Medifast Inc · NYSE:MED
Medifast — Investor Day (December 2012)
58 slides from Medifast's investor day presentation, Dec 18, 2012
Slide 1: Analyst Day Presentation
“Y Med ifast. Proven, Healthy Weight Loss.. ANALYST DAY PRESENTATION December 18, 2012
Slide 2: Safe Harbor Statement
‘Medifast. gate 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 Litigat
Slide 3: Agenda / Key Themes
“Y Medifast. Agenda / Key Themes ¢ Meet Executive Team ¢ Medifast Business Overview ¢ 5 Year Strategic Direction ¢ Channel & Functional Plans * Question & Answer Proven, healthy weight loss from the brand recommended by over 20,000 doctors since 1980.
Slide 4: Management Introduction
‘YMedifast. Management Introduction Michael MacDonald Meg Sheetz Jason Groves Brian Kagen Don Gould Chairman of the Board, President, EVP, General Counsel EVP, Chief Marketing EVP, IT Chief Executive Officer Chief Operating Officer Officer » dl | Sn i] ‘tala \ Michelle Jones Brian Lloyd Jeanne Uphou
Slide 5: Mission
“Y Medifast. To create health, hope, and happiness through clinically proven weight-management products, programs, and support To combat the obesity epidemic and improve health in two ways: * Through clinically proven weight-management products & programs * Through multiple, innovative support chann
Slide 6: Recommended by over 20,000 Doctors Since 1980
“YMed ifast. Medifast Products and Programs Have Been Recommended by over 20,000 Doctors Since 1980 and Used by Over a Million Customers Since 1980 ©0609 FAST SAFE SIMPLE LONG TERM PORTABLE Proven, healthy weight loss from the brand recommended by over 20,000 doctors since 1980.
Slide 7: Investment highlights
“Y Medifast. Over 70 « Rapidly growing addressable market and ae Food significant market penetration opportunities Items Vertically integrated model producing industry leading gross margins * Strong historical track record of growth in sales, profits and cash flows * Consistent profitability and ret
Slide 8: Strong, Consistent Financial Performance: Revenue
YMedifast. Strong, Consistent Financial Performance $257.6 $298.2 $273.5 2007 2008 2009 2010 2011 First Nine Months 2012 Revenue Proven, healthy weight loss from the brand recommended by over 20,000 doctors since 1980.
Slide 9: Strong, Consistent Financial Performance: EPS
YMedifast. Strong, Consistent Financial Performance $1.35 $1.31 $1.02 2007 2008 2009 2010 2011 First Nine Months2012 EPS Proven, healthy weight loss from the brand recommended by over 20,000 doctors since 1980.
Slide 10: Company Accolades
“YMedifast. Company Accolades | Forbes | 2012 | BEST SM PLL Forbes | 2011 BEST SMALL COMPANIES #12 IN AMERICA NIES TOP 10 FORTUNE | 2011 100 FASTEST GROWING #5 COMPANIES ht loss from the brand recommended by over 20,000 doctors since 1980.
Slide 11: Total Market $65B, Served Market $18B
“YMed ifast. Total Market — $65B Served Market — $18B - = y \ Unserved Weight Loss Served $47B Weight Loss > $18B -Diet Soft Drinks -Artificial Sweeteners -Health Club Revenues ‘Source: U.S. Census Data, COC Data, IBIS World, MarketData Enterprises Proven, healthy weight loss from the brand recommen
Slide 12: 2/3 of the U.S. Population is Overweight or Obese
“Y Medifast. _2/3 of the U.S. Population is Overweight or Obese U.S. Population 314M 15 or Older 251M Overweight/ Obese 173M Dieting 93M ‘Source: U.S. Census Data, CDC Data, IBIS World, MarketData Enterprises The Obesity Market is “Growing” Proven, healthy weight loss from the brand recommended by o
Slide 13: Will Strive for $1B in Sales Over the Next Five Years
*Y Medifast. Proven, Healthy Weight Loss.. Will Strive for $1B in Sales Over the Next Five Years
Slide 14: How will we get there?
‘YMedifast. Low will we get there? 1) Increasing and expanding coverage in new and existing markets 2) Infrastructure and process discipline — create “One Medifast” 3) Employee development and talent acquisition to support future growth Proven, healthy weight loss from the brand recommended by over
Slide 15: Current Medifast National Market Coverage
YMedifast. Current Medifast National Market Coverage Significant Growth Opportunity to Cover “White Space” Medifast Sales Proven, healthy weight loss from the brand recommended by over 20,000 doctors since 1980. 15
Slide 16: International Coverage Opportunity
YMedifast. International Coverage Opportunity 1.6B Overweight Globally and Expected to Grow 40% ii in Next 10 Years Latin America Through Medix Proven, healthy weight loss from the brand recommended by over 20,000 doctors since 1980. 1
Slide 17: Take Shape for Life, Direct, Medical Providers, Weight Control Centers
Take Shape YMedif. ast. many? ¢-) au Lite MEDICAL PROVIDERS o sy Y Medifast. ONE | YY Medif ast oe YMedif ast. WEIGHT edi CENTERSe Proven, healthy weight loss from the brand recommended by over 20,000 doctors since 1980. 7
Slide 18: Michelle Jones, Take Shape for Life
“Y Medifast. Michelle Jones Executive Vice President, Take Shape for Life Proven, healthy weight loss from the brand recommended by over 20,000 doctors since 1980. 8
Slide 19: Coach Video
“Y Medifast. “Coach” Video Proven, healthy weight loss from the brand recommended by over 20,000 doctors since 1980. 19
Slide 20: Direct Selling Overview
YMedifast. © Take Shape rueteo ay ¥ Medifast. Direct Selling Overview ¢US direct selling accounts for $30B — 24% or $7B comes from weight-loss products ¢-15.6M people engaged in direct sales in the US U.S. is the #1 direct selling market in the world Proven, healthy weight loss from the brand recomm
Slide 21: Free Personal Health Coach & Mentor
“YMedifast. © Take Shape ructeo ay ¥ Medifast. Free Personal Health Coach & Mentor to Guide Clients Through Their Weight Loss and Weight Management Journey «Health Coaches are required to take competency exam * Health Coaches do not need to purchase product themselves to receive commission * Health
Slide 22: Drive Increase in Revenue & Profitable Growth
“Y Medifast. Take Shape FUELED sy ¥ Medifast. Drive Increase in Revenue & Profitable Growth Medifast 5&1 Plan* Proven, healthy weight loss from the brand recommended by over 20,000 doctors since 1980. 2
Slide 23: Coverage Expansion/Coach Acquisition
YMedifast. ‘o) Take Shape ructeo ay ¥ Medifast. Coverage Expansion/Coach Acquisition « Expand coverage to new markets to cover “white space” « Leverage Success from Home magazine & Dr A’s book tour Dr. A’s HABITS DISCOVER of HEALTH OPTIMAL arene cm HEALTH Wi € Proven, healthy weight loss from the br
Slide 24: Improve Field Effectiveness
YMedifast. O Take Shape rucieo ay ¥ Medifast. Improve Field Effectiveness * Create development plan with simplified standards & processes * Enhance field communications & coach tools * Expand mobile “on-the-go” business @ Take Shi os nee Proven, healthy weight loss from the brand recommended by over
Slide 25: Direct: Brian Kagen
“Y Medifast. *Y Medifast. DIRECT DIRECT | Self-guided weight loss & weight management with the convenience of online ordering, support, and tools. sl Brian Kagen Executive Vice President & Chief Marketing Officer Proven, healthy weight loss from the brand recommended by over 20,000 doctors since 198
Slide 26: Direct Market Area Sales Concentration
"Peeniyast. ¥ Medi fast. DIRECT * Only 10% of 210 DMAs* over $1M in annual sales * 66% of total volume is done by just 10% of DMA’s * 50% of 210 DMA’s under $100k in annual volume “September 2011 — August 2012 volume DMA = Designated Market Area 26 Proven, healthy weight loss from the brand recommen
Slide 27: Optimize Marketing & Promotional Spends to Improve Profit
"Peeniyast. ¥ Medi fast. DIRECT Optimize Marketing & Promotional Spends to Improve Profit * Drive direct spend while capitalizing on One Medifast message ¢ Evaluate discounts on kits, cases & acquisition offers « Ensure effective execution of capital & high resource projects FREE Shipping | FREE Mea
Slide 28: Direct
“Y Medifast. YY Medifast. DIRECT Proven, healthy weight loss from the brand recommended by over 20,000 doctors since 1980. 28
Slide 29: Website Performance
“Y¥ Medifast. DIRECT Website Performance Critical Success Factors + Mobile friendly + Site load speed improved + Simplified design + Improved navigation + SEO benefits + Optimized content + Multiple versions for new & returning visitors Proven, healthy weight loss from the brand recommended by over
Slide 30: Medifast Weight Control Centers: Dom Vietri
“Y Medifast. “YMe di fas t WEIGHT CONTROL CENTERSo Dom Vietri Executive Vice President, Medifast Weight Control Centers 30 Proven, healthy weight loss from the brand recommended by over 20,000 doctors since 1980.
Slide 31: Weight Loss Management Partnership with Professionals
“YMedifast. “¥Med ifast Weight Loss Management Partnership with a Team of Professionals Dedicated to Member Success « Brick-and-mortar centers offering supervised & structured programs * Currently operating 88 company-owned & 32 franchise-owned centers YMedifast WEIGHT CONTROL CENTERS= fast, safe, s
Slide 32: Strengthening Corporate Center Operations
“YMed ifast. “‘Y Medifast WEIGHT CONTROL CENTERSe Focus on Strengthening Overall Corporate Center Operational Member Acquisition, and Member Counseling Practices * Q1 loss led to significant employee restructure in April, 2012 *« Removed many program & food discounts « Heightened focus on operationa
Slide 33: Expand Franchise Footprint
“Y Medifast. “YMe d i fa st WEIGHT CONTROL CENTERSo Expand Franchise Footprint * Focus on current franchisee expansion * International presence through Medix strategic partnership * Medifast to provide focused resources and support Proven, healthy weight loss from the brand recommended by over 20,00
Slide 34: Medical Providers: Brian Lloyd
“Y Medifast. ‘Y Medifast. MEDICAL PROVIDERS Brian Lloyd Executive Vice President Strategy & Business Development Proven, healthy weight loss from the brand recommended by over 20,000 doctors since 1980,
Slide 35: Medical Providers Customer Segments
“Y Medifast. A “‘Y Medifast. CUSTOMER MEDICAL PROVIDERS Systems Clinics & Medi Spas Individual Practices Proven, healthy weight loss from the brand recommended by over 20,000 doctors since 1980. 35
Slide 36: International
YMedifast. ‘YY Medifast. INTERNATIONAL Proven, healthy weight loss from the brand recommended by over 20,000 doctors since 1980. 36
Slide 37: International: Medix partnership
“Y Medifast. “¥ Med i fi ast. INTERNATIONAL Carlos Lopez Patan a AN Chief Executive Officer &%: RNA Medix sion Proven, healthy weight loss from the brand recommended by over 20,000 doctors since 1980. 7
Slide 38: Brian Kagen, Chief Marketing Officer
YY Medi fast. Proven, Healthy Weight Loss.. Brian Kagen Executive Vice President & Chief Marketing Officer 38
Slide 39: Marketing
“YMed ifast. Marketing * Build national brand awareness * Build multi-channel model awareness * Grow revenue across all business channels * Optimize performance of marketing initiatives * Delight the customer across all interactions Proven, healthy weight loss from the brand recommended by over 20,0
Slide 40: 2012 Television Spot
“YMedifast. 2012 Television Spot Proven, healthy weight loss from the brand recommended by over 20,000 doctors since 1980. a
Slide 41: Channel Messaging
YY Medifast. Proven, Healthy Weight Loss “Become Yourself” Highlights True Benefits of Weight Loss “Y Medifast WEIGHT CONTROL CENTERS “Here for You Before, During & Beyond” Highlights Ongoing Support Provided Proven, healthy weight loss from the brand recommended by over 20,000 doctors since 1980. “
Slide 42: Fortune and Forbes Recognition
“YMed ifast. FORTUNE _| 2011 100 FASTEST GROWING #h COMPANIES Forbes | 2011 BEST SMALL COMPANIES #12 IN AMERICA Proven, healthy weight loss recommended by over 20,000 doctors since 1980. 42
Slide 43: “YMed ifast.
“YMed ifast. healthy weight loss recommended by over 20,000 docto
Slide 44: “YMed ifast.
“YMed ifast. 44
Slide 45: Grow Revenue Across All Business Channels
“Y Medifast. Grow Revenue Across all Business Channels by Identifying Markets Prime for Expansion, Leveraging Cross Channel Synergies, and Introducing Incremental New Products, Programs and Tools “YMedifast. = Proven, Healthy Weight Loss Proven, healthy weight loss from the brand recommended by over
Slide 46: “YMedifast.
“YMedifast. Proven, healthy weight loss from the brand recommended by over 20,000 doctors since 1980. 46
Slide 47: New Products
“Y Medifast. 24 eiinoras 110 caries 11 Q Protein Peanut ut AQ Fer . Y 13g Carbohydrates ug “—“F Peanut Butter 24 enc 110 catores 11 Q Protein 14g Carbohydrates emu e & Proven, healthy weight loss from the brand recommended by over 20,000 doctors since 1980. aT
Slide 48: Build Scientific Evidence and Clinical Heritage
“YMed ifast. Continue to Build Scientific Evidence that Supports Our Position as the Weight Management Company with the Most Clinical Heritage You can choose from among hundreds of weight-loss >t plans, diets, programs, pills, and gadgets—all claiming to be different, though many are remarkably simi
Slide 49: Delight and Engage Customers; Net Promoter Score
“YMed ifast. Delight and Engage Customers Across All Interactions by Expanding Our Website, Online, Social, Mobile and Client Solutions Center Capabilities and Introducing Net Promoter Score to Measure Customer Centricity Net Promoter Score (NPS) How likely are you to recommend to a friend or family
Slide 50: Supply Chain Strategy
“YMedifast. Supply Chain Strategy oy Guy Sheetz Executive Vice President, Supply Chain Proven, healthy weight loss from the brand recommended by over 20,000 doctors since 1980. 50
Slide 51: IT Goals & Strategies
“YMedifast. IT Goals & Strategies Don Gould Executive Vice President, IT Proven, healthy weight loss from the brand recommended by over 20,000 doctors since 1980. 51
Slide 52: Strategic Goals
YY Medi fast. Proven, Healthy Weight Loss.. Strategic Goals Meg Sheetz President & Chief Operating Officer 52
Slide 53: Customer Goals
‘YMedifast. Customer Goals Customer Goals «Be a Customer Centric Organization where Nee our products, programs, channels, processes, (NPS) 8 over the & systems are aligned to delight the customer habeline Proven, healthy weight loss from the brand recommended by over 20,000 doctors since 1980. =)
Slide 54: Employee Goals
“YMedifast. Employee Goals Employee Goals «Be viewed as an Employer of « Reduced Turnover by 10% Choice by valuing our employees & creating an environment where they | * Employee engagement survey can thrive score baseline & Y/Y improvement «Facilitate a culture of Continuous Learning enabling skill
Slide 55: Financial Goals
“YMedifast. Financial Goals Financial Goals 2017 Target *Become a $1B Company over the next5 —, Revenue $1B years with 85% revenue from U.S. Y ° , : operations, 15% from international markets | , Profit (pretax) $220M «Improve Profitability through revenue . growth, profit growth, & cash generation
Slide 56: Process Goals
“Y Medifast. Process Goals Process Goals * Deliver Value to customers, partners, & shareholders by implementing fact-based decisions & process discipline using Lean Six Sigma principles + Every Medifast function & organization will | * Return on sales Deliver Cost Reduction improvement Y/Y ¢ Deliver
Slide 57: Summary
“Vitiedivast. * Execution of strategic planks and driving forces for change will drive $1B in sales by 2017 ¢ Infrastructure & process discipline lead to margin expansion opportunities ¢ New talent and employee development = increased earnings and cash flow generation Proven, healthy weight loss fro
Slide 58: Q&A
“Y Medifast. Lisa lost 49 lbs Danny lost 132 lbs Kelsey lost Kristen lost 80 lbs 55lbs Robin lost 96 Ibs Q&A Proven, healthy weight loss from the brand recommended by over 20,000 doctors since 1980. Scott lost 60 Ibs Mary lost 54 lbs 58