Medifast, Inc. (NYSE: MED), a leading developer of clinically proven health and wellness programs, products and services, today reported strong results for the second quarter ended June 30, 2019.
Second Quarter 2019 Highlights
(Compared to Prior-Year Period)
- Record revenue up 59.5% to $187.1 million
- Net income up 51.3% to $21.4 million
- 55.3% growth in active earning OPTAVIA Coaches to 30,600
- Earnings per diluted share (“EPS”) of $1.75, an increase of 50.9%
“These record results are another demonstration of Medifast’s continued commitment to delivering sustainable growth through our mission to offer the world lifelong transformation, one healthy habit at a time,”
said Dan Chard, Medifast Chief Executive Officer.
“We have a dynamic brand in OPTAVIA, and a coach community that continues to grow in size, effectiveness and geographic reach. We have developed a repeatable business rhythm that is enabling us to achieve our business objectives on a consistent basis, with ten consecutive quarters of revenue growth.
Our key metrics are trending strongly in the right direction, and we are well positioned to create shareholder value for the long-term.”
Second Quarter 2019 Results
Second quarter revenue increased 59.5% to $187.1 million from revenue of $117.3 million for the second quarter of 2018. OPTAVIA-branded products represented 75% of consumable units sold for the second quarter compared to 64% for the same period a year ago.
The total number of active earning OPTAVIA Coaches increased to 30,600, compared to 19,700 for the second quarter of 2018. The average revenue per active earning OPTAVIA Coach increased 7.1% to $5,863 compared to $5,474 for the second quarter last year.
Gross profit increased to $140.7 million from $88.8 million for the second quarter of 2018. The Company’s gross profit as a percentage of revenue decreased 50 basis points year-over-year to 75.2% from 75.7% as a result of higher product costs, obsolescence cost associated with a specific slow moving product and the cost of complying with new U.S. Food and Drug Administration nutritional labeling requirements.
Selling, general and administrative expenses (“SG&A”) increased $41.7 million to $113.4 million compared to $71.7 millionfor the second quarter of 2018, primarily as a result of higher OPTAVIA commissions expense, increased consulting costs related to information technology projects, increased salaries and benefits, and increased credit card fees resulting from higher sales. SG&A as a percentage of revenue decreased 50 basis points to 60.6% of revenue, year-over-year.
Operating income increased $10.3 million to $27.4 million from $17.1 million in the prior-year period as a result of increased gross profit, partially offset by increased SG&A expenses. Operating income as a percentage of revenue was 14.6% for the quarter, unchanged from the year-ago period.
The effective tax rate for the quarter was 23.0%, compared to 19.8% for the second quarter of 2018. This increase was primarily a result of a 2.1% decrease relating to the discrete accounting for taxes associated with share-based compensation and a 1.2% decrease related to a benefit from the net operating loss due to state apportionment.
Second quarter net income was $21.4 million, or $1.75 per diluted share, based on approximately 12.2 million shares outstanding. Second quarter 2018 net income was $14.1 million, or $1.16 per diluted share, based on approximately 12.2 million shares outstanding.
Medifast (NYSE: MED) is a leading manufacturer and distributor of clinically proven, healthy living products and programs. The brand has been recommended by more than 20,000 doctors since its founding. Its integrated coach model leverages nearly 40 years of experience from medical, franchise, e-commerce, and direct selling channels.
Medifast and its community of independent OPTAVIA Coaches embrace the future of wellness with a shared vision to offer the world lifelong transformation, one healthy habit at a time®. OPTAVIA® is represented by a community of OPTAVIA Coaches who teach Clients healthy habits, while offering support and guidance on their transformation journey.
In 2018, Medifast announced it will expand into the Asia-Pacific markets of Hong Kong and Singapore in 2019 with its integrated coach model. Medifast is traded on the New York Stock Exchange and was named to Forbes’ 100 Most Trustworthy Companies in America List in 2016 and 2017. For more information, visit www.MedifastInc.com or www.OPTAVIA.com.
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