March 10, 2016 — Medifast reported financial results, and management changes.
Year – 2015
For the fiscal year ended December 31, 2015, Medifast net revenue was $272.8 million as compared to net revenue of $285.3 million in 2014. Take Shape For Life accounted for approximately 74.1% of net revenue, Medifast Direct accounted for 17.8%, Medifast Franchise Weight Control Centers accounted for 6.3%, and Medifast Wholesale Physicians business unit accounted for 1.8% of total revenue. Income from continuing operations for 2015 decreased $1.5 million to $19.6 million.
Three executive vice presidents left Medifast in February, and the company has made some changes at lower levels. Meg Sheetz, President and CEO, is MacDonald’s niece and the daughter of late Medifast CEO Bradley MacDonald. Her pending departure comes after activist investor Glenn Welling won major changes to Medifast’s board last year.
Q 4 2015
For the fourth quarter, Medifast net revenue decreased 2% to $61.3 million from net revenue of $62.3 million in Q4 of 2014.
Revenue in the direct sales business unit, Take Shape For Life, was up 5% to $48.0 million in Q4 of 2015 as compared to $45.7 million in Q4 of the prior year. This was the fourth straight quarterly improvement in the year-over-year trend and the first time that Take Shape For Life had positive year-over-year revenue growth since Q3 of 2013.
The total number of active earning Health Coaches in Q4 was 11,900 as compared to 11,700 in Q4 of 2014. The average revenue per active earning Health Coach for the quarter was $4,039 as compared to $3,896 in Q4 of 2014.
The Medifast Direct business unit revenue decreased 18% to $9.3 million, compared to $11.4 million in Q4 of 2014. Revenue decreased year-over-year as new customer acquisition continued. to be challenging.
Revenue in the Franchise Medifast Weight Control Centers business unit decreased modestly to $3.7 million from $3.8 million in the Q4 of last year. The decrease in revenue was primarily driven by fewer franchise centers in operation during the period. The company ended the quarter with 61 franchise centers, compared to 73 centers at the end of the same period last year.
In Q4 2015, the Wholesale business unit revenue decreased to $0.3 million, compared to $1.4 million in the same period last year.
“We made significant progress in 2015 and are pleased with our continued ability to generate leverage across our business model and effectively manage our expenses to deliver earnings in-line with our annual guidance,” said Michael C. MacDonald, Medifast Chairman and CEO. “Take Shape For Life, our largest business segment, reached a key milestone with positive sales growth in the fourth quarter, and this demonstrates our team’s successful execution of our key initiatives.”
The company expects first quarter 2016 net revenue from continuing operations to be in the range of approximately $68.0 million to $71.0 million. For fiscal year 2016, the company expects revenue to be in the range of $273.0 million to $280.0 million.
Conference Call Findings
It was reported that the direct-to-consumer segment was not doing well, due to heavy competition. The firm also reported launching a new Dual Fuel line of bars and ready to drink shakes, in limited distribution at Rutgers University. This line provides an entry into and experiment/testing of the sports nutrition category. “We believe this model is scalable across other universities and athletic conferences, and could develop into a nice business for us.”, according to management.
“While we don’t yet have clear visibility of the optimal formula, we will continue to evaluate additional opportunities for new offerings, promotions and programs. Along those lines, we have identified a number of shorter-term initiatives to help drive revenue in 2016. These include the identification of partners to open up acquisition opportunities, expanded analytics and attribution, a new summer promotional campaign, site configuration changes to allow easier product selection, consumer research to capitalize on strong customer experiences and grow from challenges, re-invigorations of promotional offers to drive acquisition, email reactivation campaigns, direct mail acquisition, and offers to our Medifast Advantage customers for off-cycle orders.”
Management also reported that n 2015, they repurchased approximately 364,341 shares of common stock. And in December, they announced the initiation of a $0.25 per share quarterly cash dividend, the first ever in the company’s history.
The complete press release and financial tables can be found here: