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