Medifast, Inc. (MED), a leading United States manufacturer and provider of clinically proven weight-loss and healthy living products and programs, today reported financial results for the fourth quarter and full year ended December 31, 2016.
2016 was a year of strong execution reflecting our continued disciplined approach to effectively managing our business. We grew our revenue for the first time since 2013, increased our profitability year-over-year, and raised our quarterly dividend for 2017, all of which supported a strong return for shareholders in 2016, said Daniel R. Chard, Medifast's Chief Executive Officer.
At the same time, we embarked on an exciting business evolution process to more aggressively pursue growth strategies. Going forward, we believe we are well positioned to achieve our operational and financial objectives.
Fourth Quarter 2016 Results
Results from Continuing Operations
Income from continuing operations in the fourth quarter of 2016 was $4.1 million, or $0.34 per diluted share, based on approximately 12.0 million shares outstanding. Fourth quarter 2015 income from continuing operations was $3.9 million, or $0.33 per diluted share based on approximately 11.9 million shares outstanding.
For the fourth quarter, Medifast net revenue from continuing operations increased 2% to $62.5 million from revenue of $61.3 million in the fourth quarter of 2015.
Revenue in Take Shape For Life, was up 8% to $51.8 million in the fourth quarter of 2016, compared to $48.0 million in the fourth quarter of the prior year. This is the fifth consecutive quarter of year-over-year growth.
The total number of active earning Health Coaches in the fourth quarter was 12,500, compared to 11,900 in the fourth quarter of 2015. The average revenue per active earning Health Coach for the quarter was $4,158 as compared to $4,039 in fourth quarter of 2015.
The Company's Medifast Direct business unit revenue decreased to $6.8 million, compared to $9.3 million in the fourth quarter of 2015. Fourth quarter advertising spending for this business unit decreased to $1.6 million from $2.2 million in the fourth quarter of 2015.
Revenue in the Franchise Medifast Weight Control Centers business unit decreased modestly to $3.6 million from $3.7 million in the fourth quarter of last year. The decrease in revenue was primarily driven by fewer franchise centers in operation during the period. The Company ended the quarter with 37 franchise centers and 19 reseller locations in operation compared to 61 franchise centers at the end of the same period last year.
In the fourth quarter, the Wholesale business unit revenue was consistent with the prior year period at $0.3 million.
Gross profit for the fourth quarter of 2016 increased $1.9 million to $47.1 million compared to the fourth quarter of 2015. The Company's gross profit as a percentage of revenue increased 160 basis points to 75.4% from 73.8% in the fourth quarter of 2015, primarily driven by price increases and efficiencies in the Company's supply chain operations.
Selling, general and administrative expenses (SG&A) increased $0.8 million to $40.5 million compared to $39.7 million in the fourth quarter of 2015. SG&A as a percentage of net revenue increased 10 basis points to 64.8%, compared to 64.7% in the fourth quarter of 2015. The increase in SG&A was a result of Take Shape For Life commission expense which was a result of the 8% Take Shape For Life revenue growth for the quarter.
Medifast (MED) is the leading easy-to-use provider of clinically proven weight-loss and healthy living products and programs. Medifast aims to help customers lead a healthier lifestyle through a holistic approach to weight-loss and weight management.
Medifast's proven results are based on the use of structured meal plans featuring Medifast Meals, which are nutritionally designed to assist customers with successful weight-loss and weight management.