Medifast Earnings: Tops Forecasts

Medifast Inc. (NYSE:MED) reported net income above Wall Street’s expectations for the third quarter. Medifast is engaged in the production, distribution, and sale of weight management and disease management products and other consumable health and diet products.

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Medifast Inc. Earnings Cheat Sheet

Results: Net income for Medifast Inc. rose to $7.2 million (52 cents per share) vs. $5.1 million (36 cents per share) in the same quarter a year earlier. This marks a rise of 42.2% from the year-earlier quarter.

Revenue: Rose 19.6% to $91 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Medifast Inc. beat the mean analyst estimate of 40 cents per share. Analysts were expecting revenue of $90.3 million.

Quoting Management: “Increased sales momentum across our Take Shape for Life, Medifast Direct, and the Medifast Weight Control Center and Wholesale Physicians sales channels, combined with improved operating efficiencies enabled us to report strong earnings growth ahead of our expectations in the third quarter,” commented Michael C. MacDonald, Medifast’s Executive Chairman and Chief Executive Officer. “In Take Shape for Life, we reported higher health coach counts while increasing our revenue-per-health coach and in our direct response sales channel we generated the highest revenue-to-spend ratio in the Company’s history. We are pleased the Medifast Weight Control Centers and Wholesale Physicians sales channel continues to be profitable and we plan to drive future efficiencies. Looking ahead, we believe Medifast is positioned better than ever to increase sales and profitability long-term.”

Key Stats:

The company has seen double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 16.5%, with the biggest boost coming in the first quarter when revenue rose 19.7% from the year earlier quarter.

Last quarter’s profit increase breaks a streak of four consecutive quarters of year-over-year profit drops. In the second quarter, net income fell 52.7% from the year earlier, while the figure fell 37.2% in the first quarter, 65.8% in the fourth quarter of the last fiscal year and 11.9% in the third quarter of the last fiscal year.

The company has now beaten estimates the last two quarters. In the second quarter, it topped expectations with net income of 47 cents versus a mean estimate of net income of 37 cents per share.

Margins rose in the second quarter after falling the quarter before. Gross margin grew 0.9 percentage point from the year-earlier quarter to 75.1%. In the first quarter, the figure rose 0.5 percentage point to 75% from the year earlier quarter.

Looking Forward: The average estimate for the fourth quarter remains unchanged at 19 cents a share. The average estimate for the fiscal year is $1.38 per share, a rise from $1.31 ninety days ago.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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