,869
|
|
|
11,822
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends
declared per share
|
|
$
|
1.42
|
|
$
|
1.13
|
|
$
|
2.84
|
|
$
|
2.26
|
MEDIFAST, INC. AND
SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(U.S.
dollars in thousands, except par value)
|
|
|
|
|
|
June
30,
|
|
|
December
31,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
ASSETS
|
Current
Assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
$
|
191,987
|
|
$
|
163,723
|
Inventories
|
|
|
|
95,790
|
|
|
53,392
|
Investment
securities
|
|
|
|
5,440
|
|
|
10,752
|
Prepaid expenses and
other current assets
|
|
|
|
11,104
|
|
|
6,447
|
Total current
assets
|
|
|
|
304,321
|
|
|
234,314
|
|
|
|
|
|
|
|
|
Property, plant and
equipment - net of accumulated depreciation
|
|
|
|
37,376
|
|
|
27,633
|
Right-of-use
assets
|
|
|
|
18,061
|
|
|
10,508
|
Other
assets
|
|
|
|
3,784
|
|
|
2,937
|
Deferred tax
assets
|
|
|
|
692
|
|
|
692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
|
$
|
364,234
|
|
$
|
276,084
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
Current
Liabilities
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
|
$
|
149,022
|
|
$
|
107,677
|
Current lease
obligations
|
|
|
|
4,956
|
|
|
3,673
|
Total current
liabilities
|
|
|
|
153,978
|
|
|
111,350
|
|
|
|
|
|
|
|
|
Lease obligations,
net of current lease obligations
|
|
|
|
15,567
|
|
|
7,488
|
Total
liabilities
|
|
|
|
169,545
|
|
|
118,838
|
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
|
|
|
Common stock, par
value $.001 per share: 20,000 shares authorized;
|
|
|
|
|
|
|
|
11,738 and 11,822
issued and 11,731 and 11,772 outstanding
|
|
|
|
|
|
|
|
at June 30, 2021 and
December 31, 2020, respectively
|
|
|
|
12
|
|
|
12
|
Additional paid-in
capital
|
|
|
|
10,606
|
|
|
7,842
|
Accumulated other
comprehensive income
|
|
|
|
75
|
|
|
41
|
Retained
earnings
|
|
|
|
185,343
|
|
|
154,351
|
Less: treasury stock
at cost, 5 and 46 shares at June 30, 2021 and December 31, 2020,
respectively
|
|
|
|
(1,347)
|
|
|
(5,000)
|
Total
stockholders' equity
|
|
|
|
194,689
|
|
|
157,246
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
$
|
364,234
|
|
$
|
276,084
|
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SOURCE Medifast, Inc.