Medifast Inc · NYSE:MED
Medifast — Investor Day (April 2014)
67 slides from Medifast's investor day presentation, Apr 22, 2014
Slide 1: Analyst Day April 22, 2014
Analyst Day April 22, 2014 Exhibit 99.1
Slide 2: Safe Harbor Statement
2 2 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 Reform Act of 1995. The
Slide 3: Proven, Healthy Weight Loss
Proven, Healthy Weight Loss 3
Slide 4: Introducing Medifast
Introducing Medi f ast Mike MacDonald Chairman & CEO 4
Slide 5: Recent Accomplishments
Recent Accomplishments 5 • Canada Launch • 11 U.S. centers sold to Medix • Medix buys Slim Centers • Stop.Challenge.Choose . • E - commerce Promotions • New Products • Jimmy V Foundation • Share Repurchase
Slide 6: In 2014
In 2014 6 1 2 3 DELIVER ON PROFIT GOALS EXECUTE STRATEGIC PLAN HEALTHY LIVING Full - year 2014 earnings at our guidance represents 3 consecutive years of profit growth Health Coach expansion, Weight Control Center conversion, Technology integration and other efforts under way New product launches wi
Slide 7: Our Company
Our Company 7 https://www.youtube.com/watch?v=_CWosRky_U8
Slide 8: Since 1980
Since 1980… 8 FAST SAFE SIMPLE LONG TERM PORTABLE Over 20,000 Over Customers 1,000,000 Doctors have recommended Medifast products & programs
Slide 9: Choices
Wy Over 90 Choices! hakes A'S erazsh tits © pudding = drinks oatmeal SOUPS bites flavor of home™ chewy bars B® brOWNICS _ Bie heart healthte* SS pancake AS cereal crunch antioxidants sess naan ae ee YMeaisast. 9
Slide 10: Medifast Today
Medifast Today Enriching lives through innovative choices for lasting health 10 • Weight Management and Healthy Living products company • Founded in 1980 • $357M Revenue in 2013 • Industry - leading margins • Over 780 employees • Strong Balance Sheet • 10,000+ health coach channel • Direct - to - co
Slide 11: Recognized for Excellence
Recognized for Excellence 11 #16 2013 ; #10 2012 #12 2011 ; #1 2010 #46 2012 ; #5 2011 ; # 29 2010 2014 ; 2012 ; 2009 2014 ; Meg Sheetz President & COO 2014 Top 20 DSA Companies 2014 ; Tim Robinson, CFO 2013 ; Brian Kagen, CMO 2014 ; Meg Sheetz President & COO 2013 ; Jeannette Mills EVP, TSFL 2014 ;
Slide 12: Obesity & Diabetes – Linked Epidemics
Obesity & Diabetes – Linked Epidemics 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 12 2.62% 6.95% 2012 OBESITY as BMI% Diagnosed Diabetes Rate 1985 Sources: CDC Behavioral Risk Factor Surveillance System and Diabete
Slide 13: Diet Industry Market Size
Diet Industry Market Size 13 Total Market Served Market 2% Medifast share of served market $65 Bn $18 Bn $47 Bn Served Market ‣ Diet Foods / Meal s ‣ Weight Loss Centers ‣ Low Calories Programs ‣ Medical Plans & Surgery ‣ Books & Videos Unserved Market: ‣ Diet Soft Drinks ‣ Artificial Sweeteners ‣ H
Slide 14: Key Trends
Key Trends CONSUMER TECHNOLOGY Web, Mobile & Tracker tools require weight loss companies to embrace innovation , integration & partnering FUNCTIONAL PRODUCTS Strong interest in foods that support the consumer’s lifestyle D emand increasing for clean labeling , simpler ingredients RELATIONSHIP MODEL
Slide 15: Key Strategies
Key Strategies 15 ‣ DELIVER profitability and enhance shareholder value long term ‣ INNOVATE in products, programs & technology ‣ BUILD the network and reach of TSFL health coaches ‣ LEVERAGE our medical provider heritage & relationships ‣ GROW our online business thru best - in - class platform ‣ E
Slide 16: Business Development
CORPORATE WELLNESS Weight management a key element in growing industry ; Obesity epidemic is costing employers in premiums and lost productivity ; Affordable Care Act promotes proactive steps and insurance coverage for weight management ; Medifast exploring partnership models to enter market this ye
Slide 17: Leadership for Growth
Leadership for Growth • Channel Marketing 20 yrs Consumer Products • Clinical & Scientific 24 yrs Biotech/Pharmaceutical • Product Development 31 yrs Food, Beverage & Consumer Goods • Global Procurement 25 yrs Food Manufacturing & Retail • Quality & Regulatory 40 yrs Food Manufacturing – LatAm Exper
Slide 18: Beyond Weight Loss
Beyond Weight Loss 18 1 8 Addressable Weight Loss Market Healthy Living Market: Foods, Programs, Products Sources: U.S. Weight Loss Market Update, Marketdata, February 2014. Health and Wellness in the US, Euromonitor, August 2013 Gym, Health & Fitness Clubs in the U.S., IBISWorld, February 2014. Vit
Slide 19: Built for Growth
Built for Growth Tim Robinson C F O 19
Slide 20: 2008 - 2013 Revenue
2008 - 2013 Revenue $110 $170 $258 $298 $357 $357 2008 2009 2010 2011 2012 2013 20 5 - Year 27 % CAGR
Slide 21: 2008 - 2013 EPS
2008 - 2013 EPS $0.30 $0.77 $1.35 $1.31 $1.57 $1.73 2008 2009 2010 2011 2012* 2013 21 *2012 EPS excludes two non - recurring items, including a FTC settlement recorded in the second quarter and a sales tax accrual in the fourth quarter. Reported EPS $1.16. 5 - Year 42% CAGR
Slide 22: 2014 Outlook
2014 Outlook • 2014 Guidance Update*: – 1Q14 r evenue will fall within previously announced range of $86M to $88M – 1Q14 e arnings per diluted s hare will exceed guidance of $0.32 to $0.35 – FY14 guidance reiterated for net revenue in the range of $340M to $380M, and earnings per diluted share in th
Slide 23: Strong Cash & Balance Sheet
Strong Cash & Balance Sheet 23 • $68M Cash & Investments • No Long Term Debt • Low Working Capital Levels ; 3.8X Inventory Turns • Minimal CapEx Requirements ; 3.3% of Revenue • Strong Free Cash Flows ; $30.8M Note: Fiscal 2013 Results
Slide 24: Introducing Strategic Partner: Medix
Introducing Strategic Partner: Medix Carlos Lopez Patan Director General Productos Medix S.A. 24
Slide 25: A Vision for Health Professionals
A Vision for Health Professionals in the management of weight and obesity Carlos Lopez Patan • Director General since 2007 • Established the vision for focus on curing obesity: Providing patients with complete treatment and preventative options to achieve weight management and combat the obesity epi
Slide 26: Weight Management Solutions
Weight Management Solutions 26 2 6 1 2 3 NUTRACEUTICAL PHARMACEUTICAL PREVENTATIVE Slender Line • Fiber supplements • Garcinia Cambogia • Vitamins • Chromium Clinical Obesity Treatment • Prescription drug treatments through medical providers Medifast Meal Replacements & Programs
Slide 27: Medix - Medifast Partnership
Medix - Medifast Partnership • Launched June 2012 • Medifast enables Medix to offer robust preventative products & programs in addition to existing nutraceutical & pharmaceutical options • Multi - channel market strategy: – Leveraging 6,000+ physician network – Medifast - branded clinics: 3 in Mexic
Slide 28: Medix Weight Loss Center Expansion
Medix Weight Loss Center Expansion Slim Centers Acquisition • Immediate coverage for 21M+ Greater Mexico City • Incorporate Medifast brand U.S. Medifast Centers • Advance partnership in U.S. through sale of 11 corporate - owned Medifast centers – Austin – 3 – San Antonio – 3 – Miami – 5 • Focus on H
Slide 29: Become Yourself
Become Yourself Meg Sheetz President & COO 29
Slide 30: What It Takes
What It Takes 30 ‣ PROGRAMS that work ‣ PRODUCTS people want ‣ TECHNOLOGY that powers change ‣ PEOPLE who carry the message ‣ PROCESSES that drive innovation 30
Slide 31: Programs that Work: The 5&1
Programs that Work: The 5&1 31 5&1 VIDEO https://www.youtube.com/watch?v=cncg020v5wA&list=PLAY0FUPmndtfVT4H1_zPYTQoj1weTeiGH&index=2
Slide 32: Products People Want
Products People Want 32 Gluten Free Chocolate Lovers To Go
Slide 33: And our newest… Flavors of Home
And our newest… 33 Flavors of Home Lean & Green™ Meals
Slide 34: Technology that Drives Change
Technology that Drives Change • Engage and motivate the client • Support Healthy Living beyond Weight Loss • Interface with the Apps and Trackers consumers are using • New desktop and mobile platform launching in 2014 34
Slide 35: Our Clients' Success is the Key
Our Clients’ Success is the Key 35 Ginamarie l ost 100 lbs* Ted l ost 167 lbs* Diana l ost 61 lbs* *Results vary. Typical weight loss on the Medifast 5 & 1 Plan is 2 - 5 lbs. per week for the first two weeks and 1 - 2 lbs per week thereafter.
Slide 36: Conversations with Yourself
Conversations with Yourself 36 https://www.youtube.com/watch?v=_kbhFpKuwcI&list=PLAY0FUPmndtdLuumaf9r8M7mcFg2YtGxf
Slide 37: Our Newest Campaign
Our Newest Campaign 37
Slide 38: Growing Brand Awareness
Growing Brand Awareness 38 25% 26% 32% 40% 44% Nov 11 Apr 12 Oct 12 May 13 Nov 13 Source: Medifast Brand Awareness based from proprietary research based on statistically representative samples of over 1,000 consumers
Slide 39: People Spread the Story
People Spread the Story 39 Learning about Weight Loss is heavily Social*: 42% from Friends/Relatives 22% from Social Media 10% 2 0% 30% 40% 50% 60% 7 0% 8 0% 9 0% 0% Netflix Am Ex Verizon Medifast United USAA iPad Wegmans Comcast Net Promoter Score – February 2014** Sources: *Internal research based
Slide 40: Ways to Support Our Clients
4 Ways to Support Our Clients 40 4 0 10,000+ Independent Health Coaches 12 4 Franchise and Corporate Centers Medical Provider Wholesale Channel Direct to Consumer E - c ommerce
Slide 41: TSFL: A Unique Model
TSFL: A Unique Model Our coaches are our success stories • Most coaches joined to achieve a healthy weight …and stayed for the business opportunity • Emphasize long term “ O ptimal Health” • Certification exams* Our processes are clear and transparent • 94% of orders go directly to clients, and 6% f
Slide 42: TSFL Strategy
TSFL Strategy 42 4 2 1 2 3 EXPAND COACH NETWORK IMPROVED COMMISSION PLAN NEW PRODUCTS 10,000 and Growing • Stop.Challenge.Choose • 5 Super - regionals in 1Q14 • National Convention July 2014 in Anaheim – over 1,750 pre - registered, more than 50% up YoY Integrated Plan Focuses on Growth • Rewards de
Slide 43: Direct-to-Consumer
Direct - to - Consumer • Complete E - commerce business & experience • I nformation, tools & support for successful self - guided weight management 43 ‣ Full Product Line & Programs ‣ Quick Start Guides & Video How - to’s ‣ Dashboard for Tracking the Weight Loss Journey ‣ The Science Behind Medifast
Slide 44: Medifast Direct Strategy
Medifast Direct Strategy 44 1 2 3 ENHANCE WEB PLATFORM ADDRESS DIY TREND OPTIMIZE AD & PROMO SPEND Best in class capabilities to drive orders • Streamlined ordering experience to increase conversion • Flexibility to rapidly change and target promotions Innovate for rewarding online experience • Laun
Slide 45: Local, Personal, Accountable
Local, Personal, Accountable • 64 Corporate Centers • 60 Franchise Centers • Supervised Programs • Dietitian Support • Body Composition Technology • Onsite Product Purchasing • Weekly Weigh - ins • Constant Contact “Care Calls” 45
Slide 46: MWCC Strategy
MWCC Strategy 46 1 2 3 CONVERT TO FRANCHISES GROW FOOTPRINT PROGRESS TO DATE Highly Accretive Shift to Wholesale • Food revenues will decline to wholesale price • Operating Profit will improve with SG&A reductions Responsibly Expand Franchise Footprint • Entrepreneurial management will invest to gro
Slide 47: Leveraging Our Medical Heritage
Leveraging Our Medical Heritage • Obese patients spend 50% more on healthcare costs — over $7,100 more per year • Obesity screening and nutritional counseling now an “essential benefit” under Affordable Care Act • Providers seeking new revenue streams to offset increasing financial pressures • S ale
Slide 48: Medical Providers Strategy
Medical Providers Strategy 48 1 2 3 EXPAND COVERAGE & TERRITORY CURRENT CLIENT REVENUE GROWTH BUSINESS MODEL ENHANCEMENTS Expand US & Establish business in Canada • Drive account acquisition with multi - touch campaigns and trade events • Streamline on - boarding process and enhance client support D
Slide 49: Innovation – from Concept to Consumer
Innovation – from Concept to Consumer 49 49
Slide 50: Manufacturing & Distribution
Manufacturing & Distribution 50 • Company - owned state - of - the - art facilities • Supports industry - leading gross margins • Capacity to drive aggressive growth • Partnerships with leading suppliers
Slide 51: Innovation Across Channels
Innovation Across Channels Products Programs & Technology New Meal Replacements New Transition & Maintenance Guide Flavors of Home ™ Meals New Website Experience Healthy Living Shakes & Bars New Online Dashboards Healthy Sleep Set New Mobile App Stress Relief Products Integration with Trackers Snack
Slide 52: The Life You Want
The Life You Want Brian Kagen EVP & CMO 52
Slide 53: Healthy Living Trends: Concerned but Confused
Healthy Living Trends 53 CONCERNED BUT CONFUSED Across markets, consumers want to be healthy and in control of their bodies, but face competing choices and claims 53 1
Slide 54: Healthy Living Trends: Functional but Natural
Healthy Living Trends 54 FUNCTIONAL BUT “NATURAL” Consumers look for clean labels, but still want convenience, taste and lifestyle support 54 2
Slide 55: There's Need for Our Healthy Living Products
There’s Need for Our Healthy Living Products 55 Countless options Few integrated plans or programs It’s about more than diets It’s about the whole journey
Slide 56: Why Medifast?
Why Medifast? TRUSTED HEALTH BRAND 4 CHANNELS TO REACH CONSUMERS PRODUCT & PROGRAM EXPERTISE “The people who know how to lose weight and keep it off, know how to keep you healthy in the first place” Each channel has strengths for reaching current and new clients with products that address needs for
Slide 57: Healthy Living Strategy
Healthy Living Strategy 57 5 7 1 2 3 NEW OFFERS TO WEIGHT LOSS CLIENTS NEW ENTRY POINT NEW PRODUCTS SIMPLER INGREDIENTS Increase Existing Customer Lifetime Value: • Help clients “keep it off” with maintenance foods and tools • Provide new products & programs to extend relationship Attract Non Weight
Slide 58: Medifast Opportunity – The Whole Journey
Medifast Opportunity – The Whole Journey 58 Weight Loss Healthy Eating Healthy Mind & Body Active Lifestyle Aging
Slide 59: Meal Replacements and Lean & Green Meals
59 MEAL REPLACEMENTS LEAN & GREEN TM MEALS* Delicious additions to meal replacement line Quick & Convenient – Clients are already asking for more Flavors of Home Garlic Mashed Potatoes Sour Cream & Chive Mashed Potatoes Gingerbread Soft Bake Turkey Meatball Marinara Chicken Cacciatore Chicken with R
Slide 60: Maintenance, Snacks and Energy Drinks
60 MAINTENANCE BARS & SHAKES SNACKS ENERGY DRINKS Balanced nutrition for your active, on - the - go lifestyle Get the crunch you crave, the healthy way Fuel your day with quick, refreshing choices Peanut Butter Chocolate Shake Strawberry Banana Smoothie Salted Caramel Nut Bar Cookies & Cream Bar Che
Slide 61: Sleep and Stress Relief
61 SLEEP TEA & MELATONIN STRESS RELIEF GUM SLEEP SET Sleep disorders are a national epidemic… get the start you need for a good night’s rest Chill out anytime, anywhere A complete set of sleep & stress aids – even a scientifically designed blanket to regulate your temperature Restful Mind Herbal Sle
Slide 62: Trackers, Apps and Sports Nutrition
62 TRACKERS & SCALES APPS & DASHBOARDS SPORTS NUTRITION We’ll carry the best products so that clients can stay with us for the whole journey More than weight loss, more than fitness - and integrated with leading devices We’re working to develop the right products and branding for the right channels
Slide 63: Product Launches & Roadmap
Product Launches & Roadmap 0 5 10 15 20 25 30 2010 2011 2012 2013 2014 Fitness Sleep & Stress Energy Foods Maintenance Snacks Lean & Green Extras Meal Replacements 63 Number of new product launches
Slide 64: 2014 Product Launches
2014 Product Launches 64 Meal Replacements • Garlic Mashed Potatoes (1Q) • Sour Cream & Chive Mashed Potatoes (1Q) • Gingerbread Soft Bake (4Q) Lean & Green ™ Meals • Turkey Meatball Marinara* (1Q) • Chicken Cacciatore* (1Q) • Chicken with Rice & Vegetables* (1Q) • Beef Stew* (2Q) • Cheddar & Sour C
Slide 65: Just the beginning…
J ust the beginning… 65
Slide 66: Key Strategies
Key Strategies 66 ‣ DELIVER profitability and enhance shareholder value long term ‣ INNOVATE in products, programs & technology ‣ BUILD the network and reach of TSFL health coaches ‣ LEVERAGE our medical provider heritage & relationships ‣ GROW our online business thru best - in - class platform ‣ E
Slide 67: Q&A
“‘Y Medifast. Q&A April 22, 2014 ae ee YMecifast