OWINGS MILLS, Md., May 12 Medifast, Inc.(NYSE: MED) announced today first quarter financial results for the periodended March 31, 2008.
For the first quarter Medifast reported revenue of $25.2 million, a 25%increase from $20.1 million in the first quarter of 2007. The Company reportednet income of $1.4 million or $0.10 per basic and diluted share compared with$1.4 million, or $0.11 per basic share - $0.10 per diluted share in the firstquarter of 2007.
The Company's balance sheet remains strong with stockholders' equity of$38.6 million and working capital of $9.8 million as of March 31, 2008. Thecurrent ratio was 2.3 to 1.
"We are pleased with the results of the quarter," commented Michael S.McDevitt, chief executive officer of Medifast, Inc. "Our multi-channeldistribution model continues to gain traction, with virtually all of ourchannels achieving solid double-digit growth for the quarter. The Take Shapefor Life division grew 63% year-over-year; and now represents approximately39% of overall revenues for the first quarter. This growth can largely beattributed to the investments made during 2007 in the tools and training topromote growth in the recruiting of health coaches. In that regard, the numberof active health coaches grew to 2,200 at the end of the first quarter of 2008as compared to 1,350 for the same time period in 2007, an increase of 63%. Webelieve that the growth in health coach activity is a positive trend thatshould continue, and will lead to significant revenue growth in the nearfuture."
Mr. McDevitt continued, "Our Medifast Weight Control Centers experiencedrevenue growth of 75% versus last year's comparable quarter. We areparticularly pleased with the average monthly revenue per clinic growing 35%,to $39,000 per clinic in the first quarter from $29,000 in the first quarterlast year. In the more established Dallas market, average monthly revenue perclinic is approximately $50,000. We believe that the recent growth in theMedifast Weight Control Centers validates our model and confirms the highdemand from this segment of the weight loss market. During the first quarterwe opened four additional corporate owned clinics in the Houston market and weplan on opening four additional corporate owned clinics in the Houston marketby the end of the second quarter of 2008. We also expect to further developthe Dallas market by opening two additional clinics. Although we are in thevery early stages of developing this channel, we are heartened by the consumerresponse."
"During the quarter," Mr. McDevitt continued, "Medifast Direct Responseincreased revenues by 6%. The engine that drives product sales in thisbusiness is advertising spend. Commencing this month, we have realigned ouradvertising spend between the different media types. In the first quarter of2008, we assessed the return to spend on each advertising medium which haschanged since prior year. We have made adjustments to the allocation of ouradvertising dollars between print, TV, and web and believe we will see thebenefit of these changes in the coming quarters of 2008. Additionally, wewill continue to generate revenue by expanding our client base throughremarketing efforts such as direct mail and e-mail campaigns. The umbrella ofnational brand awareness generated by our direct response advertising drivesbusiness across our multi-channeled platform by fueling customers and businessleads to Take Shape for Life and creating walk-ins to Medifast Weight ControlCenters. The Company provides customers many options for support on ourclinically proven weight loss program. The solutions that we provide toconsumers dedicated to improving their quality of life have proven to beeffective and we are dedicated to delivering our value proposition to themarket in the most efficient and cost-effective manner possible."
Gross margins increased to 75.8% from 74.8% for th