Medifast Announces Second Quarter 2008 Financial Results
For the second quarter Medifast reported revenue of $27.5 million, a 25%increase from $22 million in the second quarter of 2007. The Company reportednet income of $1.5 million, or $0.12 per basic share and $0.11 per fullydiluted share, compared with $0.9 million, or $0.07 per basic and dilutedshare in the second quarter of 2007.
For the six months ended June 30, 2008, Medifast reported revenue of $52.7million, an increase of 25% from $42.1 million for the six months ended June30, 2007. The Company reported net income of $2.9 million, or $0.22 per basicshare and $0.21 per fully diluted share, versus $2.3 million, or $0.18 perbasis share and $0.17 per fully diluted share, in 2007.
"We are pleased with the results of the quarter; particularly in the faceof the difficult economic environment," commented Michael S. McDevitt, ChiefExecutive Officer of Medifast, Inc. "Our strategy of offering the clinicallyproven Medifast program via multiple distribution channels continues to gainsignificant traction. Revenue in our direct sales segment, Take Shape forLife, grew 79% year-over-year; and represented 44% of overall second quarterrevenues. The growth in this segment correlates directly to the increase inhealth coaches, which began to accelerate following our National Convention inJuly 2007. The number of active health coaches in the second quarter of 2008grew 87% to 2,800 compared to 1,500 for the same time period in 2007, and upfrom 2,200 at the end of the first quarter of 2008. Having completed our 2008National Convention in Orlando, FL on July 26th, we anticipate an expansion inthe number of health coaches, as well as an increase in segment revenues."
Mr. McDevitt continued, "Our Medifast Weight Control Centers experiencedrevenue growth of 61% versus last year's comparable quarter. The growth inclinic revenues were attributable to growth in revenue per clinic as well asadditional clinics opened during the past 12 months. Average monthly revenueper clinic increased 5%, to $41,000 per clinic in the second quarter from$39,000 in the second quarter last year and $39,000 in the first quarter of2008. At the end of the quarter, we had 17 operational Medifast Weight ControlCenters versus nine at the end of the second quarter of 2007.
"We are especially pleased that the 7 clinics that have been operationalfor more than one year, primarily in the Dallas market, have seen average samestore sales increase by 20%. Executing the strategy that successfully createdbrand awareness in the Dallas market and expanded product sales in all of ourmarketing channels, we expect to replicate those results in all of our clinicmarkets, including our new franchise clinics, which are set to open inBaltimore and Southern California in the next 45 days."
"During the quarter," Mr. McDevitt concluded, "Medifast Direct Responsesaw revenues decrease by 1%, however the advertising dollars spent to achievenearly the same amount of sales were 9% less than the second quarter of 2007.As previously discussed, the goal for the year has been to focus on moreeffective advertising. We retooled our advertising spend by medium at thebeginning of June, shifting more spend towards areas where we have obtainedbetter returns on investment. Those adjustments, while only in effect for thefinal month of the quarter, helped to improve our revenue-to-spend ratio. Weremain dedicated to providing our customers the clinically proven Medifastweight loss program through our four unique support channels allowing them todetermine the amount of support they need to successfully achieve their weightloss goals and to improve their quality of life. We are equally dedicated tomanaging the business with the expressed intention of enhancing value for
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