BALTIMORE, Feb. 26, 2020 PRNewswire/ -- Medifast (NYSE:
MED), the company behind one of the fastest-growing health and
wellness communities, OPTAVIA®, which offers Lifelong
Transformation, One Healthy Habit at a Time®, today reported
results for the fourth quarter and full year ended December 31, 2019.
Fourth Quarter 2019 Highlights Compared to Prior-Year
Period
- Revenue up 17.0% to $170.6
million
- 32.0% growth in active earning OPTAVIA Coaches to
31,800
- Net income increased 27.0% to $19.9
million
- Earnings per diluted share ("EPS") of $1.66, an increase of 27.7%
- Declared a quarterly cash dividend of $13.4 million, or $1.13 per share paid on February 6, 2020, an increase of over 50%
compared to the prior-year period.
Full Year 2019 Highlights Compared to the Prior-Year
Period
- Revenue of $713.7 million, an
increase of 42.4% year-over-year
- Net income of $77.9 million, an
increase of 39.7% year-over-year
- EPS of $6.43, an increase of
39.2% year-over-year
- Cash, cash equivalents, and investment securities of
$92.7 million and the Company remains
free of interest-bearing debt as of December
31, 2019
"We are pleased with our strong growth in revenue and active
earning coaches during 2019 and are confident with our ability to
drive continued gains in 2020 and beyond. We made excellent
progress during the fourth quarter implementing our technology and
supply chain upgrades, are seeing strong improvements in client
satisfaction and are now better positioned to support our ongoing
growth opportunities. With the recent operational challenges
that temporarily muted the growth of active earning Coaches and
clients largely behind us, we expect to see our growth rate improve
as the year progresses," said Dan
Chard, Chief Executive Officer of Medifast. "2019 was a
transformative year where we laid the foundations for global
expansion, built the systems and infrastructure to support
significant future growth and we believe further demonstrated that
our growth model is sustainable long-term. Our commitment to
lifelong transformation one healthy habit at a time is unwavering
across our organization. We are confident in our ability to
produce long-term growth for our Stockholders and remain committed
to making ongoing improvements to the Coach and Client experience
in 2020 and beyond.
Fourth Quarter 2019 Results
Fourth quarter revenue increased 17.0% to $170.6 million from revenue of $145.8 million for the fourth quarter of 2018.
OPTAVIA-branded products represented 79% of consumable units
sold for the fourth quarter compared to 72% for the same period a
year ago.
The total number of active earning OPTAVIA Coaches
increased to 31,800, compared to 24,100 for the fourth quarter of
2018. The average revenue per active earning OPTAVIA Coach
decreased 9.2% to $5,229 compared to
$5,756 for the fourth quarter last
year.
Gross profit increased 17.4% to $128.1
million from $109.1 million
for the fourth quarter of 2018. The Company's gross profit as a
percentage of revenue increased 30 basis points year-over-year to
75.1% from 74.8% primarily as a result of a mid-year price increase
and improvements in costs related to inventory obsolescence,
partially offset by customer concessions.
Selling, general and administrative expenses ("SG&A")
increased $20.1 million to
$109.4 million compared to
$89.3 million for the fourth quarter
of 2018, primarily due to higher OPTAVIA commission expense,
increased consulting costs related to technology initiatives,
increased salaries and benefits. SG&A as a percentage of
revenue increased 290 basis points year-over-year to 64.1% of
revenue.
Operating income decreased $1.1
million to $18.7 million from
$19.8 million in the prior-year
period as increased gross profit was offset by increased SG&A
expenses. Operating income as a percentage of revenue was 11.0% for
the quarter, a decrease of 260 basis points from the year-ago
period.
The effective tax rate for the quarter was a 4.7% benefit for
the fourth quarter of 2019 compared to a 22.4% expense in the
year-ago period. The fourth quarter tax benefit reflected the
impact of discrete federal tax benefits from share-based
compensation, partially offset by increases in the effective state
tax rate of 2.0%.
Fourth quarter net income was $19.9
million, or $1.66 per diluted
share, based on approximately 11.9 million shares outstanding. The
discrete federal tax benefit from share-based compensation had a
$5.7 million impact on net income in
the fourth quarter, or $0.47 per
diluted share. Fourth quarter 2018 net income was
$15.7 million, or $1.30 per diluted share, based on approximately
12.0 million shares outstanding.
Full Year Fiscal 2019 Results
For the fiscal year ended December 31,
2019, revenue increased 42.4% to $713.7 million compared to revenue of
$501.0 million in 2018.
Net income for 2019 was $77.9
million, or $6.43 per diluted
share based on approximately 12.1 million shares outstanding,
compared to $55.8 million, or
$4.62 per diluted share for the
comparable period last year based on approximately 12.1 million
shares outstanding.
Balance Sheet
The Company's balance sheet remains strong with stockholders'
equity of $104.8 million and working
capital of $74.8 million as of
December 31, 2019. Cash, cash
equivalents, and investment securities decreased $8.3 million to $92.7
million as of December 31,
2019 compared to $101.0
million at December 31, 2018.
The Company remains free of interest-bearing debt. Inventory
increased $9.9 million to
$48.8 million at December 31, 2019 compared to $38.9 million at December
31, 2018 as the Company increased inventory levels to
support the launch of 32 new international products, initial
production of the new Habits of Health system and a continued
effort to meet current and future demand.
The Company declared a quarterly cash dividend of $13.4 million, or $1.13 per share that was paid on February 6, 2020. The Company did not repurchase
any shares during the fourth quarter of 2019 and repurchased
approximately 296,000 shares during fiscal year 2019. There
are approximately 2,369,000 shares of common stock remaining under
the Company's share repurchase program. Medifast expects to
maintain a program of paying dividends on a quarterly basis.
Outlook
The Company expects first quarter revenue to be in the range of
$166.0 million to $171.0 million and EPS to be in the range of
$1.35 to $1.42. For the full year 2020, the Company
expects revenue of $715.0 million to
$745.0 million and EPS of
$6.25 to $6.55. The full-year 2019 earnings guidance
assumes a 22.5% to 23.5% effective tax rate.
Conference Call Information
The conference call is scheduled for today, Wednesday, February 26, 2020 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, and will be archived
online through March 11, 2020. In
addition, listeners may dial (855) 560-2579.
A telephonic playback will be available from 6:30 p.m. ET, February 26,
2020, through March 4, 2020.
Participants can dial (877) 344-7529 to hear the playback and enter
passcode 10139285.
About Medifast®:
Medifast (NYSE: MED) is the company behind one of the
fastest-growing health and wellness
communities, OPTAVIA®, which offers Lifelong
Transformation, One Healthy Habit at a Time®. Based on nearly 40
years of experience, Medifast has redefined direct selling by
combining the best aspects of the model. Its community of thousands
of independent OPTAVIA Coaches teach Clients to develop
holistic healthy habits through products and clinically proven
plans, the Habits of Health® Transformational System and
comprehensive support from a community of like-minded people. In
2019, Medifast expanded the OPTAVIA movement globally,
beginning with the Asia-Pacific region. Medifast is
traded on the New York Stock Exchange and was named to Fortune's
100 Fastest-Growing Companies list in 2019 and Forbes' 100
Most Trustworthy Companies in America
List in 2016 and 2017. For more information, visit
www.MedifastInc.com or www.OPTAVIA.com.
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. Medifast believes this release should
be read in conjunction with all of its filings with the United
States Securities and Exchange Commission and cautions its readers
that these forward-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 OPTAVIA Coaches and clients, Medifast's
inability to prevent the use of stolen identities and credit cards
outside of the Company's systems to transact business on the
Company's e-commerce sites, increases in competition, litigation,
regulatory changes, and its planned growth into new domestic and
international markets and new channels of distribution. 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 latest Annual Report on Form 10-K and Quarterly
Report on Form 10-Q, 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
|
CONSOLIDATED
STATEMENTS OF INCOME (UNAUDITED)
|
Quarters and Years
Ended December 31, 2019 and 2018
|
(in thousands, except
per share amounts & dividend data)
|
|
|
|
Three months ended
December 31,
|
|
Year ended
December 31,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
170,632
|
|
$
|
145,844
|
|
$
|
713,672
|
|
$
|
501,003
|
Cost of
sales
|
|
|
42,564
|
|
|
36,753
|
|
|
176,814
|
|
|
121,104
|
Gross
profit
|
|
|
128,068
|
|
|
109,091
|
|
|
536,858
|
|
|
379,899
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general, and
administrative
|
|
|
109,361
|
|
|
89,288
|
|
|
445,819
|
|
|
310,836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
|
18,707
|
|
|
19,803
|
|
|
91,039
|
|
|
69,063
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income,
net
|
|
|
234
|
|
|
366
|
|
|
1,295
|
|
|
1,306
|
Other
income
|
|
|
40
|
|
|
1
|
|
|
29
|
|
|
179
|
|
|
|
274
|
|
|
367
|
|
|
1,324
|
|
|
1,485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations before income taxes
|
|
|
18,981
|
|
|
20,170
|
|
|
92,363
|
|
|
70,548
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
|
(900)
|
|
|
4,517
|
|
|
14,447
|
|
|
14,759
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
19,881
|
|
$
|
15,653
|
|
$
|
77,916
|
|
$
|
55,789
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share -
basic
|
|
$
|
1.71
|
|
$
|
1.32
|
|
$
|
6.62
|
|
$
|
4.67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share -
diluted
|
|
$
|
1.66
|
|
$
|
1.30
|
|
$
|
6.43
|
|
$
|
4.62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding -
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
11,617
|
|
|
11,894
|
|
|
11,771
|
|
|
11,947
|
Diluted
|
|
|
11,947
|
|
|
12,014
|
|
|
12,117
|
|
|
12,079
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends
declared per share
|
|
$
|
1.13
|
|
$
|
0.75
|
|
$
|
3.38
|
|
$
|
2.19
|
MEDIFAST, INC. AND
SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS (UNAUDITED)
|
As of December 31,
2019 and 2018
|
(in thousands, except
par value)
|
|
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
Current
Assets
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
$
|
76,974
|
|
$
|
81,364
|
|
Accounts receivable -
net of doubtful accounts of $235 and $394 at
|
|
|
|
|
|
|
|
|
December 31, 2019 and
2018, respectively
|
|
|
|
1,437
|
|
|
1,011
|
|
Inventory
|
|
|
|
48,771
|
|
|
38,888
|
|
Investment
securities
|
|
|
|
15,704
|
|
|
19,670
|
|
Income taxes,
prepaid
|
|
|
|
5,169
|
|
|
-
|
|
Prepaid expenses and
other current assets
|
|
|
|
6,096
|
|
|
4,586
|
|
Total current
assets
|
|
|
|
154,151
|
|
|
145,519
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment - net of accumulated depreciation
|
|
|
|
26,039
|
|
|
19,747
|
|
Right-of-use
assets
|
|
|
|
12,803
|
|
|
-
|
|
Other
assets
|
|
|
|
353
|
|
|
1,183
|
|
Deferred tax
assets
|
|
|
|
1,307
|
|
|
2,980
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
|
$
|
194,653
|
|
$
|
169,429
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
Current
Liabilities
|
|
|
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
|
|
$
|
76,220
|
|
$
|
60,323
|
|
Current lease
obligations
|
|
|
|
3,168
|
|
|
-
|
|
Total current
liabilities
|
|
|
|
79,388
|
|
|
60,323
|
|
|
|
|
|
|
|
|
|
|
Lease obligations,
less current lease obligations
|
|
|
|
10,433
|
|
|
-
|
|
Total
liabilities
|
|
|
|
89,821
|
|
|
60,323
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
|
|
|
|
Common stock, par
value $.001 per share: 20,000 shares authorized;
|
|
|
|
|
|
|
|
|
12,272 and 12,117
issued and 11,764 and 11,868 outstanding
|
|
|
|
|
|
|
|
|
at December 31, 2019
and December 31, 2018, respectively
|
|
|
|
12
|
|
|
12
|
|
Additional paid-in
capital
|
|
|
|
-
|
|
|
8,802
|
|
Accumulated other
comprehensive income (loss)
|
|
|
|
25
|
|
|
(173)
|
|
Retained
earnings
|
|
|
|
168,788
|
|
|
131,344
|
|
Less: Treasury stock
at cost, 489 and 193 shares at December 31,
|
|
|
|
|
|
|
|
|
2019 and December 31,
2018, respectively
|
|
|
|
(63,993)
|
|
|
(30,879)
|
|
Total stockholders'
equity
|
|
|
|
104,832
|
|
|
109,106
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
$
|
194,653
|
|
$
|
169,429
|
|
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SOURCE Medifast, Inc.