med-20230331

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, 2023

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 24, 2023 was 10,887,193.


Part 1 – Financial Information



Item 1 – Financial Statements


Condensed Consolidated Statements of Income (unaudited) for the Three Months Ended March 3 1 , 202 3 and 20 2 2			2

Condensed Consolidated Statements of Comprehensive Income (unaudited) for the Three Months Ended March 3 1 , 202 3 and 20 2 2			3

Condensed Consolidated Balance Sheets (unaudited) as of March 3 1 , 202 3 and December 31, 20 2 2			4

Condensed Consolidated Statements of Cash Flows (unaudited) for the Three Months Ended March 3 1 , 202 3 and 20 2 2			5

Condensed Consolidated Statements of Changes in Stockholders’ Equity (unaudited) for the Three Months Ended March 3 1 , 202 3 and 20 2 2			6

Notes to Condensed Consolidated Financial Statements (unaudited)			7

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations			13

Item 3 – Quantitative and Qualitative Disclosures about Market Risk			18

Item 4 – Controls and Procedures			18

Part II – Other Information

Item 1 – Legal Proceedings			19

Item 1A – Risk Factors			19

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds			19

Item 6 – Exhibits			20


	Three months ended March 31,
	2023		2022

Revenue	$	348,983	$	417,600
Cost of sales	102,593		115,314
Gross profit	246,390		302,286

Selling, general, and administrative	192,879		247,199

Income from operations	53,511		55,087

Other expense
Interest expense	(181)		(95)
Other expense	(1)		(16)
	(182)		(111)

Income from operations before income taxes	53,329		54,976

Provision for income taxes	13,361		13,195

Net income	$	39,968	$	41,781

Earnings per share - basic	$	3.68	$	3.62

Earnings per share - diluted	$	3.67	$	3.59

Weighted average shares outstanding
Basic	10,864		11,557
Diluted	10,899		11,638

Cash dividends declared per share	$	1.65	$	1.64


	March 31, 2023		December 31, 2022

ASSETS
Current Assets
Cash and cash equivalents	$	123,748	$	87,691
Inventories	96,896		118,856


Prepaid expenses and other current assets	9,674		16,237
Total current assets	230,318		222,784

Property, plant and equipment - net of accumulated depreciation	55,960		57,185
Right-of-use assets	17,091		18,460
Other assets	13,709		12,456
Deferred tax assets	4,528		5,328


TOTAL ASSETS	$	321,606	$	316,213

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses	$	113,300	$	134,690
Income taxes payable	13,031		428
Current lease obligations	5,411		5,776
Total current liabilities	131,742		140,894

Lease obligations, net of current lease obligations	18,964		20,275


Total liabilities	150,706		161,169

Stockholders' Equity
Common stock, par value $0.001 per share: 20,000 shares authorized;
10,887 and 10,928 issued and 10,887 and 10,873 outstanding
at March 31, 2023 and December 31, 2022, respectively	11		11
Additional paid-in capital	19,030		21,555
Accumulated other comprehensive income	33		24
Retained earnings	151,826		139,852
Less: treasury stock at cost, 0 and 54 shares at March 31, 2023 and December 31, 2022, respectively	—		(6,398)
Total stockholders' equity	170,900		155,044

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	321,606	$	316,213


	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


	Three months ended March 31, 2022
	Number of Shares Issued	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income		Retained Earnings		Treasury Stock		Total

Balance, December 31, 2021	11,594	$	12	$	12,018	$	111	$	190,333	$	—	$	202,474
Net income	—	—		—		—		41,781		—		41,781
Share-based compensation	18	—		2,275		—		—		—		2,275
Net shares repurchased for employee taxes	(8)	—		(1,459)		—		—		—		(1,459)
Treasury stock from stock repurchases	—	—		—		—		—		(10,000)		(10,000)
Treasury stock retired from stock repurchases	(51)	—		—		—		(10,000)		10,000		—
Other comprehensive income	—	—		—		16		—		—		16
Cash dividends declared to stockholders	—	—		—		—		(19,063)		—		(19,063)

Balance, March 31, 2022	11,553	$	12	$	12,834	$	127	$	203,051	$	—	$	216,024


	March 31, 2023		December 31, 2022

Raw materials	$	12,932	$	12,670
Packaging	4,296		3,611
Non-food finished goods	7,032		8,738
Finished goods	78,825		97,675
Reserve for obsolete inventory	(6,189)		(3,838)
Total	$	96,896	$	118,856


2023 (excluding the three months ended March 31, 2023)	$	4,440
2024	5,693
2025	5,825
2026	4,160
2027	2,553
Thereafter	2,858
Total lease payments	$	25,529
Less: imputed interest	(1,154)
Total	$	24,375


2023	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	30,265	119.00	30,265	1,323,568
February 1 - February 28	3,733	115.27	—	1,323,568
March 1 - March 31	5,239	104.01	—	1,323,568


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 (fu rnished herewith).



101						The following financial statements from Medifast, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 filed May 1, 2023, 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:			May 1, 2023


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

Dated:			May 1, 2023


	Three months ended March 31,
	2023			2022
	Awards	Weighted-Average Exercise Price		Awards	Weighted-Average Exercise Price

Outstanding at beginning of period	33	$	54.98	32	$	54.98
Exercised	(4)	27.18		—	—
Forfeited	—	—		—	—
Outstanding at end of the period	29	$	58.65	32	$	54.98
Exercisable at end of the period	29	$	58.65	28	$	52.76


	Three months ended March 31,
	2023			2022
	Shares	Weighted-Average Grant Date Fair Value		Shares	Weighted-Average Grant Date Fair Value

Outstanding at beginning of period	60	$	187.94	43	$	183.51
Granted	67	102.83		29	175.66
Vested	(22)	163.81		(18)	149.95
Forfeited	—	190.76		—	—
Outstanding at end of the period	105	$	138.33	54	$	190.20


	Three months ended March 31,
	2023			2022
	Shares	Share-Based Compensation Expense		Shares	Share-Based Compensation Expense
Options and restricted stock	134	$	1,226	86	$	1,087
Market and performance-based share awards granted in 2023	47	79		—	—
Market and performance-based share awards granted in 2022	25	(1,388)		25	79
Performance-based share awards granted in 2021	15	640		15	640
Performance-based share awards granted in 2020	4	49		26	469
Total share-based compensation	225	$	606	152	$	2,275

SEC Form 10-Q filed by MEDIFAST INC