Medifast Inc. (MED)

[XV19]

November 14, 2006 - 4:10 PM EST


Medifast Announces Record Third-Quarter and YTD Revenues and Profits

OWINGS MILLS, Md., Nov. 14 /PRNewswire-FirstCall/ --Medifast, Inc. (NYSE: MED) announced today third quarter results for the period ended September 30, 2006. For the quarter-ended September 30, 2006, Medifast reported revenue of $19.6 million, a 79% increase from $11 million in the third quarter of 2005.

The Company reported net income of $1,490,000, or $0.12 per basic share ($0.11 per diluted share), versus $607,000 or $0.05 per basic share ($0.05 per diluted share) in 2005. Net income in the third quarter of 2006 was positively impacted by a tax benefit received as a result of the Company's investment in infrastructure in prior years. The third quarter of 2006 represented the Company's 28th consecutive quarter of profitability.


For the nine months ended September 30, 2006, Medifast reported revenue of $58.8 million, an increase of 97% from $29.9 million for the nine months ended September 30, 2005. The Company reported net income of $4.6 million, or $.37 per basic share ($.34 per diluted share), versus $1.6 million or $.13 per basis share ($.13 per diluted share) in 2005.


The Company had stockholders' equity of $27.2 million and working capital of $13 million at September 30, 2006, compared to $21.3 million and $9.6 million at September 30, 2005, respectively.


'We are pleased with the third quarter results, which were driven by our growing customer base within a multi-channeled business. Our customer acquisition strategy is driving brand awareness, which benefits our direct to consumer business and also drives customers and business opportunity leads into our direct sales network while fueling significant walk-ins to our new medically supervised clinics, which are now operational in test markets. We believe that our diverse infrastructure model, which does not rely on a single distribution method, will allow Medifast to benefit long term in the over $40 billion weight loss category. In a customer driven world, Medifast is positioned to handle the needs of all types of customers. Whether a person is looking to lose weight utilizing the advice of a nutritionist, the support of a health coach, share their experience with others in an online community or stay under medical supervision in a clinic or doctor's office, Medifast provides a program to cater to the individual needs of the customer,' said Michael S. McDevitt, Medifast President and CFO.


'Medifast combines products and programs that have been clinically proven and trusted by physicians for over 25 years with a 21st century business model that recognizes that every consumer is an individual. Medifast is in the business of making people healthy in a time when we are experiencing an obesity epidemic in our country. Medifast is committed to providing a lasting solution for health and we are excited about expanding our programs to include broader recommendations for using Medifast for long term health as we move forward,' stated Bradley T. MacDonald, Chairman and CEO.


2006 Financial Guidance


The company expects to generate revenue of $70 to $72 million for the year with after-tax earnings of $0.38 to $0.40 per diluted share.


Third Quarter Conference Call


The Company will hold a conference call and webcast at 5:00 PM EST on November 14, 2006 to discuss second quarter results.


Interested participants should call [phone] when calling within the United States or [phone] when calling internationally. Please refer to pass code 61684562. There will be a playback available as well. To listen to the playback, please call [phone] when calling within the United States or [phone] when calling internationally. Please use pass code 85452066 for the replay. The replay will be available until February 21, 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 February 21, 2007.


Medifast has been helping people lose weight and achieve better health for 25 years. Its meal replacement foods have been proven effective in multiple clinical studies, recommended by over 15,000 physicians and used by more than 1 million customers. Medifast offers its customers world-class customer service and nutrition support.


This release contains forward-looking statements which may involve known, and unknown risks, uncertainties and other factors that may cause Medifast's actual results and performance in future periods to be materially different from any future results or performance suggested by these statements. Medifast cautions investors not to place undue reliance on forward-looking statements, which speak only to management's expectation on this date.


MEDIFAST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, 2006 December 31, 2005
(Unaudited) (Audited)
ASSETS
Current assets:
Cash $1,114,000 $1,484,000
Accounts receivable-net of
allowance for doubtful accounts
of $100,000 764,000 985,000
Income tax refund receivable 1,048,000 -
Inventory 8,003,000 5,475,000
Investment securities 2,420,000 2,700,000
Deferred compensation 640,000 525,000
Prepaid expenses and other
current assets 2,927,000 3,273,000
Note receivable - current 230,000 -
Deferred tax asset 90,000 -
Total Current Assets 17,236,000 14,442,000

Property, plant and equipment - net 11,578,000 9,535,000
Trademarks and intangibles - net 4,690,000 6,508,000
Deferred tax asset, net of current
portion 282,000 -
Note receivable, net of current
portion 1,305,000 -
Other assets 37,000 60,000

TOTAL ASSETS $35,128,000 $30,545,000

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
expenses $2,661,000 $2,263,000
Income taxes payable 501,000 899,000
Line of credit 612,000 633,000
Current maturities of long-term debt 502,000 561,000
Deferred tax liability - current - 90,000
Total current liabilities 4,276,000 4,446,000

Long-term debt, net of current
portion 3,603,000 3,977,000
Deferred tax liability - non-current - 101,000
Total Liabilities 7,879,000 8,524,000

Stockholders' Equity:

Common stock; par value $.001 per
share; 20,000,000 authorized;
13,544,481 and 12,782,791 shares
issued and outstanding, respectively 14,000 13,000
Additional paid-in capital 26,326,000 21,759,000
Accumulated other comprehensive income 208,000 282,000
Retained Earnings 5,787,000 1,149,000
32,335,000 23,203,000

Less: cost of 240,749 and 210,902
shares of common stock in treasury (1,565,000) (1,075,000)
Less: unearned compensation (3,521,000) (107,000)
Total Stockholders' Equity 27,249,000 22,021,000

TOTAL LIABILITIES & STOCKHOLDERS'
EQUITY $35,128,000 $30,545,000




MEDIFAST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Nine Months Ended Three Months Ended
September 30, September 30,
2006 2005 2006 2005
(Unaudited) (Unaudited) (Unaudited) (Unaudited)

Revenue $58,779,000 $29,865,000 $19,642,000 $10,985,000
Cost of sales 14,334,000 7,370,000 4,705,000 2,675,000
Gross Profit 44,445,000 22,495,000 14,937,000 8,310,000

Selling, general, and
administration 36,880,000 19,163,000 12,967,000 7,044,000

Income from operations 7,565,000 3,332,000 1,970,000 1,266,000

Other income/(expense)
Interest expense (271,000) ( 97,000) (90,000) (47,000)
Loss on sale of
Consumer Choice
Systems (323,000) - - -
Stock compensation
expense (346,000) - (164,000) -
Interest income 137,000 - 48,000 -
Other income (expense) 184,000 10,000 24,000 7,000

Income before provision
for income taxes 6,946,000 3,245,000 1,788,000 1,226,000
Provision for income
tax (expense) (2,307,000) (1,367,000) (298,000) (609,000)

Net income 4,639,000 1,878,000 1,490,000 617,000

Less: Preferred stock
dividend requirement - (291,000) - (10,000)

Net income $4,639,000 $1,587,000 $1,490,000 $607,000


Basic earnings per
share $0.37 $0.13 $0.12 $0.05
Diluted earnings per
share $0.34 $0.13 $0.11 $0.05

Weighted average
shares outstanding -
Basic 12,657,842 12,235,475 12,767,629 12,595,175
Diluted 13,493,421 12,438,531 13,603,208 12,989,147


SOURCE Medifast, Inc.



Source: PR Newswire (November 14, 2006 - 4:10 PM EST)

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