10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from________ to ________.

Commission File Number: 001-31573

Medifast, Inc.

(Exact name of registrant as specified in its charter)

Delaware	13-3714405
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

100 International Drive

Baltimore, Maryland 21202

Telephone Number: (410) 581-8042

(Address of Principal Executive Offices, Zip Code and Telephone Number, Including Area Code)

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

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
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. o

Indicate by checkmark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

The number of shares of the registrant’s common stock outstanding at July 25, 2022 was 11,017,899.

Medifast, Inc. and Subsidiaries

Index

Part 1 – Financial Information
Item 1 – Financial Statements
Condensed Consolidated Statements of Income (unaudited) for the Three and Six Months Ended June 30, 2022 and 2021	2
Condensed Consolidated Statements of Comprehensive Income (unaudited) for the Three and Six Months Ended June 30, 2022 and 2021	3
Condensed Consolidated Balance Sheets (unaudited) as of June 30, 2022 and December 31, 2021	4
Condensed Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended June 30, 2022 and 2021	5
Condensed Consolidated Statements of Changes in Stockholders’ Equity (unaudited) for the Three and Six Months Ended June 30, 2022 and 2021	6
Notes to Condensed Consolidated Financial Statements (unaudited)	8
Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3 – Quantitative and Qualitative Disclosures about Market Risk	22
Item 4 – Controls and Procedures	23
Part II – Other Information
Item 1 – Legal Proceedings	24
Item 1A – Risk Factors	24
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 6 – Exhibits	25

1

MEDIFAST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(U.S. dollars in thousands, except per share amounts & dividend data)

	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
Revenue	$	453,333	$	394,189	$	870,933	$	734,858
Cost of sales	131,651		100,482		246,965		192,604
Gross profit	321,682		293,707		623,968		542,254
Selling, general, and administrative	272,718		232,273		519,917		428,021
Income from operations	48,964		61,434		104,051		114,233
Other expense
Interest expense	(164)		(67)		(259)		(44)
Other expense	(4)		(22)		(20)		(3)
	(168)		(89)		(279)		(47)
Income from operations before income taxes	48,796		61,345		103,772		114,186
Provision for income taxes	9,683		14,382		22,878		26,160
Net income	$	39,113	$	46,963	$	80,894	$	88,026
Earnings per share - basic	$	3.44	$	4.00	$	7.06	$	7.48
Earnings per share - diluted	$	3.42	$	3.96	$	7.01	$	7.42
Weighted average shares outstanding
Basic	11,354		11,753		11,455		11,762
Diluted	11,435		11,858		11,534		11,869
Cash dividends declared per share	$	1.64	$	1.42	$	3.28	$	2.84

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

MEDIFAST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(U.S. dollars in thousands)

	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
Net income	$	39,113	$	46,963	$	80,894	$	88,026
Other comprehensive income (loss), net of tax:
Foreign currency translation	148		(11)		$	177	$	67
Unrealized losses on investment securities	(7)		(17)		$	(21)	$	(33)
	141		(28)		$	156	$	34
Comprehensive income	$	39,254	$	46,935	$	81,050	$	88,060

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

MEDIFAST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(U.S. dollars in thousands, except par value)

	June 30, 2022		December 31, 2021
ASSETS
Current Assets
Cash and cash equivalents	$	61,069	$	104,183
Inventories	156,974		180,043
Investment securities	—		5,361
Income taxes, prepaid	8,547		945
Prepaid expenses and other current assets	16,710		16,334
Total current assets	243,300		306,866
Property, plant and equipment - net of accumulated depreciation	58,544		56,131
Right-of-use assets	21,347		24,457
Other assets	12,955		6,468
Deferred tax assets	4,404		4,404
TOTAL ASSETS	$	340,550	$	398,326
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses	$	154,782	$	163,309
Revolving credit facility	27,000		—
Current lease obligations	6,378		6,523
Total current liabilities	188,160		169,832
Lease obligations, net of current lease obligations	22,914		26,020
Total liabilities	211,074		195,852
Stockholders' Equity
Common stock, par value $0.001 per share: 20,000 shares authorized;
11,019 and 11,594 issued and 11,018 and 11,593 outstanding
at June 30, 2022 and December 31, 2021, respectively	11		12
Additional paid-in capital	—		12,018
Accumulated other comprehensive income	268		111
Retained earnings	129,197		190,333
Total stockholders' equity	129,476		202,474
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	340,550	$	398,326

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

MEDIFAST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(U.S. dollar in thousands)

	Six months ended June 30,
	2022		2021
Operating Activities
Net income	$	80,894	$	88,026
Adjustments to reconcile net income to cash provided by operating activities
Depreciation and amortization	5,176		2,453
Non-cash lease expense	3,211		2,187
Share-based compensation	5,140		4,344
Amortization of premium on investment securities	14		49
Change in operating assets and liabilities:
Inventories	23,069		(42,398)
Income taxes, prepaid	(7,602)		—
Prepaid expenses and other current assets	(376)		(4,657)
Other assets	(8,169)		(762)
Accounts payable and accrued expenses	(13,922)		36,962
Net cash flow provided by operating activities	87,435		86,204
Investing Activities
Sale and maturities of investment securities	5,267		5,145
Purchase of property and equipment	(5,849)		(12,196)
Net cash flow used in investing activities	(582)		(7,051)
Financing Activities
Borrowing under revolving credit facility	27,000		—
Options exercised by executives and directors	—		702
Net shares repurchased for taxes	(1,479)		(1,833)
Cash dividends paid to stockholders	(35,617)		(30,095)
Stock repurchases, settled	(100,038)		(19,730)
Stock repurchases, not yet settled	(20,010)		—
Net cash flow used in financing activities	(130,144)		(50,956)
Foreign currency impact	177		67
(Decrease) Increase in cash and cash equivalents	(43,114)		28,264
Cash and cash equivalents - beginning of the period	104,183		163,723
Cash and cash equivalents - end of period	$	61,069	$	191,987
Supplemental disclosure of cash flow information:
Income taxes paid	$	30,283	$	26,751
Dividends declared included in accounts payable	$	19,305	$	17,531

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

MEDIFAST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)

(U.S. dollars in thousands)

	Six months ended June 30, 2022
	Number of Shares Issued	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income		Retained Earnings		Treasury Stock		Total
Balance, December 31, 2021	11,594	$	12	$	12,018	$	111	$	190,333	$	—	$	202,474
Net income	—	—		—		—		41,781		—		41,781
Share-based compensation	18	—		2,275		—		—		—		2,275
Net shares repurchased for taxes	(8)	—		(1,459)		—		—		—		(1,459)
Treasury stock from stock repurchases	—	—		—		—		—		(10,000)		(10,000)
Treasury stock retired from stock repurchases	(51)	—		—		—		(10,000)		10,000		—
Other comprehensive income	—	—		—		16		—		—		16
Cash dividends declared to stockholders	—	—		—		—		(19,063)		—		(19,063)
Balance, March 31, 2022	11,553	$	12	$	12,834	$	127	$	203,051	$	—	$	216,024
Net income	—	—		—		—		39,113		—		39,113
Share-based compensation	1	—		2,865		—		—		—		2,865
Net shares repurchased for taxes	—	—		(20)		—		—		—		(20)
Treasury stock from stock repurchases	—	—		—		—		—		(90,038)		(90,038)
Treasury stock retired from stock repurchases	(535)	(1)		—		—		(90,038)		90,038		(1)
Stock repurchases, not yet settled	—	—		(15,679)		—		(4,331)		—		(20,010)
Other comprehensive income	—	—		—		141		—		—		141
Cash dividends declared to stockholders	—	—		—		—		(18,598)		—		(18,598)
Balance, June 30, 2022	11,019	$	11	$	—	$	268	$	129,197	$	—	$	129,476

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

	Six months ended June 30, 2021
	Number of Shares Issued	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income		Retained Earnings		Treasury Stock		Total
Balance, December 31, 2020	11,822	$	12	$	7,842	$	41	$	154,351	$	(5,000)	$	157,246
Net income	—	—		—		—		41,063		—		41,063
Share-based compensation	13	—		2,198		—		—		—		2,198
Options exercised by executives and directors	11	—		481		—		—		—		481
Net shares repurchased for taxes	(7)	—		(1,807)		—		—		—		(1,807)
Treasury stock from stock repurchases	—	—		—		—		—		(7,500)		(7,500)
Other comprehensive income	—	—		—		62		—		—		62
Cash dividends declared to stockholders	—	—		—		—		(16,852)		—		(16,852)
Balance, March 31, 2021	11,839	$	12	$	8,714	$	103	$	178,562	$	(12,500)	$	174,891
Net income	—	—		—		—		46,963		—		46,963
Share-based compensation	10	—		1,697		—		142		—		1,839
Options exercised by executives and directors	3	—		221		—		—		—		221
Net shares repurchased for taxes	—	—		(26)		—		—		—		(26)
Other comprehensive loss	—	—		—		(28)		—		—		(28)
Treasury stock from stock repurchases	—	—		—		—		—		(12,230)		(12,230)
Treasury stock retired from stock repurchases	(114)	—		—		—		(23,383)		23,383		—
Cash dividends declared to stockholders	—	—		—		—		(16,941)		—		(16,941)
Balance, June 30, 2021	11,738	$	12	$	10,606	$	75	$	185,343	$	(1,347)	$	194,689

The accompanying notes are an integral part of these condensed consolidated financial statements.

7

MEDIFAST, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation - The accompanying unaudited condensed consolidated financial statements of Medifast, Inc. and its wholly-owned subsidiaries (“Medifast,” the “Company,” “we,” “us,” or “our”) included herein have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim reporting and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and notes that are normally required by GAAP have been condensed or omitted. However, in the opinion of management, all adjustments consisting of normal, recurring adjustments considered necessary for a fair presentation of the financial position and results of operations have been included and management believes the disclosures that are made are adequate to make the information presented not misleading. The condensed consolidated balance sheet at December 31, 2021 has been derived from the audited consolidated financial statements at that date included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (“2021 Form 10-K”).

The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of results that may be expected for the fiscal year ending December 31, 2022. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the 2021 audited consolidated financial statements and notes thereto, which are included in the 2021 Form 10-K.

Presentation of Financial Statements - The unaudited condensed consolidated financial statements included herein include the accounts of the Company. All significant intercompany accounts and transactions have been eliminated.

Reclassification - Certain amounts reported for prior periods have been reclassified to be consistent with the current period presentation. No reclassification in the condensed consolidated financial statements had a material impact on the presentation.

Use of Estimates - The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates.

Accounting Pronouncements Adopted in 2022

In March 2020, the FASB issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for a limited time to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying accounting principles under GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met and to other derivative instruments if there is a change to the interest rates used for discounting, margining or contract price alignment. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. We adopted Topic 848 beginning in the first quarter of fiscal 2022 without any material impact on the Company's financial position and results of operations.

2. INVENTORIES

Inventories consist principally of raw materials, non-food finished goods and packaged meal replacements held in the Company’s warehouses and outsourced distribution centers. Inventories are stated at the lower of cost or net realizable value, utilizing the first-in, first-out method. The cost of finished goods includes the cost of raw materials, packaging supplies, direct

8

and indirect labor and other indirect manufacturing costs. On a quarterly basis, management reviews inventories for unsalable or obsolete inventories.

The Company donated inventory with an aggregate cost of $9.4 million to Ukrainian refugees and those in need in Ukraine, increasing SG&A during the three months ended June 30, 2022. The donations were made to two 501(c)(3) organizations that are coordinating the distribution throughout refugee camps in Europe and in Ukraine.

Inventories consisted of the following (in thousands):

	June 30, 2022		December 31, 2021
Raw materials	$	12,942	$	15,196
Packaging	2,987		3,641
Non-food finished goods	12,810		15,991
Finished goods	131,435		152,687
Reserve for obsolete inventory	(3,200)		(7,472)
Total	$	156,974	$	180,043

3. EARNINGS PER SHARE

Basic earnings per share (“EPS”) computations are calculated utilizing the weighted average number of shares of the Company’s common stock outstanding during the periods presented. Diluted EPS is calculated utilizing the weighted average number of shares of the Company’s common stock outstanding adjusted for the effect of dilutive common stock equivalents.

The following table sets forth the computation of basic and diluted EPS (in thousands, except per share data):

	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
Numerator:
Net income	$	39,113	$	46,963	$	80,894	$	88,026
Denominator:
Weighted average shares of common stock outstanding	11,354		11,753		11,455		11,762
Effect of dilutive common stock equivalents	81		105		79		107
Weighted average shares of common stock outstanding	11,435		11,858		11,534		11,869
Earnings per share - basic	$	3.44	$	4.00	$	7.06	$	7.48
Earnings per share - diluted	$	3.42	$	3.96	$	7.01	$	7.42

The calculation of diluted EPS excluded 3 and 0 antidilutive restricted stock awards for the three months ended June 30, 2022 and 2021, respectively, and 1 and 0 antidilutive restricted stock awards for the six months ended June 30, 2022 and 2021, respectively. EPS is computed independently for each of the periods presented above, and accordingly, the sum of the quarterly earnings per common share may not equal the year-to-date total computed.

4. SHARE-BASED COMPENSATION

Stock Options

The Company has issued non-qualified and incentive stock options to employees and non-employee directors. The fair value of these options are estimated on the date of grant using the Black-Scholes option pricing model, which requires estimates of the expected term of the option, the risk-free interest rate, the expected volatility of the price of the Company’s common stock, and

9

dividend yield. Options outstanding as of June 30, 2022 generally vest over a period of three years and expire ten years from the date of grant. The exercise price of these options ranges from $26.52 to $66.68. Due to the Company’s lack of option exercise history on the date of grant, the expected term is calculated using the simplified method defined as the midpoint between the vesting period and the contractual term of each option. The risk free interest rate is based on the U.S. Treasury yield curve in effect on the date of grant that most closely corresponds to the expected term of the option. The expected volatility is based on the historical volatility of the Company’s common stock over the period of time equivalent to the expected term for each award. The dividend yield is computed as the annualized dividend rate at the grant date divided by the strike price of the stock option. For the six months ended June 30, 2022 and 2021, the Company did not grant stock options.

The following table is a summary of our stock option activity (in thousands, except per share data):

	Six months ended June 30,
	2022			2021
	Awards	Weighted-Average Exercise Price		Awards	Weighted-Average Exercise Price
Outstanding at beginning of period	33	$	54.98	61	$	48.19
Exercised	—	—		(14)	50.58
Outstanding at end of the period	33	$	54.98	47	$	47.51
Exercisable at end of the period	28	$	52.76	38	$	42.18

As of June 30, 2022, the weighted-average remaining contractual life for outstanding stock options was 4.8 years with an aggregate intrinsic value of $4.2 million and the weighted-average remaining contractual life for exercisable stock options was 4.7 years with an aggregate intrinsic value of $3.6 million. The unrecognized compensation expense calculated under the fair value method for stock options expected to vest as of June 30, 2022 was $0.1 million and is expected to be recognized over a weighted-average period of 0.6 year. For the six months ended June 30, 2022, there was no exercise activity of stock options. For the six months ended June 30, 2021, the Company received $0.7 million in cash proceeds from the exercise of stock options. The total intrinsic value for stock options exercised during the six months ended June 30, 2021 was $2.3 million.

Restricted Stock

The Company has issued restricted stock to employees and non-employee directors generally with vesting terms up to five years after the date of grant. The fair value of the restricted stock is equal to the market price of the Company’s common stock on the date of grant. Expense for restricted stock is amortized ratably over the vesting period.

The following table summarizes our restricted stock activity (in thousands, except per share data):

	Six months ended June 30,
	2022			2021
	Shares	Weighted-Average Grant Date Fair Value		Shares	Weighted-Average Grant Date Fair Value
Outstanding at beginning of period	44	$	183.51	50	$	116.06
Granted	38	176.81		21	267.15
Vested	(19)	155.57		(25)	113.91
Forfeited	(1)	186.53		(2)	154.91
Outstanding at end of the period	62	$	187.80	44	$	182.96

The Company withheld approximately 8,000 and 7,000 shares of the Company’s common stock to cover minimum tax liability withholding obligations upon the vesting of shares of restricted stock for the six months ended June 30, 2022 and 2021, respectively. The total fair value of restricted stock awards vested during the six months ended June 30, 2022 and 2021 was $3.3 million and $6.7 million, respectively.

Market and Performance-based Share Awards

10

The Company has issued market and performance-based share awards to certain key executives who were granted deferred shares and may earn between 0% and 250% of the target number depending upon both the Company's total stockholder return and the Company's performance against predetermined performance goals over a three-year performance period after the date of grant. Market and performance-based share awards that are tied to the Company’s total stockholder return are valued using the Monte Carlo method and are recognized ratably as expense over the award’s performance period. The fair value of the performance-based share awards is equal to the market price of the Company’s common stock on the date of grant adjusted by expected level of achievement over the performance period. Expense for performance-based share awards is amortized ratably over the performance period.

Share-based compensation expense is recorded in selling, general, and administrative expense in the accompanying Condensed Consolidated Statements of Income. The total expenses during the three months ended June 30, 2022 and 2021 are as follows (in thousands):

	Three months ended June 30,
	2022			2021
	Shares	Share-Based Compensation Expense		Shares	Share-Based Compensation Expense
Options and restricted stock	86	$	1,311	103	$	938
Market and performance-based share awards granted in 2022	25	433		—	—
Performance-based share awards granted in 2021	15	647		14	54
Performance-based share awards granted in 2020	26	474		28	495
Performance-based share awards granted in 2019	—	—		17	711
Total share-based compensation	152	$	2,865	162	$	2,198

The total expenses during the six months ended June 30, 2022 and 2021 are as follows (in thousands):

	Six months ended June 30,
	2022			2021
	Shares	Share-Based Compensation Expense		Shares	Share-Based Compensation Expense
Options and restricted stock	91	$	2,398	91	$	2,059
Market and performance-based share awards granted in 2022	25	512		—	—
Performance-based share awards granted in 2021	15	1,287		14	357
Performance-based share awards granted in 2020	26	943		28	850
Performance-based share awards granted in 2019	—	—		17	1,078
Total share-based compensation	157	$	5,140	150	$	4,344

The total income tax benefit recognized in the accompanying Condensed Consolidated Statements of Income for restricted stock awards was $0.4 million and $0.9 million for the three months ended June 30, 2022 and 2021, respectively, and $0.9 million and $2.1 million for the six months ended June 30, 2022 and 2021, respectively.

There was $8.9 million of total unrecognized compensation cost related to restricted stock awards as of June 30, 2022, which is expected to be recognized over a weighted-average period of 2.0 years. There was $9.4 million of unrecognized compensation costs related to the 65,477 performance-based shares discussed above as of June 30, 2022, which is expected to be recognized over a weighted-average period of 2.1 years.

5. LEASES

Operating Leases

The Company has operating leases for office and warehouse space and certain equipment. In certain of the Company’s lease agreements, the rental payments are adjusted periodically based on defined terms within the lease. The Company did not have any finance leases as of June 30, 2022 and 2021, respectively, or for the six-month periods then ended, respectively.

11

Our leases relating to office and warehouse space have lease terms of 18 months to 126 months. Our leases relating to equipment have lease terms of 24 months to 203 months, with certain of them having automatic renewal clauses.

The Company’s warehouse agreements also contain non-lease components, in the form of payments towards variable logistics services and labor charges, which the Company is obligated to pay based on the services consumed by it. Such amounts are not included in the measurement of the lease liability but are recognized as expenses when they are incurred.

The operating lease expense was $1.7 million and $1.4 million for the three months ended June 30, 2022 and 2021, respectively, and $3.5 million and $2.4 million for the six months ended June 30, 2022 and 2021, respectively.

Supplemental cash flow information related to the Company’s operating leases was as follows (in thousands):

	Six months ended June 30,
	2022		2021
Cash paid for amounts included in the measurements of lease liabilities
Operating cash flow used in operating leases	$	3,674	$	2,005
Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	103	$	9,745

As of June 30, 2022, the weighted average remaining lease term was 5.3 years and the weighted average discount rate was 2.1%.

The following table presents the maturity of the Company’s operating lease liabilities as of June 30, 2022 (in thousands):

2022 (excluding the six months ended June 30, 2022)	$	3,525
2023	6,241
2024	5,693
2025	5,825
2026	4,160
Thereafter	5,412
Total lease payments	$	30,856
Less: imputed interest	(1,564)
Total	$	29,292

6. ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table sets forth the components of accumulated other comprehensive income, net of tax where applicable (in thousands):

	June 30, 2022		December 31, 2021
Foreign currency translation	$	268	$	90
Unrealized gains on investment securities	—		21
Accumulated other comprehensive income	$	268	$	111

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7. FINANCIAL INSTRUMENTS

Certain financial assets and liabilities are accounted for at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following fair value hierarchy prioritizes the inputs used to measure fair value:

Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies.

Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value from the perspective of a market participant.

The following tables present the Company’s cash and financial assets that are measured at fair value on a recurring basis for each of the hierarchy levels (in thousands):

	June 30, 2022
	Cost		Unrealized Gains		Accrued Interest		Estimated Fair Value		Cash & Cash Equivalents		Investment Securities
Cash	$	60,277	$	—	$	—	$	60,277	$	60,277	$	—
Level 1:
Money market accounts	792		—		—		792		792		—
Total	$	61,069	$	—	$	—	$	61,069	$	61,069	$	—

	December 31, 2021
	Cost		Unrealized Gains		Accrued Interest		Estimated Fair Value		Cash & Cash Equivalents		Investment Securities
Cash	$	94,824	$	—	$	—	$	94,824	$	94,824	$	—
Level 1:
Money market accounts	9,359		—		—		9,359		9,359		—
Government & agency securities	1,401		12		—		1,413		—		1,413
	10,760		12		—		10,772		9,359		1,413
Level 2:
Municipal bonds	3,880		9		59		3,948		—		3,948
Total	$	109,464	$	21	$	59	$	109,544	$	104,183	$	5,361

The Company had a realized loss of $0.2 million for the three and six months ended June 30, 2022 and no realized gain or losses for the three and six months ended June 30, 2021.

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8. DEBT

Credit Agreement

On April 13, 2021, the Company and certain of its subsidiaries (collectively, the “Guarantors”) entered into a credit agreement (the “Credit Agreement”) among the Company, the Guarantors, the lenders party thereto and Citibank, N.A., in its capacity as administrative agent. On May 31, 2022, the Credit Agreement was amended to increase the borrowing capacity and convert the interest rate to be based on Secured Overnight Financing Rate (SOFR), from London Inter-Bank Offered Rate (LIBOR) (the “Amended Credit Agreement”). The Amended Credit Agreement provides for a $225.0 million senior secured revolving credit facility with a $20.0 million letter of credit sublimit. The Amended Credit Agreement also provides for an uncommitted incremental facility that permits the Company, subject to certain conditions, to increase the senior secured revolving credit facility by up to $100.0 million. The Amended Credit Agreement matures on April 13, 2026.

The Company’s obligations under the Amended Credit Agreement are guaranteed by the Guarantors. The obligations of the Company and the Guarantors are secured by first-priority liens on substantially all of the assets of the Company and the Guarantors, subject to certain exceptions.

Under the Amended Credit Agreement, the Company will pay to the administrative agent for the account of each revolving lender a commitment fee on a quarterly basis based on amounts committed but unused under the revolving facility from 0.20% to 0.40% per annum depending on the Company’s Total Net Leverage Ratio (as defined in the Amended Credit Agreement). The Company is also obligated to pay the administrative agent customary fees for credit facilities of this size and type.

Revolving borrowings under the Amended Credit Agreement bear interest at a rate per annum equal to (i) the Term SOFR Rate for the interest period plus the Applicable Rate (as defined in the Amended Credit Agreement) based on the Company’s Total Net Leverage Ratio or (ii) the Alternate Base Rate (as defined in the Amended Credit Agreement) as in effect from time to time plus the Applicable Rate based on the Company’s Total Net Leverage Ratio. As of June 30, 2022, the Applicable Rate for Term SOFR Loans is 1.25% per annum and the Applicable Rate for ABR Loans is 0.25% per annum. SOFR based loans also include a Credit Spread Adjustment based on the duration of the borrowing.

The Amended Credit Agreement contains affirmative and negative covenants customarily applicable to senior secured credit facilities, including covenants that, among other things, limit or restrict the ability of the Company and its subsidiaries, subject to negotiated exceptions, to incur additional indebtedness and additional liens on their assets, engage in mergers or acquisitions or dispose of assets, pay dividends or make other distributions, voluntarily prepay other indebtedness, enter into transactions with affiliated persons, make investments and change the nature of their businesses. The Amended Credit Agreement also contains customary events of default, subject to thresholds and grace periods, including, among others, payment default, covenant default, cross default to other material indebtedness and judgment default. In addition, the Amended Credit Agreement requires the Company to maintain a Total Net Leverage Ratio of no more than 2.75 to 1.00 and an Interest Coverage Ratio of at least 3.50 to 1.00.

The Company has $27.0 million of borrowings outstanding under the Amended Credit Agreement as of June 30, 2022.

9. ACCELERATED SHARE REPURCHASE (“ASR”) PROGRAM

In the second quarter of fiscal 2022, the Company entered into an ASR agreement with JPMorgan Chase, National Association ("JPMorgan Chase") to purchase shares of its common stock from JPMorgan Chase for an aggregate purchase price of $100.0 million. Pursuant to the ASR program, the Company received an initial delivery of approximately 480 thousand shares of common stock based on the closing price of the common stock on May 31, 2022. As a result, approximately $20.0 million remains at JPMorgan Chase for additional repurchases until the completion of the ASR program. The final number of shares that will be delivered to the Company under the ASR agreement will be based on the average of the daily volume-weighted average trading prices of the Company’s common stock during the term of the ASR program, less a discount. The Company expects to receive the remaining shares no later than October 3, 2022. The effect of the potential share settlement is excluded in the diluted EPS calculation as the effect is anti-dilutive.

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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Note Regarding Forward-Looking Statements

Certain information in this report contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements generally can be identified by use of phrases or terminology such as "intend," “anticipate,” “expect” 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. These statements are based on the current expectations of our management and are subject to certain events, risks, uncertainties and other factors. These risks and uncertainties include, but are not limited to, those described in our 2021 Form 10-K and those described from time to time in our future reports filed with the SEC. 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 report. All of the forward-looking statements contained herein speak only as of the date of this report.

The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and related notes appearing elsewhere herein.

Overview

Medifast is the global company behind one of the fastest-growing health and wellness communities, OPTAVIA®, which offers Lifelong Transformation, One Healthy Habit at a Time®. Reflecting the success of our holistic approach to health and wellness, we have consistently grown revenue over the past five years. Of equal importance, we expect our differentiated model to continue to deliver growth in the foreseeable future.

Our OPTAVIA brand offers a highly competitive and effective lifestyle solution centered on developing new healthy habits through smaller, foundational changes called micro-habits. The program is built around four key components:

•Independent OPTAVIA Coaches: Provide individualized support and guidance to customers on the path to optimal health and wellbeing.

•OPTAVIA Community: A Community of like-hearted people providing each other with real-time connection and support.

•The Habits of Health® Transformational System: A proprietary system which offers easy steps to a sustainably healthy lifestyle.

•Products & Plans: Clinically proven plans and scientifically developed products, called “Fuelings,” backed by dietitians, scientists and physicians.

We help customers achieve their health goals through a network of approximately 68,000 independent OPTAVIA Coaches, about 90% of whom were customers first, and have impacted more than 2 million lives to date. OPTAVIA Coaches introduce customers to a set of healthy habits, in most cases starting with the habit of healthy eating, and offer exclusive Fuelings, which are nutrient-dense, portion-controlled, nutritionally interchangeable and simple to use. They are formulated with high-quality ingredients and are fortified with probiotic cultures, vitamins and minerals, as well as other nutrients essential for good health. Our products support the process of integrating healthy habits into our customer’s day-to-day lives.

The OPTAVIA coaching model is customer-centric and boasts an energized health and wellness community. It promotes holistic health and wellness and positions healthy weight as a catalyst to greater lifestyle changes. OPTAVIA Coaches provide personalized support to customers and motivate them by sharing their passion for healthy living and lifestyle transformation. We believe this personal coaching is an essential factor in customer success based on findings from a clinical study published in Obesity Science and Practice in 2018, which validated the effectiveness of combining the OPTAVIA meal plan with education and support consistent with that was provided by OPTAVIA Coaches.

The entrepreneurial spirit of our OPTAVIA Coaches is another key to our success, as they create a continuous cycle of growth, activating new customers, many of whom go on to become OPTAVIA Coaches. We offer economic incentives designed to support each OPTAVIA Coach’s long-term success, which we believe plays an important role in their financial wellness,

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providing the opportunity to improve their finances while changing the health trajectory of families, communities and generations.1

OPTAVIA Coaches are independent contractors, not employees, who support customers and market our products and services primarily through word of mouth, email and social media channels such as Facebook, Instagram, Twitter and video conferencing platforms. As entrepreneurs, OPTAVIA Coaches market our products to friends, family and other acquaintances. OPTAVIA products are shipped directly to OPTAVIA customers who are working with an OPTAVIA Coach. OPTAVIA Coaches do not handle or deliver merchandise to customers. This arrangement frees our OPTAVIA Coaches from having to manage inventory and allows them to maintain an arms-length transactional relationship while focusing their attention on support and encouragement.

We are one of the fastest growing health and wellness companies in the United States ("U.S."), with a large and growing market opportunity. We believe our coach-based model is scalable and drives both customer success and growth. We expect our continued investment in fostering a robust community around our OPTAVIA brand and our OPTAVIA Coaching model will continue to drive a sustainable, repeatable business rhythm focused on our mission of offering the world Lifelong Transformation, One Healthy Habit at a Time.

Our operations are conducted through our wholly owned subsidiaries, Jason Pharmaceuticals, Inc., OPTAVIA, LLC, Jason Enterprises, Inc., Jason Properties, LLC, Medifast Franchise Systems, Inc., Seven Crondall Associates, LLC, Corporate Events, Inc., OPTAVIA (Hong Kong) Limited, OPTAVIA (Singapore) PTE. LTD and OPTAVIA Health Consultation (Shanghai) Co., Ltd.

As we previously disclosed, global expansion is an important component of our long-term growth strategy. In July 2019, we commenced our international operations, entering into the Asia Pacific markets of Hong Kong and Singapore. Our decision to enter these markets was based on industry market research that reflects a dynamic shift in how health care is being prioritized and consumed in those countries. We outsource a distribution center in Hong Kong to provide adequate product distribution capacity for the foreseeable future in these markets.

COVID-19 Update

A novel strain of coronavirus (“COVID-19”) surfaced in late 2019 and has spread around the world, including to the U.S. In March 2020, the World Health Organization declared COVID-19 a worldwide pandemic.

In response to the pandemic, many governments implemented policies intended to stop or slow the further spread of the disease, such as social distancing guidelines, shelter-in-place orders and other measures. Nutritional supplements and health foods have been designated critical/essential infrastructure in the U.S. As a manufacturer and distributor of these products our manufacturing and distribution facilities remain fully operational to date and we have not experienced any meaningful disruption to our worldwide supply chain. The Company’s priorities during the COVID-19 pandemic continue to be protecting the health and safety of our employees and OPTAVIA Coaches, and their families, and we have undertaken numerous steps and instituted additional precautions to protect their safety and well-being, including:

•enhanced safety protocols, limiting visitation to our plant and distribution center and rolling out additional sick leave (crisis pay) for our onsite essential employees;

•through the majority of 2021, our non-essential employees continued to work from home. Effective October 2021, the Company implemented a hybrid work approach which enables our non-essential employees the flexibility to work partially from home and partially from the office;

•established additional health and safety precautions in our headquarters and manufacturing and distribution centers, including use of personal protective equipment and frequent hand sanitization;

•created process controls in relation to social distancing, visitors, travel and quarantine; and

•organized 16 vaccination clinics in partnership with the health department across all our operations.

1 OPTAVIA makes no guarantee of financial success. Success with OPTAVIA results from successful sales efforts, which require hard work, diligence, skill, persistence, competence, and leadership. Please see the OPTAVIA Income Disclosure Statement (http://bit.ly/idsOPTAVIA) for statistics on actual earnings of Coaches.

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Although vaccines are available in various countries where we operate, it is possible the COVID-19 pandemic could further impact our operations and the operations of our suppliers and vendors, particularly in light of the potential of variant strains of the virus to cause a resumption of high levels of infection and hospitalization. Should that occur, the extent to which the pandemic ultimately impacts the Company’s business, financial condition, results of operations, cash flows, and liquidity may differ from management’s current expectations. Factors that could cause actual results to differ from management’s expectations include inherent uncertainties regarding the duration and further spread of the outbreak, its severity, government actions taken to contain the virus or treat its impact, changes in consumer behavior resulting from the pandemic and how quickly and to what extent normal economic and operating conditions can resume. The senior management team meets regularly to review and assess the status of the Company’s operations and the health and safety of its various constituencies, and will continue to proactively respond to the situation and communicate with our supply chain partners to identify and mitigate risk and to manage inventory levels. The Company may take further actions that alter its business operations as may be required by governmental authorities, or that are determined to be in the best interests of employees, OPTAVIA Coaches and customers.

These uncertainties make it challenging for our management to estimate our future business performance. However, we intend to continue to actively monitor the impact of COVID-19 and related developments on our business and will update our practices accordingly, as we have done throughout the pandemic.

Critical Accounting Policies and Estimates

Our unaudited condensed consolidated financial statements are prepared in accordance with GAAP. Our significant accounting policies are described in Note 2 to the audited consolidated financial statements included in the 2021 Form 10-K. We consider all of our significant accounting policies and estimates to be critical. There were no significant changes in our critical accounting policies during the first six months of 2022.

The preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Management develops, and changes periodically, these estimates and assumptions based on historical experience and on various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. There were no significant changes in our critical estimates during the first six months of 2022.

Overview of Results of Operations

Our product sales accounted for approximately 98.0% of our revenues for each of the three and six months ended June 30, 2022 and 2021, respectively.

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The following tables reflect our income statements (in thousands, except percentages):

	Three months ended June 30,
	2022			2021			$ Change		% Change
Revenue	$	453,333		$	394,189		$	59,144	15.0	%
Cost of sales	131,651			100,482			31,169		31.0	%
Gross profit	321,682			293,707			27,975		9.5	%
Selling, general, and administrative	272,718			232,273			40,445		17.4	%
Income from operations	48,964			61,434			(12,470)		(20.3)	%
Other expense
Interest expense	(164)			(67)			(97)		144.8	%
Other expense	(4)			(22)			18		(81.8)	%
	(168)			(89)			(79)		88.8	%
Income from operations before income taxes	48,796			61,345			(12,549)		(20.5)	%
Provision for income taxes	9,683			14,382			(4,699)		(32.7)	%
Net income	$	39,113		$	46,963		$	(7,850)	(16.7)	%
% of revenue
Gross profit	71.0		%	74.5		%
Selling, general, and administrative costs	60.2		%	58.9		%
Income from operations	10.8		%	15.6		%

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	Six months ended June 30,
	2022			2021			$ Change		% Change
Revenue	$	870,933		$	734,858		$	136,075	18.5	%
Cost of sales	246,965			192,604			54,361		28.2	%
Gross profit	623,968			542,254			81,714		15.1	%
Selling, general, and administrative	519,917			428,021			91,896		21.5	%
Income from operations	104,051			114,233			(10,182)		(8.9)	%
Other expense
Interest expense	(259)			(44)			(215)		488.6	%
Other expense	(20)			(3)			(17)		566.7	%
	(279)			(47)			(232)		493.6	%
Income from operations before income taxes	103,772			114,186			(10,414)		(9.1)	%
Provision for income taxes	22,878			26,160			(3,282)		(12.5)	%
Net income	$	80,894		$	88,026		$	(7,132)	(8.1)	%
% of revenue
Gross profit	71.6		%	73.8		%
Selling, general, and administrative costs	59.7		%	58.2		%
Income from operations	11.9		%	15.5		%

Revenue: Revenue increased $59.1 million, or 15.0%, to $453.3 million for the three months ended June 30, 2022 from $394.2 million for the three months ended June 30, 2021. The average revenue per active earning OPTAVIA Coach was $6,667 for the three months ended June 30, 2022 compared to $6,662 for the three months ended June 30, 2021. Revenue increased $136.1 million, or 18.5%, to $870.9 million for the six months ended June 30, 2022 from $734.9 million for the six months ended June 30, 2021. The average revenue per active earning OPTAVIA Coach was $6,602 for the six months ended June 30, 2022 compared to $6,558 for the six months ended June 30, 2021. Increase in the productivity per active earning OPTAVIA Coach for the quarter was driven by an increase in the number of customers supported by each Coach. The year-over-year growth in revenue was primarily driven by the increase in the number of active earning OPTAVIA Coaches and in the productivity per active earning OPTAVIA Coach.

Cost of sales: Cost of sales increased $31.2 million, or 31.0%, to $131.7 million from $100.5 million for the three months ended June 30, 2022 from the corresponding period in 2021 and increased $54.4 million, or 28.2%, to $247.0 million from $192.6 million from the corresponding period in 2021. The increase in cost of sales was primarily driven by an increase in OPTAVIA product sales and higher product costs resulting from inflation in raw ingredient costs, and labor costs. In addition, acceleration of demand for OPTAVIA-branded products led to the increase in the Company’s use of co-manufacturers, which further increased cost of sales.

Gross profit: For the three months ended June 30, 2022, gross profit increased $28.0 million, or 9.5%, to $321.7 million from $293.7 million for the three months ended June 30, 2021. As a percentage of revenue, gross profit decreased 350 basis points to 71.0% for 2022 from 74.5% for 2021. For the six months ended June 30, 2022, gross profit increased $81.7 million, or 15.1%, to $624.0 million from $542.3 million for the six months ended June 30, 2021. The increase in gross profit was primarily attributable to higher revenue partially offset by increased cost of sales. As a percentage of revenue, gross profit decreased 220 basis points to 71.6% for the six months ended June 30, 2022 from 73.8% for the corresponding period in 2021. The decrease in gross margin percentage for the first half of 2022 was primarily due to a customer acquisition program and higher product costs resulting from inflation in raw ingredient costs, and labor costs.

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Selling, general, and administrative: Selling, general, and administrative (“SG&A”) expenses were $272.7 million for the three months ended June 30, 2022, an increase of $40.4 million, or 17.4%, as compared to $232.3 million from the corresponding period in 2021. As a percentage of revenue, SG&A expenses were 60.2% for the three months ended June 30, 2022 as compared to 58.9% for the corresponding period in 2021. SG&A expenses included research and development costs of $1.2 million and $1.1 million for the three months ended June 30, 2022 and 2021, respectively, in connection with the development of new products and programs and clinical research activities. Selling, general, and administrative (“SG&A”) expenses were $519.9 million for the six months ended June 30, 2022, an increase of $91.9 million, or 21.5%, as compared to $428.0 million from the corresponding period in 2021. As a percentage of revenue, SG&A expenses were 59.7% for the six months ended June 30, 2022 as compared to 58.2% for the corresponding period in 2021. SG&A expenses included research and development costs of $2.2 million and $2.2 million for the six months ended June 30, 2022 and 2021, respectively, in connection with the development of new products and programs and clinical research activities. The increase in SG&A expenses for the six months ended June 30, 2022 was primarily due to higher OPTAVIA Coach compensation expense, donations made to the Ukraine refugees, incremental costs related to continued investment in information technology and distribution infrastructure, as well as the increased credit card fees resulting from higher sales.

Non-GAAP adjusted SG&A expenses were $263.3 million for the three months ended June 30, 2022, an increase of $31.0 million, or 13.4%, as compared to $232.3 million from the corresponding period in 2021. Non-GAAP adjusted SG&A expenses were $510.5 million for the six months ended June 30, 2022, an increase of $82.5 million, or 19.3%, as compared to 428.0 million from the corresponding period in 2021. Non-GAAP adjusted SG&A excludes expenses in connection with the Ukraine Donations of $9.4 million. Refer to “Non-GAAP Financial Measures” section below for a reconciliation of each of Non-GAAP financial measures to its most comparable GAAP financial measure.

OPTAVIA Coach compensation expense, which is a variable expense, increased $28.2 million, or 16.4%, to $200.6 million for the three months ended June 30, 2022 from $172.4 million for the corresponding period in 2021. For the six months ended June 30, 2022, OPTAVIA compensation expense increased $64.9 million, or 20.4%, to $383.6 million from $318.7 million for the corresponding period in 2021. The increase was primarily the result of increased OPTAVIA product sales. The total number of active earning OPTAVIA Coaches for the three months ended June 30, 2022 increased to 68,000 from 59,200 for the corresponding period in 2021, an increase of 14.9%.

Income from operations: For the three months ended June 30, 2022, income from operations decreased $12.5 million to $49.0 million from $61.4 million for the corresponding period in 2021 primarily as a result of increased SG&A expenses partially offset by increased gross profit. Income from operations as a percentage of revenue decreased to 10.8% for the three months ended June 30, 2022 from 15.6% for the corresponding period in 2021 due to the factors described above impacting gross profit and SG&A expenses. For the six months ended June 30, 2022, income from operations decreased $10.2 million to $104.1 million from $114.2 million for the corresponding period in 2021 primarily as a result of increased SG&A expenses partially offset by increased gross profit. Income from operations as a percentage of revenue decreased to 11.9% for the six months ended June 30, 2022 from 15.5% for the corresponding period in 2021.

Non-GAAP adjusted income from operations was $58.4 million for the three months ended June 30, 2022, a decrease of $3.0 million, or 5.0%, as compared to $61.4 million from the corresponding period in 2021. Non-GAAP adjusted income from operations was $113.5 million for the six months ended June 30, 2022, a decrease of $0.7 million, or 0.7%, as compared to $114.2 million from the corresponding period in 2021. Refer to “Non-GAAP Financial Measures” section below for a reconciliation of each of Non-GAAP financial measures to its most comparable GAAP financial measure.

Provision for income taxes: For the three months ended June 30, 2022, the Company recorded $9.7 million in income tax expense, an effective tax rate of 19.8%, as compared to $14.4 million in income tax expense, an effective tax rate of 23.4%, for the three months ended June 30, 2021. For the six months ended June 30, 2022, the Company recorded $22.9 million in income tax expense, an effective tax rate of 22.0%, as compared to $26.2 million in income tax expense, an effective tax rate of 22.9%, for the six months ended June 30, 2021. The decrease in the effective tax rate for the quarter and six months ended June 30, 2022 was primarily driven by the tax benefit for inventory donations in the quarter, partially offset by an increase in state income tax rate and a decrease in the tax benefit of stock compensation.

Non-GAAP adjusted income tax provision was $13.9 million for the three months ended June 30, 2022, an effective tax rate of 23.9% as compared to 23.4% for the corresponding period in 2021. Non-GAAP adjusted income tax provision was $27.1 million for the six months ended June 30, 2022, an effective tax rate of 24.0%, as compared to 22.9% for the corresponding period in 2021. Refer to “Non-GAAP Financial Measures” section below for a reconciliation of each of Non-GAAP financial measures to its most comparable GAAP financial measure.

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Net income: Net income was $39.1 million and $80.9 million, or $3.42 and $7.01 per diluted share, for the three and six months ended June 30, 2022 as compared to $47.0 million and $88.0 million, or $3.96 and $7.42 per diluted share, for the three and six months ended June 30, 2021. The period-over-period changes were driven by the factors described above in the section titled "Income from operations."

Non-GAAP adjusted net income was $44.3 million or $3.87 per diluted share for the three months ended June 30, 2022 as compared to $3.96 per diluted share for the corresponding period in 2021. Non-GAAP adjusted net income was $86.1 million or $7.46 per diluted share for the six months ended June 30, 2022 as compared to $7.42 per diluted share for the corresponding period in 2021. Refer to “Non-GAAP Financial Measures” section below for a reconciliation of each of Non-GAAP financial measures to its most comparable GAAP financial measure.

Non-GAAP Financial Measures

In an effort to provide investors with additional information regarding our results as determined by GAAP, we disclose various non-GAAP financial measures in this quarterly report, our quarterly earnings press release and other public disclosures. The following GAAP financial measures have been presented on an as-adjusted basis: SG&A expenses, income from operations, provision for income taxes, net income and diluted earnings per share. Each of these as-adjusted financial measures excludes the impact of certain amounts related to our donations to Ukrainian refugees as further identified below and have not been calculated in accordance with GAAP. A reconciliation of each of these non-GAAP financial measures to its most comparable GAAP financial measure is included below. These non-GAAP financial measures are not intended to replace GAAP financial measures.

We use these non-GAAP financial measures internally to evaluate and manage the Company’s operations because we believe they provide useful supplemental information regarding the Company’s on-going economic performance. We have chosen to provide this information to investors to enable them to perform more meaningful comparisons of operating results and as a means to emphasize the results of on-going operations.

The following tables reconcile the non-GAAP financial measures included in this report (in thousands):

	Three Months Ended June 30, 2022			Three Months Ended June 30, 2021
	GAAP	Donation Adjustments	Non-GAAP	GAAP	Donation Adjustments	Non-GAAP
Selling, general, and administrative	272,718	(9,426)	263,292	232,273	—	232,273
Income from operations	48,964	9,426	58,390	61,434	—	61,434
Provision for income taxes	9,683	4,256	13,939	14,382	—	14,382
Net income	39,113	5,170	44,283	46,963	—	46,963
Diluted earnings per share (1)	3.42	0.45	3.87	3.96	—	3.96

	Six Months Ended June 30, 2022			Six Months Ended June 30, 2021
	GAAP	Donation Adjustments	Non-GAAP	GAAP	Donation Adjustments	Non-GAAP
Selling, general, and administrative	519,917	(9,426)	510,491	428,021	—	428,021
Income from operations	104,051	9,426	113,477	114,233	—	114,233
Provision for income taxes	22,878	4,256	27,134	26,160	—	26,160
Net income	80,894	5,170	86,064	88,026	—	88,026
Diluted earnings per share (1)	7.01	0.45	7.46	7.42	—	7.42

(1) The weighted-average diluted shares outstanding used in the calculation of these non-GAAP financial measures are the same as the weighted-average shares outstanding used in the calculation of the reported per share amounts.

Liquidity and Capital Resources

The Company had stockholders’ equity of $129.5 million and working capital of $55.1 million at June 30, 2022 as compared with $202.5 million and $137.0 million at December 31, 2021, respectively. The $73.0 million net decrease in stockholders’

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equity reflects $80.9 million in net income for the six months ended June 30, 2022 offset by $120.0 million in repurchases of the Company’s common stock and $37.7 million for declared dividends paid to holders of the Company’s common stock as well as the other equity transactions described in the “Condensed Consolidated Statements of Changes in Stockholders’ Equity” included in this report. The Company declared a quarterly dividend of $1.64 per share on June 16, 2022, to stockholders of record as of June 28, 2022 that will be paid in the third quarter of 2022. While we intend to continue the dividend program and believe we will have sufficient liquidity to do so, we can provide no assurance that we will be able to continue to declare and pay dividends. The Company’s cash, cash equivalents and investment securities decreased from $109.5 million at December 31, 2021 to $61.1 million at June 30, 2022.

Net cash provided by operating activities increased by $1.2 million to $87.4 million for the six months ended June 30, 2022 from $86.2 million for the six months ended June 30, 2021 primarily driven by a $65.5 million increase related to changes in inventory balances offset by a reduction in net income, as well as decreases related to changes in certain balance sheet accounts, including prepaid income taxes $7.6 million, other assets $7.4 million and accounts payable and accrued expenses $50.9 million. We continued to expand our cloud computing technology capabilities to support our planned growth during the six months ended June 30, 2022.

Net cash used in investing activities was $0.6 million for the six months ended June 30, 2022 as compared to $7.1 million for the six months ended June 30, 2021.

Net cash used in financing activities increased by $79.2 million to $130.1 million for the six months ended June 30, 2022 from $51.0 million for the six months ended June 30, 2021. This increase was primarily due to the $100 million accelerated share repurchase ("ASR") program and $5.5 million increase in cash dividends paid to stockholders, partially offset by borrowings under the revolving credit facility in the amount of $27.0 million. Under the terms of the ASR agreement, approximately 480 thousand shares were delivered in the second quarter of 2022, with the remainder to be delivered at termination of the agreement, on or before October 3, 2022.

In pursuing its business strategy, the Company may require additional cash for operating and investing activities. The Company expects future cash requirements, if any, to be funded from operating cash flow and financing activities.

From time to time the Company evaluates potential acquisitions that complement our business. If consummated, any such transactions may use a portion of our working capital or require the issuance of equity or debt. We have no present understandings, commitments or agreements with respect to any material acquisitions.

On April 13, 2021, the Company and certain of its subsidiaries (collectively, the “Guarantors”) entered into a credit agreement among the Company, the Guarantors, the lenders party thereto and Citibank, N.A., in its capacity as administrative agent. On May 31, 2022, the Credit Agreement was amended to increase the borrowing capacity and convert the interest rate to be based on SOFR, from LIBOR (the “Amended Credit Agreement”). The Amended Credit Agreement provides for a $225.0 million senior secured revolving credit facility with a $20.0 million letter of credit sublimit. The Amended Credit Agreement also provides for an uncommitted incremental facility that permits the Company, subject to certain conditions, to increase the senior secured revolving credit facility by up to $100.0 million. The Amended Credit Agreement contains affirmative and negative covenants customarily applicable to credit facilities. As of June 30, 2022, the Company had outstanding borrowings of $27.0 million under the credit facility and was in compliance with all of its debt covenants.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Market risk is the potential loss arising from adverse changes in market rates and prices, such as interest rates and a decline in the stock market. The Company does not enter into derivatives, foreign exchange transactions or other financial instruments for trading or speculative purposes.

The Company is exposed to market risk related to changes in interest rates and market pricing impacting our credit facility. If market interest rates were to increase and market pricing were to decrease immediately and uniformly by 10% from levels at June 30, 2022, the Company estimates that the fair value of its borrowings under its credit facility would decline by an immaterial amount and therefore it would not expect its operating results or cash flows to be affected to any significant degree by the effect of a change in market conditions on our investments.

There have been no material changes to our market risk exposure since December 31, 2021.

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Item 4. Controls and Procedures

Management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, as of June 30, 2022. Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported accurately and on a timely basis. Based on this evaluation performed in accordance with the criteria established in the 2013 Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, our management concluded that the Company’s disclosure controls and procedures are effective at the reasonable assurance level as of the end of the period covered by this report.

Changes in Internal Control over Financial Reporting

There have been no material changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Act) during the fiscal quarter ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II Other Information

Item 1. Legal Proceedings

The Company is, from time to time, subject to a variety of litigation and similar proceedings that arise out of the ordinary course of its business. Based upon the Company’s experience, current information and applicable law, it does not believe that these proceedings and claims will have a material adverse effect on its results of operations, financial position or liquidity. However, the results of legal actions cannot be predicted with certainty. Therefore, it is possible that the Company’s results of operations, financial condition or cash flows could be materially adversely affected in any particular period by the unfavorable resolution of one or more legal actions.

Item 1A. Risk Factors

There have been no material changes to the risk factors set forth in Part I, Item 1A of the 2021 Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

2022	Total Number of Shares Purchased (1)(3)	Average Price Paid per Share		Total Number of Shares Purchased as Part of a Publicly Announced Plan or Program	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (2)
April 1 - April 30	48,095	$	181.40	47,982	1,986,034
May 1 - May 31	7,077	$	182.95	7,077	1,978,957
June 1 - June 30	479,760	$	166.75	479,760	1,499,197

(1)Also included are shares of common stock surrendered by employees and directors to the Company to cover minimum tax liability withholding obligations upon the exercise of stock options or the vesting of shares of restricted stock previously granted to such employees and directors.

(2)At the outset of the quarter ended June 30, 2022, there were 2,034,016 shares of the Company's common stock eligible for repurchase under the stock repurchase authorization dated September 16, 2014 (the "Stock Repurchase Plan").

(3)In the second quarter of fiscal 2022, the Company paid $100 million under an Accelerated Share Repurchase (“ASR”) agreement and received an initial delivery of approximately 480 thousand shares with the remainder to be delivered at termination of the agreement, on or before October 3, 2022.’See Note 9 to the Consolidated Financial Statements included in this report for further description of the ASR.

As of June 30, 2022, there were 1,499,197 shares of the Company’s common stock eligible for repurchase under the Stock Repurchase Plan. There can be no assurances as to the amount, timing or prices of repurchases, which may vary based on market conditions and other factors. The Stock Repurchase Plan does not have an expiration date and can be modified or terminated by the Board of Directors at any time.

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Item 6. Exhibits

Exhibit Number	Description of Exhibit
3.1	Restated and Amended Certificate of Incorporation of Medifast, Inc. (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K (File No. 001-31573) filed February 27, 2015).
3.2	Amended and Restated Bylaws of Medifast, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Amendment No. 1 Current Report on Form 8-K (File No. 001-31573) filed on December 4, 2019).
10.1	First Amendment to Credit Agreement, dated May 31, 2022 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-31573) filed on June 3, 2022).
10.2	Amendment No. 2 to Medifast, Inc. Executive Severance Plan (filed herewith)
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following financial statements from Medifast, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 filed August 4, 2022, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Income, (ii) Condensed Consolidated Statements of Comprehensive Income, (iii) Condensed Consolidated Balance Sheets, (iv) Condensed Consolidated Statements of Cash Flows, (v) Condensed Consolidated Statements of Changes in Stockholders’ Equity, and (vi) Notes to the Condensed Consolidated Financial Statements (filed herewith).
104	Cover Page Interactive Data File - The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

In accordance with SEC Release No. 33-8238, Exhibit 32.1 is being furnished and not filed.

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SIGNATURES

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, thereunto duly authorized.

Medifast, Inc.

By:	/s/ DANIEL R. CHARD
	Daniel R. Chard
	Chief Executive Officer
	(Principal Executive Officer)
Dated:	August 3, 2022
	/s/ JAMES P. MALONEY
	James P. Maloney
	Chief Financial Officer
	(Principal Financial Officer)
Dated:	August 3, 2022

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EX-10.1

MEDIFAST, INC. AMENDED AND RESTATED 2012 SHARE INCENTIVE PLAN

GRANT NOTICE PERFORMANCE SHARE UNITS

Medifast, Inc. (the “Company”) hereby grants to the Participant named below performance-based Deferred Shares (“Performance Share Units” or “PSUs”) pursuant to the Medifast, Inc. Amended and Restated 2012 Share Incentive Plan (the “Plan”) in the number specified below (the “Target Award Opportunity”) covering the three-year Performance Period specified below and subject to the achievement of Performance Goals, which relate to the Performance Measures specified below. Each PSU relates to and corresponds in value to a single share of Company common stock (“Share”) and represents the right to receive one Share for each vested PSU.

The PSUs are subject to all of the terms and conditions as set forth in this Grant Notice, the Performance Share Units Award Agreement (the “Award Agreement”) and the Plan, all of which are attached hereto and incorporated herein in their entirety. Capitalized terms not otherwise defined herein shall have the meanings set forth in the Plan or the Award Agreement.

Participant Name:

Grant Date:

Target Award Opportunity:

Performance Period:

Vesting Schedule (other than in connection with a Change in Control as provided in Section 8 of the Plan)

Additional Terms/Acknowledgements: The undersigned Participant acknowledges receipt of, and understands and agrees to the terms set forth in this Grant Notice, the Award Agreement and the Plan (by accepting this Grant Notice and attached Award Agreement electronically, you agree to the terms and conditions in the Grant Notice, Award Agreement and Plan).

Participant further acknowledges that as of the Grant Date, this Grant Notice, the Award Agreement, the Plan, and any employment or change in control agreement between you and the Company set forth the entire understanding between Participant and the Company regarding the acquisition of Shares in accordance with this Grant Notice, the Award Agreement and the Plan and supersede all prior oral and written Award Agreements on that subject.

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MEDIFAST, INC. AMENDED AND RESTATED 2012 SHARE INCENTIVE PLAN

PERFORMANCE SHARE UNITS AWARD AGREEMENT

Pursuant to your Performance Share Units Grant Notice (“Grant Notice”) and this Award Agreement, Medifast, Inc. (the “Company”) has granted to you performance-based Deferred Shares (“Performance Share Units”, “PSUs” or “Award”) under the Plan covering the number of PSUs indicated in your Grant Notice, which vest in accordance with the Vesting Schedule indicated in your Grant Notice and this Award Agreement.

Capitalized terms not otherwise defined herein shall have the meanings set forth in the Plan or your Grant Notice.

The details of your Performance Share Units are as follows:

1.Eligibility for Payment or Distribution of Vested PSUs. You must be continuously employed by the Company or any of its subsidiaries from the Grant Date through and up to the last day of the Performance Period specified in your Grant Notice to be eligible for a payment or distribution of your PSUs that vest and become nonforfeitable in accordance with Section 2 of this Award Agreement. If you incur a Termination of Service for any reason other than Retirement prior the last day of the Performance Period, you will forfeit any nonvested PSUs that you then hold and you shall not be entitled to any distribution or payout with respect to such forfeited PSUs, except as otherwise provided in Section 3 of this Award Agreement.

2.Retirement. If your employment with the Company is terminated by virtue of a Retirement, the PSUs shall continue to vest and be settled as they would have absent an employment termination and shall be eligible to vest at the conclusion of the Performance Period on a pro-rata basis, as set forth in Section 2 below.

“Retirement” means your termination of employment from the Company and its subsidiaries other than for cause, provided that you (i) have attained age 55, (ii) the numerical sum of your age and years of service with the Company or its subsidiaries is equal to at least 70, (iii) you are performing your job duties to the Company’s satisfaction at the time of notice and until your termination of employment, and (iv) you have given notice to the Company, in form satisfactory to the Company, of your intent to retire specifying the exact intended date of retirement to the Company that is at least 12 months following such notice date (provided that prior to such notice the Company had not already given you notice that you would be terminated), and remained employed by the Company until the earlier of (a) the one year anniversary of the date of such notice or (b) the date on which you are terminated by the Company without Cause. The Chief Executive Officer of the Company (or the Compensation Committee of the Board of Directors of the Company, in the event that you are at the time of notice either of the Chief Executive Officer (“CEO”), or the CEO’s direct report at the Executive Vice President-level or above, or one of the Company’s “Named Executive Officers” in the Company’s most recent Proxy filing pursuant to Item 402 of Regulation S-K) may, in his or her discretion, waive the requirement that you remain employed until the one year anniversary of the date of such notice.

3.Determination of Number of Vested PSUs. Subject to the requirements of Section 1 of this Agreement, at the conclusion of the Performance Period the Committee shall determine whether and to what extent you have become vested in your Award in accordance with Appendix A to this Agreement. In the event of your Retirement prior to the conclusion of the Performance Period, you shall be eligible to vest in a number of PSUs equal to the number of PSUs that would have vested if you had remained employed until the end of the Performance Period times a fraction, the numerator of which is the number of full months during the Performance Period that you were employed prior to your Retirement and the denominator of which is the number of months during the Performance Period.

4.Effect of a Change in Control Prior to a Vesting Date. The treatment of any nonvested PSUs that you hold upon or after a Change in Control will be determined under Section 8 of the Plan.

5.Form and Timing of Settlement of PSUs. As provided for under Section 6(e)(ii) of the Plan, within two and one-half months after the close of the calendar year in which your shares vest, the Company will issue and deliver to you (at the Company’s sole discretion) the number of shares of Stock equal to the number of your PSUs that vested on such Vesting Date, subject to satisfaction of applicable tax and/or other obligations as described in Section 9 of this Award Agreement.

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6.Dividend Equivalents. In the event that the Company declares and pays a dividend in respect of its outstanding Shares and, on the record date for such dividend, you hold PSUs granted pursuant to this Award Agreement that have not been settled, the Company shall credit to an account maintained by the Company for your benefit an amount equal to the cash dividends you would have received if you were the holder of record, as of such record date, of the number of Shares related to the portion of the PSUs that have not been settled or forfeited as of such record date (the “Dividend Equivalent” or “DER”). Such account is intended to constitute an “unfunded” account, and neither this Section 5 nor any action taken pursuant to or in accordance with this Section 5 shall be construed to create a trust of any kind. Amounts credited to such account with respect to PSUs that vest in accordance with Sections 2 or 3 of this Award Agreement will become vested DERs and will be paid to you in cash, Shares, or a combination thereof, as determined by the Committee in its sole discretion, at the same time as your vested PSUs are settled. You shall not be entitled to receive any interest with respect to the timing of payment of DERs. In the event all or any portion of the PSUs granted to you pursuant to this Award Agreement fail to become vested under Sections 2 or 3 of this Award Agreement, the unvested DERs accumulated in your account with respect to such PSUs shall be forfeited.

7.Delivery of Shares. The Company shall deliver Shares in settlement of your vested PSUs to you in accordance with this Section 6; provided, however, the Company shall not be obligated to deliver Shares to you if (i) you have not satisfied all applicable tax withholding obligations, (ii) Shares are not properly registered or subject to an applicable exemption therefrom, (iii) Shares are not listed on the stock exchanges on which Company Shares are otherwise listed, or (iv) the Company determines that the delivery of Shares would violate any federal or state securities or other applicable laws. At the discretion of the Company, Shares may be delivered to you by book-entry credit to an account in your name established by the Company with the Company’s transfer agent, or upon written requestfrom you (or your personal representative, beneficiary or estate, as the case may be) in certificates in your name (or your personal representative, beneficiary or estate).You shall not acquire or have any rights as a shareholder of the Company until Shares issuable hereunder are actually issued and delivered to you in accordance with the Award Agreement.

8.Restrictive Covenants. Without limiting any other non-competition, non-solicitation, non-disparagement or non-disclosure or other similar agreement to which you may be a party, you shall be subject to the confidentiality and restrictive covenants set forth on Exhibit A attached hereto, which Exhibit A is incorporated herein and forms part of this Award Agreement. In the event that you violate any of the restrictive covenants referred to in this Section 8, in addition to any other remedy that may be available at law or in equity, the PSUs shall be automatically forfeited effective as of the date on which such violation first occurs and any payment or delivery with respect to the PSUs during the [6 months] prior to such violation shall be rescinded. The Company shall notify you in writing of any such rescission within two years after such payment or delivery. Within ten days after receiving such a notice from the Company, you shall return the Shares to the Company or pay to the Company any profit or gain your realized in connection with sale of such Shares. The foregoing rights and remedies are in addition to any other rights and remedies that may be available to the Company and shall not prevent (and you shall not assert that they shall prevent) the Company from bringing one or more actions in any applicable jurisdiction to recover damages as a result of your breach of such restrictive covenants.

9.Forfeiture and Recoupment. Notwithstanding any provision of this Award Agreement or the Plan to the contrary, you agree that your right to retain your Award, to retain any amount received pursuant to your Award and to retain any profit or gain your realized in connection with sale of such Shares, shall be subject to any recoupment or “clawback” policy or forfeiture policy adopted by the Company.

10.Restrictions on Resales of Shares. The Company may impose such restrictions, conditions, and limitations as it determines appropriate as to the timing and manner of any resales by you or other subsequent transfers by you of any Shares issued as a result of the settlement of your PSUs, including (i) restrictions under an insider trading policy, (ii) restrictions designed to delay and/or coordinate the timing and manner of sales by you and other PSU holders, and (iii) restrictions as to the use of a specified brokerage firm for such resales or other transfers.

11.Tax Withholding Obligations.

a.At the time your PSUs are settled, you hereby authorize withholding from payroll and any other amounts payable to you by the Company, and otherwise agree to make adequate provision for, any sums required to satisfy the federal, state, local and foreign tax withholding obligations

3

(“Withholding Obligations”) of the Company, if any, which arise in connection with the settlement of your PSUs.

b.Upon your request and subject to approval by the Company, in its sole discretion, and compliance with any applicable legal conditions or restrictions, the Company may withhold from fully vested Shares otherwise issuable to you upon the settlement of your PSUs a number of whole Shares having a Fair Market Value, determined by the Company as of the date of settlement, at least equal to the minimum statutory amount of tax required to be withheld by law but in no event in excess of the maximum statutory amount of tax that is permitted to be withheld by law.

12.Tax Consequences. You hereby agree that the Company does not have a duty to design or administer the Plan or its other compensation programs in a manner that minimizes your tax liabilities. You shall not make any claim against the Company, or any of its Officers, Directors, Employees or Affiliates related to tax liabilities arising from your PSUs or your other compensation.

13.Applicability of Section 409A of the Internal Revenue Code.

a.Your PSUs granted hereunder are not intended to provide for a “deferral of compensation” within the meaning of Section 409A of the U.S. Internal Revenue Code (“Section 409A”) and shall be interpreted and construed in a manner consistent with that intent. If any provision of this Award Agreement, your Grant Notice or the Plan causes your PSUs to be subject to the requirements of Section 409A, or could otherwise cause you to recognize income or be subject to the interest and penalties under Section 409A, then the provision shall have no effect or, to the extent practicable, the Committee may, in its sole discretion and without the Participant’s consent, modify the provision to (i) comply with, or avoid being subject to Section 409A, or to avoid the incurrence of any taxes, interest and penalties under Section 409A, and/or (ii) maintain, to the maximum extent practicable, the original intent and economic benefit to you of the applicable provision without materially increasing the cost to the Company or contravening the provisions of Section 409A. This Section 12 does not create an obligation of the Company to modify this Award Agreement, your Grant Notice or the Plan and does not guarantee that your PSUs will not be subject to taxes, interest and penalties under Section 409A.

b.If you are a “specified employee” as defined under Code Section 409A and your PSUs are to be settled on account of your separation from service (for reasons other than death) and such PSUs constitutes “deferred compensation” as defined under Code Section 409A, then any portion of your PSUs that would otherwise be settled during the six-month period commencing on your separation from service shall be settled as soon as practicable following the conclusion of the six-month period (or following your death if it occurs during such six-month period).

c.Your Termination of Service shall not be deemed to have occurred for purposes of any provision of the Award Agreement providing for the payment of any amounts or benefits that are considered nonqualified deferred compensation under Section 409A upon or following a Termination of Service, unless such termination is also a “separation from service” within the meaning of Section 409A and the payment thereof prior to a “separation from service” could otherwise cause you to recognize income or be subject to the interest and penalties under Section 409A.

14.Restrictions on Transferability. Your PSUs may not be sold, transferred, pledged, assigned, exchanged, encumbered, or otherwise alienated or hypothecated, except (i) by will or by the laws of descent and distribution; (ii) to the extent permitted by the Plan and allowed under applicable law and approved by the Committee in its sole discretion; or (iii) pursuant to a domestic relations order.

15.Beneficiary Designation. You may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under this Award Agreement is to be paid in case of your death before you receive any or all of such benefit. Each such designation shall revoke all prior designations by you, shall be in a form prescribed by the Company, and will be effective only when filed by you in writing with the Secretary of the Company during your lifetime. In the absence of any such designation, benefits remaining unpaid at the time of your death shall be paid to your estate.

16.Securities Laws. This Award Agreement shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required, or the Committee determines are advisable. You agree to take all steps that the Company determines are necessary to comply with all applicable provisions of federal and state

4

securities law in exercising your rights under this Award Agreement. The Committee may impose such restrictions on any Shares acquired by you under the Award Agreement as it may deem necessary or advisable, under applicable federal securities laws, the requirements of any stock exchange or market upon which such Shares are then listed or traded or any blue sky or state securities laws applicable to such Shares. In addition, the Shares shall be subject to any trading restrictions, stock holding requirements or other policies in effect from time to time as determined by the Committee.

17.Data Privacy. To administer the Plan, the Company may process personal data about you. Such data includes the information provided in this Award Agreement, other appropriate personal and financial data about you such as home address and business addresses and other contact information, payroll information and any other information deemed appropriate by the Company to facilitate the administration of the Plan. By accepting this award, you consent to the Company’s processing of such personal data and the transfer of such data outside the country in which you work or are employed, including, with respect to non-U.S. residents, to the United States, to transferees who shall include the Company and other persons designated by the Company to administer the Plan.

18.No Right to Continued Employment or Further Awards.

a.Neither the Plan nor this Award Agreement shall (i) alter your status as an “at-will” employee of the Company; (ii) be construed as giving you any right to continue in the employ of the Company; or (iii) be construed as giving you any right to be reemployed by the Company following any Termination of Service. The Termination of Service provisions in this Award Agreement shall solely apply to the treatment of your PSUs as specified herein and shall not otherwise affect your employment relationship with the Company.

b.The Company has granted your PSUs in its sole discretion. Your Grant Notice, this Award Agreement and the Plan do not confer to you any right or entitlement to receive another grant of PSUs, or any other similar award at any time in the future or in respect of any future period. Your PSU grant does not confer on you any right or entitlement to receive compensation in any specific amount for any future fiscal year, and does not diminish in any way the Company’s discretion to determine the amount, if any, of your compensation.

19.Notices. Any notice required or permitted to be given under this Award Agreement, or Grant Notice or the Plan shall be in writing and shall be deemed to have been given when delivered personally or by courier, or sent by certified or registered United States mail, postage prepaid, return receipt requested, duly addressed to the party concerned at the address indicated below or to such changed address as such party may subsequently by similar process give notice of:

If to the Company:

Medifast, Inc.
100 International Drive

18th Floor

Baltimore, Maryland 21202
Attn.: General Counsel

If to the Employee:

To the last address delivered to the Company by the
Employee in the manner set forth herein.

20.General Provisions.

a.Headings. The headings preceding the text of the sections in this Award Agreement are inserted solely for convenience of reference, and shall not constitute a part of this Award Agreement, nor shall they affect its meaning, construction, or effect.

b.Severability. If any provision of this Award Agreement is declared to be illegal, invalid, or otherwise unenforceable by a court of competent jurisdiction, such provision shall be reformed, if possible, to the extent necessary to render it legal, valid, and enforceable, or otherwise deleted, and the remainder of the provisions of this Award Agreement shall not be affected except to the extent necessary to reform or delete such illegal, invalid, or unenforceable provision.

c.Governing Documents. This Award Agreement is subject to all of the terms and conditions as set forth in your Grant Notice and the Plan, all of which are incorporated herein in their entirety.

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Your Grant Notice, this Award Agreement, the Plan, and any employment or change in control agreement between you and the Company constitute the entire understanding between you and the Company regarding the PSUs. Any prior Award Agreements, commitments or negotiations concerning the PSUs are superseded. In the event of any conflict between the provisions of your Grant Notice and this Award Agreement and those of the Plan, the provisions of the Plan shall control.

d.Binding on Parties. The provisions of this Award Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective permitted heirs, beneficiaries, successors and assigns.

e.Applicable Law. Your Grant Notice and this Award Agreement shall be governed, construed, interpreted, and administered solely in accordance with the laws of the state of Delaware, without regard to principles of conflicts of law, with consent of jurisdiction by you in the State of Maryland.

f.Rescission of Award Agreement and PSU Grant. Your PSUs granted under this Award Agreement may be rescinded if necessary to ensure compliance with federal, state or other applicable laws.

g.Administration of PSUs. All questions arising under your Grant Notice, this Award Agreement and the Plan shall be decided by the Committee in its total and absolute discretion. It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of your Grant Notice, this Award Agreement and the Plan; all such determinations shall be binding upon you and your successors.

h.No Shareholder Rights. The PSUs granted to you under pursuant this Award Agreement do not and shall not entitle you to any rights of a holder of a Share of Company common stock prior to the date Shares are issued to you in settlement of the PSUs, if at all (or an appropriate book entry has been made). Except as described in the Plan, no adjustments are made for dividends or other rights if the applicable record date occurs prior to the date Shares are issued to you in settlement of the PSUs (or an appropriate book entry has been made).

i.Unfunded Arrangement. The PSUs create a contractual obligation on the part of the Company to distribute to you Shares in connection with the vesting of the PSUs at the time provided for in this Award Agreement. Neither you nor any other party claiming an interest under this Agreement shall have any interest whatsoever in any specific assets of the Company. Your right to receive Shares under this Agreement is that of an unsecured general creditor of Company.

j.Consent to Electronic Delivery. Certain statutory materials relating to the Plan may be delivered to you in electronic form. By accepting this grant, you consent to electronic delivery and acknowledge receipt of these materials, including the Plan.

This Award Agreement is not a stock certificate or a negotiable instrument.

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Appendix A

Unless otherwise provided in the Award Agreement or Plan, set forth below are the Performance Goals applicable to your Award and the method for calculating the number of your PSUs that vest at the conclusion of the Performance Period ending on ________________, 20__.

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EX-10.2

MEDIFAST, INC.

EXECUTIVE SEVERANCE PLAN

Medifast, Inc., a Delaware corporation (the “Company”), has adopted this Medifast, Inc. Executive Severance Plan (the “Plan”) to provide key employees of the Company and its affiliates and subsidiaries with severance protection under covered circumstances.

Article 1.

DEFINITIONS AND INTERPRETATIONS

Section 1.0aDefinitions. Capitalized terms used in this Plan shall have the following respective meanings, except as otherwise provided or as the context shall otherwise require:

“Annual Base Salary” shall mean the base salary paid to a Participant on an annual basis exclusive of any bonus payments, commission payments or additional payments under any benefit plan of the Company.

“Administrator” shall mean be the Compensation Committee.

“Board” shall mean the Board of Directors of the Company.

“Cause” shall mean (a) indictment or conviction for, or a please of guilty or nolo contendere to, a felony or of a criminal act involving moral turpitude; (b) gross misconduct or willful and continued failure to substantially perform employment duties reasonably requested by the Company or an affiliate, after thirty (30) days’ written notice by certified mail of such conduct or failure, and the failure of the Participant to remedy such conduct or failure; (c) fraud, embezzlement, or misappropriation of any amounts of money or other assets or property of the Company; (d) misconduct or negligence in connection with the business of the Company or an affiliate which has a substantial adverse effect on the Company or the affiliate; or (e) violation of any material policy of the Company, including the Company’s Code of Conduct and Business Ethics. Determination of Cause shall be made by the Compensation Committee in its sole discretion.

“Change in Control” shall have the meaning set forth in the Amended and Restated 2012 Share Incentive Plan or any successor to such plan.

“Change in Control Period” shall mean the 24 month period beginning on the date of a Change in Control.

“Code” shall mean the Internal Revenue Code of 1986, as amended. Reference in this Plan to any section of the Code shall be deemed to include any amendments or successor provisions to such section and any regulations under such section.

“Compensation Committee” shall mean the Compensation Committee of the Company’s Board of Directors.

“Effective Date” shall mean September 12, 2019.

“Good Reason” shall mean a Participant’s resignation of employment upon the occurrence (without the Participant’s prior written consent) of (a) a material reduction in the Participant’s Annual Base Salary or Target Bonus, (b) a material diminution in the Participant’s authority, duties or responsibilities, (c) a relocation of the Participant’s principal work location by more than 50 miles, or (d) any other action or inaction that constitutes a material breach by

the Company of any written agreement under which the Participant provides services; provided, however, that, notwithstanding the foregoing, the Participant may not resign his or her employment for Good Reason unless (i) the Participant has provided the Company with at least thirty (30) days prior written notice of his or her intent to resign for Good Reason (which notice must be provided within ninety (90) days following the occurrence of the event(s) purported to constitute Good Reason); and (ii) the Company has not remedied the alleged violation(s) within the thirty (30) day period following its receipt of such notice.

“Participants” shall mean those employees of the Company or any of its subsidiaries who are from time to time designated as Participants in accordance with Section 2.01.

“Plan” shall mean this Medifast, Inc. Executive Severance Plan, as amended, supplemented or modified from time to time in accordance with its terms.

“Qualifying Termination” shall mean a Participant’s Termination of Employment (a) by the Company and its subsidiaries without Cause or (b) by the Participant for Good Reason.

“Target Bonus” shall mean the Participant’s target annual incentive bonus.

“Termination Date” shall mean, with respect to any Participant, the actual date of the Participant’s Termination of Employment.

“Termination of Employment” shall mean the time when the employee-employer relationship between the Participant and the Company or any subsidiary of the Company is terminated for any reason, with or without Cause, including, but not by way of limitation, a termination by resignation, discharge, death, permanent disability or retirement; provided, that such “Termination of Employment” constitutes a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h).

Section 1.0bInterpretation. In this Plan, unless a clear contrary intention appears, (a) the words “herein,” “hereof” and “hereunder” refer to this Plan as a whole and not to any particular Article, Section or other subdivision, (b) reference to any Article or Section, means such Article or Section hereof and (c) the words “including” (and with correlative meaning “include”) means including, without limiting the generality of any description preceding such term. The Article and Section headings herein are for convenience only and shall not affect the construction hereof.

Article 2.

ELIGIBILITY AND BENEFITS

Section 1.0cEligible Employees. This Plan is only for the benefit of the following Participants, and no other employees, personnel, consultants or independent contractors shall be eligible to participate in this Plan or to receive any rights or benefits hereunder:

(i)Chief Executive Officer;

(ii)Chief Financial Officer; and

(iii)All other executive officers of the Company who are direct reports of the Chief Executive Officer and are at the Executive Vice President-level or above (“Other Executives”).

    2

Article 3.

SEVERANCE AND RELATED TERMINATION BENEFITS

Section 1.0aQualifying Termination. Except as set forth in Section 3.02, in the event that a Participant incurs a Qualifying Termination, then, subject to Section 3.03, such Participant shall be entitled to receive the severance benefits set forth on Exhibit A attached hereto.

Section 1.0bQualifying Termination Following Change in Control. In the event that, during the Change in Control Period, a Participant incurs a Qualifying Termination, then in lieu of the benefits payable pursuant to Section 3.01 and subject to Section 3.03, the Participant will be entitled to receive the severance benefits set forth on Exhibit B attached hereto.

Section 1.0cConditions to Receipt of Severance Benefits. A Participant’s receipt of any payment or benefits under this Article III shall be conditioned on and subject to such Participant’s execution and non-revocation of a general waiver and release of claims in favor of the Company, within the applicable time periods for execution following the Termination Date, as set forth in such agreements.

Section 1.0dOther Terminations of Employment. For the avoidance of doubt, in no event shall the Participant be entitled to any benefit under this Plan in the event that the Participant resigns without Good Reason or otherwise terminates employment due to death, permanent disability, or retirement, or is terminated by the Company for Cause.

Section 1.0eNo Duplication of Benefits. Notwithstanding anything to the contrary in this Plan, in the event that a Participant is entitled to severance benefits under any other employment agreement, severance agreement or similar agreement between the Participant and the Company, no benefits shall be payable under this Plan.

Section 1.0fPlan Unfunded; Participant's Rights Unsecured. The Company shall not be required to establish any special or separate fund or make any other segregation of funds or assets to assure the payment of any benefit hereunder. The right of any Participant to receive the benefits provided for herein shall be an unsecured claim against the general assets of the Company.

Article 4.

CLAIMS PROCEDURES

Section 1.0aInitial Claims. A Participant who believes he or she is entitled to a payment under the Plan that has not been received may submit a written claim for benefits to the Plan within 60 days after the Participant's Qualifying Termination. Claims should be addressed and sent to:

Medifast, Inc.

Chair of the Compensation Committee

100 International Drive

Baltimore, MD 21202

    3

If the Participant's claim is denied, in whole or in part, the Participant will be furnished with written notice of the denial within 90 days after the Administrator's receipt of the Participant's written claim, unless special circumstances require an extension of time for processing the claim, in which case a period not to exceed 180 days will apply. If such an extension of time is required, written notice of the extension will be furnished to the Participant before the termination of the initial 90-day period and will describe the special circumstances requiring the extension, and the date on which a decision is expected to be rendered. Written notice of the denial of the Participant's claim will contain the following information:

(i)the specific reason or reasons for the denial of the Participant's claim;

(ii)references to the specific Plan provisions on which the denial of the Participant's claim was based;

(iii)a description of any additional information or material required by the Administrator to reconsider the Participant's claim (to the extent applicable) and an explanation of why such material or information is necessary; and

(iv)a description of the Plan's review procedures and time limits applicable to such procedures, including a statement of the Participant's right to bring a civil action under Section 502(a) of ERISA following a benefit claim denial on review.

Section 1.0gAppeal of Denied Claims. If the Participant's claim is denied and he or she wishes to submit a request for a review of the denied claim, the Participant or his or her authorized representative must follow the procedures described below:

(v)Upon receipt of the denied claim, the Participant (or his or her authorized representative) may file a request for review of the claim in writing with the Administrator. This request for review must be filed no later than 60 days after the Participant has received written notification of the denial.

(vi)The Participant has the right to submit in writing to the Administrator any comments, documents, records or other information relating to his or her claim for benefits.

(vii)The Participant has the right to be provided with, upon request and free of charge, reasonable access to and copies of all pertinent documents, records and other information that is relevant to his or her claim for benefits.

(viii)The review of the denied claim will take into account all comments, documents, records and other information that the Participant submitted relating to his or her claim, without regard to whether such information was submitted or considered in the initial denial of his or her claim.

Section 1.0bAdministrator's Response to Appeal. The Administrator will provide the Participant with written notice of its decision within 60 days after the Administrator's receipt of the Participant's written claim for review. There may be special circumstances which require an extension of this 60-day period. In any such case, the Administrator will notify the Participant in writing within the 60-day period and the final decision will be made no later than 120 days after the Administrator's receipt of the Participant's written claim for review. The Administrator's decision on the Participant's claim for review will be communicated to the Participant in writing and will clearly state:

(ix)the specific reason or reasons for the denial of the Participant's claim;

    4

(x)reference to the specific Plan provisions on which the denial of the Participant's claim is based;

(xi)a statement that the Participant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, the Plan and all documents, records, and other information relevant to his or her claim for benefits; and

(xii)a statement describing the Participant's right to bring an action under Section 502(a) of ERISA.

Section 1.0aExhaustion of Administrative Remedies. The exhaustion of these claims procedures is mandatory for resolving every claim and dispute arising under the Plan. As to such claims and disputes:

(1)no claimant shall be permitted to commence any legal action to recover benefits or to enforce or clarify rights under the Plan under Section 502 or Section 510 of ERISA or under any other provision of law, whether or not statutory, until these claims procedures have been exhausted in their entirety; and

(2)in any such legal action, all explicit and implicit determinations by the Administrator (including, but not limited to, determinations as to whether the claim, or a request for a review of a denied claim, was timely filed) shall be afforded the maximum deference permitted by law.

Article 5.

MISCELLANEOUS PROVISIONS

Section 1.0cNo Mitigation. No Participant shall be required to mitigate the amount of any payment provided for in this Plan by seeking or accepting other employment following a termination of his or her employment with the Company or otherwise. The amount of any cash payment provided for in this Plan shall not be reduced by any cash compensation earned by a Participant as the result of employment by another employer or by retirement benefits.

Section 1.0dAmendment or Termination. The Board may amend or terminate the Plan at any time; provided, however, that no such termination or amendment may materially and adversely affect any rights of any Participant who has incurred a Qualifying Termination prior to the date of such termination or amendment; and provided, further, that the Plan cannot be terminated or materially amended during the Change in Control Period. Notwithstanding the foregoing, the Plan shall terminate when all of the obligations to Participants hereunder have been satisfied in full.

Section 1.0eEnforceability. The failure of a Participant or the Company or any of its subsidiaries to insist upon strict adherence to any term of the Plan on any occasion shall not be considered a waiver of such party's rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of the Plan.

Section 1.0fGoverning Law. This Plan shall be governed by and construed in accordance with the laws of the State of Maryland, without giving effect to its conflict of laws rules, and applicable federal law.

Section 1.0gTax Withholding. The Company shall have the right to deduct from any payment or benefit hereunder all federal, state and local taxes which are required to be withheld therefrom.

    5

Section 1.0hPlan Administration. The Compensation Committee shall have full and final authority to make determinations with respect to the administration of this Plan, to construe and interpret its provisions and to take all other actions deemed necessary or advisable for the proper administration of this Plan, but such authority shall be subject to the provisions of this Plan.

Section 1.0iSuccessors and Assigns. This Plan shall be binding upon and inure to the benefit of the Company and its successors and assigns. This Plan and all rights of each Participant shall inure to the benefit of and be enforceable by each such Participant and his or her personal or legal representatives, executors, administrators, heirs and permitted assigns. If any Participant should die while any amounts are due and payable to such Participant hereunder, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Plan to such Participant’s devisees, legatees or other designees or, if there be no such devisees, legatees or other designees, to such Participant’s estate. No payments, benefits or rights arising under this Plan may be assigned or pledged by any Participant, except under the laws of descent and distribution.

Section 1.0jNotices. All notices and other communications provided for in this Plan shall be in writing and shall be sent, delivered or mailed, addressed as follows: (a) if to the Company, at the Company’s principal office address or such other address as the Company may have designated by written notice to all Participants for purposes hereof, directed to the attention of the Chief Financial Officer of the Company (or such other officer as may be designated by the Company), and (b) if to any Participant, at his or her residence address on the records of the Company or to such other address as he or she may have designated to the Company in writing for purposes hereof. Each such notice or other communication shall be deemed to have been duly given or mailed by United States certified or registered mail, return receipt requested, postage prepaid, except that any change of notice address shall be effective only upon receipt.

Section 1.0kNo Employment Rights Conferred. The Plan does not alter the status of each Participant as an at-will employee of the Company. This Plan shall not be deemed to create a contract of employment between any Participant and the Company and/or any of its subsidiaries. Nothing contained in this Plan shall (a) confer upon any Participant any right with respect to continuation of employment with the Company or any of its subsidiaries or (b) subject to the rights and benefits of any Participant hereunder, interfere in any way with the right of the Company or any of its subsidiaries to terminate such Participant's employment at any time.

Section 1.jSeverability. If any provision of the Plan is, becomes, or is deemed to be invalid, illegal, or unenforceable in any respect, the validity, legality, and enforceability of the remaining provisions of this Plan shall not be affected thereby.

Section 1.kSection 409A.

(1)The Plan is intended to comply with Section 409A of the Code or an exemption thereunder and shall be construed and administered in accordance with Section 409A of the Code. Notwithstanding any other provision of the Plan, payments provided under the Plan may only be made upon an event and in a manner that complies with Section 409A of the Code or an applicable exemption. Any payments under the Plan that may be excluded from Section 409A of the Code either as separation pay due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A of the Code to the maximum extent possible. For purposes of Section 409A of the Code, each installment payment provided under the Plan shall be treated as a separate payment. Any payments to be made under the Plan upon a termination of employment shall only be made upon a "separation from service" under Section

    6

409A of the Code. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under the Plan comply with Section 409A of the Code and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest, or other expenses that may be incurred by a Participant on account of non-compliance with Section 409A of the Code.

(2)Notwithstanding any other provision of the Plan, if any payment or benefit provided to a Participant in connection with his or her Qualifying Termination is determined to constitute "nonqualified deferred compensation" within the meaning of Section 409A of the Code and the Participant is determined to be a "specified employee" as defined in Section 409A(a)(2)(b)(i) of the Code, then such payment or benefit shall not be paid until the first payroll date to occur following the six-month anniversary of the Qualifying Termination or, if earlier, on the Participant's death (the "Specified Employee Payment Date"). The aggregate of any payments that would otherwise have been paid before the Specified Employee Payment Date shall be paid to the Participant in a lump sum on the Specified Employee Payment Date and thereafter, any remaining payments shall be paid without delay in accordance with their original schedule. Notwithstanding any other provision of the Plan, if any payment or benefit is conditioned on the Participant's execution of a Release/Severance Agreement, the first payment shall include all amounts that would otherwise have been paid to the Participant during the period beginning on the date of the Qualifying Termination and ending on the payment date if no delay had been imposed.

(3)To the extent required by Section 409A of the Code, each reimbursement or in-kind benefit provided under the Plan shall be provided in accordance with the following: (i) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during each calendar year cannot affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year; and (ii) any right to reimbursements or in-kind benefits under the Plan shall not be subject to liquidation or exchange for another benefit.

    7

IN WITNESS WHEREOF, and as conclusive evidence of the adoption of this Plan, Medifast, Inc. has caused this Plan to be duly executed in its name and behalf by its proper officer thereunto duly authorized as of the Effective Date.

__/s/ DANIEL R. CHARD_________________November 7, 2019__________________    

Daniel R. Chard,                    Date

Chief Executive Officer,

Medifast, Inc.

    8

Exhibit A

Amended on September 10, 2020

Qualifying Termination (General)

	Cash Severance	Annual Bonus – Year of Termination	Stock Options	Time-Based Restricted Shares or Deferred Shares	Performance-Based Restricted Shares or Deferred Shares
Chief Executive Officer	1.5 times the sum of the Annual Base Salary and the Target Bonus	Pro-rated annual bonus for year of termination, based on the number of full months during the year the Participant was employed, paid at the end of the year based on actual Company performance	Fully vest and remain exercisable for 90 days	Vest on a pro-rata basis, based on the number of full months during the vesting period the Participant was employed	Vest on a pro-rata basis, based on the number of full months during the performance period the Participant was employed, paid out at the end of the performance period based on actual performance
Other Executives	1 times the sum of the Annual Base Salary and the Target Bonus

The Cash Severance shall be paid in a lump sum, no later than 30 days following the Termination Date, subject to Section 3.03. The Annual Bonus – Year of Termination will be paid at the same time the annual bonus is paid to active employees, subject to Section 3.03.

    9

Exhibit B

Amended on June 16, 2022

Qualifying Termination Following Change in Control

	Cash Severance	Annual Bonus – Year of Termination	Stock Options	Time-Based Restricted Shares or Deferred Shares	Performance-Based Restricted Shares or Deferred Shares
Chief Executive Officer	2.5 times the sum of the Annual Base Salary and the Target Bonus	Bonus for year of termination, pro-rated based on the number of full months during the year the Participant was employed, based on the greater of (i) target level performance OR (ii) actual Company performance as determined by the most recent forecast as of the date of termination	Fully vest and remain exercisable for 90 days	Fully vest	Vest on a pro-rata basis, based on the number of full months during the performance period the Participant was employed, at the greater of (i) target level performance OR (ii) actual Company performance as determined by the most recent financial projections/forecast used for accrual purposes as of the date of termination. For those PSU grants that may contain a PSU kicker, the kicker shall be calculated based on the Company’s most current projection of performance
Other Executives	1.5 times the sum of the Annual Base Salary and the Target Bonus

Cash Severance and Annual Bonus – Year of Termination shall be paid in a lump sum, no later than 30 days following the Termination Date, subject to Section 3.03. 

    10

    11

EX-31.1

Exhibit 31.1

RULE 13a-14(a) CERTIFICATION

I, Daniel R. Chard, certify that:

1.I have reviewed this report on Form 10-Q of Medifast, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	August 3, 2022	/s/    Daniel R. Chard
		Daniel R. Chard
		Chief Executive Officer

EX-31.2

Exhibit 31.2

RULE 13a-14(a) CERTIFICATION

I, James P. Maloney, certify that:

1.I have reviewed this report on Form 10-Q of Medifast, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	August 3, 2022	/s/    James P. Maloney
		James P. Maloney
		Chief Financial Officer

EX-32.1

Exhibit 32.1

MEDIFAST, INC.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q (the “Report”) for the quarter ended March 31, 2022 of Medifast, Inc. (the “Company”), as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Daniel R. Chard, Chief Executive Officer and I, James P. Maloney, Chief Financial Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of the operations of the Company.

By:	/s/ DANIEL R. CHARD
	Daniel R. Chard
	Chief Executive Officer
	August 3, 2022
	/s/ JAMES P. MALONEY
	James P. Maloney
	Chief Financial Officer
	August 3, 2022

XML

Cover - shares	6 Months Ended
	Jun. 30, 2022	Jul. 25, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2022
Document Transition Report	false
Entity File Number	001-31573
Entity Registrant Name	Medifast, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	13-3714405
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
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	MED
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		11,017,899
Entity Central Index Key	0000910329
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Income Statement [Abstract]
Revenue	$ 453,333	$ 394,189	$ 870,933	$ 734,858
Cost of sales	131,651	100,482	246,965	192,604
Gross profit	321,682	293,707	623,968	542,254
Selling, general, and administrative	272,718	232,273	519,917	428,021
Income from operations	48,964	61,434	104,051	114,233
Other expense
Interest expense	(164)	(67)	(259)	(44)
Other expense	(4)	(22)	(20)	(3)
Total other (expense) income	(168)	(89)	(279)	(47)
Income from operations before income taxes	48,796	61,345	103,772	114,186
Provision for income taxes	9,683	14,382	22,878	26,160
Net income	$ 39,113	$ 46,963	$ 80,894	$ 88,026
Basic earnings per share
Earnings per share - basic (in dollars per share)	$ 3.44	$ 4.00	$ 7.06	$ 7.48
Diluted earnings per share
Earnings per share - diluted (in dollars per share)	$ 3.42	$ 3.96	$ 7.01	$ 7.42
Weighted average shares outstanding -
Basic (in shares)	11,354	11,753	11,455	11,762
Diluted (in shares)	11,435	11,858	11,534	11,869
Cash dividends declared per share (in dollars per share)	$ 1.64	$ 1.42	$ 3.28	$ 2.84

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Statement of Comprehensive Income [Abstract]
Net income	$ 39,113	$ 46,963	$ 80,894	$ 88,026
Other comprehensive income (loss), net of tax:
Foreign currency translation	148	(11)	177	67
Unrealized losses on investment securities	(7)	(17)	(21)	(33)
Other comprehensive income (loss), net of tax	141	(28)	156	34
Comprehensive income	$ 39,254	$ 46,935	$ 81,050	$ 88,060

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Current Assets
Cash and cash equivalents	$ 61,069	$ 104,183
Inventories	156,974	180,043
Investment securities	0	5,361
Income taxes, prepaid	8,547	945
Prepaid expenses and other current assets	16,710	16,334
Total current assets	243,300	306,866
Property, plant and equipment - net of accumulated depreciation	58,544	56,131
Right-of-use assets	21,347	24,457
Other assets	12,955	6,468
Deferred tax assets	4,404	4,404
TOTAL ASSETS	340,550	398,326
Current Liabilities
Accounts payable and accrued expenses	154,782	163,309
Revolving credit facility	27,000	0
Current lease obligations	6,378	6,523
Total current liabilities	188,160	169,832
Lease obligations, net of current lease obligations	22,914	26,020
Total liabilities	211,074	195,852
Stockholders' Equity
Common stock, par value $.001 per share: 20,000 shares authorized; 11,594 and 11,594 issued and 11,593 and 11,593 outstanding at March 31, 2022 and December 31, 2021, respectively	11	12
Additional paid-in capital	0	12,018
Accumulated other comprehensive income	268	111
Retained earnings	129,197	190,333
Total stockholders' equity	129,476	202,474
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 340,550	$ 398,326

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands	Jun. 30, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	20,000	20,000
Common stock, issued (in shares)	11,019	11,594
Common stock, outstanding (in shares)	11,018	11,593

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Operating Activities
Net income	$ 80,894	$ 88,026
Adjustments to reconcile net income to cash provided by operating activities
Depreciation and amortization	5,176	2,453
Non-cash lease expense	3,211	2,187
Share-based compensation	5,140	4,344
Amortization of premium on investment securities	14	49
Change in operating assets and liabilities:
Inventories	23,069	(42,398)
Income taxes, prepaid	(7,602)	0
Prepaid expenses and other current assets	(376)	(4,657)
Other assets	(8,169)	(762)
Accounts payable and accrued expenses	(13,922)	36,962
Net cash flow provided by operating activities	87,435	86,204
Investing Activities
Sale and maturities of investment securities	5,267	5,145
Purchase of property and equipment	(5,849)	(12,196)
Net cash flow used in investing activities	(582)	(7,051)
Financing Activities
Borrowing under revolving credit facility	27,000	0
Options exercised by executives and directors	0	702
Net shares repurchased for taxes	(1,479)	(1,833)
Cash dividends paid to stockholders	(35,617)	(30,095)
Stock repurchases, settled	(100,038)	(19,730)
Stock repurchases, not yet settled	(20,010)	0
Net cash flow used in financing activities	(130,144)	(50,956)
Foreign currency impact	177	67
(Decrease) Increase in cash and cash equivalents	(43,114)	28,264
Cash and cash equivalents - beginning of the period	104,183	163,723
Cash and cash equivalents - end of period	61,069	191,987
Supplemental disclosure of cash flow information:
Income taxes paid	30,283	26,751
Dividends declared included in accounts payable	$ 19,305	$ 17,531

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Income	Retained Earnings	Treasury Stock
Balance (in shares) at Dec. 31, 2020		11,822
Balance at Dec. 31, 2020	$ 157,246	$ 12	$ 7,842	$ 41	$ 154,351	$ (5,000)
Net income	41,063				41,063
Share-based compensation (in shares)		13
Share-based compensation	2,198		2,198
Options exercised by executives and directors (in shares)		11
Options exercised by executives and directors	481		481
Net shares repurchased for taxes (in shares)		(7)
Net shares repurchased for taxes	(1,807)		(1,807)
Treasury stock from stock repurchases	(7,500)					(7,500)
Other comprehensive income	62			62
Cash dividends declared to stockholders	(16,852)				(16,852)
Balance (in shares) at Mar. 31, 2021		11,839
Balance at Mar. 31, 2021	174,891	$ 12	8,714	103	178,562	(12,500)
Balance (in shares) at Dec. 31, 2020		11,822
Balance at Dec. 31, 2020	157,246	$ 12	7,842	41	154,351	(5,000)
Net income	$ 88,026
Net shares repurchased for taxes (in shares)	(7)
Other comprehensive income	$ 34
Balance (in shares) at Jun. 30, 2021		11,738
Balance at Jun. 30, 2021	194,689	$ 12	10,606	75	185,343	(1,347)
Balance (in shares) at Mar. 31, 2021		11,839
Balance at Mar. 31, 2021	174,891	$ 12	8,714	103	178,562	(12,500)
Net income	46,963				46,963
Share-based compensation (in shares)		10
Share-based compensation	1,839		1,697		142
Options exercised by executives and directors (in shares)		3
Options exercised by executives and directors	221		221
Net shares repurchased for taxes	(26)		(26)			0
Treasury stock from stock repurchases	$ (12,230)					(12,230)
Treasury stock retire from stock repurchases (in shares)	(114)
Treasury stock retired from stock repurchases	$ 0				(23,383)	23,383
Other comprehensive income	(28)			(28)		0
Cash dividends declared to stockholders	(16,941)				(16,941)
Balance (in shares) at Jun. 30, 2021		11,738
Balance at Jun. 30, 2021	194,689	$ 12	10,606	75	185,343	(1,347)
Balance (in shares) at Dec. 31, 2021		11,594
Balance at Dec. 31, 2021	202,474	$ 12	12,018	111	190,333	0
Net income	41,781				41,781
Share-based compensation (in shares)		18
Share-based compensation	2,275		2,275
Net shares repurchased for taxes (in shares)		(8)
Net shares repurchased for taxes	(1,459)		(1,459)
Treasury stock from stock repurchases	(10,000)					(10,000)
Treasury stock retire from stock repurchases (in shares)		(51)
Treasury stock retired from stock repurchases	0				(10,000)	10,000
Other comprehensive income	16			16
Cash dividends declared to stockholders	(19,063)				(19,063)
Balance (in shares) at Mar. 31, 2022		11,553
Balance at Mar. 31, 2022	216,024	$ 12	12,834	127	203,051	0
Balance (in shares) at Dec. 31, 2021		11,594
Balance at Dec. 31, 2021	202,474	$ 12	12,018	111	190,333	0
Net income	$ 80,894
Net shares repurchased for taxes (in shares)	(8)
Other comprehensive income	$ 156
Balance (in shares) at Jun. 30, 2022		11,019
Balance at Jun. 30, 2022	129,476	$ 11	0	268	129,197	0
Balance (in shares) at Mar. 31, 2022		11,553
Balance at Mar. 31, 2022	216,024	$ 12	12,834	127	203,051	0
Net income	39,113				39,113
Share-based compensation (in shares)		1
Share-based compensation	2,865		2,865
Net shares repurchased for taxes	(20)		(20)			0
Treasury stock from stock repurchases	$ (90,038)					(90,038)
Treasury stock retire from stock repurchases (in shares)	(535)
Treasury stock retired from stock repurchases	$ (1)				(90,038)	90,038
Stock repurchases, not yet settled	(20,010)		(15,679)		(4,331)
Other comprehensive income	141			141
Cash dividends declared to stockholders	(18,598)				(18,598)
Balance (in shares) at Jun. 30, 2022		11,019
Balance at Jun. 30, 2022	$ 129,476	$ 11	$ 0	$ 268	$ 129,197	$ 0

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation - The accompanying unaudited condensed consolidated financial statements of Medifast, Inc. and its wholly-owned subsidiaries (“Medifast,” the “Company,” “we,” “us,” or “our”) included herein have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim reporting and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and notes that are normally required by GAAP have been condensed or omitted. However, in the opinion of management, all adjustments consisting of normal, recurring adjustments considered necessary for a fair presentation of the financial position and results of operations have been included and management believes the disclosures that are made are adequate to make the information presented not misleading. The condensed consolidated balance sheet at December 31, 2021 has been derived from the audited consolidated financial statements at that date included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (“2021 Form 10-K”).

The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of results that may be expected for the fiscal year ending December 31, 2022. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the 2021 audited consolidated financial statements and notes thereto, which are included in the 2021 Form 10-K.

Presentation of Financial Statements - The unaudited condensed consolidated financial statements included herein include the accounts of the Company. All significant intercompany accounts and transactions have been eliminated.

Reclassification - Certain amounts reported for prior periods have been reclassified to be consistent with the current period presentation. No reclassification in the condensed consolidated financial statements had a material impact on the presentation.

Use of Estimates - The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates.

Accounting Pronouncements Adopted in 2022

In March 2020, the FASB issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for a limited time to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying accounting principles under GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met and to other derivative instruments if there is a change to the interest rates used for discounting, margining or contract price alignment. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. We adopted Topic 848 beginning in the first quarter of fiscal 2022 without any material impact on the Company's financial position and results of operations.

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INVENTORIES

6 Months Ended

Jun. 30, 2022

Inventory Disclosure [Abstract]

INVENTORIES

INVENTORIESInventories consist principally of raw materials, non-food finished goods and packaged meal replacements held in the Company’s warehouses and outsourced distribution centers. Inventories are stated at the lower of cost or net realizable value, utilizing the first-in, first-out method. The cost of finished goods includes the cost of raw materials, packaging supplies, direct

and indirect labor and other indirect manufacturing costs. On a quarterly basis, management reviews inventories for unsalable or obsolete inventories.

The Company donated inventory with an aggregate cost of $9.4 million to Ukrainian refugees and those in need in Ukraine, increasing SG&A during the three months ended June 30, 2022. The donations were made to two 501(c)(3) organizations that are coordinating the distribution throughout refugee camps in Europe and in Ukraine.

Inventories consisted of the following (in thousands):

	June 30, 2022		December 31, 2021
Raw materials	$	12,942	$	15,196
Packaging	2,987		3,641
Non-food finished goods	12,810		15,991
Finished goods	131,435		152,687
Reserve for obsolete inventory	(3,200)		(7,472)
Total	$	156,974	$	180,043

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EARNINGS PER SHARE

6 Months Ended

Jun. 30, 2022

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHARE

Basic earnings per share (“EPS”) computations are calculated utilizing the weighted average number of shares of the Company’s common stock outstanding during the periods presented. Diluted EPS is calculated utilizing the weighted average number of shares of the Company’s common stock outstanding adjusted for the effect of dilutive common stock equivalents.

The following table sets forth the computation of basic and diluted EPS (in thousands, except per share data):

	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
Numerator:
Net income	$	39,113	$	46,963	$	80,894	$	88,026
Denominator:
Weighted average shares of common stock outstanding	11,354		11,753		11,455		11,762
Effect of dilutive common stock equivalents	81		105		79		107
Weighted average shares of common stock outstanding	11,435		11,858		11,534		11,869
Earnings per share - basic	$	3.44	$	4.00	$	7.06	$	7.48
Earnings per share - diluted	$	3.42	$	3.96	$	7.01	$	7.42

The calculation of diluted EPS excluded 3 and 0 antidilutive restricted stock awards for the three months ended June 30, 2022 and 2021, respectively, and 1 and 0 antidilutive restricted stock awards for the six months ended June 30, 2022 and 2021, respectively. EPS is computed independently for each of the periods presented above, and accordingly, the sum of the quarterly earnings per common share may not equal the year-to-date total computed.

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SHARE-BASED COMPENSATION

6 Months Ended

Jun. 30, 2022

Share-based Payment Arrangement [Abstract]

SHARE-BASED COMPENSATION

SHARE-BASED COMPENSATION

Stock Options

The Company has issued non-qualified and incentive stock options to employees and non-employee directors. The fair value of these options are estimated on the date of grant using the Black-Scholes option pricing model, which requires estimates of the expected term of the option, the risk-free interest rate, the expected volatility of the price of the Company’s common stock, and

dividend yield. Options outstanding as of June 30, 2022 generally vest over a period of three years and expire ten years from the date of grant. The exercise price of these options ranges from $26.52 to $66.68. Due to the Company’s lack of option exercise history on the date of grant, the expected term is calculated using the simplified method defined as the midpoint between the vesting period and the contractual term of each option. The risk free interest rate is based on the U.S. Treasury yield curve in effect on the date of grant that most closely corresponds to the expected term of the option. The expected volatility is based on the historical volatility of the Company’s common stock over the period of time equivalent to the expected term for each award. The dividend yield is computed as the annualized dividend rate at the grant date divided by the strike price of the stock option. For the six months ended June 30, 2022 and 2021, the Company did not grant stock options.

The following table is a summary of our stock option activity (in thousands, except per share data):

	Six months ended June 30,
	2022			2021
	Awards	Weighted-Average Exercise Price		Awards	Weighted-Average Exercise Price
Outstanding at beginning of period	33	$	54.98	61	$	48.19
Exercised	—	—		(14)	50.58
Outstanding at end of the period	33	$	54.98	47	$	47.51
Exercisable at end of the period	28	$	52.76	38	$	42.18

As of June 30, 2022, the weighted-average remaining contractual life for outstanding stock options was 4.8 years with an aggregate intrinsic value of $4.2 million and the weighted-average remaining contractual life for exercisable stock options was 4.7 years with an aggregate intrinsic value of $3.6 million. The unrecognized compensation expense calculated under the fair value method for stock options expected to vest as of June 30, 2022 was $0.1 million and is expected to be recognized over a weighted-average period of 0.6 year. For the six months ended June 30, 2022, there was no exercise activity of stock options. For the six months ended June 30, 2021, the Company received $0.7 million in cash proceeds from the exercise of stock options. The total intrinsic value for stock options exercised during the six months ended June 30, 2021 was $2.3 million.

Restricted Stock

The Company has issued restricted stock to employees and non-employee directors generally with vesting terms up to five years after the date of grant. The fair value of the restricted stock is equal to the market price of the Company’s common stock on the date of grant. Expense for restricted stock is amortized ratably over the vesting period.

The following table summarizes our restricted stock activity (in thousands, except per share data):

	Six months ended June 30,
	2022			2021
	Shares	Weighted-Average Grant Date Fair Value		Shares	Weighted-Average Grant Date Fair Value
Outstanding at beginning of period	44	$	183.51	50	$	116.06
Granted	38	176.81		21	267.15
Vested	(19)	155.57		(25)	113.91
Forfeited	(1)	186.53		(2)	154.91
Outstanding at end of the period	62	$	187.80	44	$	182.96

The Company withheld approximately 8,000 and 7,000 shares of the Company’s common stock to cover minimum tax liability withholding obligations upon the vesting of shares of restricted stock for the six months ended June 30, 2022 and 2021, respectively. The total fair value of restricted stock awards vested during the six months ended June 30, 2022 and 2021 was $3.3 million and $6.7 million, respectively.

Market and Performance-based Share Awards

The Company has issued market and performance-based share awards to certain key executives who were granted deferred shares and may earn between 0% and 250% of the target number depending upon both the Company's total stockholder return and the Company's performance against predetermined performance goals over a three-year performance period after the date of grant. Market and performance-based share awards that are tied to the Company’s total stockholder return are valued using the Monte Carlo method and are recognized ratably as expense over the award’s performance period. The fair value of the performance-based share awards is equal to the market price of the Company’s common stock on the date of grant adjusted by expected level of achievement over the performance period. Expense for performance-based share awards is amortized ratably over the performance period.

Share-based compensation expense is recorded in selling, general, and administrative expense in the accompanying Condensed Consolidated Statements of Income. The total expenses during the three months ended June 30, 2022 and 2021 are as follows (in thousands):

	Three months ended June 30,
	2022			2021
	Shares	Share-Based Compensation Expense		Shares	Share-Based Compensation Expense
Options and restricted stock	86	$	1,311	103	$	938
Market and performance-based share awards granted in 2022	25	433		—	—
Performance-based share awards granted in 2021	15	647		14	54
Performance-based share awards granted in 2020	26	474		28	495
Performance-based share awards granted in 2019	—	—		17	711
Total share-based compensation	152	$	2,865	162	$	2,198

The total expenses during the six months ended June 30, 2022 and 2021 are as follows (in thousands):

	Six months ended June 30,
	2022			2021
	Shares	Share-Based Compensation Expense		Shares	Share-Based Compensation Expense
Options and restricted stock	91	$	2,398	91	$	2,059
Market and performance-based share awards granted in 2022	25	512		—	—
Performance-based share awards granted in 2021	15	1,287		14	357
Performance-based share awards granted in 2020	26	943		28	850
Performance-based share awards granted in 2019	—	—		17	1,078
Total share-based compensation	157	$	5,140	150	$	4,344

The total income tax benefit recognized in the accompanying Condensed Consolidated Statements of Income for restricted stock awards was $0.4 million and $0.9 million for the three months ended June 30, 2022 and 2021, respectively, and $0.9 million and $2.1 million for the six months ended June 30, 2022 and 2021, respectively.

There was $8.9 million of total unrecognized compensation cost related to restricted stock awards as of June 30, 2022, which is expected to be recognized over a weighted-average period of 2.0 years. There was $9.4 million of unrecognized compensation costs related to the 65,477 performance-based shares discussed above as of June 30, 2022, which is expected to be recognized over a weighted-average period of 2.1 years.

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LEASES

6 Months Ended

Jun. 30, 2022

Leases [Abstract]

LEASES

LEASES

Operating Leases

The Company has operating leases for office and warehouse space and certain equipment. In certain of the Company’s lease agreements, the rental payments are adjusted periodically based on defined terms within the lease. The Company did not have any finance leases as of June 30, 2022 and 2021, respectively, or for the six-month periods then ended, respectively.

Our leases relating to office and warehouse space have lease terms of 18 months to 126 months. Our leases relating to equipment have lease terms of 24 months to 203 months, with certain of them having automatic renewal clauses.

The Company’s warehouse agreements also contain non-lease components, in the form of payments towards variable logistics services and labor charges, which the Company is obligated to pay based on the services consumed by it. Such amounts are not included in the measurement of the lease liability but are recognized as expenses when they are incurred.

The operating lease expense was $1.7 million and $1.4 million for the three months ended June 30, 2022 and 2021, respectively, and $3.5 million and $2.4 million for the six months ended June 30, 2022 and 2021, respectively.

Supplemental cash flow information related to the Company’s operating leases was as follows (in thousands):

	Six months ended June 30,
	2022		2021
Cash paid for amounts included in the measurements of lease liabilities
Operating cash flow used in operating leases	$	3,674	$	2,005
Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	103	$	9,745

As of June 30, 2022, the weighted average remaining lease term was 5.3 years and the weighted average discount rate was 2.1%.

The following table presents the maturity of the Company’s operating lease liabilities as of June 30, 2022 (in thousands):

2022 (excluding the six months ended June 30, 2022)	$	3,525
2023	6,241
2024	5,693
2025	5,825
2026	4,160
Thereafter	5,412
Total lease payments	$	30,856
Less: imputed interest	(1,564)
Total	$	29,292

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ACCUMULATED OTHER COMPREHENSIVE INCOME

6 Months Ended

Jun. 30, 2022

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

ACCUMULATED OTHER COMPREHENSIVE INCOME

ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table sets forth the components of accumulated other comprehensive income, net of tax where applicable (in thousands):

	June 30, 2022		December 31, 2021
Foreign currency translation	$	268	$	90
Unrealized gains on investment securities	—		21
Accumulated other comprehensive income	$	268	$	111

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FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2022

Investments, All Other Investments [Abstract]

FINANCIAL INSTRUMENTS

FINANCIAL INSTRUMENTS

Certain financial assets and liabilities are accounted for at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following fair value hierarchy prioritizes the inputs used to measure fair value:

Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies.

Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value from the perspective of a market participant.

The following tables present the Company’s cash and financial assets that are measured at fair value on a recurring basis for each of the hierarchy levels (in thousands):

	June 30, 2022
	Cost		Unrealized Gains		Accrued Interest		Estimated Fair Value		Cash & Cash Equivalents		Investment Securities
Cash	$	60,277	$	—	$	—	$	60,277	$	60,277	$	—
Level 1:
Money market accounts	792		—		—		792		792		—
Total	$	61,069	$	—	$	—	$	61,069	$	61,069	$	—

	December 31, 2021
	Cost		Unrealized Gains		Accrued Interest		Estimated Fair Value		Cash & Cash Equivalents		Investment Securities
Cash	$	94,824	$	—	$	—	$	94,824	$	94,824	$	—
Level 1:
Money market accounts	9,359		—		—		9,359		9,359		—
Government & agency securities	1,401		12		—		1,413		—		1,413
	10,760		12		—		10,772		9,359		1,413
Level 2:
Municipal bonds	3,880		9		59		3,948		—		3,948
Total	$	109,464	$	21	$	59	$	109,544	$	104,183	$	5,361

The Company had a realized loss of $0.2 million for the three and six months ended June 30, 2022 and no realized gain or losses for the three and six months ended June 30, 2021.

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DEBT

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

DEBT

DEBT

Credit Agreement

On April 13, 2021, the Company and certain of its subsidiaries (collectively, the “Guarantors”) entered into a credit agreement (the “Credit Agreement”) among the Company, the Guarantors, the lenders party thereto and Citibank, N.A., in its capacity as administrative agent. On May 31, 2022, the Credit Agreement was amended to increase the borrowing capacity and convert the interest rate to be based on Secured Overnight Financing Rate (SOFR), from London Inter-Bank Offered Rate (LIBOR) (the “Amended Credit Agreement”). The Amended Credit Agreement provides for a $225.0 million senior secured revolving credit facility with a $20.0 million letter of credit sublimit. The Amended Credit Agreement also provides for an uncommitted incremental facility that permits the Company, subject to certain conditions, to increase the senior secured revolving credit facility by up to $100.0 million. The Amended Credit Agreement matures on April 13, 2026.

The Company’s obligations under the Amended Credit Agreement are guaranteed by the Guarantors. The obligations of the Company and the Guarantors are secured by first-priority liens on substantially all of the assets of the Company and the Guarantors, subject to certain exceptions.

Under the Amended Credit Agreement, the Company will pay to the administrative agent for the account of each revolving lender a commitment fee on a quarterly basis based on amounts committed but unused under the revolving facility from 0.20% to 0.40% per annum depending on the Company’s Total Net Leverage Ratio (as defined in the Amended Credit Agreement). The Company is also obligated to pay the administrative agent customary fees for credit facilities of this size and type.

Revolving borrowings under the Amended Credit Agreement bear interest at a rate per annum equal to (i) the Term SOFR Rate for the interest period plus the Applicable Rate (as defined in the Amended Credit Agreement) based on the Company’s Total Net Leverage Ratio or (ii) the Alternate Base Rate (as defined in the Amended Credit Agreement) as in effect from time to time plus the Applicable Rate based on the Company’s Total Net Leverage Ratio. As of June 30, 2022, the Applicable Rate for Term SOFR Loans is 1.25% per annum and the Applicable Rate for ABR Loans is 0.25% per annum. SOFR based loans also include a Credit Spread Adjustment based on the duration of the borrowing.

The Amended Credit Agreement contains affirmative and negative covenants customarily applicable to senior secured credit facilities, including covenants that, among other things, limit or restrict the ability of the Company and its subsidiaries, subject to negotiated exceptions, to incur additional indebtedness and additional liens on their assets, engage in mergers or acquisitions or dispose of assets, pay dividends or make other distributions, voluntarily prepay other indebtedness, enter into transactions with affiliated persons, make investments and change the nature of their businesses. The Amended Credit Agreement also contains customary events of default, subject to thresholds and grace periods, including, among others, payment default, covenant default, cross default to other material indebtedness and judgment default. In addition, the Amended Credit Agreement requires the Company to maintain a Total Net Leverage Ratio of no more than 2.75 to 1.00 and an Interest Coverage Ratio of at least 3.50 to 1.00.

The Company has $27.0 million of borrowings outstanding under the Amended Credit Agreement as of June 30, 2022.

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ACCELERATED SHARE REPURCHASE ("ASR")	6 Months Ended
	Jun. 30, 2022
Equity [Abstract]
ACCELERATED SHARE REPURCHASE ("ASR")	ACCELERATED SHARE REPURCHASE (“ASR”) PROGRAMIn the second quarter of fiscal 2022, the Company entered into an ASR agreement with JPMorgan Chase, National Association ("JPMorgan Chase") to purchase shares of its common stock from JPMorgan Chase for an aggregate purchase price of $100.0 million. Pursuant to the ASR program, the Company received an initial delivery of approximately 480 thousand shares of common stock based on the closing price of the common stock on May 31, 2022. As a result, approximately $20.0 million remains at JPMorgan Chase for additional repurchases until the completion of the ASR program. The final number of shares that will be delivered to the Company under the ASR agreement will be based on the average of the daily volume-weighted average trading prices of the Company’s common stock during the term of the ASR program, less a discount. The Company expects to receive the remaining shares no later than October 3, 2022. The effect of the potential share settlement is excluded in the diluted EPS calculation as the effect is anti-dilutive.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation - The accompanying unaudited condensed consolidated financial statements of Medifast, Inc. and its wholly-owned subsidiaries (“Medifast,” the “Company,” “we,” “us,” or “our”) included herein have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim reporting and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and notes that are normally required by GAAP have been condensed or omitted. However, in the opinion of management, all adjustments consisting of normal, recurring adjustments considered necessary for a fair presentation of the financial position and results of operations have been included and management believes the disclosures that are made are adequate to make the information presented not misleading. The condensed consolidated balance sheet at December 31, 2021 has been derived from the audited consolidated financial statements at that date included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (“2021 Form 10-K”).

The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of results that may be expected for the fiscal year ending December 31, 2022. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the 2021 audited consolidated financial statements and notes thereto, which are included in the 2021 Form 10-K.

Presentation of Financial Statements

Presentation of Financial Statements - The unaudited condensed consolidated financial statements included herein include the accounts of the Company. All significant intercompany accounts and transactions have been eliminated.

Reclassification

Reclassification - Certain amounts reported for prior periods have been reclassified to be consistent with the current period presentation. No reclassification in the condensed consolidated financial statements had a material impact on the presentation.

Use of Estimates

Use of Estimates - The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates.

Accounting Pronouncements Adopted in 2022

Accounting Pronouncements Adopted in 2022 In March 2020, the FASB issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for a limited time to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying accounting principles under GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met and to other derivative instruments if there is a change to the interest rates used for discounting, margining or contract price alignment. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. We adopted Topic 848 beginning in the first quarter of fiscal 2022 without any material impact on the Company's financial position and results of operations.

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INVENTORIES (Tables)

6 Months Ended

Jun. 30, 2022

Inventory Disclosure [Abstract]

Schedule of Inventories

Inventories consisted of the following (in thousands):

	June 30, 2022		December 31, 2021
Raw materials	$	12,942	$	15,196
Packaging	2,987		3,641
Non-food finished goods	12,810		15,991
Finished goods	131,435		152,687
Reserve for obsolete inventory	(3,200)		(7,472)
Total	$	156,974	$	180,043

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EARNINGS PER SHARE (Tables)

6 Months Ended

Jun. 30, 2022

Earnings Per Share [Abstract]

Schedule of the Table Sets Forth the Computation of Basic and Diluted EPS

The following table sets forth the computation of basic and diluted EPS (in thousands, except per share data):

	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
Numerator:
Net income	$	39,113	$	46,963	$	80,894	$	88,026
Denominator:
Weighted average shares of common stock outstanding	11,354		11,753		11,455		11,762
Effect of dilutive common stock equivalents	81		105		79		107
Weighted average shares of common stock outstanding	11,435		11,858		11,534		11,869
Earnings per share - basic	$	3.44	$	4.00	$	7.06	$	7.48
Earnings per share - diluted	$	3.42	$	3.96	$	7.01	$	7.42

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SHARE-BASED COMPENSATION (Tables)

6 Months Ended

Jun. 30, 2022

Share-based Payment Arrangement [Abstract]

Summary of Stock Option Activity

The following table is a summary of our stock option activity (in thousands, except per share data):

	Six months ended June 30,
	2022			2021
	Awards	Weighted-Average Exercise Price		Awards	Weighted-Average Exercise Price
Outstanding at beginning of period	33	$	54.98	61	$	48.19
Exercised	—	—		(14)	50.58
Outstanding at end of the period	33	$	54.98	47	$	47.51
Exercisable at end of the period	28	$	52.76	38	$	42.18

Summary of Restricted Stock Activity

The following table summarizes our restricted stock activity (in thousands, except per share data):

	Six months ended June 30,
	2022			2021
	Shares	Weighted-Average Grant Date Fair Value		Shares	Weighted-Average Grant Date Fair Value
Outstanding at beginning of period	44	$	183.51	50	$	116.06
Granted	38	176.81		21	267.15
Vested	(19)	155.57		(25)	113.91
Forfeited	(1)	186.53		(2)	154.91
Outstanding at end of the period	62	$	187.80	44	$	182.96

Disclosure of Share-based Compensation Arrangements by Share-based Payment Award

The total expenses during the three months ended June 30, 2022 and 2021 are as follows (in thousands):

	Three months ended June 30,
	2022			2021
	Shares	Share-Based Compensation Expense		Shares	Share-Based Compensation Expense
Options and restricted stock	86	$	1,311	103	$	938
Market and performance-based share awards granted in 2022	25	433		—	—
Performance-based share awards granted in 2021	15	647		14	54
Performance-based share awards granted in 2020	26	474		28	495
Performance-based share awards granted in 2019	—	—		17	711
Total share-based compensation	152	$	2,865	162	$	2,198

The total expenses during the six months ended June 30, 2022 and 2021 are as follows (in thousands):

	Six months ended June 30,
	2022			2021
	Shares	Share-Based Compensation Expense		Shares	Share-Based Compensation Expense
Options and restricted stock	91	$	2,398	91	$	2,059
Market and performance-based share awards granted in 2022	25	512		—	—
Performance-based share awards granted in 2021	15	1,287		14	357
Performance-based share awards granted in 2020	26	943		28	850
Performance-based share awards granted in 2019	—	—		17	1,078
Total share-based compensation	157	$	5,140	150	$	4,344

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LEASES (Tables)

6 Months Ended

Jun. 30, 2022

Leases [Abstract]

Summary of Supplemental Cash Flow Information

Supplemental cash flow information related to the Company’s operating leases was as follows (in thousands):

	Six months ended June 30,
	2022		2021
Cash paid for amounts included in the measurements of lease liabilities
Operating cash flow used in operating leases	$	3,674	$	2,005
Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	103	$	9,745

Summary of Maturity of the Company's Operating Lease Liabilities

The following table presents the maturity of the Company’s operating lease liabilities as of June 30, 2022 (in thousands):

2022 (excluding the six months ended June 30, 2022)	$	3,525
2023	6,241
2024	5,693
2025	5,825
2026	4,160
Thereafter	5,412
Total lease payments	$	30,856
Less: imputed interest	(1,564)
Total	$	29,292

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ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables)

6 Months Ended

Jun. 30, 2022

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Schedule of Accumulated Other Comprehensive Income

The following table sets forth the components of accumulated other comprehensive income, net of tax where applicable (in thousands):

	June 30, 2022		December 31, 2021
Foreign currency translation	$	268	$	90
Unrealized gains on investment securities	—		21
Accumulated other comprehensive income	$	268	$	111

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FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2022

Investments, All Other Investments [Abstract]

Schedule of Cash and Financial Assets That are Measured at Fair Value on a Recurring Basis for Each of the Hierarchy Levels

The following tables present the Company’s cash and financial assets that are measured at fair value on a recurring basis for each of the hierarchy levels (in thousands):

	June 30, 2022
	Cost		Unrealized Gains		Accrued Interest		Estimated Fair Value		Cash & Cash Equivalents		Investment Securities
Cash	$	60,277	$	—	$	—	$	60,277	$	60,277	$	—
Level 1:
Money market accounts	792		—		—		792		792		—
Total	$	61,069	$	—	$	—	$	61,069	$	61,069	$	—

	December 31, 2021
	Cost		Unrealized Gains		Accrued Interest		Estimated Fair Value		Cash & Cash Equivalents		Investment Securities
Cash	$	94,824	$	—	$	—	$	94,824	$	94,824	$	—
Level 1:
Money market accounts	9,359		—		—		9,359		9,359		—
Government & agency securities	1,401		12		—		1,413		—		1,413
	10,760		12		—		10,772		9,359		1,413
Level 2:
Municipal bonds	3,880		9		59		3,948		—		3,948
Total	$	109,464	$	21	$	59	$	109,544	$	104,183	$	5,361

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INVENTORIES (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Inventory Disclosure [Abstract]
Donated inventory	$ 9,400
Raw materials	12,942	$ 15,196
Packaging	2,987	3,641
Non-food finished goods	12,810	15,991
Finished goods	131,435	152,687
Reserve for obsolete inventory	(3,200)	(7,472)
Total	$ 156,974	$ 180,043

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EARNINGS PER SHARE - Computation of Basic and Diluted EPS (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2022	Jun. 30, 2021
Numerator:
Net income	$ 39,113	$ 41,781	$ 46,963	$ 41,063	$ 80,894	$ 88,026
Denominator:
Weighted average shares of common stock outstanding (in shares)	11,354		11,753		11,455	11,762
Effect of dilutive common stock equivalents (in shares)	81		105		79	107
Weighted average shares of common stock outstanding (in shares)	11,435		11,858		11,534	11,869
Basic earnings per share
Earnings per share - basic (in dollars per share)	$ 3.44		$ 4.00		$ 7.06	$ 7.48
Diluted earnings per share
Earnings per share - diluted (in dollars per share)	$ 3.42		$ 3.96		$ 7.01	$ 7.42

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EARNINGS PER SHARE - Narrative (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Restricted Stock
Anti-dilutive awards	3	0	1	0

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SHARE-BASED COMPENSATION - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, options, grants in period, gross			0	0
Proceeds from stock options exercised			$ 0	$ 702
Shares withheld for employee taxes			8,000	7,000
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period			5 years
Compensation cost recognition weighted average period			2 years
Share-based compensation arrangement, fair value of awards vested			$ 3,300	$ 6,700
Total income tax benefit recognized related to restricted stock awards	$ 400	$ 900	900	$ 2,100
Unrecognized compensation costs	8,900		$ 8,900
Shares granted in period			38	21
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period			3 years
Award expiration period			10 years
Share-based compensation, shares authorized under stock option plans, exercise price range, lower range limit			$ 26.52
Share-based compensation, shares authorized under stock option plans, exercise price range, upper range limit			$ 66.68
Weighted-average remaining contractual life of options outstanding			4 years 9 months 18 days
Aggregate intrinsic value of options outstanding	4,200		$ 4,200
Weighted-average remaining contractual life of options exercisable			4 years 8 months 12 days
Aggregate intrinsic value of options exercisable	3,600		$ 3,600
Employee service share based compensation nonvested awards total compensation cost not yet recognized	100		$ 100
Compensation cost recognition weighted average period			7 months 6 days
Intrinsic value of options exercised				$ 2,300
Performance-Based Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation cost recognition weighted average period			2 years 1 month 6 days
Performance period			3 years
Unrecognized compensation costs	$ 9,400		$ 9,400
Shares granted in period			65,477
Performance-Based Shares | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Additional performance-based shares, percentage			0.00%
Performance-Based Shares | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Additional performance-based shares, percentage			250.00%

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SHARE-BASED COMPENSATION - Stock Options Activity (Details) - Stock Options	6 Months Ended
	Jun. 30, 2022 $ / shares shares	Jun. 30, 2021 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares, Outstanding at beginning of period (in shares) | shares	33	61
Shares, Exercised (in shares) | shares	0	(14)
Shares, Outstanding at end of the period (in shares) | shares	33	47
Shares, Exercisable at end of the period (in shares) | shares	28	38
Weighted-Average Exercise Price, Outstanding at beginning of period (in dollars per share) | $ / shares	$ 54.98	$ 48.19
Weighted-Average Exercise Price, Exercised (in dollars per share) | $ / shares	0	50.58
Weighted-Average Exercise Price, Outstanding at end of the period (in dollars per share) | $ / shares	54.98	47.51
Weighted-Average Exercise Price, Exercisable at end of the period (in dollars per share) | $ / shares	$ 52.76	$ 42.18

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SHARE-BASED COMPENSATION - Restricted Stock Activity (Details) - Restricted Stock - $ / shares	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Shares
Outstanding at beginning of period (in shares)	44	50
Granted (in shares)	38	21
Vested (in shares)	(19)	(25)
Forfeited (in shares)	(1)	(2)
Outstanding at end of period (in shares)	62	44
Weighted-Average Grant Date Fair Value
Outstanding at beginning of period (in dollars per share)	$ 183.51	$ 116.06
Granted (in dollars per share)	176.81	267.15
Vested (in dollars per share)	155.57	113.91
Forfeited (in dollars per share)	186.53	154.91
Outstanding at end of period (in dollars per share)	$ 187.80	$ 182.96

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SHARE-BASED COMPENSATION - Summary of Performance-based Share Awards (Details) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options and restricted stock (in shares)	152	162	157	150
Share-based payment arrangement, expense	$ 2,865	$ 2,198	$ 5,140	$ 4,344
Options And Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options and restricted stock (in shares)	86	103	91	91
Share-based payment arrangement, expense	$ 1,311	$ 938	$ 2,398	$ 2,059
Market and Performance-Based Shares | Granted In 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options and restricted stock (in shares)	25	0	25	0
Share-based payment arrangement, expense	$ 433	$ 0	$ 512	$ 0
Performance-Based Shares | Granted In 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options and restricted stock (in shares)	15	14	15	14
Share-based payment arrangement, expense	$ 647	$ 54	$ 1,287	$ 357
Performance-Based Shares | Granted In 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options and restricted stock (in shares)	26	28	26	28
Share-based payment arrangement, expense	$ 474	$ 495	$ 943	$ 850
Performance-Based Shares | Granted In 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options and restricted stock (in shares)	0	17	0	17
Share-based payment arrangement, expense	$ 0	$ 711	$ 0	$ 1,078

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LEASES - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Lessee, Lease, Description [Line Items]
Operating lease expense	$ 1.7	$ 1.4	$ 3.5	$ 2.4
Minimum | Operating Lease Arrangement for Real Estate
Lessee, Lease, Description [Line Items]
Lease term	18 months		18 months
Minimum | Operating Lease Arrangement for Equipment
Lessee, Lease, Description [Line Items]
Lease term	24 months		24 months
Maximum | Operating Lease Arrangement for Real Estate
Lessee, Lease, Description [Line Items]
Lease term	126 months		126 months
Maximum | Operating Lease Arrangement for Equipment
Lessee, Lease, Description [Line Items]
Lease term	203 months		203 months

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LEASES - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Leases [Abstract]
Cash paid for amounts included in the measurements of lease liabilities - Operating cash flow used in operating leases	$ 3,674	$ 2,005
Right-of-use assets obtained in exchange for lease obligations - Operating leases	$ 103	$ 9,745
Weighted average remaining lease term	5 years 3 months 18 days
Weighted average discount rate	2.10%

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LEASES - Future Minimum Lease Commitments (Details) $ in Thousands	Jun. 30, 2022 USD ($)
Lessee, Operating Lease, Liability, Payment, Due [Abstract]
2022 (excluding the six months ended June 30, 2022)	$ 3,525
2023	6,241
2024	5,693
2025	5,825
2026	4,160
Thereafter	5,412
Total lease payments	30,856
Less: imputed interest	(1,564)
Total	$ 29,292

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ACCUMULATED OTHER COMPREHENSIVE INCOME - Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Foreign currency translation	$ 268	$ 90
Unrealized gains on investment securities	0	21
Accumulated other comprehensive income	$ 268	$ 111

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FINANCIAL INSTRUMENTS - Narrative (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Investments, All Other Investments [Abstract]
Realized loss or gains	$ (200,000)	$ 0	$ (200,000)	$ 0

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FINANCIAL INSTRUMENTS - Cash and Financial Assets That are Measured at Fair Value on a Recurring Basis for Each of the Hierarchy Levels (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Cash And Cash Equivalents And Marketable securities [Line Items]
Cost	$ 61,069	$ 109,464
Unrealized Gains	0	21
Accrued Interest	0	59
Estimated Fair Value	61,069	109,544
Cash & Cash Equivalents	61,069	104,183
Investment Securities	0	5,361
Cash
Cash And Cash Equivalents And Marketable securities [Line Items]
Cost	60,277	94,824
Estimated Fair Value	60,277	94,824
Cash & Cash Equivalents	60,277	94,824
Level 1:
Cash And Cash Equivalents And Marketable securities [Line Items]
Cost		10,760
Unrealized Gains		12
Estimated Fair Value		10,772
Cash & Cash Equivalents		9,359
Investment Securities		1,413
Level 1: | Money market accounts
Cash And Cash Equivalents And Marketable securities [Line Items]
Cost	792	9,359
Estimated Fair Value	792	9,359
Cash & Cash Equivalents	$ 792	9,359
Level 1: | Government & agency securities
Cash And Cash Equivalents And Marketable securities [Line Items]
Cost		1,401
Unrealized Gains		12
Estimated Fair Value		1,413
Investment Securities		1,413
Level 2: | Municipal bonds
Cash And Cash Equivalents And Marketable securities [Line Items]
Cost		3,880
Unrealized Gains		9
Accrued Interest		59
Estimated Fair Value		3,948
Investment Securities		$ 3,948

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DEBT - Narrative (Details) - Credit Agreement $ in Millions	Apr. 13, 2021	Jun. 30, 2022 USD ($)	May 31, 2022 USD ($)
Debt Instrument [Line Items]
Maximum Total Net Leverage Ratio	2.75
Minimum Interest Coverage Ratio	3.50
Borrowings		$ 27.0
Eurodollar
Debt Instrument [Line Items]
Applicable Rate	1.25%
Base Rate
Debt Instrument [Line Items]
Applicable Rate	0.25%
Senior Secured Revolving Credit Facility
Debt Instrument [Line Items]
Credit facility maximum borrowing capacity			$ 225.0
Letter of Credit
Debt Instrument [Line Items]
Credit facility maximum borrowing capacity			20.0
Accordion feature, increase limit			$ 100.0
Minimum
Debt Instrument [Line Items]
Commitment fee percentage	0.20%
Maximum
Debt Instrument [Line Items]
Commitment fee percentage	0.40%

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ACCELERATED SHARE REPURCHASE ("ASR") (Details) - USD ($) shares in Thousands, $ in Millions	May 31, 2022	Jun. 30, 2022
Equity [Abstract]
Repurchase amount		$ 100.0
Initial amount received (in shares)	480
Remaining repurchase amount		$ 20.0