BALTIMORE, Aug. 5, 2020 /PRNewswire/ -- Medifast (NYSE:
MED), the company behind one of the fastest-growing health and
wellness communities, OPTAVIA®, today reported results
for the second quarter ended June 30,
2020.
Second Quarter 2020 Highlights Compared to Prior-Year
Period
- Revenue increased 17.6% to $220.0
million
- 19.3% growth in active earning OPTAVIA Coaches to
36,500
- Revenue per active earning OPTAVIA Coach increased 9.7%
over the first quarter
- Net income increased 2.6% to $21.9
million
- Non-GAAP adjusted net income increased 7.8% to $23.1 million
- Earnings per diluted share ("EPS") of $1.86, an increase of 6.3%
- Non-GAAP adjusted earnings per diluted share of $1.96, a 12.0% increase
"This has been a strong quarter for Medifast, with strong demand
and engagement among OPTAVIA Coaches and Clients helping to
deliver meaningful revenue growth," said Dan Chard Chief Executive Officer of Medifast.
"We have more active earning Coaches than at any point in our
history, and Coach productivity is up substantially
quarter-over-quarter near all-time highs. At a time when health and
wellness is more important than ever to people in the United States and around the world, our
service and products are clearly resonating with consumers who want
to achieve lifelong transformation one healthy habit at a
time."
"We have adapted well in the face of the COVID-19 pandemic, and
the fundamentals of our business remain extremely positive. We are
focused on our business goals, and we remain confident in our
ability to deliver consistent long-term growth for our
stockholders."
Second Quarter 2020 Results
Second quarter revenue increased 17.6% to $220.0 million from revenue of $187.1 million for the second quarter of 2019.
OPTAVIA-branded products represented 83% of consumable
units sold for the second quarter compared to 75% for the same
period a year ago.
The total number of active earning OPTAVIA Coaches
increased 19.3% to 36,500, compared to 30,600 for the second
quarter of 2019. The average revenue per active earning
OPTAVIA Coach was $5,851
compared to $5,863 for the second
quarter last year. While productivity was flat to the same
period last year, productivity increased 9.7% sequentially compared
to first quarter 2020.
Gross profit increased 13.2% to $159.3
million from $140.7 million
for the second quarter of 2019. The Company's gross profit as a
percentage of revenue decreased 280 basis points year-over-year to
72.4% from 75.2%, which was primarily the result of promotional
activity during the quarter as well as higher production
costs.
Selling, general and administrative expenses ("SG&A")
increased $17.8 million to
$131.2 million compared to
$113.4 million for the second quarter
of 2019, primarily due to higher OPTAVIA commission expense
as a result of our growth in OPTAVIA sales for the quarter
along with incremental professional service costs in connection
with the Schedule 13D filing, and additional coach incentives
during the quarter. SG&A as a percentage of revenue decreased
100 basis points year-over-year to 59.6% of revenue. Non-GAAP
adjusted SG&A increased $16.4
million to $129.8 million and
Non-GAAP adjusted SG&A as a percentage of revenue decreased 160
basis points year-over-year to 59.0%. Non-GAAP adjusted
SG&A excludes expenses in connection with the Schedule 13D
filing of $1.2 million and severance
related costs of $0.2 million
resulting from organizational change with the Company's Chief
Financial Officer.
Income from operations increased $0.7
million to $28.1 million from
$27.4 million in the prior-year
period primarily as a result of increased gross profit partially
offset by increased SG&A. Income from operations as a
percentage of revenue was 12.8% for the quarter, a decrease of 180
basis points from the year-ago period. Non-GAAP adjusted income
from operations increased $2.2
million to $29.5 million.
Non-GAAP adjusted income from operations as a percentage of revenue
was 13.4%, a decrease of 120 basis points from the year-ago
period.
The effective tax rate was 22.1% for the second quarter of 2020
compared to a 23.0% expense in the year-ago period.
Second quarter net income was $21.9
million, or $1.86 per diluted
share, based on approximately 11.8 million shares outstanding.
Non-GAAP adjusted net income was $23.1
million, or $1.96 per diluted
share. Second quarter 2019 net income was $21.4 million, or $1.75 per diluted share, based on approximately
12.2 million shares outstanding.
Balance Sheet
The Company's balance sheet remains strong with cash, cash
equivalents, and investment securities of $145.4 million as of June
30, 2020 compared to $92.7
million at December 31, 2019.
The Company remains free of interest-bearing debt.
The Company declared a quarterly cash dividend of $13.4 million, or $1.13 per share that is payable on August 6, 2020. The Company repurchased 46,075
common shares during the second quarter of 2020. There are
approximately 2,323,000 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 and intends to
utilize its share repurchase program as opportunities arise.
Conference Call Information
The conference call is scheduled for today, Wednesday, August 5, 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 or directly at
https://www.webcaster4.com/Webcast/Page/1029/35743, and will be
archived online through August 19,
2020. In addition, listeners may dial (855) 560-2579.
A telephonic playback will be available from 6:30 p.m. ET, August 5,
2020, through August 12, 2020.
Participants can dial (877) 344-7529 to hear the playback and enter
passcode 10146306.
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, the impact of the COVID-19 pandemic
on Medifast's results, 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, the severity, length and ultimate impact of
COVID-19 on people and economies, and Medifast's 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, for the quarter ended
March 31, 2020, 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
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands,
except per share amounts & dividend data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
219,999
|
|
$
|
187,103
|
|
$
|
398,460
|
|
$
|
352,979
|
|
Cost of
sales
|
|
|
60,699
|
|
|
46,393
|
|
|
103,920
|
|
|
87,122
|
|
Gross
profit
|
|
|
159,300
|
|
|
140,710
|
|
|
294,540
|
|
|
265,857
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general, and
administrative
|
|
|
131,201
|
|
|
113,355
|
|
|
242,908
|
|
|
213,787
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
|
28,099
|
|
|
27,355
|
|
|
51,632
|
|
|
52,070
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income,
net
|
|
|
58
|
|
|
425
|
|
|
168
|
|
|
737
|
|
Other income
(expense)
|
|
|
1
|
|
|
(2)
|
|
|
(18)
|
|
|
(8)
|
|
|
|
|
59
|
|
|
423
|
|
|
150
|
|
|
729
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations before income taxes
|
|
|
28,158
|
|
|
27,778
|
|
|
51,782
|
|
|
52,799
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
|
6,223
|
|
|
6,395
|
|
|
11,370
|
|
|
10,666
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
21,935
|
|
$
|
21,383
|
|
$
|
40,412
|
|
$
|
42,133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share -
basic
|
|
$
|
1.86
|
|
$
|
1.80
|
|
$
|
3.43
|
|
$
|
3.55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share -
diluted
|
|
$
|
1.86
|
|
$
|
1.75
|
|
$
|
3.42
|
|
$
|
3.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
11,777
|
|
|
11,861
|
|
|
11,774
|
|
|
11,870
|
|
Diluted
|
|
|
11,821
|
|
|
12,218
|
|
|
11,822
|
|
|
12,229
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends
declared per share
|
|
$
|
1.13
|
|
$
|
0.75
|
|
$
|
2.26
|
|
$
|
1.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MEDIFAST, INC. AND
SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands,
except par value)
|
|
|
|
|
|
|
|
|
|
|
|
|
June
30,
|
|
|
December
31,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
ASSETS
|
Current
Assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
$
|
130,828
|
|
$
|
76,974
|
Accounts
receivable-net of doubtful accounts of $61 and $235 at
|
|
|
|
|
|
|
|
June 30, 2020 and
December 31, 2019, respectively
|
|
|
|
836
|
|
|
1,437
|
Inventories
|
|
|
|
38,580
|
|
|
48,771
|
Investment
securities
|
|
|
|
14,564
|
|
|
15,704
|
Income taxes,
prepaid
|
|
|
|
-
|
|
|
5,169
|
Prepaid expenses and
other current assets
|
|
|
|
6,437
|
|
|
6,096
|
Total current
assets
|
|
|
|
191,245
|
|
|
154,151
|
|
|
|
|
|
|
|
|
Property, plant and
equipment - net of accumulated depreciation
|
|
|
|
24,574
|
|
|
26,039
|
Right-of-use
assets
|
|
|
|
11,362
|
|
|
12,803
|
Other assets
|
|
|
|
2,833
|
|
|
353
|
Deferred tax
assets
|
|
|
|
2,071
|
|
|
1,307
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
|
$
|
232,085
|
|
$
|
194,653
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
Current
Liabilities
|
|
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
|
|
$
|
103,335
|
|
$
|
76,220
|
Current lease
obligations
|
|
|
|
3,270
|
|
|
3,168
|
Total current
liabilities
|
|
|
|
106,605
|
|
|
79,388
|
|
|
|
|
|
|
|
|
Lease obligations, less
current lease obligations
|
|
|
|
8,744
|
|
|
10,433
|
Total
liabilities
|
|
|
|
115,349
|
|
|
89,821
|
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
|
|
|
Common stock, par
value $.001 per share: 20,000 shares authorized;
|
|
|
|
|
|
|
|
11,806 and 12,272
issued and 11,756 and 11,764 outstanding
|
|
|
|
|
|
|
|
at June 30, 2020 and
December 31, 2019, respectively
|
|
|
|
12
|
|
|
12
|
Additional paid-in
capital
|
|
|
|
2,871
|
|
|
-
|
Accumulated other
comprehensive income
|
|
|
|
99
|
|
|
25
|
Retained
earnings
|
|
|
|
118,754
|
|
|
168,788
|
Less: Treasury stock
at cost, 46 and 489 shares at June 30, 2020 and December 31, 2019,
respectively
|
|
|
|
(5,000)
|
|
|
(63,993)
|
Total stockholders'
equity
|
|
|
|
116,736
|
|
|
104,832
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
$
|
232,085
|
|
$
|
194,653
|
Non-GAAP Financial Measures
In an effort to provide investors with additional information
regarding our results, we disclose various non-GAAP financial
measures in our quarterly earnings press release and other public
disclosures. The following GAAP financial measures have been
presented on an as adjusted basis: SG&A expenses, income from
operations, net income and diluted earnings per share. Each of
these non-GAAP financial measures excludes the impact of certain
amounts as further identified below that the Company believes are
not indicative of its core ongoing operational performance. A
reconciliation of each of these non-GAAP financial measures to its
most comparable GAAP financial measure is included below. These
non-GAAP financial measures are not intended to replace GAAP
financial measures.
We use these non-GAAP financial measures internally to evaluate
and manage the Company's operations because we believe they provide
useful supplemental information regarding the Company's on-going
economic performance. We have chosen to provide this information to
investors to enable them to perform more meaningful comparisons of
operating results and as a means to emphasize the results of
on-going operations.
The following tables reconcile the non-GAAP financial measures
included in this report (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general, and
administrative
|
|
$
|
131,201
|
|
$
|
113,355
|
|
$
|
242,908
|
|
$
|
213,787
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional services
for 13D Filing
|
|
|
1,203
|
|
|
-
|
|
|
5,811
|
|
|
-
|
Incremental severance
costs
|
|
|
239
|
|
|
-
|
|
|
1,237
|
|
|
-
|
Non-GAAP Adjusted
selling, general, and administrative
|
|
$
|
129,759
|
|
$
|
113,355
|
|
$
|
235,860
|
|
$
|
213,787
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
$
|
28,099
|
|
$
|
27,355
|
|
$
|
51,632
|
|
$
|
52,070
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional services
for 13D Filing
|
|
|
1,203
|
|
|
-
|
|
|
5,811
|
|
|
-
|
Incremental severance
costs
|
|
|
239
|
|
|
-
|
|
|
1,237
|
|
|
-
|
Non-GAAP Adjusted
income from operations
|
|
$
|
29,541
|
|
$
|
27,355
|
|
$
|
58,680
|
|
$
|
52,070
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
Six months ended
June 30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
21,935
|
|
$
|
21,383
|
|
$
|
40,412
|
|
$
|
42,133
|
Adjustments, net of
tax
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional services
for 13D Filing
|
|
|
937
|
|
|
-
|
|
|
4,535
|
|
|
-
|
Incremental severance
costs
|
|
|
186
|
|
|
-
|
|
|
965
|
|
|
-
|
Non-GAAP Adjusted net
income
|
|
$
|
23,058
|
|
$
|
21,383
|
|
$
|
45,912
|
|
$
|
42,133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share (1)
|
|
$
|
1.86
|
|
$
|
1.75
|
|
$
|
3.42
|
|
$
|
3.45
|
Impact for adjustments
(1)
|
|
|
0.10
|
|
|
-
|
|
|
0.47
|
|
|
-
|
Non-GAAP Adjusted
diluted earnings per share (1)
|
|
$
|
1.96
|
|
$
|
1.75
|
|
$
|
3.89
|
|
$
|
3.45
|
|
(1) The
weighted-average diluted shares outstanding used in the calculation
of these non-GAAP financial measures are the same as the
weighted-average shares outstanding used in the calculation of the
reported per share amounts.
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/medifast-inc-announces-second-quarter-2020-financial-results-301106890.html
SOURCE Medifast, Inc.