Medifast Inc · NYSE:MED
Medifast — Investor Presentation (January 2018)
35 slides from Medifast's investor presentation, Jan 9, 2018
Slide 1: Investor Presentation January 2018
INVESTOR PRESENTATION January 2018
Slide 2: Safe Harbor Statement
SAFE HARBOR S TATEMENT ▪ 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
Slide 3: Today's Presenters & Agenda
TODAY’S PRESENTERS & AGENDA Dan Chard Chief Executive Officer Tim Robinson Chief Financial Officer Agenda ▪ Medifast Today ▪ New Brand: OPTA VIA ® ▪ Growth Strategy ▪ Financials 3
Slide 4: Medifast Today
“MEDIFAST. MEDIFAST®° TODAY
Slide 5: Medifast Vision & Mission
MEDIFAST ® VISION & MISSION To Offer the World LIFELONG TRANSFORMATION One Healthy Habit at a Time ™ 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 14,000 OPTA VIA Coaches ™ ▪ Our Coaches teach habits that lead to Optimal Wellbeing TM and Lifelong Transformation ▪ Achievi
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 gro
Slide 8: Large and Growing Market Opportunity
LARGE AND GROWING MARKET OPPORTUNITY Obesity at Critical Levels ▪ Nearly 70% of U.S. Adults are Overweight or Obese (1) ▪ International levels now 2X from 30 years ago (3) Current & Growth Markets ▪ A ddressable U.S. Weight Loss Products & Services market expected to grow 5% per year through 2022 (4
Slide 9: Proven & Effective Products & Programs
PROVEN & EFFECTIVE PRODUCTS & PROGRAMS 9 ▪ 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 ▪
Slide 10: Life-Changing Results
LIFE - CHANGING RESULTS 10 * Average weight loss for Clients on the Optimal Weight 5&1 Plan ® with support is 20 pounds
Slide 11: Multiple Support Models
84% 11% 5% OPTAVIA Medifast Direct Medifast Business Partners MULTIPLE SUPPORT MODELS Self - directed E - commerce Net Sales Breakdown YTD 2017 (3) 14,200 (1) Independent Coaches OPTA VIA ® Medifast Direct ® Weight Loss Control Centers 35 (2) Franchise locations 2 (2) Reseller locations 11 (1) Activ
Slide 12: Direct-to-Consumer Is the Best Approach
DIRECT - TO - CONSUMER IS THE BEST APPROACH The Right Sales & Support ▪ Personal selling is optimal for helping consumers understand complex products ▪ Studies have consistently shown that weight loss works best with personal support ▪ Leverages consumer trends to personal recommendations ▪ Medifast
Slide 13: Introducing OPTAVIA
“MEDIFAST. INTRODUCING OPTAVIA®
Slide 14: Take Shape for Life Became OPTAVIA July 2017
TAKE SHAPE FOR LIFE ® BECAME OPTA VIA ® JULY 2017 1/8/2018 14 ▪ 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 ™
Slide 15: Proven Nutrition and OPTAVIA Coaches
15 PROVEN NUTRITION gets you where you want to go. OPTA VIA COACHES ; make sure you never go it alone. People are More Successful in their Transformation Journey when they; ; Have a Support System (Coach and Community) ; Learn and i ncorporate Healthy Habits into Their Lives (Habits of Health System
Slide 16: 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 OPTA VIA ® product sales go directly to Clients; 9 % are consumed by Coaches ▪ All commissions based on product sales ▪ Coaches do not buy or carry inventory, d
Slide 17: OPTAVIA Opportunity: The Coached Becomes the Coach
▪ When you succeed, your transformation will be an inspiration to others ▪ OPTA VIA offers a compelling financial opportunity ▪ LOW - RISK: Registering as a Coach costs under $200 ▪ ATTRACTIVE COMPENSATION: High AOV(~$230) and commission rates (Commissions are ~42 % of OPTA VIA Revenues) ▪ FLEXIBILI
Slide 18: Strategy for Growth
STRATEGY FOR GROWTH
Slide 19: Strategy for Growth
STRATEGY FOR GROWTH 19 Grow Our Coach Community Drive Innovation Expand Segments & Geographies Accelerate Coach Success Develop Digital Tools
Slide 20: Accelerating Coach Success
ACCELERATING COACH SUCCESS 20 ▪ 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 aspect
Slide 21: 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 s ocial t ools Makes sharing their story easy ▪ Scalable to support expa
Slide 22: OPTAVIA Product Innovation On-Trend
OPTA VIA ® PRODUCT INNOVATION ON - TREND OPTAVIA TM Select OPTAVIA TM Essential MEDIFAST Classic Proven Clinically - proven weight loss programs that include our unique Fueling formulation x x x Interchangeable Each Fueling can be eaten for any meal occasion, making it easy to follow the program x x
Slide 23: Innovation Path-Forward Based on Healthy Habits
INNOVATION PATH - FORWARD BASED ON HEALTHY HABITS 23 NUTRITION SLEEP MOVEMENT HYDRATION
Slide 24: Significant U.S. Expansion Opportunities
SIGNIFICANT U.S. EXPANSION OPPORTUNITIES 24 1 Regional Many U.S markets under - represented; All under - penetrated 2 Generationa l 3 Diversity 4 Lifestyle Younger demographics can drive faster Coach development Penetrate important U.S. communities and build synergies for International Serve clients
Slide 25: International Potential
INTERNATIONAL POTENTIAL 25 Peer Direct Selling companies generate majority of their revenue in $185Bn Global Market Nu Skin $2.2Bn - Global $245M – US / Canada US / Canada All Other USANA $1.0Bn – Global $252M – Americas / Europe Americas / Europe All Other Public Company Examples: ▪ Largest Markets
Slide 26: Strong Financial Foundation
STRONG FINANCIAL FOUNDATION
Slide 27: 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 sh
Slide 28: Accelerating Revenue Trajectory
ACCELERATING REVENUE TRAJECTORY 28 $200 $225 $250 $275 $300 $325 2014 2015 2016 2017 Guidance $285 $273 $275 $ 295 - $298 ($ millions) - Revenue from continuing operations .
Slide 29: Scalable Business Model Drives Earnings Growth
SCALABLE BUSINESS MODEL DRIVES EARNINGS GROWTH $1.00 $1.25 $1.50 $1.75 $2.00 $2.25 2014 2015 2016 2017 Guidance $1.65 $1.62 $1.49 $2.15 - $2.18 $1.89 $1.73 $1.89 Adj. GAAP 29 - EPS from continuing operations . - 2014 Non - GAAP EPS excludes the net of tax items of $ 1 . 3 million accrual for franchi
Slide 30: Highly Variable Cost Structure
28% 41% 31% COGS Commissions Other HIGHLY VARIABLE COST STRUCTURE 30 Total Company Expenses 2017 YTD thru Q3017 Percentages to Total Expenses of the Company, COGS + Operating Expenses
Slide 31: Highly Predictable OPTAVIA Financial Model
HIGHLY PREDICTABLE OPTA VIA ® 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%)
Slide 32: Strong Cash Flow Generation
- 20.0 40.0 60.0 80.0 100.0 120.0 2014 2015 2016 YTD 2017 Stock Repurchase Dividend Other Financing Activities Cash & Investments Retained STRONG CASH FLOW GENERATION 32 ($ millions) Share Repurchase + Dividend ($67.8M (62% of Cumulative Cash Flow) $109.3 Note: YTD 2017 represents cumulative cash fl
Slide 33: Strong Cash & Balance Sheet
STRONG CASH & BALANCE SHEET ▪ $95.7M Cash & Investments ▪ No debt ▪ Low working c apital Levels ▪ Minimal CAPEX r equirements ▪ Strong cash flow generation ▪ Existing stock r epurchase p rogram ▪ Increased quarterly cash dividend in December 2017 by 50% to $0.48 per share Note: Cash and Investments
Slide 34: 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 gro
Slide 35: Medifast
“¥ MEDIFAST.