For the third quarter Medifast reported revenue of $27.3 million, a 25%increase from $21.8 million in the third quarter of 2007. The Company reportednet income of $1.5 million, or $0.11 per basic share and $0.11 per fullydiluted share, compared with $1 million, or $0.07 per basic and diluted sharein the third quarter of 2007.
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For the nine months ended September 30, 2008, Medifast reported revenue of$80 million, an increase of 25% from $64 million for the nine months endedSeptember 30, 2007. The Company reported net income of $4.5 million, or $0.34per basic share and $0.32 per fully diluted share, versus $3.2 million, or$0.25 per basis share and $0.24 per fully diluted share, in 2007.
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"We are extremely pleased with the financial results of the third quarter,particularly the positive trending we are continuing to see into the months ofSeptember and into October as this is a sign that we can expect to experiencecontinued growth in the near and long-term future," commented Michael S.McDevitt, Chief Executive Officer of Medifast, Inc. "The results are a directreflection of the strategic business plan that the board and management teamof Medifast laid out to offer the clinically proven Medifast program viamultiple distribution channels. This strategic plan has given us the abilityto increase sales and market share when many in our industry are havingdifficulties."
Mr. McDevitt continued, "Revenues in our direct sales segment, Take Shapefor Life, grew 99% year-over-year; and represented 50% of overall thirdquarter revenues. The growth in this segment correlates directly to theincrease in health coaches, which has increased significantly every quarterthis year. The number of active health coaches in the third quarter of 2008grew 94% to approximately 3,200 compared to 1,650 for the same time period in2007, and up from 2,800 at the end of the second quarter of 2008. Trending inthis segment continued to show accelerated growth in the month of Septemberand into October. The initiatives and messaging implemented in the past yearpositioning the Medifast program as a clinically proven, cost effective way tolose weight in a short period of time continues to gain traction as evidencedby the continued growth. Additionally, as individuals look for means tosupplement their income during this difficult economic environment, Medifastrepresents a unique opportunity to deliver a value proposition that focuses onimproving the quality of life of their family, friends and associates."
"We continue to experienced strong revenue growth in our Medifast WeightControl Centers segment," continued Mr. McDevitt. "Revenue during the quarterincreased 77% versus last year's comparable quarter. The sales growth is dueto the expansion of the clinic model as well as increased brand awareness inthe markets in which we operate due to increased targeted advertising spend.At the end of the quarter, we had twenty operational Medifast Weight ControlCenters versus ten at the end of the third quarter of 2007 with our firstfranchise center opening in the Baltimore market in the past few weeks."
"During the quarter," Mr. McDevitt concluded, "Medifast Direct Responseexperienced a 15% decrease in revenues on a planned 15% reduction inadvertising dollars spent. We continue to adjust to the purchasing trends ofthe consumer to allocate our ad spend in areas where we believe we can achievethe greatest return on our investment."
"As we have commented, we believe that the strategic business decision toprovide our customers the clinically proven Medifast weight loss programthrough our four unique support channels is creating the flexibility in ourbusiness to increase sales and capture market share in this difficult economicenvironment."
Gross margins increased to a record 76.1% from 74.7% for the third quarterof 2008 compared with a year ago. The gross margins improved due toefficiencies gained from new machinery purchases, changes in shipping rules,and a price increase during the month of July.
The Company's balance sheet remains strong with stockholders' equity of$37 million and working capital of $12.1 million as of September 30, 2008. Thecurrent ratio was 2.5 to 1.
2008 Full-Year Guidance
Management expects to be able to meet or exceed previously issued guidancefor revenue growth for full-year 2008 in the range of 8-10%; and dilutedearnings per share growth in the range of 30-35% for the year ended December31, 2008.
Third Quarter 2008 Conference Call
The Company will hold a conference call and web cast to discuss theresults on Thursday, November 6, at 11:00 a.m. ET. Interested parties canaccess the call by dialing (866) 524-3160 or (412) 317-6760 or can listen viaa live Internet web cast, which can be found at www.choosemedifast.com in thesection marked "Investor Relations". A replay of the call is available via webcast at www.choosemedifast.com until February 7, 2009 or by playback at (877)344-7529 or (412) 317-0088 through December 8, 2008. Please use account#425067 for the replay.
About Medifast:
Medifast (NYSE: MED) is the leading easy-to-use, clinically provenportion-controlled weight loss program. Medifast has been recommended by15,000 physicians and used by over one million customers. Medifast iscommitted to enriching lives by providing innovative choices for lastinghealth. Medifast programs have been proven effective through studies by majoruniversity teaching hospitals. The company sells its products and programs viafour unique distribution channels: 1) the web and national call centers, 2)national network of physicians, 3) medically supervised Medifast WeightControl Centers, and 4) the Take Shape For Life direct-selling division, anetwork of health coaches. Medifast was founded in 1980 and is located inOwings Mills, Maryland. For more information, log ontohttp://www.ChooseMedifast.com.
Please Note: This release contains "forward-looking statements" within themeaning of Section 27A of the Securities Act of 1933, as amended, Section 21Eof the Securities Exchange Act of 1934, as amended, and the Private SecuritiesLitigation Reform Act of 1995. These forward-looking statements generally canbe identified by use of phrases or terminology such as "intend" or othersimilar words or the negative of such terminology. Similarly, descriptions ofMedifast's objectives, strategies, plans, goals or targets contained hereinare also considered forward-looking statements. Medifast believes this releaseshould be read in conjunction with all of its filings with the United StatesSecurities and Exchange Commission and cautions its readers that theseforward-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 Associates and Members,stability in the pricing of print, TV and Direct Mail marketing initiativesaffecting the cost to acquire customers, increases in competition, litigation,regulatory changes, and its planned growth into new domestic and internationalmarkets and new channels of distribution. Although Medifast's believes thatthe expectations, statements, and assumptions reflected in these forward-looking statements are reasonable, it cautions readers to always consider allof the risk factors and any other cautionary statements carefully inevaluating each forward-looking statement in this release, as well as thoseset forth in its latest Annual Report on Form 10-K and Quarterly Report onForm 10-Q, and other filings filed with the United States Securities andExchange Commission, including its current reports on Form 8-K. All of theforward-looking statements contained herein speak only as of the date of thisrelease.Financial highlights included: -- Third quarter revenues increased 25% compared to 2007; -- Diluted EPS for the quarter increased 57% to $0.11 versus $0.07 year- over-year; -- Direct sales segment, Take Shape for Life, increased sales 99% year- over-year; -- Medifast Weight Control Centers quarterly revenues increased 77% -- Current ratio of 2.5 to 1 -- 36th consecutive quarter of profitability
SOURCE Medifast, Inc.
