Slide 1: Investor Presentation
Investor Presentation Mike MacDonald, Chairman & Chief Executive Officer Meg Sheetz, President & Chief Operating Officer Tim Robinson, Chief Financial Officer May, 2013
Slide 2: Safe Harbor Statement
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 . Th
Slide 3: Products and Programs Recommended by Over 20,000 Doctors Since 1980
Medifast Products and Programs Have Been Recommended by over 20,000 Doctors Since 1980 and Used by Over a Million Customers Since 1980 FAST SAFE SIMPLE LONG TERM PORTABLE 3
Slide 4: Vision and Mission
Vision To create health, hope, and happiness through clinically proven weight - management products, programs, and support Mission To combat the obesity epidemic and improve health in two ways: • Through clinically proven weight - management products & programs • Through multiple, innovative support
Slide 5: Investment Highlights
• Rapidly growing addressable market and significant market penetration opportunities • Vertically integrated model producing industry leading gross margins • Strong historical track record of growth in sales, profits and cash flows • Consistent profitability and return on invested capital Over 70 U
Slide 6: Medifast 5&1 Plan, Transition, & Maintenance
6 Medifast 5&1 Plan, Transition, & Maintenance
Slide 7: Clinically Proven and Scientifically Based
MacDonald Center for Obesity Prevention & Education Scientific Advisory Board 7 Clinically Proven and Scientifically Based
Slide 8: Medifast: Take Shape
¥ Medif ast. Take shape MEDICAL PROVIDERS Fy rite. | -QNE J “Y Medifast — “Y Medif ast. WEIGHT CONTROL CENTERS DIRECT Prowen, heathy weight loss tom the brand mcammnandad by ove 20,000 dectors since 1980, g
Slide 9: Company-Owned Manufacturing and Distribution
• Company - owned state - of - the - art manufacturing and distribution facilities • Help support industry leading gross margins • Capacity in place to drive aggressive growth Owings Mills, MD Ridgely, MD MANUFACTURING AND DISTRIBUTION Dallas, TX 9
Slide 10: Strong, Consistent Financial Performance: Revenue
Strong, Consistent Financial Performance Revenue 10
Slide 11: Strong, Consistent Financial Performance: EPS
Strong, Consistent Financial Performance EPS 11 * 2012 EPS excluding two non - recurring items, including a FTC settlement recorded in the second quarter and a sales tax accrual in the fourth quarter
Slide 12: U.S. Weight Loss Market Estimated at $65B per Year
Source: U.S. Census Data, CDC Data, IBIS World, MarketData Enterprises Unserved Weight Loss $47B - Diet Soft Drinks - Artificial Sweeteners - Health Club Revenues Served Weight Loss $18B Total Market – $65B Served Market – $18B U.S. Weight Loss Market is Estimated to be a $65B per Year Industry 12
Slide 13: 2/3 of the U.S. Population is Overweight or Obese
Source: U.S. Census Data, CDC Data, IBIS World, MarketData Enterprises U.S. Population 314M 15 or Older 251M Overweight/ Obese 173M Dieting 93M 2/3 of the U.S. Population is Overweight or Obese The Obesity Market is “ Growing ” 13
Slide 14: Current Medifast National Market Coverage
Current Medifast National Market Coverage 18 3 Significant Growth Opportunity to Cover “ White Space ” 14
Slide 15: International Coverage Opportunity
International Coverage Opportunity Australia India Europe Asia Canada Latin America Through Medix Brazil Mexico (Medix) 1.6B Overweight Globally and Expected to Grow 40% in Next 10 Years 15
Slide 16: Medifast Direct
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Slide 17: 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 Direct Selling Overview 17
Slide 18: Free Personal Health Coach & Mentor
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 Coaches are not compensated for their own or
Slide 19: Direct Sales Revenues
19 Direct Sales Revenues (in $ millions)
Slide 20: Coverage Expansion
Coverage Expansion • Expand coverage to new markets to cover “white space” • Leverage Success from Home magazine & Dr A ’ s book tour 20
Slide 21: Improve Field Effectiveness
Improve Field Effectiveness • Create development plan with simplified standards & processes • Enhance field communications & coach tools • Expand mobile “ on - the - go ” business 21
Slide 22: Self Guided Weight Loss with Online Ordering and Tools
22 Self Guided Weight Loss & Weight Management with the Convenience of Online Ordering, Support, & Tools
Slide 23: Direct Response Revenues
• 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 23 Direct Response Revenues (in $ millions)
Slide 24: Optimize Marketing & Promotional Spends to Improve Profit
Optimize Marketing & Promotional Spends to Improve Profit • Drive multi - media customer acquisition strategy (website/call center) • Continue to evaluate discounts & promotional offers • Ensure effective execution of capital & high resource projects 24
Slide 25: Website Performance Critical Success Factors
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 25
Slide 26: Weight Control Centers
YMedifast. “‘Y Medifast WEIGHT CONTROL CENTERS eo Proven, healthy weight loss kom the brand recommended by owe 20,000 dectors since 1980.
Slide 27: Weight Loss Management Partnership with Professionals
Weight Loss Management Partnership with a Team of Professionals Dedicated to Member Success • Brick - and - mortar centers offering supervised & structured programs • Currently operating 86 company - owned & 36 franchise - owned centers 27
Slide 28: Clinic Revenues
28 Clinic Revenues (in $ millions)
Slide 29: Strengthening Corporate Center Operations and Member Practices
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 operational efficiencies • Acquire & retain members by focus
Slide 30: Expand Franchise Footprint
Expand Franchise Footprint • Focus on current franchisee expansion • International presence through Medix strategic partnership • Medifast to provide focused resources and support 30
Slide 31: Medical Providers
YMedi fast. “Y Medifast. MEDICAL PROVIDERS
Slide 32: Medical Provider Customers
CUSTOMER Health Care Systems Ambulatory Care Centers Clinics & Medi Spas Individual Practices 32
Slide 33: Strategic Planks Drive Aggressive Growth
• Execution of strategic planks and driving forces for change will drive aggressive growth • Infrastructure & process discipline lead to margin expansion opportunities • New talent and employee development = increased earnings and cash flow generation 33