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Medifast, Inc. announced today fourth quarter and year-end financial results for the period ended December 31, 2006. For the full year-ended December 31, 2006, Medifast reported revenue of $74.1 million, an 85% increase from $40.1 million in 2005. The company reported net income of $5,082,000, or $0.40 per basic share ($0.38 per diluted share), versus $2,436,000 or $0.20 per basic share ($0.19 per diluted share) in 2005. This represented a 100% increase in both basic and diluted earnings per share.
The company reported fourth quarter revenue of $15.3 million, compared to revenue of $10.2 million for the same period in 2005, an increase of 50%. The company reported net income of $443,000, or $.03 per basic share ($.03 per diluted share), compared to $849,000, or $.05 per basic share ($.04 per diluted share) for the fourth quarter of 2005. The fourth quarter of 2006 represented the Company’s 29th consecutive quarter of profitability.
In the fourth quarter SG&A expense was largely affected by expenses associated with becoming Sarbanes Oxley compliant. In order to meet this requirement, the Company had to increase resources and expenses in the areas of consulting and personnel. These expenses occurred mainly in the 4th quarter and decreased diluted EPS by approximately $.02. The Company expects the expense to be immaterial next year and into the future.
The Company had stockholders’ equity of $28.2 million and working capital of $9.6 million at December 31, 2006, compared to $22 million and $10 million at December 31, 2005, respectively.
“We are extremely pleased with 2006 year-end results, which were driven by our innovative business model that allows the clinically proven Medifast brand to serve many different target customers through unique programs for support and education. We have multiple platforms for growth and a strong brand that is trusted by the medical community and our growing customer base. 2006 was a fantastic year for our company as we were recognized by Forbes Magazine, listing Medifast 28th of the top 200 small companies in the United States. While we grew significantly in 2006, we also concentrated on building infrastructure to support future growth and we are excited about the potential of Medifast to enrich millions of lives by providing innovative choices for lasting health,” said Michael S. McDevitt, Chief Executive Officer.
2007 Full-Year Guidance
For 2007, the Company expects to report revenue of $85 to $88 million, representing a year over year increase of 15% to 19%, with after-tax profit of $0.45 to $0.46 per diluted share, an increase of 18% to 21% from 2006. On a quarterly basis, full-year 2007 guidance will be reviewed, reiterated or updated as necessary.
Fourth Quarter and Year-End Conference Call
Medifast will release full-year financial results for the period ended December 31, 2006 on Friday, March 16 after the market closes. The Company will hold a conference call and webcast at 5:00 PM EDT.
Interested participants should call (800) 901-5259 when calling within the United States or (617) 786-4514 when calling internationally. Please refer to pass code 83279785. There will be a playback available as well. To listen to the playback, please call (888) 286-8010 when calling within the United States or (617) 801-6888 when calling internationally. Please use pass code 89127658 for the replay. The replay will be available until June 23, 2007.
The webcast may be accessed via the Company’s web site at http://www.medifastdiet.com/. Interested parties should go to the section marked “Investor Relations” to listen to the call. The webcast can be accessed until June 23, 2007.
About Medifast: (http://www.medifastdiet.com/)
Medifast is the leading easy-to-use, clinically proven portion-controlled weight loss program. Medifast has been recommended by 15,000 physicians and used by over one million customers. It is committed to enriching lives by providing innovative choices for lasting health. Medifast programs have been proven effective through studies by major university teaching hospitals. The company sells its products and programs via four unique distribution channels: 1) the web and national call centers, 2) national network of physicians, 3) medically supervised Medifast Weight Control Centers, and 4) Take Shape For Life program. Medifast was founded in 1980 and is located in Owings Mills, Maryland.
Tables to follow:
MEDIFAST, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of December 31, 2006 and 2005
2006 2005
ASSETS
Current assets:
Cash and cash equivalents $1,085,000 $1,484,000
Accounts receivable-net of allowance
for doubtful accounts of $100,000 448,000 985,000
Inventory 8,255,000 5,475,000
Investment securities 1,540,000 2,700,000
Deferred compensation 673,000 525,000
Prepaid expenses and other current
assets 2,599,000 3,273,000
Note receivable - current 174,000 -
Current portion of deferred tax asset 90,000 -
Total current assets 14,864,000 14,442,000
Property, plant and equipment - net 14,020,000 9,535,000
Trademarks and intangibles - net 6,274,000 6,508,000
Deferred tax asset, net of current
portion 367,000 -
Note receivable, net of current assets 1,355,000 -
Other assets 47,000 60,000
TOTAL ASSETS $36,927,000 $30,545,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $2,913,000 $2,263,000
Income taxes payable 535,000 899,000
Dividends payable - -
Line of credit 1,256,000 633,000
Current maturities of long-term debt 548,000 561,000
Deferred tax liability - current - 90,000
Total current liabilities 5,252,000 4,446,000
Other liabilities and deferred credits
Long-term debt, net of current portion 3,509,000 3,977,000
Deferred tax liability - non-current - 101,000
Total liabilities 8,761,000 8,524,000
Stockholders' Equity:
Preferred stock, $.001 par value
(1,500,000 authorized, no shares
issued and outstanding) - -
Common stock; par value $.001 per
share; 20,000,000 shares authorized;
13,631,898 and 12,782,791 shares
issued and outstanding 14,000 13,000
Additional paid-in capital 26,629,000 21,759,000
Accumulated other comprehensive income 334,000 282,000
Retained earnings 6,231,000 1,149,000
33,208,000 23,203,000
Less: cost of 249,184 and 210,902
shares of common stock in treasury (1,686,000) (1,075,000)
Less: Unearned compensation (3,356,000) (107,000)
Total stockholders' equity 28,166,000 22,021,000
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $36,927,000 $30,545,000
The accompanying notes are an integral part of these consolidated
financial statements
MEDIFAST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31,
2006 2005 2004
Revenue $74,086,000 $40,129,000 $27,340,000
Cost of sales (18,237,000) (10,161,000) (6,746,000)
Gross profit 55,849,000 29,968,000 20,594,000
Selling, general, and
administration (47,737,000) (25,894,000) (17,590,000)
Income from operations 8,112,000 4,074,000 3,004,000
Other income (expense):
Interest expense (369,000) (317,000) (245,000)
Interest income 175,000 158,000 154,000
Stock compensation exp (533,000) - -
Loss on sale of CCS (323,000) - -
Other income (expense) 276,000 15,000 (7,000)
(774,000) (144,000) (98,000)
Income before provision for
income taxes 7,338,000 3,930,000 2,906,000
Provision for income taxes (2,256,000) (1,203,000) (1,159,000)
Net income 5,082,000 2,727,000 1,747,000
Less: Preferred stock
dividend requirement - (291,000) (18,000)
Net income attributable to
common shareholders $5,082,000 $2,436,000 $1,729,000
Basic earnings per share $0.40 $0.20 $0.16
Diluted earnings per share $0.38 $0.19 $0.14
Weighted average shares
outstanding -
Basic 12,699,066 12,258,734 10,832,360
Diluted 13,482,894 12,780,959 12,413,424
The accompanying notes are an integral part of these consolidated
financial statements
First Call Analyst:
FCMN Contact: bconnors@medifastdiet.com
SOURCE: Medifast, Inc.
CONTACT: Media, Kerry O’Neill, Warschawski of Medifast, Inc.,
+1-410-367-2700, or Investor Relations, ir@medifastdiet.com
Web site: http://www.medifastdiet.com/
