med-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from________ to ________.

Commission File Number: 001-31573

Medifast, Inc.

(Exact name of registrant as specified in its charter)


Delaware						13-3714405
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

100 International Drive

Baltimore, Maryland 21202

Telephone Number: (410) 581-8042

(Address of Principal Executive Offices, Zip Code and Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, par value $0.001 per share

MED

New York Stock Exchange

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by checkmark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

The number of shares of the registrant’s common stock outstanding at April 22, 2024 was 10,937,245.


Part 1 – Financial Information



Item 1 – Financial Statements


Condensed Consolidated Statements of Income (unaudited) for the Three Months Ended March 31, 2024 and 2023			2

Condensed Consolidated Statements of Comprehensive Income (unaudited) for the Three Months Ended March 31, 2024 and 2023			3

Condensed Consolidated Balance Sheets (unaudited) as of March 31, 2024 and December 31, 2023			4

Condensed Consolidated Statements of Cash Flows (unaudited) for the Three Months Ended March 31, 2024 and 2023			5

Condensed Consolidated Statements of Changes in Stockholders’ Equity (unaudited) for the Three Months Ended March 31, 2024 and 2023			6

Notes to Condensed Consolidated Financial Statements (unaudited)			7

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations			15

Item 3 – Quantitative and Qualitative Disclosures about Market Risk			22

Item 4 – Controls and Procedures			22

Part II – Other Information

Item 1 – Legal Proceedings			23

Item 1A – Risk Factors			23

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds			23

Item 6 – Exhibits			24


	Three months ended March 31,
	2024		2023

Revenue	$	174,739	$	348,983
Cost of sales	47,447		102,593
Gross profit	127,292		246,390

Selling, general, and administrative	119,352		192,879

Income from operations	7,940		53,511

Other income (expense)
Interest income (expense)	1,223		(181)
Other income (expense)	2,422		(1)
	3,645		(182)

Income from operations before income taxes	11,585		53,329

Provision for income taxes	3,269		13,361

Net income	$	8,316	$	39,968

Earnings per share - basic	$	0.76	$	3.68

Earnings per share - diluted	$	0.76	$	3.67

Weighted average shares outstanding
Basic	10,909		10,864
Diluted	10,958		10,899

Cash dividends declared per share	$	—	$	1.65


	March 31, 2024		December 31, 2023

ASSETS
Current Assets
Cash and cash equivalents	$	97,471	$	94,440
Inventories	46,273		54,591
Investments	58,957		55,601
Income taxes, prepaid	5,471		8,727
Prepaid expenses and other current assets	11,412		10,670
Total current assets	219,584		224,029

Property, plant and equipment - net of accumulated depreciation	50,986		51,467
Right-of-use assets	14,536		15,645
Other assets	13,648		14,650
Deferred tax assets	4,005		4,117


TOTAL ASSETS	$	302,759	$	309,908

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses	$	71,229	$	86,415

Current lease obligations	5,958		5,885
Total current liabilities	77,187		92,300

Lease obligations, net of current lease obligations	14,611		16,127


Total liabilities	91,798		108,427

Stockholders' Equity
Common stock, par value $0.001 per share: 20,000 shares authorized;
10,937 and 10,896 issued and outstanding
at March 31, 2024 and December 31, 2023, respectively	11		11
Additional paid-in capital	27,963		26,573
Accumulated other comprehensive income	22		248
Retained earnings	182,965		174,649

Total stockholders' equity	210,961		201,481

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	302,759	$	309,908


	Three months ended March 31, 2024
	Number of Shares Issued	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income		Retained Earnings		Treasury Stock		Total

Balance, December 31, 2023	10,896	$	11	$	26,573	$	248	$	174,649	$	—	$	201,481
Net income	—	—		—		—		8,316		—		8,316
Share-based compensation	59	—		2,171		—		—		—		2,171
Options exercised by directors	1	—		36		—		—		—		36
Net shares repurchased for employee taxes	(19)	—		(817)		—		—		—		(817)


Other comprehensive income	—	—		—		(226)		—		—		(226)


Balance, March 31, 2024	10,937	$	11	$	27,963	$	22	$	182,965	$	—	$	210,961


	Three months ended March 31, 2023
	Number of Shares Issued	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income		Retained Earnings		Treasury Stock		Total

Balance, December 31, 2022	10,928	$	11	$	21,555	$	24	$	139,852	$	(6,398)	$	155,044
Net income	—	—		—		—		39,968		—		39,968
Share-based compensation	69	—		606		—		—		—		606
Options exercised by directors	4	—		105		—		—		—		105
Net shares repurchased for employee taxes	(30)	—		(3,236)		—		—		—		(3,236)
Treasury stock from stock repurchases	—	—		—		—		—		(3,602)		(3,602)
Treasury stock retired from stock repurchases	(84)	—		—		—		(10,000)		10,000		—
Other comprehensive income	—	—		—		9		—		—		9
Cash dividends declared to stockholders	—	—		—		—		(17,994)		—		(17,994)

Balance, March 31, 2023	10,887	$	11	$	19,030	$	33	$	151,826	$	—	$	170,900


	March 31, 2024		December 31, 2023

Raw materials	$	6,343	$	7,944
Packaging	1,673		1,962
Non-food finished goods	2,877		3,703
Finished goods	36,769		43,248
Reserve for obsolete inventory	(1,389)		(2,266)
Total	$	46,273	$	54,591


2024 (excluding the three months ended March 31, 2024)	$	4,749
2025	6,462
2026	4,783
2027	2,553
2028	2,618
Thereafter	240
Total lease payments	$	21,405
Less: imputed interest	(836)
Total	$	20,569


	March 31, 2024		December 31, 2023

Foreign currency translation	$	(33)	$	(48)
Unrealized gains on investments	55		296
Accumulated other comprehensive income	$	22	$	248


	March 31, 2024
	Cost		Unrealized Gains (Losses)		Accrued Interest		Estimated Fair Value		Cash & Cash Equivalents		Investment Securities

Cash and cash equivalents, excluding money market accounts	$	92,291	$	—	$	—	$	92,291	$	92,291	$	—

Level 1:
Money market accounts	5,180		—		—		5,180		5,180		—
Government & agency securities	15,454		(14)		64		15,504		—		15,504
Equity securities	10,000		2,587		—		12,587		—		12,587
	30,634		2,573		64		33,271		5,180		28,091

Level 2:
Corporate bonds	30,412		182		272		30,866		—		30,866

Total	$	153,337	$	2,755	$	336	$	156,428	$	97,471	$	58,957


	December 31, 2023
	Cost		Unrealized Gains		Accrued Interest		Estimated Fair Value		Cash & Cash Equivalents		Investment Securities

Cash and cash equivalents, excluding money market accounts	$	88,778	$	—	$	—	$	88,778	$	88,778	$	—

Level 1:
Money market accounts	5,662		—		—		5,662		5,662		—
Government & agency securities	15,282		126		40		15,448		—		15,448
Equity securities	10,000		150		—		10,150		—		10,150
	30,944		276		40		31,260		5,662		25,598

Level 2:
Corporate bonds	29,440		293		270		30,003		—		30,003

Total	$	149,162	$	569	$	310	$	150,041	$	94,440	$	55,601


	Three months ended March 31,
	2024			2023
	Awards	Weighted-Average Exercise Price		Awards	Weighted-Average Exercise Price

Outstanding at beginning of period	25	$	62.20	33	$	54.98
Exercised	(1)	27.68		(4)	27.18
Forfeited	(2)	26.52		—	—
Outstanding at end of the period	22	$	66.68	29	$	58.65
Exercisable at end of the period	22	$	66.68	29	$	58.65


	Three months ended March 31,
	2024			2023
	Shares	Weighted-Average Grant Date Fair Value		Shares	Weighted-Average Grant Date Fair Value

Outstanding at beginning of period	114	$	127.87	60	$	187.94
Granted	162	35.75		67	102.83
Vested	(34)	139.19		(22)	163.81
Forfeited	—	—		—	190.76
Outstanding at end of the period	242	$	64.55	105	$	138.33


	Three months ended March 31,
	2024			2023
	Shares	Share-Based Compensation Expense		Shares	Share-Based Compensation Expense
Options and restricted stock	264	$	1,600	134	$	1,226
Performance-based share awards granted in 2024	117	77		—	—
Market and performance-based share awards granted in 2023	47	482		47	79
Market and performance-based share awards granted in 2022	24	—		25	(1,388)
Performance-based share awards granted in 2021	14	12		15	640
Performance-based share awards granted in 2020	—	—		4	49
Total share-based compensation	466	$	2,171	225	$	606


2024	Total Number of Shares Purchased (1)	Average Price Paid per Share	Total Number of Shares Purchased as Part of a Publicly Announced Plan or Program	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (2)
January 1 - January 31	—	—	—	1,323,568
February 1 - February 29	107	48.62	—	1,323,568
March 1 - March 31	10,986	36.64	—	1,323,568


	March 31, 2024		March 31, 2023

Net gains recognized during the period on equity securities	$	2,437	$	—
Less: Net gains recognized on equity securities sold	—		—
Unrealized gains recognized during the reporting period on equity securities still held at the reporting date	$	2,437	$	—


	Three Months Ended March 31, 2024
	GAAP		Unrealized Gain on Investment in LifeMD Common Stock		LifeMD Prepaid Services Amortization		Non-GAAP
Selling, general, and administrative	$	119,352	$	—	$	(1,327)	$	118,025
Income from operations	7,940		—		1,327		9,267
Other income (expense)	3,645		(2,841)		—		804
Provision for income taxes	3,269		(710)		332		2,891
Net income	8,316		(2,130)		995		7,181
Diluted earnings per share (1)	0.76		(0.19)		0.09		0.66


Exhibit Number						Description of Exhibit

3.1						Restated and Amended Certificate of Incorporation of Medifast, Inc. (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K (File No. 001-31573) filed February 27, 2015).

3.2						Amended and Restated Bylaws of Medifast, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Amendment No. 1 Current Report on Form 8-K (File No. 001-31573) filed on December 4, 2019).

31.1						Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

31.2						Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

32.1						Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).



101						The following financial statements from Medifast, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 filed April 29, 2024, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Income, (ii) Condensed Consolidated Statements of Comprehensive Income, (iii) Condensed Consolidated Balance Sheets, (iv) Condensed Consolidated Statements of Cash Flows, (v) Condensed Consolidated Statements of Changes in Stockholders’ Equity, and (vi) Notes to the Condensed Consolidated Financial Statements (filed herewith).

104						Cover Page Interactive Data File - The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.


By:			/s/ DANIEL R. CHARD
			Daniel R. Chard
			Chief Executive Officer
			(Principal Executive Officer)

Dated:			April 29, 2024


			/s/ JAMES P. MALONEY
			James P. Maloney
			Chief Financial Officer
			(Principal Financial Officer)

Dated:			April 29, 2024