BALTIMORE, Aug. 7, 2023 /PRNewswire/ -- Medifast (NYSE:
MED), the health and wellness company known for its habit-based and
Coach-guided lifestyle solution, OPTAVIA®, today
reported results for the second quarter ended June 30,
2023.
Second Quarter 2023
- Revenue of $296.2 million, with
revenue per active earning coach of $5,578
- Independent active earning OPTAVIA Coaches of
53,100
- Net income of $30.3 million
- Earnings per diluted share ("EPS) of $2.77
- Cash and Cash Equivalents of $147.4
million and no interest-bearing debt
"We are ahead of our Fuel for the Future plan with key
initiatives aimed at driving efficiency and cost reduction, which
helped to mitigate the impact of continued economic headwinds on
our revenues during the quarter," said Dan
Chard, Chairman & Chief Executive Officer of Medifast.
"In addition, we have made significant progress advancing our
broader health and wellness agenda with the recent launch of our
new OPTAVIA ACTIVETM line of products, which
marks an inflection point for Medifast as we target new areas of
growth and more than triple our total addressable market. We also
have pilot programs underway to assess potential growth
opportunities related to medically-supported weight loss that
leverage the strength of our business model. We believe our
scientifically-designed solution, OPTAVIA, is a great
complement to those seeking to improve their health and wellness
regardless of the method they choose to utilize."
Chard concluded, "Industry dynamics have changed numerous times
over the years and Medifast has proven adept at making the
necessary adjustments in its business model to thrive in new
environments. Even though the operating environment remains
challenging, and we continue to expect that programming
adjustments, compensation dynamics, and future growth initiatives
will take time to deliver meaningful results, we are confident that
the changes we are making to diversify our business into new areas
will have similar success."
Second Quarter 2023 Results
Second quarter 2023 revenue decreased 34.7% to $296.2 million from $453.3
million for the second quarter of 2022, primarily driven by
a decrease in the number of active earning OPTAVIA Coaches
and the decline in the productivity per active earning
OPTAVIA Coach. The average revenue per active earning
OPTAVIA Coach was $5,578,
compared to $6,667 for the second
quarter last year, a decline of 16.3%, driven by continued pressure
on customer acquisition, partially offset by the price increase
implemented in November 2022. The
total number of active earning OPTAVIA Coaches decreased
21.9% to 53,100 compared to 68,000 for the second quarter of
2022.
Gross profit decreased 34.5% to $210.7
million from $321.7 million
for the second quarter of 2022. The decrease in gross profit was
due to lower revenue. The Company's gross profit as a percentage of
revenue was 71.1% compared to 71.0% in the second quarter of
2022.
Selling, general, and administrative expenses ("SG&A")
decreased 36.9% to $172.0 million
compared to $272.7 million for the
second quarter of 2022. As a percentage of revenue, SG&A
decreased 208 basis points year-over-year to 58.1% of revenue, as
compared to 60.2% for the second quarter of 2022. The decrease in
SG&A was primarily due to progress on several cost reduction
and optimization initiatives. Additional factors that positively
impacted SG&A included charitable donations in the second
quarter of 2022 that did not recur in 2023 and decreased Coach
compensation due to lower volumes and fewer active earning
Coaches.
Income from operations decreased 21.0% to $38.7 million from $49.0
million in the prior-year period. As a percentage of
revenue, income from operations was 13.1% for the second quarter of
2023 compared to 10.8% in the prior-year period due to the factors
described above impacting revenue and SG&A expenses.
The effective tax rate was 22.6% for the second quarter of 2023
compared to 19.8% in the prior-year period. The increase in the
effective tax rate for the three months ended June 30, 2023 was primarily driven by a decrease
in the tax benefit from charitable donations of inventory donations
in the second quarter as mentioned above.
In the second quarter of 2023, net income was $30.3 million, or $2.77 per diluted share, based on approximately
10.9 million shares of common stock outstanding. In the second
quarter of 2022, net income was $39.1
million, or $3.42 per diluted
share, based on approximately 11.4 million shares of common stock
outstanding.
Capital Allocation and Balance Sheet
The Company announced a quarterly cash dividend of $1.65 per share, or $18.2
million, payable on August 8,
2023, to stockholders of record as of the close of business
on June 27, 2023.
The Company's balance sheet remains strong with $147.4 million in cash and cash equivalents and
no interest-bearing debt as of June 30, 2023 compared to
$87.7 million in cash and cash
equivalents and no debt at December 31, 2022.
Outlook
The Company expects third quarter 2023 revenue to be in the
range of $220 million to $240
million and third quarter 2023 diluted EPS to be in the
range of $0.71 to $1.32 The third quarter 2023 earnings guidance
assumes a 23.0% to 25.0% effective tax rate. The guidance includes
the impact of investments being made for future growth initiatives,
which are expected to continue throughout the year, impacting
profitability.
Conference Call Information
The conference call is scheduled for today, Monday, August 7, 2023 at 4:30 p.m. ET. The call will be broadcast live
over the Internet, hosted on the Investor Relations section of
Medifast's website at www.MedifastInc.com or directly at
https://app.webinar.net/vb1JL58Wrwo and will be archived
online and available through November 7,
2023. In addition, listeners may dial (877) 344-7529 to join
via telephone.
A telephonic playback will be available from 6:30 p.m. ET, August 7,
2023, through August 14, 2023.
Participants can dial (877) 344-7529 and enter passcode 7120911 to
hear the playback.
About Medifast®: Medifast (NYSE:
MED) is the health and wellness company known for its habit-based
and Coach-guided lifestyle solution OPTAVIA®, which
provides people with a simple, yet comprehensive approach to help
them achieve lasting optimal health and wellbeing. OPTAVIA
offers clinically proven plans, scientifically developed products
and a framework for habit creation reinforced by independent
Coaches and Community support. As a physician-founded company with
a 40+ year history, Medifast is a leader in the U.S. weight
management industry. The company continues to innovate and build
upon its scientific and clinical heritage to deliver on its mission
of offering the world Lifelong Transformation, One Healthy Habit at
a Time®. Medifast was recognized in 2023 by Financial Times as one
of The Americas' Fastest Growing Companies and in 2022 as one
of America's Best Mid-Sized Companies by Forbes. For more
information, visit MedifastInc.com and
OPTAVIA.com and follow @Medifast on
Twitter.
MED-F
Forward Looking Statements
Please Note: This release contains "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995, Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.
These forward-looking statements generally can be identified by use
of phrases or terminology such as "intend," "anticipate," "expect"
or other similar words or the negative of such terminology.
Similarly, descriptions of Medifast's objectives, strategies,
plans, goals, outlook or targets contained herein are also
considered forward-looking statements. These statements are based
on the current expectations of the management of Medifast and are
subject to certain events, risks, uncertainties and other factors.
Some of these factors include, among others, risks associated with
Medifast's direct-to-consumer business model; the impact of rapid
growth on Medifast's systems; disruptions in Medifast's supply
chain; Medifast's inability to continue to develop new products;
effectiveness of Medifast's advertising and marketing programs,
including use of social media by independent OPTAVIA
Coaches; Medifast's inability to maintain and grow the network of
independent OPTAVIA Coaches; the departure of one or more
key personnel; Medifast's inability to protect against online
security risks and cyberattacks; to protect its brand and
intellectual property, or to protect against product liability
claims; Medifast's planned growth into domestic and international
markets; adverse publicity associated with Medifast's products;
Medifast's inability to continue declaring dividends; fluctuations
of Medifast's common stock market price; the prolonged effects of
COVID-19 on consumer spending and disruptions to our distribution
network, supply chains and operations; increases in competition or
litigation; the consequences of other geopolitical events,
including natural disasters, global health crises, acts of war
(including the war in Ukraine),
changes in trade policies and tariffs, climate change, regulatory
changes, increases in costs of raw materials, fuel, or other
energy, transportation, or utility costs and in the costs of labor
and employment, labor shortages, supply chain issues and the
resulting impact on market conditions and consumer sentiment and
spending; and Medifast's ability to prevent or detect a failure of
internal control over financial reporting. 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 Annual Report on Form 10-K for the fiscal year ended
December 31, 2022, and other filings
filed with the United States Securities and Exchange Commission,
including its quarterly reports on Form 10-Q and current reports on
Form 8-K. All of the forward-looking statements contained herein
speak only as of the date of this release.
Investor Contact:
Medifast,
Inc.
Steven
Zenker
InvestorRelations@medifastinc.com
(443) 379-5256
MEDIFAST, INC. AND
SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(U.S. dollars in
thousands, except per share amounts & dividend
data)
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
Revenue
|
$
296,188
|
|
$
453,333
|
|
$
645,170
|
|
$
870,933
|
Cost of
sales
|
85,473
|
|
131,651
|
|
188,065
|
|
246,965
|
Gross
profit
|
210,715
|
|
321,682
|
|
457,105
|
|
623,968
|
|
|
|
|
|
|
|
|
Selling, general, and
administrative
|
172,009
|
|
272,718
|
|
364,887
|
|
519,917
|
|
|
|
|
|
|
|
|
Income from
operations
|
38,706
|
|
48,964
|
|
92,218
|
|
104,051
|
|
|
|
|
|
|
|
|
Other income
(expense)
|
|
|
|
|
|
|
|
Interest income
(expense)
|
462
|
|
(164)
|
|
281
|
|
(259)
|
Other
expense
|
(51)
|
|
(4)
|
|
(53)
|
|
(20)
|
|
411
|
|
(168)
|
|
228
|
|
(279)
|
|
|
|
|
|
|
|
|
Income from
operations before income taxes
|
39,117
|
|
48,796
|
|
92,446
|
|
103,772
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
8,837
|
|
9,683
|
|
22,198
|
|
22,878
|
|
|
|
|
|
|
|
|
Net
income
|
$
30,280
|
|
$
39,113
|
|
$
70,248
|
|
$
80,894
|
|
|
|
|
|
|
|
|
Earnings per share -
basic
|
$
2.78
|
|
$
3.44
|
|
$
6.46
|
|
$
7.06
|
|
|
|
|
|
|
|
|
Earnings per share -
diluted
|
$
2.77
|
|
$
3.42
|
|
$
6.43
|
|
$
7.01
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
|
|
|
|
|
|
|
Basic
|
10,888
|
|
11,354
|
|
10,876
|
|
11,455
|
Diluted
|
10,917
|
|
11,435
|
|
10,923
|
|
11,534
|
|
|
|
|
|
|
|
|
Cash dividends declared
per share
|
$
1.65
|
|
$
1.64
|
|
$
3.30
|
|
$
3.28
|
MEDIFAST, INC. AND
SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(U.S. dollars in
thousands, except par value)
|
|
|
|
|
|
June 30,
2023
|
|
December 31,
2022
|
|
|
|
|
ASSETS
|
|
|
|
Current
Assets
|
|
|
|
Cash and cash
equivalents
|
$
147,405
|
|
$
87,691
|
Inventories
|
68,896
|
|
118,856
|
Prepaid expenses and
other current assets
|
12,516
|
|
16,237
|
Total current
assets
|
228,817
|
|
222,784
|
|
|
|
|
Property, plant and
equipment - net of accumulated depreciation
|
54,412
|
|
57,185
|
Right-of-use
assets
|
16,699
|
|
18,460
|
Other assets
|
14,269
|
|
12,456
|
Deferred tax
assets
|
4,528
|
|
5,328
|
|
|
|
|
TOTAL
ASSETS
|
$
318,725
|
|
$
316,213
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
Liabilities
|
|
|
|
Accounts payable
and accrued expenses
|
$
105,188
|
|
$
134,690
|
Income taxes
payable
|
4,302
|
|
428
|
Current lease
obligations
|
5,405
|
|
5,776
|
Total current
liabilities
|
114,895
|
|
140,894
|
|
|
|
|
Lease
obligations, net of current lease obligations
|
18,269
|
|
20,275
|
Total
liabilities
|
133,164
|
|
161,169
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
Common stock, par
value $0.001 per share: 20,000 shares authorized;
|
|
|
|
10,889
and 10,928 issued and 10,889 and 10,873
outstanding
|
|
|
|
at June 30, 2023
and December 31, 2022, respectively
|
11
|
|
11
|
Additional paid-in
capital
|
21,542
|
|
21,555
|
Accumulated other
comprehensive income
|
123
|
|
24
|
Retained
earnings
|
163,885
|
|
139,852
|
Less: treasury stock
at cost, 0 and 54 shares at June 30, 2023 and
December 31, 2022, respectively
|
—
|
|
(6,398)
|
Total stockholders'
equity
|
185,561
|
|
155,044
|
|
|
|
|
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY
|
$
318,725
|
|
$
316,213
|
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SOURCE Medifast, Inc.