Medifast Inc · NYSE:MED
Medifast — Investor Presentation (August 2018)
36 slides from Medifast's investor presentation, Aug 27, 2018
Slide 1: Investor Presentation August 2018
INVESTOR PRESENTATION August 2018
Slide 2: Safe Harbor Statement
SAFE HARBOR STATEMENT Certain information included in this presentation may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Refo
Slide 3: Today's Presenters & Agenda
TODAY’S PRESENTERS & AGENDA Agenda Dan Chard Chief Executive Officer Medifast Today OPTAVIA ® Growth Strategy Tim Robinson Chief Financial Officer Financials 3
Slide 4: Medifast Vision & Mission
MEDIFAST VISION & MISSION ® To Offer the World LIFELONG TRANSFORMATION One Healthy Habit at a Time™ 4
Slide 5: Company Profile
COMPANY PROFILE Leading Health & Wellness company $371.1M Net Sales1 Recommended by over 20,000 doctors since 1980 Unique direct-to-consumer model with approximately 19,700 OPTAVIA Coaches™ Our Coaches teach habits that lead to Optimal Wellbeing and Lifelong Transformation TM Achieving a healt
Slide 6: Key Investment Highlights
KEY INVESTMENT HIGHLIGHTS Health and wellness company with differentiated, science-based products & programs Large and growing market opportunity addressing a global need Scalable Coach-based distribution model – products, technology, support Ideally positioned for an acceleration of growth in t
Slide 7: Large and Growing Market Opportunity
LARGE AND GROWING MARKET OPPORTUNITY Obesity at Critical Levels Current & Growth Markets Nearly 70% of U.S. Adults are Addressable U.S. Weight Loss Products Overweight or Obese(1) & Services market expected to grow 5% per year through 2022(4) Broader Health and Wellness markets are U.S Health an
Slide 8: Proven & Effective Products & Programs
PROVEN & EFFECTIVE PRODUCTS & PROGRAMS The Plan: Eat 6 small meals every day 5 of our meal replacements (“Fuelings”) Plus 1 meal we teach you to make yourself Scientifically Formulated: The Plan is designed to put you in a gentle fat- burning state which is essential for losing weight He
Slide 9: Life-Changing Results
LIFE-CHANGING RESULTS *Average weight loss for Clients on the Optimal Weight 5&1 Plan® with support is 20 pounds 9
Slide 10: OPTAVIA
~—< ee OPTAVIA
Slide 11: Focused on Scaleable Coaching Model
FOCUSED ON SCALEABLE COACHING MODEL Executing Strategy to Integrate Business Units ® Weight Control Centers Business Unit OPTAVIA Medifast Direct ® and Wholesale Business Model Coach Model Self-Directed Model Wholesale Model 2017 Net Sales $256.6M $31.9M $13.1M Integration Strategy Focus on generati
Slide 12: Coaching Model is the Best Approach
COACHING MODEL IS THE BEST APPROACH The Right Sales & Support Compelling Business Model Personal selling is optimal for helping Clients become Coaches, who attract consumers understand complex products more Clients Studies have consistently shown that Minimal company advertising costs weight los
Slide 13: Our OPTAVIA Brand
™ OUR OPTAVIA BRAND ® Lifestyle-focused brand of our Coach community Designed to be relevant across international markets Developed around a motivating mission and compelling story Equipped with uniquely formulated, exclusive products 8/23/2018 13
Slide 14: Compelling Brand Narrative
COMPELLING BRAND NARRATIVE People are More Successful in their Transformation Journey OPTAVIA when they… P R O V E N C O A C H E S ™ N U T R I T I O N Have a Support System gets you where you want to go. make sure you never go it alone. (Coach and Community) Learn and incorporate Healthy Habits
Slide 15: OPTAVIA Video
“¥ MEDIFAST OPTAVIA® VIDEO My Za OPTAVIA.
Slide 16: Unique and Transparent Distribution Model
UNIQUE AND TRANSPARENT DISTRIBUTION MODEL Perfect balance between the power of a personal selling channel and a retail model 91% of all OPTAVIA® product sales go directly to Clients; 9% are consumed by Coaches All commissions based on product sales Coaches do not buy or carry inventory, don’t ha
Slide 17: OPTAVIA Opportunity: The Coached Becomes the Coach
OPTAVIA OPPORTUNITY: ® THE COACHED BECOMES THE COACH When you succeed, your transformation will be an inspiration to others OPTAVIA offers a compelling financial opportunity LOW-RISK: Registering as a Coach costs under $200 ATTRACTIVE COMPENSATION: High AOV(~$250) and commission rates (Commissio
Slide 18: Growth Strategy
GROWTH STRATEGY
Slide 19: Strategy for Growth
STRATEGY FOR GROWTH Accelerate Develop Digital Coach Tools Success Grow Our Coach Community Expand Drive Segments & Innovation Geographies 19
Slide 20: Accelerating Coach Success
ACCELERATING COACH SUCCESS Capitalizing on a new brand and compelling message Offering new, exclusive products based on Medifast® proven science Delivering an easy to share, compelling story about a complex problem facing the world Teaching a simple growth model Streamlining all aspects of the
Slide 21: New Digital & Social Tools
NEW DIGITAL & SOCIAL TOOLS New Coach Business Suite Improves Coach productivity (Launched December 2017) Deep visibility into Coach team activities Work flow enabled Real time updates New e-commerce platform Improves Client experience (In development) New social tools Makes sharing their story
Slide 22: OPTAVIA Product Innovation On-Trend
OPTAVIA PRODUCT INNOVATION ON-TREND ® OPTAVIATM OPTAVIATM MEDIFAST Select Essential Classic Proven Clinically-proven weight loss programs that include our unique Fueling formulation Interchangeable Each Fueling can be eaten for any meal occasion, making it easy to follow the program Fat-
Slide 23: Innovation Path-Forward Based on Healthy Habits
INNOVATION PATH-FORWARD BASED ON HEALTHY HABITS NUTRITION SLEEP MOVEMENT HYDRATION 23
Slide 24: Significant U.S. Expansion Opportunities
SIGNIFICANT U.S. EXPANSION OPPORTUNITIES 1 Regional 2 Generational 3 Diversity 4 Lifestyle Many U.S markets Younger demographics Penetrate important U.S. Serve clients in different under-represented; All can drive faster Coach communities and build stages of their journey to under-penetrated develop
Slide 25: International Potential
INTERNATIONAL POTENTIAL Direct Selling companies generate Global Direct Selling Market* majority of their revenue in Largest Markets Fastest Growing (3-yr CAGR) $185Bn Global Market U.S. $36Bn China 22.5% China $35Bn Indonesia 11.9% Public Company Examples: Korea $17Bn U.K. 9.8% Nu Ski
Slide 26: Global Expansion Plans Announced
GLOBAL EXPANSION PLANS ANNOUNCED Announced plans to expand into first two Asia-Pacific markets in 1H 2019 – Hong Kong and Singapore Plan to introduce the same clinically studied plans and similar Fuelings to those offered in the United States, including the popular Optimal Weight 5&1 Plan® Hong Ko
Slide 27: Strong Financial Foundation
STRONG FINANCIAL FOUNDATION
Slide 28: Attractive Financial Characteristics
ATTRACTIVE FINANCIAL CHARACTERISTICS Significant opportunity to accelerate revenue growth Highly predictable financial model High gross margins and variable cost structure Asset-light with minimal working capital and capex requirements Significant cash flow generation Strong balance sheet with
Slide 29: Accelerating Revenue Trajectory
ACCELERATING REVENUE TRAJECTORY ($ millions) $117 $500 $460 - $470 $120 $450 $100 $76 $400 $80 $350 $60 $302 $285 $273 $275 $300 $40 $250 $20 $200 $- 2014 2015 2016 2017 2018 Q2 '17 Q2 '18 - Revenue from continuing operations. Guidance 29
Slide 30: Business Initiatives Are Driving Recent Growth
BUSINESS INITIATIVES ARE DRIVING RECENT GROWTH ($ millions) OPTAVIA messaging resonating with Clients $125 $117 Strong energy around One Healthy Habit at a Time™ narrative Ongoing shift to OPTAVIA branded products $99 $100 Higher average order volumes OPTAVIA opportunity resonating with Co
Slide 31: Scalable Business Model Drives Earnings Growth
SCALABLE BUSINESS MODEL DRIVES EARNINGS GROWTH $4.35 - $4.45 $1.16 $4.50 $1.25 $4.00 $3.50 $1.00 $3.00 $2.29 $0.63 $0.75 $2.50 $1.89 $1.89 Adj. $1.73 GAAP $2.00 $0.50 $1.50 $1.65 $1.62 $1.49 $1.00 $0.25 $0.50 $0.00 $0.00 2014 2015 2016 2017 2018 Gudance Q2 '17 Q2 '18 - EPS from continuing operations
Slide 32: Highly Variable Cost Structure
HIGHLY VARIABLE COST STRUCTURE 28% 28% Total Company Expenses Last Twelve Months Ending June 30, 2018 44% Percentages to Total Expenses of the Company, COGS + Operating Expenses COGS Commissions Other 32
Slide 33: Highly Predictable OPTAVIA Financial Model
® HIGHLY PREDICTABLE OPTAVIA FINANCIAL MODEL Direct-To-Consumer Model Majority of new Coaches come from Client base Consistent patterns create strong visibility into future results Coaches acquiring new Clients Client retention Significant % of Clients on continuity shipments (~85% of orde
Slide 34: Strong Cash & Balance Sheet
STRONG CASH & BALANCE SHEET $103.3M Cash & Investments No debt Low working capital Levels Minimal CAPEX requirements Strong cash flow generation Existing stock repurchase program Increased quarterly cash dividend in December 2017 by 50% to $0.48 per share Note: Cash and Investments as well as
Slide 35: Key Investment Highlights
KEY INVESTMENT HIGHLIGHTS Health and wellness company with differentiated, science-based products & programs Large and growing market opportunity addressing a global need Scalable Coach-based distribution model – products, technology, support Ideally positioned for an acceleration of growth in t
Slide 36: Medifast
“* MEDIFAST.