Medartis
Annual Report 2019

Plain-text annual report

2019 ANNUAL REPORT Dan Chard | Chief Executive Officer Dear Fellow Stockholder: T he past twelve months have seen significant milestones at Medifast as we have continued to deliver on our mission to offer the world Lifelong Transformation, One Healthy Habit at a Time®. Our business is at the heart of a health and wellness industry currently estimated to be worth a remarkable $230 billion in the United States alone. The weight loss, weight management and healthy lifestyle elements of that industry continue to expand, and we believe this presents a huge addressable market for us, not just at home but around the world. We’ve already established ourselves as a leading player in the United States, and we’ll continue to drive industry share by supporting our independent OPTAVIA Coaches and serving a growing number of Clients across the globe. When we set the goal of reaching 30,000 OPTAVIA Coaches by the end of 2019, I’m sure it raised a few eyebrows with some observers. However, thanks to the quality of our incredible team and the unique and dynamic OPTAVIA Community, we surpassed that goal easily — with a few months to spare. In 2019, we also launched OPTAVIA outside the United States, with successful expansion into both Hong Kong and Singapore. These are early days for our international business, but we’re seeing very encouraging signs of early adoption, and we look forward to continuing to build momentum and growth in these markets during 2020. Organizationally, we continue to work hard to build the Coach and Client experience as we seek to maintain the competitive advantage that our Integrated Coach Model enables. We were particularly pleased with the success of OPTAVIA Convention this year, with almost 9,500 engaged and motivated OPTAVIA members of the OPTAVIA Community participating in our best attended event to date. We recently announced that future Conventions will be moving to a much larger There’s much to be excited about, with a highly differentiated direct-to-consumer business model in an ecosystem that continues to grow year after year.” 1 Medifast 2019 Annual Report venue in Atlanta, Ga., and it’ll be exciting to see the energy and enthusiasm such an impressive new space can produce. Thanks to the hard work of our teams and OPTAVIA Coach Community, we recorded record revenues during 2019 of $714 million, with record operating income of $91 million. long-term growth for our stockholders. We continue to see massive opportunity on the road ahead, with health and wellness challenges still on the rise around the globe. Consumers devote large amounts of discretionary income to health and wellness products and services, and yet there is high frustration with fad diets, unused gym memberships and companies that promise quick fixes. As with most businesses, Medifast faced its own unique challenges during 2019. Our business was negatively impacted by operational execution challenges in technology and supply chain change programs as well as credit card bad debt. These issues affected our forecasting as well as the quality of the experience our OPTAVIA Coaches and Clients have come to expect, and as a result, our revenues were a little lower than anticipated. I’m pleased to say we have taken significant action to address these issues and focused investment projects are well underway. Our efforts are designed specifically to improve all aspects of the Coach and Client experience that have been disrupted, including order and data accuracy and timeliness, product quality at delivery point, call center support quality and technology user experience. We’ve made solid progress in returning the Coach and Client experience back to previous levels, and we feel well positioned to reestablish our business growth rhythm in 2020. Technology remains at the heart of our business and our ability to drive greater scale and efficiency. Our teams are working around the clock to optimize the OPTAVIA Coach and Client experience through mobile apps and other systems and processes that leverage ever-improving technology to offer our Community better tools than ever before. We’re at an important point for our business as we develop from fast acceleration into a more mature business that seeks to deliver consistent and At Medifast, we believe complex problems require holistic solutions. Our approach combines clinically proven plans and scientifically developed products with the ongoing support of OPTAVIA Coaches to help deliver long-term, sustainable success for our Clients. The fundamentals of our business remain incredibly strong, and we’ve built a solid foundation from which to grow over the coming years. There’s much to be excited about, with a highly differentiated direct- to-consumer business model in an ecosystem that continues to grow year after year. We’re building a world-class organization, and we’ve developed the rigor and repeatable business rhythm that will allow us to expand and develop for the long-term. This is not just good news for stockholders but for our Clients whose lives we play an important part in changing every single day. Through our OPTAVIA Coaches, plans and products, we help Clients break cycles of unhealthy habits that have perpetuated for many years, and we enable lifelong transformations — for individuals, for families and for communities. We’ve already impacted more than 1.5 million lives. This is what drives us forward every day as a team and ensures we’ll be relentless in our mission for the long-term to the benefit of our Coaches, Clients, employees and stakeholders. Sincerely, Dan Chard Chief Executive Officer FORWARD-LOOKING STATEMENTS Certain information included in this Annual Report, such as descriptions of Medifast’s objectives, goals or targets, 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 Reform Act of 1995. Forward-looking statements give expectations or forecasts of future events. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, many of which are beyond the Company’s control and are difficult to predict. Although Medifast believes that the expectations, statements, and assumptions reflected in these forward-looking statements are reasonable, actual results could differ materially from those expressed or implied in the forward-looking statements. Risks, uncertainties, and other factors that might cause such differences include, among others, Medifast’s inability to attract and retain independent OPTAVIA Coaches, increases in competition, litigation, regulatory changes, and its planned growth into new domestic and international markets and new channels of distribution and other risks, uncertainties and factors identified in Medifast’s filings with the U.S. Securities and Exchange Commission. The reader should not place undue reliance on these forward-looking statements, which speak only as of the date of this report. Unless legally required, Medifast undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Medifast 2019 Annual Report 2019 10-K 

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