Medartis
Annual Report 2021

Plain-text annual report

2021 ANNUAL REPORT As a company, we see a world in which people find it easier and more rewarding to transform their lives for the better, through a health and wellbeing journey that is powered and optimized through deep and engaged community. Chairman & Chief Executive Officer Dear Fellow Stockholder: of the most illustrious and well-known names in the consumer world. In terms of revenue, we are now the publicly traded market leader in the U.S. $7 billion weight management industry, surpassing companies that just a few years ago were several times our size. It’s a truly remarkable achievement in a very short time period, and a testament to the passion and dedication of the OPTAVIA community and our employees. Together we have shown that our shared mission of providing the world lifelong transformation, one healthy habit at a time not only inspires change in our growing OPTAVIA community but has also built a foundation for a fast growing and vibrant company that is changing the way individuals approach health and wellness. In 2021, Medifast recorded a 63.2% increase in revenues over the prior year. Net income increased 59.5% year-over-year to $164.0 million, while earnings per share grew 60% to $13.89. Continued growth in Coach attraction, retention and productivity were significant drivers of this outstanding success. By the fourth quarter of 2021, our number of active earning coaches grew to 59,800, an increase of more than 35% over the prior year, while average revenue per active earning OPTAVIA Coach was $6,321 compared to $5,932 for the fourth quarter of 2020, an increase of 6.6%. Our commitment to client experience has played an important role in this success. We have made significant investments in our supply chain over the course of the past eighteen months, more than doubling our manufacturing and distribution capacity so that we can power growth and ensure that Clients can get products in a timely and effective manner. We’ve also driven Coach productivity by harnessing the power of digital and social technology. During 2021, we launched two integrated digital apps to help Coaches support their current and future clients, as well as to help Clients better manage their OPTAVIA relationship and their overall health and wellness journey. By the end of 2021, these apps were being used by more than 300,000 users in the OPTAVIA community, and we continue to see further potential for growth in the months ahead. As a company, we see a world in which people find it easier and more rewarding to transform their lives for the better, through a health and wellbeing journey that is powered and optimized through a deep and engaged community. When we began our business transformation five years ago, we defined our market in the United States as the commercial weight loss meal plan and replacement sector, worth an estimated $7 billion. Three years ago we laid out our vision to grow Medifast to a billion dollars in sales by the end of 2021. We built a wide-ranging and methodical plan to deliver against our goals, invested in growth, and created the organizational rigor and structure to help us maximize our effectiveness and prepare for our next growth objective. I’m delighted to say that this intentional approach paid dividends in 2021, as we not only hit that $1 billion revenue milestone, but ended the year above $1.5 billion. Our health and wellness brand, OPTAVIA, now reaches a community of more than one million people annually who have used our coaching services, branded products and digital apps. It’s no wonder that OPTAVIA has now joined the ranks of just a small number of food and beverage brands that have broken through the billion dollar revenue mark in the 21st century, placing us alongside some Having achieved so much in this space, we believe that our differentiated model gives us a unique opportunity to expand and operate in a much wider addressable market than we do today. The health and wellness market as a whole is worth $230 billion in the United States alone, and it’s our intention to pursue deeper penetration of that market through new and existing products and services in the future. As we move forward to 2022, we have set a new growth milestone to double our revenue to $3 billion. With our long- term growth objective of 15% firmly in focus, we anticipate we will achieve this goal within five years. Technology will be at the core of our expanded growth vision. We’ll leverage social media, communication platforms, apps and data to improve the efficiency of our Coach and Client community, and add to our strong platform of clinically proven products as well as our pioneering Habits of Health system. Through this process, we’ll make our offer more attractive to increasing numbers of Clients, and unlock further opportunities for new service and subscription offers. This process, in combination with continued improvement in field-led training, will be important to driving increased Coach efficiency and productivity, both in the United States and in international markets. We continue to believe that there is significant opportunity around the globe, and as we expand into the broader health and wellness segment, we’ll be looking for further ways to bring our deep insight and knowledge to bear in markets outside our domestic stronghold. Our commitment to helping clients achieve lifelong transformation is relentless, with more than two million lives now impacted. Whether it’s at home or internationally, it always starts with the work that we do in the communities where we live and work. Our corporate social responsibility initiative, Healthy Habits for All, advances our mission by providing underserved communities with education and access to tools and support to help build their personal and family wellbeing. Through partnerships with a number of non-profits, we can help break inter- generational chains of poor health to give kids and families in underserved communities the ability to transform their health and wellness destinies. It is important work, and I am proud of the role our employees, Coaches and Clients play in driving its success. Whether we are working in the community or driving organizational effectiveness, the Medifast team is working with passion and commitment to drive positive outcomes. We are building our operational effectiveness and repeatable business rhythms as we power our economic engine for consistent growth over the years ahead. We believe we have a fast-moving agile organization that can shift to take advantage of opportunities, and we have the solid financial foundation to give us a platform from which to expand into the wider health and wellness sector. More than anything, we have a world- class team that continues to improve all the time. It’s no wonder we are optimistic about the future. Thank you for your continued support as an investor in this company. I look forward to updating you further on our progress and success for many years to come. Sincerely, Dan Chard Chairman & 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 the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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, its planned growth into new domestic and international markets and new channels of distribution, disruptions in Medifast’s supply chain, the impact of the COVID-19 pandemic on Medifast’s results, and 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 Annual 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. 100 International Drive, 18th Floor Baltimore, MD 21202 © 2022 Medifast, Inc. All Rights Reserved. 

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