OWINGS MILLS, Md., May 12 /PRNewswire-FirstCall/ -- Medifast, Inc. reported today record first quarter revenue for the period ended March 31, 2004. The Company reported revenue of $6.82 million, versus $6.35 million for the same period in 2003. Domestic sales grew by $1.4 million, or 26% versus the year-earlier period. Medifast recorded $40,000 in international sales, compared to $1 million in the fiscal 2003 first quarter. The Company expects that international shipments that occurred in last year’s first quarter will be shipped in the second, third and fourth quarters of its current fiscal year. Medifast generated pre-tax Income from Operations of $894,000 versus $1.4 million in the 2003 first quarter. The 2004 first quarter represented the Company’s eighteenth consecutive quarter of profitability.
The Company reported net income of $647,000, or $0.06 per share ($0.05 per share on a fully diluted basis), versus $845,000, or $0.11 per share ($0.08 per share on a fully diluted basis) for the 2003 first quarter. Selling, General and Administrative expenses increased from $3.2 million in the year- earlier period to $4.5 million in the 2003 first quarter, as a result of improvements to the Company’s customer service and information technology systems to support increased sales activity during the balance of the year, and increased legal and insurance fees relating to Sarbanes-Oxley. Net income was also impacted by the higher provision for income taxes under GAAP in the 2004 first quarter compared to the same period in 2003. Medifast did not pay Federal taxes for either the 2004 or 2003 first quarter.
The Company improved Shareholders’ Equity at the end of the first quarter of 2004 to $17.8 million, versus $17.1 million at year-end. The Company ended the quarter with $1.5 million in cash and cash equivalents, along with $4 million in investment securities. Inventory increased from $3 million at the end of December to $4.1 million at the end of the first quarter, to support expected growth during the second quarter and throughout the year.
“We were pleased that we were able to implement many initiatives in the first quarter that we expect to drive significant revenue and earnings growth during the balance of the year,” said Brad MacDonald, Medifast’s Chairman and Chief Executive Officer. “We have increased our Hi-Energy clinic business significantly, and have already seen strong demand from diabetics for our branded Medifast Plus line. Our `Tasting Party Plan’ has been enormously popular among our Health Advisors, supporting continued strong growth in our Take Shape for Life division. We also expect to make inroads into new international markets.”
Some of the highlights of the 2004 first quarter included: -- Expansion of Hi-Energy clinics. The Company increased the number of clinics to over 100 during the period. The clinics also expanded their product lines to include Medifast’s disease management products. The Company expects to have over 125 clinics by the end of the year. -- Growth in Take Shape for Life division. Medifast added over 200 new Health Advisors during the quarter, which assisted in the success of launching the “Tasting Party Plan.” -- Improvements to the Company’s knowledge-based call center. Medifast invested in recruiting, training and technology to support its advertising initiatives during the second quarter. Such changes are expected to increase the closing rates from the Company’s national advertising campaign. Medifast also created a new video that is sent to respondents to the Company’s advertising programs. The video, among other changes, has improved response rates. -- Joint venture with XL Health. The Company entered into a joint venture with XL Health for its CMS Medicare Demonstration Project. The pilot project will use Medifast Plus for Diabetics as its exclusive nutritional intervention program.
“We are excited by our recently expanded national advertising campaign,” continued Mr. MacDonald. “We have already increased the rate at which leads are generated, and improved our closing rates, as a result of the investments and changes we made during the first quarter. A substantial increase in the number of knowledge-based call center operators, combined with additional training is already yielding results. We expect May and June’s closing rates to continue to increase significantly, thereby realizing the return on the investment of our television and print advertising throughout the second quarter, and the remainder of the year. Our advertising activities have also yielded many other benefits. For example, the interest in our clinical business, as a result of our improved visibility in the market, has never been greater. These initiatives give us confidence that we will meet our objectives for the year.”
2004 Financial Guidance
Medifast reiterated its 2004 financial guidance. The Company expects to report full-year revenue of $38 to $39 million with a pretax profit of $0.55 to $0.58 per diluted share. The Company believes it will grow sequentially on a quarterly basis as a result of the initiatives outlined in this press release, with substantial growth in the third and fourth quarter of the year. For the second quarter ending June 30, 2004, Medifast believes it will report revenue of $9.0 to $9.2 million, and pretax profit of $1.53 million to $1.65 million or $0.13 to $0.14 per diluted share. The Company has met or exceeded its revenue guidance for each quarter since its recapitalization in 1999.
The Company will hold a conference call and webcast today at 4:30 pm. Interested participants should call (888) 632-0064 when calling within the United States or (706) 679-8133 when calling internationally. Please refer to pass code 7381292. There will be a playback available as well. To listen to the playback, please call (800) 642-1687 when calling within the United States or (706) 645-9291 when calling internationally. Please use pass code 7381292 for the replay. The replay will be available until May 26, 2004.
The webcast may be accessed via the Company’s web site at http://www.medifastdiet.com/. Interested parties should go to the section marked “For Investors” to listen to the call. The webcast can be accessed until May 26, 2004.
This release contains forward-looking statements that may involve known, and unknown risks, uncertainties and other factors that may cause Medifast’s actual results and performance in future periods to be materially different from any future results or performance suggested by these statements. Medifast cautions investors not to place undue reliance on forward-looking statements, which speak only to management’s expectations or beliefs on this date.
Medifast, Inc. and Subsidiaries Condensed Consolidated Balance Sheets March 31, December 31, 2004 2003 (Unaudited) ASSETS Current assets: Cash $1,539,000 $2,524,000 Accounts receivable-net of allowance for doubtful accounts of $55,000 788,000 641,000 Inventory 4,083,000 2,988,000 Investment Securities 3,974,000 3,983,000 Deferred Compensation 321,000 321,000 Prepaid expenses and other current assets 1,267,000 936,000 Deferred tax asset 350,000 596,000 Total Current Assets 12,322,000 11,989,000 Property, plant and equipment - net 7,379,000 7,449,000 Trademarks and Intangibles 4,389,000 4,419,000 Other assets 423,000 375,000 TOTAL ASSETS $24,513,000 $24,232,000 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued expenses $1,500,000 $1,714,000 Dividends payable 58,000 58,000 Line of credit 86,000 55,000 Current maturities of long term debt 745,000 764,000 Total Current Liabilities 2,389,000 2,591,000 Long-term debt, net of current portion 4,342,000 4,564,000 Total Liabilities 6,731,000 7,155,000 Stockholders’ Equity: Series B Convertible Preferred Stock; par value $1.00; 600,000 shares authorized; 353,734 and 403,734 shares issued and outstanding, respectively 354,000 404,000 Series C Convertible Preferred Stock; stated value $1.00; 1,015,000 shares authorized; 267,000 and 267,000 shares issued and outstanding, respectively. 267,000 267,000 Common stock; par value $.001 per share; 15,000,000 authorized; 10,650,142 and 10,482,609 shares issued and outstanding, respectively 10,000 10,000 Additional paid-in capital 20,214,000 20,120,000 Accumulated comprehensive loss (20,000) (25,000) Accumulated deficit (2,369,000) (3,016,000) 18,456,000 17,760,000 Less Cost of Common Stock in treasury; 88,500 and 83,863 shares, respectively (674,000) (683,000) Total Stockholder’s Equity 17,782,000 17,077,000 TOTAL LIABILITIES & STOCKHOLDER EQUITY $24,513,000 $24,232,000 Medifast, Inc. and Subsidiaries Condensed Consolidated Statements of Operations Three Months Ended March 31, 2004 2003 (unaudited) (unaudited) Revenue $6,817,000 $6,347,000 Cost of sales 1,350,000 1,683,000 Gross Profit 5,467,000 4,664,000 Selling, general, and administration 4,548,000 3,220,000 Income from operations 919,000 1,444,000 Other income/(expense) Interest expense (23,000) (33,000) Other income (expense) (2,000) (10,000) Income before provision for income taxes 894,000 1,401,000 Provision for income tax benefit (expense) (247,000) (537,000) Net income 647,000 864,000 Less: Stock dividend on preferred stock - 19,000 Net income attributable to common shareholders $647,000 $845,000 Basic earnings per share $.06 $.11 Diluted earnings per share $.05 $.08 Weighted average shares outstanding - Basic 10,610,391 7,940,238 Diluted 12,157,860 10,240,712
Medifast, Inc.
CONTACT: Jeremy Hunt, Investor Relations Specialist, +1-410-504-8196, orCasey Seward, Public Relations Manager, +1-410-504-8154, both of Medifast; orKen Sgro, CEOcast, Inc. for Medifast, +1-212-732-4300
Web site: http://www.medifastdiet.com/
