Medifast Inc · NYSE:MED
Medifast — 2020 ICR Conference
31 slides from Medifast's conference presentation, Jan 13, 2020
Slide 1: Investor Presentation January 2020
INVESTOR PRESENTATION January 2020
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 Refor
Slide 3: Agenda
AGENDA 1 Medifast At A Glance OPTAVIA Transition And 2 Performance Highlights 3 Our Plan For Growth 3
Slide 4: Medifast At A Glance
MEDIFAST AT A GLANCE Ҥ MEDIFAST. 3) OPTAVIA. Zaye
Slide 5: Medifast At A Glance: Who We Are
Medifast At A Glance • The company behind one of the fastest-growing health and wellness communities, OPTAVIA • Differentiated direct-to-consumer sales model: – Network of 32,200 Coaches, most of whom initially started as clients – 100% of products are directly shipped to clients for consumption, ne
Slide 6: Medifast At A Glance (Cont'd): What We Do
Medifast At A Glance (Cont’d) • We empower passionate and engaged communities of people committed to healthier lifestyles • Our network of talented and committed Coaches provide clients with the encouragement and inspiration they need to drive change What We Do • Everything we do is aimed at helping
Slide 7: A New and Unique Direct-To-Consumer Model
A New and Unique Direct-To-Consumer Model OPTAVIA DIRECT-TO-CONSUMER MODEL TRADITIONAL DIRECT SELLER Health and wellness community Selling network Clients and certified Coaches Distributors/sales agents and wholesale buyers Client service and community building Recruiting and transactions Long-term
Slide 8: Key Investment Highlights
Key Investment Highlights Health & wellness innovator with differentiated, science-based programs and products Large and growing market opportunity addressing a global need Scalable coach-based direct-to-consumer selling model Attractive, highly predictable business model Significant free cash flow
Slide 9: Key Financial Metrics
Key Financial Metrics $ 689 mm $ 92 mm 60 % 62 % LTM Q3 2019 LTM Q3 2019 2017–LTM Q3 2019 2017–LTM Q3 2019 Revenue Operating Income Revenue CAGR Operating Income CAGR 9
Slide 10: Attractive Variable Cost Model
Attractive Variable Cost Model ~70 ~2 % % $ 75 mm 93 % $ 76 mm SG&A is LTM Q3 2019 LTM Q3 2019 LTM Q3 2019 LTM Q3 2019 Variable CapEx as % of Free Cash Flow1 FCF Conversion2 Return to Revenue Shareholders3 1Free Cash Flow defined as cash flow from operations – cash flow from investing 2Free Cash Flo
Slide 11: Strong Free Cash Flow Facilitates Attractive Return of Capital to Shareholders
Strong Free Cash Flow Facilitates Attractive Return of Capital to Shareholders ($ in mm) CASH & INVESTMENTS 2014 – Q3 2019 $97mm Stock Repurchase DEBT-FREE $29 Dividend $5 QUARTERLY DIVIDEND Other Financing Activities Cash & Investments $1.13 Retained $108 • Financial capacity to handle any CapEx re
Slide 12: Strong Management Team
Strong Management Team DAN CHARD TIM ROBINSON NICHOLAS JOHNSON TONY TYREE Chief Executive Officer Chief Financial Officer Market President, OPTAVIA Chief Marketing Officer • 25+ years of marketing and • 25+ years of diverse management • 10+ years of sales, marketing, and • 25+ years of global integr
Slide 13: OPTAVIA Transition and Performance Highlights
OPTAVIA TRANSITION AND PERFORMANCE HIGHLIGHTS 13
Slide 14: The OPTAVIA Model
The OPTAVIA Model People are More Successful in their Virtuous Circle for Growth Transformation Journey when they... Active Earning 1• Have a Support System BECOMES Coach ACTIVATES (Coach and Community) PROVEN Minimal NUTRITION marketing costs OPTAVIA 2• Learn and incorporate COACHES TM gets you whe
Slide 15: Our Strategy
Our Strategy WHERE TO PLAY Our scalable business model to offer the world optimal health by combining clinically proven plans with scientifically developed products and the encouragement, inspiration and support of Coaches GROWTH AREAS Operational Enhanced Program Technology Expansion Effectiveness
Slide 16: Strong and Sustainable Customer Loyalty
Strong and Sustainable Customer Loyalty 2x ≈20x 86 % 50 % OPTAVIA repeat Client spend on Customer retention OPTAVIA customers rates vs industry OPTAVIA rates who have bought benchmark* products vs CPG products more than benchmarks* four times 16 ^Nielsen panel data analysis benchmarking OPTAvia agai
Slide 17: Growing Active Earning Coach Community
Growing Active Earning Coach Community <25 25-250 251-500 501-750 751-1,000 1,001+ Fiscal 2016 Fiscal 2019 Alaska Hawaii Alaska Hawaii Hong Kong Singapore 17 Note: Represents active earning Coaches in Q4 of respective years
Slide 18: Active Earning Coaches
Active Earning Coaches ~50,000 +42% Q3 18 – Q3 19 Launch of New Business 32,200 Strategy 30,600 27,200 24,100 22,600 19,700 $5,863 $5,817 16,700 $5,781 Number of 14,200 15,000 $5,756 $5,715 12,600 12,800 12,800 12,500 13,000 13,500 $5,474 Coaches $5,278 $4,713 $4,693 Revenue $4,490 $4,562 Per Coach
Slide 19: OPTAVIA Driving Transformational Growth
OPTAVIA Driving Transformational Growth ($ in mm, Except Per Share Data) $1,000 Launch of New Business Strategy $700- $710 ~20% CAGR $501 ~40% Revenue $285 $302 +66% $273 $275 +10% +48% +74% Operating $30 $29 $27 $40 $69 Income 2014* 2015* 2016 2017 2018 2019 Guidance 2021 Target Diluted EPS $1.65 $
Slide 20: Our Plan For Growth
OUR PLAN FOR GROWTH Ҥ MEDIFAST. 3) OPTAVIA. Zaye
Slide 21: Vision: Double the Size of the Business Every 3-4 Years
Vision: Double the Size of the Business Every 3-4 Years 1 OPTIMIZE OPERATIONAL EFFECTIVENESS 2 3 4 5 Utilize Enhance Drive Program Expand Technology Coach & Client Development & Segments & to Maximize Experience Innovation Geographies Performance DRAMATICALLY GROW OPTAVIA COACH COMMUNITY 21
Slide 22: Optimize Operational Effectiveness
• Creating an organization that can power long-term 1 sustained growth • Maximize efficiency and growth, while minimizing impact of Optimize any short-term air pockets Operational Effectiveness • Scalable systems and processes • Replicable across multiple geographies, products and services 22
Slide 23: All Key Metrics Trending Positively
All Key Metrics Trending Positively Credit Card Bad Debt Normalized Product Returns as a % of Sales Call Center Metrics Consumer Net Promoter Score Monthly Client Retention Rate 23
Slide 24: Enhance Coach & Client Experience
2 • Call center and CRM Enhance • Supply chain and support enhancements Coach & Client Experience • Improved user technology experience • Enhanced product sensory experience 24
Slide 25: Utilize Technology to Maximize Performance
• New Coach Business Suite Improves Coach productivity – Deep visibility into Coach team activities – Work flow enabled 3 – Real time updates Utilize • New e-commerce platform Improves Client Technology experience and payment security to Maximize Performance • New social tools Makes sharing their st
Slide 26: Support Additional Healthy Habits Through Products, Education and Community
Support Additional Healthy Habits Through Products, Education and Community 4 Drive Program Development & Innovation Nutrition Hydration Sleep Movement Aging 26
Slide 27: Market Opportunities
Market Opportunities 5 Expand Segments & Geographies Regional Generational Diversity Lifestyle International Underrepresented Target younger Outreach to Serve clients in Establish a global markets demographics important different stages of footprint communities optimal wellbeing 27
Slide 28: Summary
SUMMARY "YMEDIFAST. 36 OPTAVIA.
Slide 29: Key Investment Highlights
Key Investment Highlights Health & wellness innovator with differentiated, science-based programs and products Large and growing market opportunity addressing a global need Scalable coach-based direct-to-consumer selling model Attractive, highly predictable business model Significant free cash flow
Slide 30: Thank You
Thank You wt “FMEDIFAST 36 OPTA
Slide 31: Non-GAAP Reconciliation
Non-GAAP Reconciliation ($ in mm) Reconciliation of free cash flow and free cash flow conversion to Net cash provided by operating activities, the most directly comparable GAAP financial measure, for the last twelve months ended September 30, 2019. Non-GAAP measures should be evaluated with, and are