Medifast Inc · NYSE:MED
Medifast — Investor Presentation (January 2015)
41 slides from Medifast's investor presentation, Jan 13, 2015
Slide 1: Investor Relations Presentation January 2015
Investor Relations Presentation January 201 5 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 27 A of the Securities Act of 1933 , as amended, Section 21 E of the Securities Exchange Act of 1934 , as amended, and the Private Securities Litigation Reform Act of 1995
Slide 3: Our Company
Our Company ae ee YMedifast 2
Slide 4: Since 1980…
Since 1980… 4 FAST SAFE SIMPLE LONG TERM PORTABLE Over 20,000 Over Customers 1,000,000 Doctors have recommended Medifast products & programs
Slide 5: Medifast Today
Medifast Today Enriching lives through innovative choices for lasting health 5 • Weight Management and Healthy Living products company • Founded in 1980 • Industry - leading margins • Strong Balance Sheet • 10,000+ health coach channel • Direct - to - consumer E - commerce platform • Franchise Weigh
Slide 6: 2014 Recent Accomplishments
2014 Recent Accomplishments 6 • Canada Launch • 25 U.S. centers sold to Medix • 12 June 2014 • 13 December 2014 • 16 U.S. centers sold to TransformU • 12 June 2014 • 4 December 2014 • Successfully closed remaining 34 corporate centers • Medix buys 13 Slim Centers in Mexico • Stop.Challenge.Choose /
Slide 7: In 2015
In 2015 7 1 2 3 DELIVER ON PROFIT GOALS EXECUTE STRATEGIC PLAN HEALTHY LIVING Health Coach expansion, Weight Control Center Support, Technology integration and other efforts under way New product launches will address consumer demand and growth opportunities 7 Cost discipline coupled with new produc
Slide 8: Obesity & Diabetes – Linked Epidemics
Obesity & Diabetes – Linked Epidemics 8 2.62% 6.95% 2012 OBESITY as BMI% Diagnosed Diabetes Rate 1985 Sources: CDC Behavioral Risk Factor Surveillance System and Diabetes Surveillance System
Slide 9: Diet Industry Market Size
Diet Industry Market Size 9 Total Market Served Market 2% Medifast share of served market $65 Bn $18 Bn $47 Bn Served Market ‣ Diet Foods/Meals ‣ Weight Loss Centers ‣ Low Calories Programs ‣ Medical Plans & Surgery ‣ Books & Videos Unserved Market: ‣ Diet Soft Drinks ‣ Artificial Sweeteners ‣ Healt
Slide 10: Over Choices!
im Over 90 Choices! Barisan Sen Iidiing #8 oe oes oatmeal SOUPS bites flavor of home™ chewy bars #% brownies heart healthss* s=spancake cereal crunch antioxidants sonst a oe Ps ‘Medifast. 10
Slide 11: Proven Business Model to Deliver Shareholder Value
Proven Business Model to Deliver Shareholder Value 11 1 1
Slide 12: Key Strategies
Key Strategies 12 ‣ 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 ‣
Slide 13: Ways to Support Our Clients
4 Ways to Support Our Clients 13 1 3 10,200 Independent Health Coaches* 73 Franchise locations ** Medical Provider Wholesale Channel Direct to Consumer E - commerce *As of 9/30/2014 ** As of 12/31/2014
Slide 14: 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 “Optimal Health” • Certification exams* Our processes are clear and transparent • 94% of orders go directly to clients, and 6% for
Slide 15: TSFL Strategy
TSFL Strategy 15 1 5 1 2 3 EXPAND COACH NETWORK OPTIMIZE USE OF COMMISSION PLAN & INCENTIVES NEW PRODUCTS 10,000+ Health Coaches • New BeSlim Program • Renewed focus on coach growth in new demographics • New video messaging delivers consistent coaching experience • 5 Super - regionals in 1Q15 • Nati
Slide 16: Complete e-Commerce Business & Experience
Complete e - Commerce Business & Experience 16 ‣ Full Product Line & Programs ‣ Quick Start Guides & Video How - to’s ‣ Dashboard for Tracking the Weight Loss Journey ‣ The Science Behind Medifast ‣ Programs for Diabetes, Seniors, Teens, Gluten - free, more ‣ Success Stories & “Happy Afters” ‣ MyMed
Slide 17: Medifast Direct Strategy
Medifast Direct Strategy 17 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 • Prom
Slide 18: Local, Personal, Accountable
Local, Personal, Accountable • 73 Franchise Centers* • Supervised Programs • 1:1 Personal Counseling • Dietitian Support • Body Composition Technology • Onsite Product Purchasing • Weekly Weigh - ins • Constant Contact “Care Calls” 18 * As of 12/31/2014
Slide 19: MWCC – Current Status
MWCC – Current Status 19 Successfully transitioned 17 corporate centers to Franchisees at 12/31/2014: • Dallas, TX – 9 Centers • Houston, TX – 4 centers • Baltimore, MD – 4 Centers • Franchise Footprint (as of 12/31/14) • 73 Franchise Locations • 8 Franchise Owners • 9 States • Profitable business m
Slide 20: Current Franchise Locations
Current Franchise Locations 20 • 73 Franchise Locations • 8 Franchise Owners • 9 States
Slide 21: MWCC Strategy
MWCC Strategy 21 1 2 3 CONVERT TO FRANCHISE SUPPORT INNOVATE Highly Accretive Shift to Wholesale is completed • Food revenues will decline to wholesale price. • Counseling revenues shift to Franchisees. • Operating Profit improves with SG&A reductions Provide Support for Franchise Growth • Training
Slide 22: 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 • Sales
Slide 23: Medical Providers Strategy
Medical Providers Strategy 23 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 24: Strategic Growth Initiatives
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 25: 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 26: 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 corporate - owned Medifast centers • Focus on Hispanic demographic and leverage Medix marketi
Slide 27: Beyond Weight Loss
Beyond Weight Loss 27 2 7 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 28: 2014 Product Launches
2014 Product Launches 28 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 29: Digital Dashboards & Apps
29 Digital Dashboards & Apps Customized for Take Shape For Life & Medifast - Track Meals, Nutrition, Water, Weight, Exercise & More - Unique Console Allows Coaches & Center staff to work closely with Clients on Progress Trackers and Dashboards
Slide 30: Client results
30 Results vary. Clients can expect to lost 2 - 5 lbs per week for the first two weeks and 1 - 2 lbs per week, thereafter.
Slide 31: Your whole world get better
Your whole world get better 31
Slide 32: Brand Awareness Study
32 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Nov-11 May-12 Nov-12 May-13 Nov-13 May-14 Nov-14 Medifast Weight Watchers Jenny Craig Nutrisystem Jun-14 Brand Awareness Study
Slide 33: Innovation – from Concept to Consumer
Innovation – from Concept to Consumer 33 33
Slide 34: Leading Manufacturing & Distribution Infrastructure
Leading Manufacturing & Distribution Infrastructure 34 • Company - owned state - of - the - art facilities • Supports industry - leading gross margins • Capacity to drive aggressive growth • Partnerships with leading suppliers
Slide 35: Financial Overview
*Y Medifast. Financial Overview B Se ee
Slide 36: 2008 - 2014 Revenue
2008 - 2014 Revenue 36 5 - Year 27% CAGR
Slide 37: 2008 - 2014 EPS
2008 - 2014 EPS 37 *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. **2014 FY EPS guidance excludes $2.1 million, or $0.11 per diluted share, for extraordinary legal and advisory
Slide 38: Strong Cash & Balance Sheet
Strong Cash & Balance Sheet 38 • $56M Cash & Investments • No Long Term Debt • Low Working Capital Levels • Minimal CapEx Requirements • Strong Free Cash Flows Note: As of 9/30/2014
Slide 39: 2015 Priority “Return to Growth”
2015 Priority “Return to Growth” 39 1 2 3 Re - Ignite growth in coach network for TSFL Invigorate and support new franchisees to grow in 2015 Focused advertising spend on the back of sophisticated data to drive growth in Med Direct Continue to investigate International expansion opportunities Contin
Slide 40: Key Investment Highlights
Key Investment Highlights 40 Large , addressable and growing market Differentiated scientific approach to weight loss Highly efficacious product portfolio validated by customer referrals Strong, stable cash flows Unique Multi - Channel Model State - of - the - art production capabilities and low cos
Slide 41: Q&A
*Y Medifast. Q&A B Se ee