Medifast Inc · NYSE:MED
Medifast — Investor Presentation (March 2019)
36 slides from Medifast's investor presentation, Mar 5, 2019
Slide 1: Investor Presentation March 2019
INVESTOR PRESENTATION March 2019
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: An Innovator in Health & Wellness
An Innovator in Health & Wellness 3
Slide 4: A Dynamic & Exciting New Brand
A Dynamic & Exciting New Brand 4
Slide 5: A Mission to Offer the World Lifelong Transformation
A Mission to Offer the World Lifelong Transformation One Healthy Habit at a Time 5
Slide 6: Proven Effectiveness
• Nearly 40 years of research and experience • Double-blind controlled clinical study demonstrates enhanced efficacy of integrated coach model vs solo approach Proven • Substantial credibility with U.S. doctors and medical community Effectiveness • Scientific Advisory Board helps guide and advise de
Slide 7: Solid Track Record in Health Innovation
Solid Track Record in Health Innovation Coach and community Holistic approach to improving support clinically demonstrated Empowering a new attitude overall health and wellness to contribute meaningfully towards food to success WEIGHT LOSS IS A CATALYST FOR FURTHER CHANGE An effective lifestyle solu
Slide 8: Delivering on Our Promises
Delivering on Our Promises + 61 Number of Active % + 26 % Net Sales Per Active Earning Coaches Earning Coach Q4 2017 – Q4 2018 Q4 2017 – Q4 2018 8
Slide 9: Generating Exceptional Results
Generating Exceptional Results + 66 Revenue % + 74 Operating Income % + 102 Diluted EPS % 2017 – 2018 2017 – 2018 2017 – 2018 9
Slide 10: Now We are Delivering on the Next Stage of Our Growth Journey
Now We are Delivering on the Next Stage of Our Growth Journey 10
Slide 11: Fully Focused on Scaling Our Coach Model
• 24,100 active earning coaches and growing rapidly • Personal, direct-service and sales strategy, optimal for activating and supporting consumers Fully Focused • Attractive financial model, with higher lifetime value and on Scaling Our enhanced profitability Coach Model • Leverages growing consumer
Slide 12: Virtuous Circle for Growth
Active Earning Coach BECOMES ACTIVATES Minimal marketing costs Consumer / Enables premium Consumer / pricing Client Client Fits gig economy Virtuous Circle Creates sticky for Growth relationship ACTIVATES BECOMES Active Earning Coach 12
Slide 13: Optimal Balance Between Service and Sales
• Reflective of new economy (Uber, AirBnB etc.) • All commission based on product sales driven by coaching service Optimal Balance • Not a wholesale model – coaches don’t handle cash or retail products Between Service and Sales • 90% of all OPTAVIA product sales go directly to clients who are not co
Slide 14: A Compelling Career and Lifestyle Choice
A Compelling Career and Lifestyle Choice Their health and wellness Inspirational transformation inspires others Perfect for gig economy; coaches Flexible can work as much as they want Simple coach certification and Personal Development ongoing business training Helping others achieve results is rewa
Slide 15: Proven and Effective Products and Programs
• Exclusive products with flavors & variety for every taste • Scientifically developed, supported by clinical studies, nutrient dense, portion controlled, nutritionally interchangeable and simple to use Proven and • Trustworthy reputation built over time Effective Products • Educational element to e
Slide 16: A Clear Path for Growth
A CLEAR PATH FOR GROWTH Ҥ MEDIFAST. 3) OPTAVIA. Zaye
Slide 17: Our Vision
Our Vision Double the size of the business every 3-4 years by growing in the US and expanding into Asia Pacific 17
Slide 18: Large and Growing Market Opportunity
Large and Growing Market Opportunity $194B 3 70% 5%/Year 1 2 U.S. Health & Of U.S. adults are Growth projections through Wellness Market overweight or obese 2022 for U.S. weight loss $17B products and services 2 4 U.S. Weight-Loss International levels doubled from 30 years ago Market 1CDC 2Marketdat
Slide 19: Our Growth Strategy
Our Growth Strategy DRAMATICALLY GROW OPTAVIA COACH COMMUNITY 1 2 3 4 Utilize Expand Accelerate Technology Drive Product Segments & Coach Success to Optimize Innovation Geographies Effectiveness 19
Slide 20: Accelerate Coach Success
• Capitalize on OPTAVIA Brand and compelling health and wellness message 1 • Leverage new, exclusive products based on company’s proven science and clinical credibility Accelerate Coach Success • Deliver on easy to share story about a complex lifestyle issue • Teach a simple growth model • Streamlin
Slide 21: Utilize Technology to Optimize Effectiveness
• Accelerate our repeatable business rhythm 2 • Mobile app-based platform • Improve use of data analytics Utilize Technology • Streamline processes to Optimize Effectiveness • Connectivity powering customer acquisition and insight • Cloud based to enable rapid expansion • Improve coach efficiency SC
Slide 22: Growth into Adjacent Healthy Habits
Growth into Adjacent Healthy Habits 3 Drive Product Innovation Nutrition Hydration Sleep Movement Aging 22
Slide 23: U.S. Opportunities
U.S. Opportunities 4 Expand Segments & Geographies Regional Generational Diversity Lifestyle Underrepresented Target younger Outreach to Serve clients in markets demographics important different stages of communities optimal wellbeing 23
Slide 24: International Opportunities
International Opportunities 4 • Claiming our share of $790B1 global health & wellness market Expand • Launching in Hong Kong, Singapore gateway markets by June 30, 2019 Segments & Geographies • Building global presence of successful optimal weight loss plans • Strong response to product testing in-m
Slide 25: Significant Potential in International Markets
Significant Potential in International Markets Methodical approach to expansion in global markets Global Direct Selling Market* • Drive pre-market activity in U.S. Largest Markets Fastest Growing (3-yr. CAGR) • Scale to achieve profitability in newly U.S. Argentina $35B 37.0% opened markets China $3
Slide 26: Strong Financial Performance
STRONG FINANCIAL PERFORMANCE 26
Slide 27: A Resilient Business Model
• Efficient direct-to-consumer business • Consistent patterns create strong forward visibility • High percentage of clients on continuity shipments (≈ 85% of orders) • High lifetime value A Resilient • Variable cost model Business Model 27
Slide 28: Attractive Financial Model
Attractive Financial Model 1 1 LONG-TERM FISCAL 2014 FISCAL 2015 FISCAL 2016 FISCAL 2017 FISCAL 2018 TARGET YTY % Growth Revenue (12%) (4%) 1% 10% 66% 25% % of Revenue Gross Profit 73.3% 73.8% 74.9% 75.5% 75.8% 76.0% Commissions 30.0% 30.6% 33.7% 35.6% 39.6% 43.0% Other SG&A 32.7% 32.7% 31.4% 26.8%
Slide 29: OPTAVIA Driving Transformational Growth
OPTAVIA Driving Transformational Growth ($ Millions, Except Per Share Data) Launches $501 $302 Revenue $285 +66% $273 $275 +10% +74% +48% Operating $30 $29 $27 $40 $69 Income 2014* 2015* 2016 2017 2018 Diluted EPS $1.65 $1.62 $1.49 $2.29 $4.62 29 *From continuing operations.
Slide 30: Active Earning Coaches
Active Earning Coaches 24,100 +61% Q4 17 vs Q4 18 22,600 19,700 16,700 $5,781 $5,756 +26% 15,000 Q4 17 vs Q4 18 14,200 $5,474 Number of 13,000 13,500 12,600 12,800 12,800 12,500 Coaches $5,278 $4,713 Revenue $4,693 $4,490 Per Coach $4,562 $4,479 $4,463 $4,421 $4,158 2016 2017 2018 Q1 Q2 Q3 Q4 30
Slide 31: Capital Allocation Strategy
Capital Allocation Strategy ($ Millions) 2014 – 2018 33 Stock Repurchase Dividend 6 Other Financing Activities 74 Cash & Investments Retained 50 Share Repurchase + Dividend: $125M (76% of Cumulative Cash Flow) 31
Slide 32: Strong Balance Sheet Facilitating Growth
Strong Balance Sheet Facilitating Growth CASH & INVESTMENTS • Financial capacity to handle any CAPEX requirements $101M • Strong cash flow DEBT-FREE • Active share repurchase program • Raised quarterly dividend every QUARTERLY DIVIDEND year since initiation in 2015 ($0.25 in Dec 15 to $0.75 in Dec 1
Slide 33: Outlook
Outlook REVENUE DILUTED EPS Q1 $150.0M to $155.0M $1.50 to $1.55 FY $700.0M to $720.0M $6.45 to $6.65 33
Slide 34: Summary
SUMMARY Ҥ MEDIFAST. 3) OPTAVIA. Zaye
Slide 35: Investment Thesis Summary
Investment Thesis Summary Health & wellness innovator with differentiated, science-based products and programs Large and growing market opportunity addressing a global need Scalable coach-based distribution model Ideally positioned for growth acceleration in U.S. and internationally Attractive, high
Slide 36: Medifast OPTAVIA
“¥ MEDIFAST. 5,.& OPTAVIA.