Medifast Inc · NYSE:MED
Medifast — Investor Presentation (September 2017)
37 slides from Medifast's investor presentation, Sep 13, 2017
Slide 1: Investor Presentation September 2017
INVESTOR PRESENTATION SEPTEMBER 2017
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 New Brand: OPTAVIA® Growth Strategy Tim Robinson Chief Financial Officer Financials 9/13/2017 3
Slide 4: Medifast Today
MEDIFAST TODAY ® VERSION NUMBER
Slide 5: Medifast Vision & Mission
MEDIFAST VISION & MISSION ® To Offer the World LIFELONG TRANSFORMATION One Healthy Habit at a Time™ 9/13/2017 5
Slide 6: Company Profile
COMPANY PROFILE Leading Health & Wellness company $274.5M Net Sales in 2016 Recommended by over 20,000 doctors since 1980 Unique direct-to-consumer model with over 13,000 OPTAVIA Coaches™ Our Coaches teach habits that lead to Optimal WellbeingTM and Lifelong Transformation Achieving a healthy
Slide 7: 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 8: 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 9: 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 10: Life-Changing Results
LIFE-CHANGING RESULTS *Average weight loss for Clients on the Optimal Weight 5&1 Plan® with support is 20 pounds 9/13/2017 10
Slide 11: Multiple Support Models
MULTIPLE SUPPORT MODELS 5% OPTAVIA ® (1) 13,500 Independent Coaches 12% Net Sales Medifast Direct ® Self-directed E-commerce Breakdown YTD 2017(3) Weight Loss 36(2) Franchise locations 83% Control Centers 2(2) Reseller locations OPTAVIA Medifast Medifast Direct Business Partners (1) Active earning C
Slide 12: Direct-to-Consumer Is the Best Approach
DIRECT-TO-CONSUMER 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
Slide 13: Introducing OPTAVIA
“Y Med ifast. INTRODUCING OPTAVIA®
Slide 14: Take Shape for Life Became OPTAVIA
TAKE SHAPE FOR LIFE ® BECAME OPTAVIA® ™ JULY 2017 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 9/13/2017 14
Slide 15: OPTAVIA: Proven Coaches, Nutrition
® A shared vision for success 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 Habi
Slide 16: OPTAVIA Video
“Y Med ifast. OPTAVIA® VIDEO wy Zi OPTAVIA.
Slide 17: 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 18: 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(~$230) and commission rates (Commissio
Slide 19: Strategy for Growth
STRATEGY FOR GROWTH
Slide 20: Strategy for Growth
STRATEGY FOR GROWTH Accelerate Develop Digital Coach Tools Success Grow Our Coach Community Expand Drive Segments & Innovation Geographies 9/13/2017 20
Slide 21: 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 22: New Digital & Social Tools
NEW DIGITAL & SOCIAL TOOLS New Coach Business Suite Improves Coach productivity Deep visibility into Coach team activities Work flow enabled Real time updates New e-commerce platform Improves Client experience New social tools Makes sharing their story easy Scalable to support expansion plans
Slide 23: 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 24: Innovation Path-Forward Based on Healthy Habits
INNOVATION PATH-FORWARD BASED ON HEALTHY HABITS NUTRITION SLEEP MOVEMENT HYDRATION 9/13/2017 24
Slide 25: 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 26: International Potential
INTERNATIONAL POTENTIAL Peer 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 $17Bn U.K. 9.8% N
Slide 27: New Leadership with Extensive Experience in Direct Selling & International Markets
NEW LEADERSHIP WITH EXTENSIVE EXPERIENCE IN DIRECT SELLING & INTERNATIONAL MARKETS Years of Name Title Previous Experience Experience Daniel R. Chard Chief Executive Officer 25+ Mona Ameli President OPTAVIA® 20+ Bill Baker EVP Information Technology 10+ 9/13/2017 27
Slide 28: Strong Financial Foundation
STRONG FINANCIAL FOUNDATION
Slide 29: Attractive Financial Characteristics
ATTRACTIVE FINANCIAL CHARACTERISTICS Significant opportunity to accelerate revenue growth Highly predictable financial model High gross margins and variable cost structure Asset-light with minimal working capital and capex requirements Significant cash flow generation Strong balance sheet with
Slide 30: Accelerating Revenue Trajectory
ACCELERATING REVENUE TRAJECTORY ($ millions) $325 $290 - $300 $285 $300 $273 $275 $275 $250 $225 $200 2014 2015 2016 2017 Guidance 9/13/2017 30
Slide 31: Scalable Business Model Drives Earnings Growth
SCALABLE BUSINESS MODEL DRIVES EARNINGS GROWTH $2.05 - $2.15 $2.25 $1.89 $1.89 $2.00 $1.73 $1.75 Adj. $1.50 GAAP $1.65 $1.62 $1.49 $1.25 $1.00 2014 2015 2016 2017 Guidance - EPS from continuing operations. - 2014 Non-GAAP EPS excludes the net of tax items of $1.3 million accrual for franchise loan d
Slide 32: Highly Variable Cost Structure
HIGHLY VARIABLE COST STRUCTURE Other, COGS, 32% 28% Total Company Expenses 2017 YTD thru Q2017 Commissions, 40% Percentages to Total Expenses of the Company, COGS + Operating Expenses 9/13/2017 32
Slide 33: Highly Predictable OPTAVIA Financial Model
® HIGHLY PREDICTABLE OPTAVIA FINANCIAL MODEL Direct-To-Consumer Model Majority of new Coaches come from Client base Consistent patterns create strong visibility into future results Coaches acquiring new Clients Client retention Significant % of Clients on continuity shipments (~85%) High
Slide 34: Strong Cash Flow Generation
STRONG CASH FLOW GENERATION Cumulative Cash Flow (Since 2014) ($ millions) $98.3 $100.0 $78.6 $90.0 $80.0 $70.0 $56.0 $60.0 $50.0 $29.8(2) $40.0 Share Repurchase + Dividend $30.0 ($64.0M (65% of Cumulative Cash Flow) $20.0 $10.0 $0.0 2014 2015 2016 YTD 2017(1) Stock Repurchase Dividend Other Financi
Slide 35: Strong Cash & Balance Sheet
STRONG CASH & BALANCE SHEET $88.6M Cash & Investments No debt Low working capital Levels Minimal CAPEX requirements Strong cash flow generation Existing stock repurchase program Increased quarterly cash dividend 28% to $0.32 per share Note: Cash and Investments as well as debt position as of
Slide 36: 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 37: 9/13/2017
9/13/2017 37