OWINGS MILLS, Md., March 15, 2004 (PRIMEZONE) -- Medifast, Inc. (AMEX:MED) reported today record fourth quarter and fiscal 2003 full-year revenues and pre-tax earnings for the period and year ended December 31, 2003. The Company reported fourth quarter revenues of $5.84 million, a 30% increase versus the same period in the year-earlier period. Medifast reported pre-tax Income from Operations of $511,000, or $0.06 per share ($0.05 per share on a fully diluted basis), a 190% increase versus $176,000, or $0.03 per share ($0.02 per share on a fully diluted basis) for the fourth quarter of 2002.
The Company reported net income of $435,000, or $0.05 per share ($0.04 per share on a fully diluted basis), versus $124,000, or $0.02 per share ($0.02 per share on a fully diluted basis) for the 2002 fourth quarter. Net income was impacted by the Company recognizing a tax expense in the fourth quarter of 2003 for GAAP purposes as opposed to receiving a tax benefit in the fourth quarter of 2002. Medifast did not pay Federal taxes for either the 2003 or 2002 fourth quarters.
For the fiscal 2003 full-year, Medifast reported revenues of $25.4 million, an increase of 106% versus $12.3 million for the same period in 2002. The Company generated pre-tax Income from Operations of $3.6 million, a 111% increase from fiscal 2002 when Medifast had pre-tax Income from Operations of $1.7 million. For the full-year, the Company had net income attributable to common stockholders of $2.4 million or $0.25 per basic share and $0.22 per diluted share, compared to $2.4 million, or $0.36 per basic share and $0.30 per diluted share for the 2002 fiscal year. Net income was impacted by the Company having $1.1 million in tax expense under GAAP for the 2003 fiscal year. During fiscal year 2002, the Company received a tax benefit of $925,000.
The Company improved Shareholders' Equity at the end of fiscal 2003 to $16.6 million, versus $5.6 million for the 2002 fiscal year. The Company ended the year with $2.5 million in cash and cash equivalents, along with $4 million in investment securities versus $837,000 and $418,000 in the year-earlier period. The increase in Shareholder's Equity and the Company's cash position was a result of improved operating results and a private placement that was completed in July, 2003 where the Company raised gross proceeds of approximately $6.8 million through the issuance of common stock and warrants.
"2003 was a highly successful year for us," said Brad MacDonald, Medifast's Chairman and Chief Executive Officer. "In addition to strong revenue and earnings growth, we positioned the Company to continue its expansion in 2004. Our Take Shape for Life Health Network continues to add many new members and grow revenues. Our strategy of growing our business internally and through joint ventures with companies like Amazon.com and others has helped us expand our marketing reach to consumers in different trade channels. The Company is committed to long-term strategic alliances like the XL Health, Inc. program with over 10,000 Medicare Diabetics and Coronary Health patients in Texas to build its business platform in the future."
Some of the highlights of fiscal 2003 included:
- Expansion of Clinical Data and Intellectual Property. The Company has groundbreaking preliminary results from its 2-year Johns Hopkins clinical study on Medifast Plus for Diabetics which showed that patients on the Medifast Plus for Diabetics lost twice as much weight as compared to those following basic nutrition recommendations from the American Diabetes Association (ADA), and that almost twice as many people on the Medifast program were able to complete the weight loss portion of the study. On March 16, 2004, the United State Patent and Trademark Office is scheduled to issue a Utility Patent on the Medifast Plus for Diabetics line of meal replacement shakes. The US patent protected Medifast Plus for Diabetics line will provide the Company with a greater advantage over its diabetic competition and allow for greater penetration into the $132 billion diabetic market.
- Growth in the Take Shape for Life Network. As a start up in January 2003 the company reported over 10 million in revenues with over 700 Health Advisors and 15,000 customers.
- Expanded distribution to support growth initiatives. Medifast purchased a 119,825 square foot distribution facility in Ridgely, Maryland and the assets of Dunst and Associates, Inc., an 7experienced distributor in Eldersburg, Maryland to operate its new distribution facility.
- Expansion of Company's Weight and Disease Management Clinical business. Medifast as of December 31, 2003 had over 70 licensed or corporately owned clinics, and intends to more than double this number in the next year.
-- Acquired the assets of Hi-Energy Weight Control Centers. The acquisition provides Medifast, through its wholly-owned subsidiary Jason Properties, LLC with a national presence offering weight management programs, with Hi-Energy and MedSlim licensed weight loss centers in over 100 locations as of March 15, 2004.
- Acquired the assets of Consumer Choice Systems, Inc.("CCS"). CCS is a retail distribution company focusing on high quality, innovative products for women. CCS products are currently distributed in over 18,000 retail outlets nationwide.
"The Company has never been in a better position for growth than it is today," continued Mr. MacDonald. "While we have had to fine-tune our television commercial, the adjustments we are implementing are driving us towards the results experienced in the fall 2003 test campaign. Already, we have begun to see significant increases in closing rates as a result of the additional training we have done. Our television commercials have generated a substantial number of leads for our Take Shape for Life Network to follow-up, which we are confident, will lead to revenues. It has also enhanced the Company's profile nationally, which will help us dramatically grow our Hi-Energy Weight Control Centers and MEDSLIM clinics. We expect to launch new disease management product lines in each clinic. We will also be launching a 30-minute infomercial, which will highlight the Company's clinically proven weight and disease management product line, with an emphasis on the patented Medifast Plus for Diabetics product line."
"We believe the opportunity to use nutritional intervention for diabetics is enormous, and our joint venture with XL Health Inc., ("XL") announced last week, could be the most significant venture we have ever entered into," continued Mr. MacDonald. "XL is one of the leading diabetes management companies in the United States, and our clinically tested Medifast Plus for Diabetics line will be the exclusive nutritional product for XL Health's CMS Medicare Demonstration Project to provide Diabetes, Coronary Heart Failure and Coronary Artery Disease disease management nutritional services and pharmacy benefits to over 10,000 Medicare Fee-For-Service patients in Texas. The pilot project will use Medifast Plus for Diabetics as the exclusive nutritional intervention program to prove the cost effectiveness of disease management programs for Medicare beneficiaries. These and other programs position Medifast to be the leading provider of solutions."
2004 Financial Guidance
For 2004, the Company expects to report revenues of $38 to $39 million with a pretax profit of $0.55 to $0.58 per diluted share. The Company expects to grow sequentially on a quarterly basis as a result of the following initiatives. Medifast Physician and Patient Support Programs will grow by $4 million as a result of our advertising/infomercial programs and growing brand awareness in the marketplace. Take Shape for Life Physician Directed Network will grow by approximately $4 million as a result of implementation of the highly successful tasting program, the XL Health agreement and qualified leads generated from the Company's national advertising campaign. International business will grow by approximately $1 million through product line extensions and additional joint venture agreements. Hi-Energy clinics will grow by approximately $4 million as the Company rapidly expands into new markets with corporately owned centers in addition to sales increases in licensed clinics' sales due to the implementation of Medifast Disease Management programs. CCS Retail Sales and Other will grow by approximately $1 million with the introduction of innovative ephedra-free Diet Pills and expanded distribution of its Menopause Relief and UTI branded products in the growing woman's health market.
For the first quarter ended March 31, 2004, Medifast expects to report revenues of $6.5 to $6.6 million, compared to $6.3 million for the same period in 2003. The 2003 results included a pipeline shipment of $1 million, which the Company expects to occur in the second and third quarters of this year. For the first quarter, the Company expects to generate Pre-Tax EPS of between $0.07 and $0.09, compared to $0.14 for the first quarter 2003. Medifast expects to report revenues of $38 to $39 million and pre-tax EPS of $0.55 to $0.58. The Company will hold a conference call and webcast today to discuss these results. The conference call will take place at 4:30 PM EST. Interested participants should call (800) 399-4151 when calling within the United States or (706) 634-2388 when calling internationally. Please refer to pass code 6101759. There will be a playback available as well. To listen to the playback, please call (800) 642-1687 when calling within the United States or (706) 645-9291 when calling internationally. Please use pass code 6101759 for the replay. The replay will be available until March 22, 2004. This call is also being webcast and may be accessed via the Company's web site at www.medifastdiet.com. Interested parties should go to the section marked "For Investors" to listen to the call. The webcast can be accessed until March 22, 2004.
MEDIFAST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31,
2003 2002
------------ ------------
Net sales $ 25,379,000 $ 12,345,000
Cost of sales 6,825,000 3,687,000
------------ ------------
Gross profit 18,554,000 8,658,000
Selling, general and
administrative expenses 14,956,000 6,906,000
------------ ------------
Income from continuing
operations before other
income (expenses) 3,598,000 1,752,000
------------ ------------
Other income (expenses):
Interest and other
financing expense, net (150,000) (101,000)
Other income 110,000 47,000
------------ ------------
(40,000) (54,000)
------------ ------------
Net income before (provision)
benefit for income taxes 3,558,000 1,698,000
Provision for income tax
benefit (expense) (1,148,000) 925,000
------------ ------------
Net income 2,410,000 2,623,000
------------ ------------
Less:
Preferred stock dividend
requirement 58,000 218,000
------------ ------------
Net income attributable
to common stockholders $ 2,352,000 $ 2,405,000
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Basic earnings per share $ 0.25 $ 0.36
Diluted earnings per share $ 0.22 $ 0.30
Weighted average shares
outstanding
- basic 9,305,731 6,722,505
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- diluted 10,952,367 8,737,292
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MEDIFAST, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2003
ASSETS
Current assets:
Cash $ 2,524,000
Accounts receivable - net of allowance
for doubtful accounts of $55,000 641,000
Inventory 2,988,000
Investment securities 3,983,000
Deferred compensation 321,000
Prepaid expenses and other current assets 936,000
Deferred tax asset 596,000
------------
Total current assets 11,989,000
Property, plant and equipment - net 7,449,000
Trademarks and intangibles 4,419,000
Other assets 375,000
------------
Total assets $ 24,232,000
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses 1,714,000
Dividends payable 58,000
Line of credit 55,000
Current maturities of long term debt 764,000
------------
Total current liabilities 2,591,000
Long term debt, net of current portion 4,564,000
------------
Total liabilities 7,155,000
Stockholders' Equity:
Series B convertible preferred
stock; par value $1.00; 600,000 shares
authorized; 403,734 shares issued
and outstanding 404,000
Series C convertible preferred stock;
par value $0.001 market value $1.00;
1,015,000 shares authorized;
267,000 shares issued and outstanding 267,000
Common stock; par value $.001 per share;
15,000,000 shares authorized;
10,482,609 shares issued and outstanding 10,000
Additional paid-in capital 20,120,000
Accumulated comprehensive loss (25,000)
Accumulated deficit (3,016,000)
------------
17,760,000
Less: cost of 83,863 shares of
common stock in treasury (683,000)
------------
17,077,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 24,232,000
============