eDiets.com, Inc. (NASDAQ: DIET), a leading
provider of convenient at-home diet, fitness and healthy lifestyle
solutions, today announced results for the second quarter ended
June 30, 2012.
Revenues for the second quarter of 2012 were $5.6 million,
basically flat with $5.6 million in the second quarter of 2011. The
net loss from continuing operations for the second quarter of 2012
was $(0.1) million, or $(0.01) per diluted share on approximately
14.3 million shares outstanding, compared to a net loss from
continuing operations of $(0.9) million, or $(0.07) per diluted
share on approximately 12.8 million shares outstanding, in the
second quarter of 2011. On August 6, 2012, eDiets.com sold its
corporate services business for approximately $255,000 in cash.
Accordingly, the financial results for the corporate services
business have been re-classified as discontinued operations for all
periods presented in the Company's financial statements. Net income
attributable to discontinued operations for the second quarter of
2012 and 2011 was not meaningful.
Adjusted EBITDA*, defined as net loss before interest, taxes,
depreciation, amortization, stock-based compensation, bad debt
expense, non-cash severance charges for the quarter ended June 30,
2012 was $0.1 million, compared to $(0.1) million in the second
quarter of 2011.
For the six months ended June 30, 2012, the Company recorded
revenues of $12.6 million compared to $12.2 million for the same
period last year. The net loss from continuing operations was
$(1.2) million, or $(0.09) per share for the first six months of
2012, compared a net loss from continuing operations of $(1.6)
million, or $(0.13) per share, for the first six months of 2011.
Net income attributable to discontinued operations was $23,000 in
the first six months of 2012, compared to $0.3 million, or $0.03
per share, for the first six months of 2011. Adjusted EBITDA for
the first half of 2012 totaled $(0.7) million, compared to $0.1
million in the comparable prior year period.
Second Quarter and Recent Operating
Highlights:
- Grew meal delivery revenue 7% in the second quarter of 2012
compared to the second quarter of 2011
- Expanded the adjusted meal delivery gross margin* (excluding
depreciation) to 46% from 44% in the second quarter of 2011
- Reduced selling, general and administrative expenses by over
20% from the same period last year
- Completed sale of corporate services business on August 6, 2012
for $255,000
- Signed non-binding letter of intent on August 10, 2012 to be
acquired by As Seen On TV, Inc. (OTCQB: ASTV)
"We are pleased with our position relative to a year ago," said
Tom Connerty, President and CEO, eDiets.com. "Despite seasonal
summer softness, we achieved positive adjusted EBITDA for the
second quarter as a result of the operational and strategic changes
implemented over past several months. We are encouraged by our
execution and the initial results of our new meal delivery packages
and creative direction. Furthermore, the sale of our corporate
services business provides additional capital to fund our strategic
initiatives and allows us to focus our efforts solely on growing
our meal delivery business, where we believe we have the greatest
opportunities. As we look to the second half of the year, we remain
committed to delivering greater customer satisfaction and an
improved sales performance."
Additional Information On August 10, 2012,
eDiets.com entered into a letter of intent (the "Letter of Intent")
with As Seen On TV, Inc. ("ASTV"), a direct response marketing
company, whereby ASTV agreed to acquire all of the Company's
outstanding shares of common stock in exchange for 16,185,392 newly
issued shares of ASTV common stock, representing an acquisition
price of approximately $0.80 per share of eDiets.com's common stock
as of August 10, 2012. Under the Letter of Intent, all warrants and
options exercisable or convertible into Company common stock which
are outstanding immediately prior to the effective time of the
acquisition will be exchanged for stock options and warrants of
ASTV with substantially equivalent vesting and exercise rights.
The Letter of Intent is nonbinding, and the transactions
contemplated by the Letter of Intent are subject to numerous
conditions, including satisfactory completion of due diligence,
negotiation of a definitive merger agreement and closing of the
transaction on or before November 1, 2012. There is no guarantee or
assurance that the parties will execute a definitive merger
agreement.
About eDiets eDiets.com, Inc. is a leading
provider of personalized nutrition, fitness and weight-loss
programs. eDiets features its award-winning, fresh-prepared diet
meal delivery service as one of the more than 20 popular diet plans
sold directly to members on its flagship site, www.eDiets.com.
eDiets.com's unique infrastructure offers individuals an end-to-end
solution strategically tailored to meet its customers' specific
goals of achieving a healthy lifestyle. For more information,
please call 310-954-1105 or visit www.eDiets.com.
* Use of Non-GAAP Financial Measures In its earnings releases,
conference calls, slide presentations or webcasts, the Company may
use or discuss adjusted EBITDA and adjusted gross margin, which are
non-GAAP financial measures as defined by SEC Regulation G.
Management regularly reviews adjusted EBITDA as an analytical
indicator of the Company's financial performance and believes that
it is useful to investors in evaluating operating performance. In
addition, the Company uses adjusted EBITDA as a measure of
performance for its business segments and for incentive
compensation purposes.
Adjusted EBITDA and adjusted gross margin, as presented, may not
be comparable to similarly titled measures of other companies. The
Company does not intend for adjusted EBITDA or adjusted gross
margin to be considered in isolation or as a substitute for any
GAAP measure.
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
(in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2012 2011 2012 2011
--------- --------- --------- ---------
Net loss $ (144) $ (851) $ (1,214) $ (1,234)
Interest expense (income),
includes capital lease int.
exp. - 1 1 2
Interest expense on related
party notes 13 12 26 24
Income tax provision (benefit) - (4) - (4)
Depreciation 67 151 140 416
Amortization of intangibles 3 3 6 6
Stock-based compensation 145 543 273 810
Bad debt expense (recovery) - (1) - -
Non-cash severance charges
settled in stock - 12 - 67
Stock-based comp., bad debt and
amortization - discont. ops. 28 46 44 60
--------- --------- --------- ---------
Adjusted EBITDA $ 112 $ (88) $ (724) $ 147
========= ========= ========= =========
Meal Delivery Adjusted Gross Margin
(Unaudited)
(in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2012 2011 2012 2011
--------- --------- --------- ---------
Revenue - meal delivery $ 5,081 $ 4,755 $ 11,424 $ 10,301
Cost of revenues - meal delivery 2,756 2,739 6,089 5,890
Less: cost of revenue
adjustments for meal delivery
Depreciation (13) (76) (26) (218)
Revenue sharing - - - (1)
--------- --------- --------- ---------
Cost of revenues - adjusted 2,743 2,663 6,063 5,671
--------- --------- --------- ---------
Adjusted meal delivery gross
profit $ 2,338 $ 2,092 $ 5,361 $ 4,630
========= ========= ========= =========
Adjusted meal delivery gross
margin percentage 46.0% 44.0% 46.9% 44.9%
========= ========= ========= =========
Forward-Looking Statements In accordance
with the Private Securities Litigation Reform Act of 1995, we
caution you that, whether or not expressly stated, certain
statements made in this news release that reflect management's
expectations regarding future events and economic performance are
forward-looking in nature and, accordingly, are subject to risks,
uncertainties and assumptions. This news release contains
forward-looking statements about the Company including (i)
expectations that we will enter into a definitive merger agreement
with As Seen On TV, Inc. and consummate the merger by November 1,
2012; (ii) expectations that, to the extent it does not conflict
with our obligations under the Letter of Intent with As Seen On TV,
Inc., we will be able to obtain the additional financial support
required in order to remain in business, (iii) expectations
regarding our ability to manage our advertising expenditures in a
manner that enables us to acquire new meal delivery customers in a
profitable manner, (iv) expectations regarding market demand for
our products, (v) expectations regarding our intended use of our
liquidity, and (vi) expectations regarding the impact of changes to
our meal delivery products. We wish to caution readers that certain
important factors may have affected and could in the future affect
our actual results and could cause actual results to differ
significantly from those expressed in any forward-looking
statement. These factors include those risk factors set forth in
filings with the Securities and Exchange Commission, including our
annual and quarterly reports, and the following: (i) our ability to
enter into a definitive merger agreement with As Seen on TV, Inc.
and consummate the merger pursuant to the terms of the merger
agreement, including the ability and willingness of each party to
fulfill their respective due diligence and closing condition
obligations; (ii) our ability to attract and retain customers at an
acceptable cost; (iii) our ability to raise additional financial
support from one or more sources; (iv) our ability to sufficiently
increase our revenues and control expenses, including through
controlling increases in the cost of food and food services; (v)
the effectiveness of our marketing and advertising programs; (vi)
our ability to recruit and retain key executive officers and (vii)
our ability to maintain compliance with applicable regulatory
requirements, the state of the credit markets and capital markets,
including the level of volatility, illiquidity and interest rates.
These risks are not exhaustive and may not include factors that
could adversely impact our business and financial performance.
Moreover, we operate in a very competitive and rapidly changing
environment. New risk factors emerge from time to time and it is
not possible for our management to predict all risk factors, nor
can we assess the impact of all factors on its business or the
extent to which any factor, or combination of factors, may cause
actual results to differ materially from those contained in any
forward-looking statements. We cannot guarantee future results,
level of activity, performance or achievements. Moreover, neither
we nor any other person assumes responsibility for the accuracy or
completeness of any of these forward-looking statements. You should
not rely upon forward-looking statements as predictions of future
events. We do not undertake any responsibility to update any of
these forward-looking statements to conform our prior statements to
actual results or revised expectations.
eDiets.com, Inc.
Summary of Consolidated Financial Information
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- --------------------------
2012 2011 2012 2011
------------ ------------- ------------ ------------
Revenues:
Meal delivery $ 5,081 $ 4,755 $ 11,424 $ 10,301
Digital plans 413 669 858 1,439
Other 140 206 297 425
------------ ------------- ------------ ------------
Total revenues 5,634 5,630 12,579 12,165
Cost and expenses:
Cost of revenue
Meal delivery 2,756 2,739 6,089 5,890
Digital plans 42 63 87 150
Other 27 25 61 75
------------ ------------- ------------ ------------
Total cost of
revenue 2,825 2,827 6,237 6,115
Technology and
development 144 202 315 492
Sales, marketing
and support 2,118 2,345 5,689 5,025
General and
administrative 684 1,168 1,543 2,063
Amortization of
Intangibles 3 3 6 6
------------ ------------- ------------ ------------
Total cost and
expenses 5,774 6,545 13,790 13,701
------------ ------------- ------------ ------------
Loss from
operations (140) (915) (1,211) (1,536)
Interest expense,
net (13) (13) (26) (26)
------------ ------------- ------------ ------------
Loss before income
tax provision (153) (928) (1,237) (1,562)
Income tax benefit
(provision) - 4 - 4
------------ ------------- ------------ ------------
Loss from
continuing
operations (153) (924) (1,237) (1,558)
Income from
discontinued
operations, net of
tax 9 73 23 324
------------ ------------- ------------ ------------
Net loss $ (144) $ (851) $ (1,214) $ (1,234)
============ ============= ============ ============
Basic and diluted
earnings (loss)
per common share:
Continuing
operations $ (0.01) $ (0.07) $ (0.09) $ (0.13)
Discontinued
operations - - - 0.03
------------ ------------- ------------ ------------
Net loss per common
share $ (0.01) $ (0.07) $ (0.09) $ (0.10)
============ ============= ============ ============
Weighted average
common and common
equivalent shares
outstanding:
Basic and diluted 14,311 12,755 14,311 12,342
============ ============= ============ ============
Six Months Ended June 30,
---------------------------
2012 2011
------------ -------------
STATEMENT OF CASH
FLOW DATA:
Net cash provided
by (used in):
Operations $ (472) $ (596)
Investing (2) (12)
Financing (2) 3,224
June 30, December 31,
2012 2011
------------ -------------
BALANCE SHEET DATA:
Cash and cash
equivalents $ 127 $ 603
Current assets
held for sale 100 120
Total assets 1,994 2,696
Deferred revenue 223 538
Debt (excluding
capital leases) 1,000 1,000
Current
liabilities held
for sale 139 84
Stockholders'
deficit (2,269) (1,346)
Investor Relations Contact: John Mills ICR, Inc. 310-954-1105
John.Mills@icrinc.com
Ediets.Com, Inc. (MM) (NASDAQ:DIET)
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