8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  February 26, 2020

MEDIFAST, INC.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation)	001-31573 (Commission File Number)	13-3714405 (I.R.S. Employer Identification No.)
100 International Drive, Baltimore, Maryland 21202
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (410) 581-8042
N/A (Former Name or Former Address, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.001 per share	MED	New York Stock Exchange

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

         Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.           ☐

Item 2.02. Results of Operations and Financial Condition.

On February 26, 2020, Medifast, Inc. (the “Company”) issued a press release announcing its earnings for the fourth quarter and fiscal year ended December 31, 2019.

A copy of the Press Release is being furnished as Exhibit 99.1 attached hereto and is incorporated by reference herein. This information is being furnished in this report and shall not be deemed to be “filed” for any purpose, including for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01.Financial Statements and Exhibits.

(d)Exhibits.

99.1 Press release dated February 26, 2020 titled “Medifast, Inc. Announces Fourth Quarter and Full Year 2019 Financial Results”

104.1Cover Page Interactive Data File (embedded within the Inline XBRL Document)

2

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	MEDIFAST, INC.
	By:	/s/ Timothy Robinson
		Timothy Robinson Chief Financial Officer
Dated: February 26, 2020

3

EX-99.1

Exhibit 99.1

Medifast, Inc. Announces Fourth Quarter and Full Year 2019 Financial Results

Revenue increased 17% in the Fourth Quarter and 42% for the Full Year

Introduces Full Year 2020 Outlook

BALTIMORE, Feb. 26, 2020 PRNewswire/ -- Medifast (NYSE: MED), the company behind one of the fastest-growing health and wellness communities, OPTAVIA®, which offers Lifelong Transformation, One Healthy Habit at a Time®, today reported results for the fourth quarter and full year ended December 31, 2019.

Fourth Quarter 2019 Highlights Compared to Prior-Year Period

• Revenue up 17.0% to $170.6 million
• 32.0% growth in active earning OPTAVIA Coaches to 31,800
• Net income increased 27.0% to $19.9 million
• Earnings per diluted share ("EPS") of $1.66, an increase of 27.7%
• Declared a quarterly cash dividend of $13.4 million, or $1.13 per share paid on February 6, 2020, an increase of over 50% compared to the prior-year period.

Full Year 2019 Highlights Compared to the Prior-Year Period

• Revenue of $713.7 million, an increase of 42.4% year-over-year
• Net income of $77.9 million, an increase of 39.7% year-over-year
• EPS of $6.43, an increase of 39.2% year-over-year
• Cash, cash equivalents, and investment securities of $92.7 million and the Company remains free of interest-bearing debt as of December 31, 2019

"We are pleased with our strong growth in revenue and active earning coaches during 2019 and are confident with our ability to drive continued gains in 2020 and beyond. We made excellent progress during the fourth quarter implementing our technology and supply chain upgrades, are seeing strong improvements in client satisfaction and are now better positioned to support our ongoing growth opportunities. With the recent operational challenges that temporarily muted the growth of active earning Coaches and clients largely behind us, we expect to see our growth rate improve as the year progresses," said Dan Chard, Chief Executive Officer of Medifast. "2019 was a transformative year where we laid the foundations for global expansion, built the systems and infrastructure to support significant future growth and we believe further demonstrated that our growth model is sustainable long-term. Our commitment to lifelong transformation one healthy habit at a time is unwavering across our organization. We are confident in our ability to produce long-term growth for our Stockholders and remain committed to making ongoing improvements to the Coach and Client experience in 2020 and beyond.

Fourth Quarter 2019 Results

Fourth quarter revenue increased 17.0% to $170.6 million from revenue of $145.8 million for the fourth quarter of 2018. OPTAVIA-branded products represented 79% of consumable units sold for the fourth quarter compared to 72% for the same period a year ago.

The total number of active earning OPTAVIA Coaches increased to 31,800, compared to 24,100 for the fourth quarter of 2018. The average revenue per active earning OPTAVIA Coach decreased 9.2% to $5,229 compared to $5,756 for the fourth quarter last year.

Gross profit increased 17.4% to $128.1 million from $109.1 million for the fourth quarter of 2018. The Company's gross profit as a percentage of revenue increased 30 basis points year-over-year to 75.1% from 74.8% primarily as a result of a mid-year price increase and improvements in costs related to inventory obsolescence, partially offset by customer concessions.

Selling, general and administrative expenses ("SG&A") increased $20.1 million to $109.4 million compared to $89.3 million for the fourth quarter of 2018, primarily due to higher OPTAVIA commission expense, increased consulting costs related to technology initiatives, increased salaries and benefits. SG&A as a percentage of revenue increased 290 basis points year-over-year to 64.1% of revenue.

Operating income decreased $1.1 million to $18.7 million from $19.8 million in the prior-year period as increased gross profit was offset by increased SG&A expenses. Operating income as a percentage of revenue was 11.0% for the quarter, a decrease of 260 basis points from the year-ago period.

The effective tax rate for the quarter was a 4.7% benefit for the fourth quarter of 2019 compared to a 22.4% expense in the year-ago period. The fourth quarter tax benefit reflected the impact of discrete federal tax benefits from share-based compensation, partially offset by increases in the effective state tax rate of 2.0%.

Fourth quarter net income was $19.9 million, or $1.66 per diluted share, based on approximately 11.9 million shares outstanding. The discrete federal tax benefit from share-based compensation had a $5.7 million impact on net income in the fourth quarter, or $0.47 per diluted share. Fourth quarter 2018 net income was $15.7 million, or $1.30 per diluted share, based on approximately 12.0 million shares outstanding.

Full Year Fiscal 2019 Results

For the fiscal year ended December 31, 2019, revenue increased 42.4% to $713.7 million compared to revenue of $501.0 million in 2018.

Net income for 2019 was $77.9 million, or $6.43 per diluted share based on approximately 12.1 million shares outstanding, compared to $55.8 million, or $4.62 per diluted share for the comparable period last year based on approximately 12.1 million shares outstanding.

Balance Sheet

The Company's balance sheet remains strong with stockholders' equity of $104.8 million and working capital of $74.8 million as of December 31, 2019. Cash, cash equivalents, and investment securities decreased $8.3 million to $92.7 million as of December 31, 2019 compared to $101.0 million at December 31, 2018. The Company remains free of interest-bearing debt. Inventory increased $9.9 million to $48.8 million at December 31, 2019 compared to $38.9 million at December 31, 2018 as the Company increased inventory levels to support the launch of 32 new international products, initial production of the new Habits of Health system and a continued effort to meet current and future demand.

The Company declared a quarterly cash dividend of $13.4 million, or $1.13 per share that was paid on February 6, 2020. The Company did not repurchase any shares during the fourth quarter of 2019 and repurchased approximately 296,000 shares during fiscal year 2019. There are approximately 2,369,000 shares of common stock remaining under the Company's share repurchase program. Medifast expects to maintain a program of paying dividends on a quarterly basis.

Outlook

The Company expects first quarter revenue to be in the range of $166.0 million to $171.0 million and EPS to be in the range of $1.35 to $1.42. For the full year 2020, the Company expects revenue of $715.0 million to $745.0 million and EPS of $6.25 to $6.55. The full-year 2019 earnings guidance assumes a 22.5% to 23.5% effective tax rate.

Conference Call Information

The conference call is scheduled for today, Wednesday, February 26, 2020 at 4:30 p.m. ET. The call will be broadcast live over the Internet hosted at the Investor Relations section of Medifast's website at www.MedifastInc.com, and will be archived online through March 11, 2020. In addition, listeners may dial (855) 560-2579.

A telephonic playback will be available from 6:30 p.m. ET, February 26, 2020, through March 4, 2020. Participants can dial (877) 344-7529 to hear the playback and enter passcode 10139285.

About Medifast^®:

Medifast (NYSE: MED) is the company behind one of the fastest-growing health and wellness communities, OPTAVIA®, which offers Lifelong Transformation, One Healthy Habit at a Time®. Based on nearly 40 years of experience, Medifast has redefined direct selling by combining the best aspects of the model. Its community of thousands of independent OPTAVIA Coaches teach Clients to develop holistic healthy habits through products and clinically proven plans, the Habits of Health® Transformational System and comprehensive support from a community of like-minded people. In 2019, Medifast expanded the OPTAVIA movement globally, beginning with the Asia-Pacific region. Medifast is traded on the New York Stock Exchange and was named to Fortune's 100 Fastest-Growing Companies list in 2019 and Forbes' 100 Most Trustworthy Companies in America List in 2016 and 2017. For more information, visit www.MedifastInc.com or www.OPTAVIA.com.

MED-F

Forward Looking Statements

Please Note: This release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by use of phrases or terminology such as "intend," "anticipate," "expects" or other similar words or the negative of such terminology. Similarly, descriptions of Medifast's objectives, strategies, plans, goals or targets contained herein are also considered forward-looking statements. Medifast believes this release should be read in conjunction with all of its filings with the United States Securities and Exchange Commission and cautions its readers that these forward-looking statements are subject to certain events, risks, uncertainties, and other factors. Some of these factors include, among others, Medifast's inability to attract and retain independent OPTAVIA Coaches and clients, Medifast's inability to prevent the use of stolen identities and credit cards outside of the Company's systems to transact business on the Company's e-commerce sites, increases in competition, litigation, regulatory changes, and its planned growth into new domestic and international markets and new channels of distribution. 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 latest Annual Report on Form 10-K and Quarterly Report on Form 10-Q, and other filings filed with the United States Securities and Exchange Commission, including its current reports on Form 8-K. All of the forward-looking statements contained herein speak only as of the date of this release.

MEDIFAST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Quarters and Years Ended December 31, 2019 and 2018
(in thousands, except per share amounts & dividend data)
	Three months ended December 31,				Year ended December 31,
	2019		2018		2019		2018
Revenue	$	170,632	$	145,844	$	713,672	$	501,003
Cost of sales		42,564		36,753		176,814		121,104
Gross profit		128,068		109,091		536,858		379,899
Selling, general, and administrative		109,361		89,288		445,819		310,836
Income from operations		18,707		19,803		91,039		69,063
Other income
Interest income, net		234		366		1,295		1,306
Other income		40		1		29		179
		274		367		1,324		1,485
Income from operations before income taxes		18,981		20,170		92,363		70,548
Provision for income taxes		(900)		4,517		14,447		14,759
Net income	$	19,881	$	15,653	$	77,916	$	55,789
Earnings per share - basic	$	1.71	$	1.32	$	6.62	$	4.67
Earnings per share - diluted	$	1.66	$	1.30	$	6.43	$	4.62
Weighted average shares outstanding -
Basic		11,617		11,894		11,771		11,947
Diluted		11,947		12,014		12,117		12,079
Cash dividends declared per share	$	1.13	$	0.75	$	3.38	$	2.19

MEDIFAST, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
As of December 31, 2019 and 2018
(in thousands, except par value)
		2019		2018
ASSETS
Current Assets
Cash and cash equivalents	$	76,974	$	81,364
Accounts receivable - net of doubtful accounts of $235 and $394 at
December 31, 2019 and 2018, respectively		1,437		1,011
Inventory		48,771		38,888
Investment securities		15,704		19,670
Income taxes, prepaid		5,169		-
Prepaid expenses and other current assets		6,096		4,586
Total current assets		154,151		145,519
Property, plant and equipment - net of accumulated depreciation		26,039		19,747
Right-of-use assets		12,803		-
Other assets		353		1,183
Deferred tax assets		1,307		2,980
TOTAL ASSETS	$	194,653	$	169,429
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses	$	76,220	$	60,323
Current lease obligations		3,168		-
Total current liabilities		79,388		60,323
Lease obligations, less current lease obligations		10,433		-
Total liabilities		89,821		60,323
Stockholders' Equity
Common stock, par value $.001 per share: 20,000 shares authorized;
12,272 and 12,117 issued and 11,764 and 11,868 outstanding
at December 31, 2019 and December 31, 2018, respectively		12		12
Additional paid-in capital		-		8,802
Accumulated other comprehensive income (loss)		25		(173)
Retained earnings		168,788		131,344
Less: Treasury stock at cost, 489 and 193 shares at December 31,
2019 and December 31, 2018, respectively		(63,993)		(30,879)
Total stockholders' equity		104,832		109,106
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	194,653	$	169,429

CONTACT: ICR, Inc., Scott Van Winkle, scott.vanwinkle@icrinc.com, (617) 956-6736

XML

Document And Entity Information	Feb. 26, 2020
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Feb. 26, 2020
Entity Registrant Name	MEDIFAST, INC.
Entity Central Index Key	0000910329
Entity Emerging Growth Company	false
Entity File Number	001-31573
Entity Tax Identification Number	13-3714405
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	100 International Drive
Entity Address, City Or Town	Baltimore
Entity Address, State Or Province	MD
Entity Address, Postal Zip Code	21202
City Area Code	410
Local Phone Number	581-8042
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	MED
Security Exchange Name	NYSE