Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2022 | Apr. 25, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-31573 | |
Entity Registrant Name | Medifast, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 13-3714405 | |
Entity Address, Address Line One | 100 International Drive | |
Entity Address, City or Town | Baltimore | |
Entity Address, State or Province | MD | |
Entity Address, Postal Zip Code | 21202 | |
City Area Code | 410 | |
Local Phone Number | 581-8042 | |
Title of 12(b) Security | Common Stock, par value $0.001 per share | |
Trading Symbol | MED | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 11,513,656 | |
Entity Central Index Key | 0000910329 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Income Statement [Abstract] | ||
Revenue | $ 417,600 | $ 340,669 |
Cost of sales | 115,314 | 92,122 |
Gross profit | 302,286 | 248,547 |
Selling, general, and administrative | 247,199 | 195,748 |
Income from operations | 55,087 | 52,799 |
Other (expense) income | ||
Interest (expense) income | (95) | 23 |
Other (expense) income | (16) | 19 |
Total other (expense) income | (111) | 42 |
Income from operations before income taxes | 54,976 | 52,841 |
Provision for income taxes | 13,195 | 11,778 |
Net income | $ 41,781 | $ 41,063 |
Basic earnings per share | ||
Earnings per share - basic (in dollars per share) | $ 3.62 | $ 3.49 |
Diluted earnings per share | ||
Earnings per share - diluted (in dollars per share) | $ 3.59 | $ 3.46 |
Weighted average shares outstanding - | ||
Basic (in shares) | 11,557 | 11,772 |
Diluted (in shares) | 11,638 | 11,881 |
Cash dividends declared per share (in dollars per share) | $ 1.64 | $ 1.42 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 41,781 | $ 41,063 |
Other comprehensive income, net of tax: | ||
Foreign currency translation | 30 | 78 |
Unrealized losses on investment securities | (14) | (16) |
Other comprehensive income (loss), net of tax | 16 | 62 |
Comprehensive income | $ 41,797 | $ 41,125 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Current Assets | ||
Cash and cash equivalents | $ 118,003 | $ 104,183 |
Inventories | 188,972 | 180,043 |
Investment securities | 4,057 | 5,361 |
Income taxes, prepaid | 0 | 945 |
Prepaid expenses and other current assets | 13,227 | 16,334 |
Total current assets | 324,259 | 306,866 |
Property, plant and equipment - net of accumulated depreciation | 57,804 | 56,131 |
Right-of-use assets | 22,942 | 24,457 |
Other assets | 12,026 | 6,468 |
Deferred tax assets | 4,404 | 4,404 |
TOTAL ASSETS | 421,435 | 398,326 |
Current Liabilities | ||
Accounts payable and accrued expenses | 174,369 | 163,309 |
Current lease obligations | 6,663 | 6,523 |
Total current liabilities | 181,032 | 169,832 |
Lease obligations, net of current lease obligations | 24,379 | 26,020 |
Total liabilities | 205,411 | 195,852 |
Stockholders' Equity | ||
Common stock, par value $.001 per share: 20,000 shares authorized; 11,594 and 11,594 issued and 11,593 and 11,593 outstanding at March 31, 2022 and December 31, 2021, respectively | 12 | 12 |
Additional paid-in capital | 12,834 | 12,018 |
Accumulated other comprehensive income | 127 | 111 |
Retained earnings | 203,051 | 190,333 |
Total stockholders' equity | 216,024 | 202,474 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 421,435 | $ 398,326 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 20,000 | 20,000 |
Common stock, issued (in shares) | 11,553 | 11,594 |
Common stock, outstanding (in shares) | 11,552 | 11,593 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Operating Activities | ||
Net income | $ 41,781 | $ 41,063 |
Adjustments to reconcile net income to cash provided by operating activities | ||
Depreciation and amortization | 2,444 | 1,124 |
Non-cash lease expense | 1,619 | 889 |
Share-based compensation | 2,275 | 2,198 |
Amortization of premium on investment securities | 11 | 28 |
Change in operating assets and liabilities: | ||
Inventories | (8,929) | (8,842) |
Income taxes, prepaid | 945 | 0 |
Prepaid expenses and other current assets | 3,107 | (266) |
Other assets | (6,632) | (70) |
Accounts payable and accrued expenses | 7,052 | 29,202 |
Net cash flow provided by operating activities | 43,673 | 65,326 |
Investing Activities | ||
Sale and maturities of investment securities | 1,245 | 3,720 |
Purchase of property and equipment | (3,009) | (4,598) |
Net cash flow used in investing activities | (1,764) | (878) |
Financing Activities | ||
Options exercised by executives and directors | 0 | 481 |
Net shares repurchased for taxes | (1,459) | (1,807) |
Cash dividends paid to stockholders | (16,660) | (13,392) |
Stock repurchases | (10,000) | (7,500) |
Net cash flow used in financing activities | (28,119) | (22,218) |
Foreign currency impact | 30 | 78 |
Increase in cash and cash equivalents | 13,820 | 42,308 |
Cash and cash equivalents - beginning of the period | 104,183 | 163,723 |
Cash and cash equivalents - end of period | 118,003 | 206,031 |
Supplemental disclosure of cash flow information: | ||
Income taxes paid | 62 | 56 |
Dividends declared included in accounts payable | $ 19,663 | $ 17,292 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income | Retained Earnings | Treasury Stock |
Balance (in shares) at Dec. 31, 2020 | 11,822,000 | |||||
Balance at Dec. 31, 2020 | $ 157,246 | $ 12 | $ 7,842 | $ 41 | $ 154,351 | $ (5,000) |
Net income | 41,063 | 41,063 | ||||
Share-based compensation (in shares) | 13,000 | |||||
Share-based compensation | 2,198 | 2,198 | ||||
Options exercised by executives and directors (in shares) | 11,000 | |||||
Options exercised by executives and directors | $ 481 | 481 | ||||
Net shares repurchased for employee taxes (in shares) | (7,000) | (7,000) | ||||
Net shares repurchased for taxes | $ (1,807) | (1,807) | ||||
Treasury stock from stock repurchases | (7,500) | (7,500) | ||||
Other comprehensive income | 62 | 62 | ||||
Cash dividends declared to stockholders | (16,852) | (16,852) | ||||
Balance (in shares) at Mar. 31, 2021 | 11,839,000 | |||||
Balance at Mar. 31, 2021 | 174,891 | $ 12 | 8,714 | 103 | 178,562 | (12,500) |
Balance (in shares) at Dec. 31, 2021 | 11,594,000 | |||||
Balance at Dec. 31, 2021 | 202,474 | $ 12 | 12,018 | 111 | 190,333 | 0 |
Net income | 41,781 | 41,781 | ||||
Share-based compensation (in shares) | 18,000 | |||||
Share-based compensation | $ 2,275 | 2,275 | ||||
Net shares repurchased for employee taxes (in shares) | (8,000) | (8,000) | ||||
Net shares repurchased for taxes | $ (1,459) | (1,459) | ||||
Treasury stock from stock repurchases | (10,000) | (10,000) | ||||
Treasury stock retire from stock repurchases (in shares) | (51,000) | |||||
Treasury stock retired from stock repurchases | 0 | (10,000) | 10,000 | |||
Other comprehensive income | 16 | 16 | ||||
Cash dividends declared to stockholders | (19,063) | (19,063) | ||||
Balance (in shares) at Mar. 31, 2022 | 11,553,000 | |||||
Balance at Mar. 31, 2022 | $ 216,024 | $ 12 | $ 12,834 | $ 127 | $ 203,051 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation - The accompanying unaudited condensed consolidated financial statements of Medifast, Inc. and its wholly-owned subsidiaries (“Medifast,” the “Company,” “we,” “us,” or “our”) included herein have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim reporting and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and notes that are normally required by GAAP have been condensed or omitted. However, in the opinion of management, all adjustments consisting of normal, recurring adjustments considered necessary for a fair presentation of the financial position and results of operations have been included and management believes the disclosures that are made are adequate to make the information presented not misleading. The condensed consolidated balance sheet at December 31, 2021 has been derived from the audited consolidated financial statements at that date included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (“2021 Form 10-K”). The results of operations for the three months ended March 31, 2022 are not necessarily indicative of results that may be expected for the fiscal year ending December 31, 2022. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the 2021 audited consolidated financial statements and notes thereto, which are included in the 2021 Form 10-K. Presentation of Financial Statements - The unaudited condensed consolidated financial statements included herein include the accounts of the Company. All significant intercompany accounts and transactions have been eliminated. Reclassification - Certain amounts reported for prior periods have been reclassified to be consistent with the current period presentation. No reclassification in the condensed consolidated financial statements had a material impact on the presentation. Use of Estimates - The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates. Accounting Pronouncements Adopted in 2022 In March 2020, the FASB issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting |
INVENTORIES
INVENTORIES | 3 Months Ended |
Mar. 31, 2022 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | INVENTORIESInventories consist principally of raw materials, non-food finished goods and packaged meal replacements held in the Company’s warehouses and outsourced distribution centers. Inventories are stated at the lower of cost or net realizable value, utilizing the first-in, first-out method. The cost of finished goods includes the cost of raw materials, packaging supplies, direct and indirect labor and other indirect manufacturing costs. On a quarterly basis, management reviews inventories for unsalable or obsolete inventories. Inventories consisted of the following (in thousands): March 31, 2022 December 31, 2021 Raw materials $ 15,340 $ 15,196 Packaging 3,640 3,641 Non-food finished goods 13,316 15,991 Finished goods 161,698 152,687 Reserve for obsolete inventory (5,022) (7,472) Total $ 188,972 $ 180,043 |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Mar. 31, 2022 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE Basic earnings per share (“EPS”) computations are calculated utilizing the weighted average number of shares of the Company’s common stock outstanding during the periods presented. Diluted EPS is calculated utilizing the weighted average number of shares of the Company’s common stock outstanding adjusted for the effect of dilutive common stock equivalents. The following table sets forth the computation of basic and diluted EPS (in thousands, except per share data): Three months ended March 31, 2022 2021 Numerator: Net income $ 41,781 $ 41,063 Denominator: Weighted average shares of common stock outstanding 11,557 11,772 Effect of dilutive common stock equivalents 81 109 Weighted average shares of common stock outstanding 11,638 11,881 Earnings per share - basic $ 3.62 $ 3.49 Earnings per share - diluted $ 3.59 $ 3.46 |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2022 | |
Share-based Payment Arrangement [Abstract] | |
SHARE-BASED COMPENSATION | SHARE-BASED COMPENSATION Stock Options The Company has issued non-qualified and incentive stock options to employees and non-employee directors. The fair value of these options are estimated on the date of grant using the Black-Scholes option pricing model, which requires estimates of the expected term of the option, the risk-free interest rate, the expected volatility of the price of the Company’s common stock, and dividend yield. Options outstanding as of March 31, 2022 generally vest over a period of three years and expire ten years from the date of grant. The exercise price of these options ranges from $26.52 to $66.68. Due to the Company’s lack of option exercise history on the date of grant, the expected term is calculated using the simplified method defined as the midpoint between the vesting period and the contractual term of each option. The risk free interest rate is based on the U.S. Treasury yield curve in effect on the date of grant that most closely corresponds to the expected term of the option. The expected volatility is based on the historical volatility of the Company’s common stock over the period of time equivalent to the expected term for each award. The dividend yield is computed as the annualized dividend rate at the grant date divided by the strike price of the stock option. For the three months ended March 31, 2022 and 2021, the Company did not grant stock options. The following table is a summary of our stock option activity (in thousands, except per share data): Three months ended March 31, 2022 2021 Awards Weighted-Average Exercise Price Awards Weighted-Average Exercise Price Outstanding at beginning of period 32 $ 54.98 61 $ 48.19 Exercised — — (11) 42.62 Outstanding at end of the period 32 $ 54.98 50 $ 49.43 Exercisable at end of the period 28 $ 52.76 41 $ 44.93 As of March 31, 2022, the weighted-average remaining contractual life for outstanding stock options was 5.1 years with an aggregate intrinsic value of $3.8 million and the weighted-average remaining contractual life for exercisable stock options was 4.9 years with an aggregate intrinsic value of $3.3 million. The unrecognized compensation expense calculated under the fair value method for stock options expected to vest as of March 31, 2022 was $0.1 million and is expected to be recognized over a weighted-average period of 0.9 year. For the three months ended March 31, 2022, there was no exercise activity of stock options. For the three months ended March 31, 2021, the Company received $0.5 million in cash proceeds from the exercise of stock options. The total intrinsic value for stock options exercised during the three months ended March 31, 2021 was $2.3 million. Restricted Stock The Company has issued restricted stock to employees and non-employee directors generally with vesting terms up to five years after the date of grant. The fair value of the restricted stock is equal to the market price of the Company’s common stock on the date of grant. Expense for restricted stock is amortized ratably over the vesting period. The following table summarizes our restricted stock activity (in thousands, except per share data): Three months ended March 31, 2022 2021 Shares Weighted-Average Grant Date Fair Value Shares Weighted-Average Grant Date Fair Value Outstanding at beginning of period 43 $ 183.51 50 $ 116.06 Granted 29 175.66 17 253.03 Vested (18) 149.95 (14) 109.14 Outstanding at end of the period 54 $ 190.20 53 $ 157.80 The Company withheld approximately 8,000 and 7,000 shares of the Company’s common stock to cover minimum tax liability withholding obligations upon the vesting of shares of restricted stock for the three months ended March 31, 2022 and 2021, respectively. The total fair value of restricted stock awards vested during the three months ended March 31, 2022 and 2021 was $3.2 million and $3.9 million, respectively. Market and Performance-based Share Awards The Company has issued market and performance-based share awards to certain key executives who were granted deferred shares and may earn between 0% and 250% of the target number depending upon both the Company's total stockholder return and the Company's performance against predetermined performance goals over a three-year performance period after the date of grant. Market and performance-based share awards that are tied to the Company’s total stockholder return are valued using the Monte Carlo method and are recognized ratably as expense over the award’s performance period. The fair value of the performance-based share awards is equal to the market price of the Company’s common stock on the date of grant adjusted by expected level of achievement over the performance period. Expense for performance-based share awards is amortized ratably over the performance period. Share-based compensation expense is recorded in selling, general, and administrative expense in the accompanying Condensed Consolidated Statements of Income. The total expenses during the three months ended March 31, 2022 and 2021 are as follows (in thousands): Three months ended March 31, 2022 2021 Shares Share-Based Compensation Expense Shares Share-Based Compensation Expense Options and restricted stock 86 $ 1,087 103 $ 938 Performance-based share awards granted in 2022 25 79 — — Performance-based share awards granted in 2021 15 640 14 54 Performance-based share awards granted in 2020 26 469 28 495 Performance-based share awards granted in 2019 — — 17 711 Total share-based compensation 152 $ 2,275 162 $ 2,198 The total income tax benefit recognized in the accompanying Condensed Consolidated Statements of Income for restricted stock awards was $0.5 million and $1.2 million for the three months ended March 31, 2022 and 2021, respectively. There was $8.8 million of total unrecognized compensation cost related to restricted stock awards as of March 31, 2022, which is expected to be recognized over a weighted-average period of 2.4 years. There was $11.0 million of unrecognized compensation costs related to the 66,000 performance-based shares discussed above as of March 31, 2022, which is expected to be recognized over a weighted-average period of 2.1 years. |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2022 | |
Leases [Abstract] | |
LEASES | LEASES Operating Leases The Company has operating leases for office and warehouse space and certain equipment. In certain of the Company’s lease agreements, the rental payments are adjusted periodically based on defined terms within the lease. The Company did not have any finance leases as of March 31, 2022 and 2021, respectively, or for the three-month periods then ended, respectively. Our leases relating to office and warehouse space have lease terms of 18 months to 126 months. Our leases relating to equipment have lease terms of 24 months to 203 months, with certain of them having automatic renewal clauses. The Company’s warehouse agreements also contain non-lease components, in the form of payments towards variable logistics services and labor charges, which the Company is obligated to pay based on the services consumed by it. Such amounts are not included in the measurement of the lease liability but are recognized as expenses when they are incurred. The operating lease expense was $1.8 million and $1.0 million for the three months ended March 31, 2022 and 2021, respectively. Supplemental cash flow information related to the Company’s operating leases was as follows (in thousands): Three months ended March 31, 2022 2021 Cash paid for amounts included in the measurements of lease liabilities Operating cash flow used in operating leases $ 1,756 $ 1,002 Right-of-use assets obtained in exchange for lease obligations Operating leases $ 103 $ 11 As of March 31, 2022, the weighted average remaining lease term was 5.3 years and the weighted average discount rate was 2.1%. The following table presents the maturity of the Company’s operating lease liabilities as of March 31, 2022 (in thousands): 2022 (excluding the three months ended March 31, 2022) $ 5,443 2023 6,242 2024 5,693 2025 5,825 2026 4,160 Thereafter 5,412 Total lease payments $ 32,775 Less: imputed interest (1,733) Total $ 31,042 |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME | 3 Months Ended |
Mar. 31, 2022 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE INCOME | ACCUMULATED OTHER COMPREHENSIVE INCOME The following table sets forth the components of accumulated other comprehensive income, net of tax where applicable (in thousands): March 31, December 31, Foreign currency translation $ 120 $ 90 Unrealized gains on investment securities 7 21 Accumulated other comprehensive income $ 127 $ 111 |
FINANCIAL INSTRUMENTS
FINANCIAL INSTRUMENTS | 3 Months Ended |
Mar. 31, 2022 | |
Investments, All Other Investments [Abstract] | |
FINANCIAL INSTRUMENTS | FINANCIAL INSTRUMENTS Certain financial assets and liabilities are accounted for at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following fair value hierarchy prioritizes the inputs used to measure fair value: Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value from the perspective of a market participant. The following tables present the Company’s cash and financial assets that are measured at fair value on a recurring basis for each of the hierarchy levels (in thousands): March 31, 2022 Cost Unrealized Gains Accrued Interest Estimated Fair Cash & Cash Investment Cash $ 107,342 $ — $ — $ 107,342 $ 107,342 $ — Level 1: Money market accounts 10,661 — — 10,661 10,661 — Government & agency securities 1,401 5 8 1,414 — 1,414 12,062 5 8 12,075 10,661 1,414 Level 2: Municipal bonds 2,625 2 16 2,643 — 2,643 Total $ 122,029 $ 7 $ 24 $ 122,060 $ 118,003 $ 4,057 December 31, 2021 Cost Unrealized Gains Accrued Interest Estimated Fair Cash & Cash Investment Cash $ 94,824 $ — $ — $ 94,824 $ 94,824 $ — Level 1: Money market accounts 9,359 — — 9,359 9,359 — Government & agency securities 1,401 12 — 1,413 — 1,413 10,760 12 — 10,772 9,359 1,413 Level 2: Municipal bonds 3,880 9 59 3,948 — 3,948 Total $ 109,464 $ 21 $ 59 $ 109,544 $ 104,183 $ 5,361 The Company had no realized losses or gains for the three months ended March 31, 2022 and 2021, respectively. As of March 31, 2022, the maturities of the Company’s investment securities were less than one year for all the municipal bonds, and government and agency securities. |
DEBT
DEBT | 3 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT Credit Agreement On April 13, 2021, the Company and certain of its subsidiaries (collectively, the “Guarantors”) entered into a credit agreement (the “Credit Agreement”) among the Company, the Guarantors, the lenders party thereto and Citibank, N.A., in its capacity as administrative agent. The Credit Agreement provides for a $125.0 million senior secured revolving credit facility with a $20.0 million letter of credit sub-limit. The Credit Agreement also provides for an uncommitted incremental facility that permits the Company, subject to certain conditions, to increase the senior secured revolving credit facility by up to $100.0 million. The Credit Agreement matures on April 13, 2026. The Company’s obligations under the Credit Agreement are guaranteed by the Guarantors. The obligations of the Company and the Guarantors are secured by first-priority liens on substantially all of the assets of the Company and the Guarantors, subject to certain exceptions. Under the Credit Agreement, the Company will pay to the administrative agent for the account of each revolving lender a commitment fee on a quarterly basis based on amounts committed but unused under the revolving facility from 0.20% to 0.40% per annum depending on the Company’s Total Net Leverage Ratio (as defined in the Credit Agreement). The Company is also obligated to pay the administrative agent customary fees for credit facilities of this size and type. Revolving borrowings under the Credit Agreement bear interest at a rate per annum equal to (i) the Adjusted LIBOR Rate for the interest period plus the Applicable Rate (as defined in the Credit Agreement) based on the Company’s Total Net Leverage Ratio (with customary provisions under the Credit Agreement providing for the replacement of LIBOR with a successor rate) or (ii) the Alternate Base Rate (as defined in the Credit Agreement) as in effect from time to time plus the Applicable Rate based on the Company’s Total Net Leverage Ratio. As of March 31, 2022, the Applicable Rate for Eurodollar Loans is 1.25% per annum and the Applicable Rate for ABR Loans is 0.25% per annum. The Credit Agreement contains affirmative and negative covenants customarily applicable to senior secured credit facilities, including covenants that, among other things, limit or restrict the ability of the Company and its subsidiaries, subject to negotiated exceptions, to incur additional indebtedness and additional liens on their assets, engage in mergers or acquisitions or dispose of assets, pay dividends or make other distributions, voluntarily prepay other indebtedness, enter into transactions with affiliated persons, make investments and change the nature of their businesses. The Credit Agreement also contains customary events of default, subject to thresholds and grace periods, including, among others, payment default, covenant default, cross default to other material indebtedness and judgment default. In addition, the Credit Agreement requires the Company to maintain a Total Net Leverage Ratio of no more than 3.00 to 1.00 and an Interest Coverage Ratio of at least 3.50 to 1.00. The Company has no borrowings under the Credit Agreement as of March 31, 2022. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation - The accompanying unaudited condensed consolidated financial statements of Medifast, Inc. and its wholly-owned subsidiaries (“Medifast,” the “Company,” “we,” “us,” or “our”) included herein have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim reporting and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and notes that are normally required by GAAP have been condensed or omitted. However, in the opinion of management, all adjustments consisting of normal, recurring adjustments considered necessary for a fair presentation of the financial position and results of operations have been included and management believes the disclosures that are made are adequate to make the information presented not misleading. The condensed consolidated balance sheet at December 31, 2021 has been derived from the audited consolidated financial statements at that date included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (“2021 Form 10-K”). The results of operations for the three months ended March 31, 2022 are not necessarily indicative of results that may be expected for the fiscal year ending December 31, 2022. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the 2021 audited consolidated financial statements and notes thereto, which are included in the 2021 Form 10-K. |
Presentation of Financial Statements | Presentation of Financial Statements - The unaudited condensed consolidated financial statements included herein include the accounts of the Company. All significant intercompany accounts and transactions have been eliminated. |
Reclassification | Reclassification - Certain amounts reported for prior periods have been reclassified to be consistent with the current period presentation. No reclassification in the condensed consolidated financial statements had a material impact on the presentation. |
Use of Estimates | Use of Estimates - The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates. |
Recent Accounting Pronouncements | Accounting Pronouncements Adopted in 2022 In March 2020, the FASB issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting |
INVENTORIES (Tables)
INVENTORIES (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories consisted of the following (in thousands): March 31, 2022 December 31, 2021 Raw materials $ 15,340 $ 15,196 Packaging 3,640 3,641 Non-food finished goods 13,316 15,991 Finished goods 161,698 152,687 Reserve for obsolete inventory (5,022) (7,472) Total $ 188,972 $ 180,043 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of the Table Sets Forth the Computation of Basic and Diluted EPS | The following table sets forth the computation of basic and diluted EPS (in thousands, except per share data): Three months ended March 31, 2022 2021 Numerator: Net income $ 41,781 $ 41,063 Denominator: Weighted average shares of common stock outstanding 11,557 11,772 Effect of dilutive common stock equivalents 81 109 Weighted average shares of common stock outstanding 11,638 11,881 Earnings per share - basic $ 3.62 $ 3.49 Earnings per share - diluted $ 3.59 $ 3.46 |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Share-based Payment Arrangement [Abstract] | |
Summary of Stock Option Activity | The following table is a summary of our stock option activity (in thousands, except per share data): Three months ended March 31, 2022 2021 Awards Weighted-Average Exercise Price Awards Weighted-Average Exercise Price Outstanding at beginning of period 32 $ 54.98 61 $ 48.19 Exercised — — (11) 42.62 Outstanding at end of the period 32 $ 54.98 50 $ 49.43 Exercisable at end of the period 28 $ 52.76 41 $ 44.93 |
Summary of Restricted Stock Activity | The following table summarizes our restricted stock activity (in thousands, except per share data): Three months ended March 31, 2022 2021 Shares Weighted-Average Grant Date Fair Value Shares Weighted-Average Grant Date Fair Value Outstanding at beginning of period 43 $ 183.51 50 $ 116.06 Granted 29 175.66 17 253.03 Vested (18) 149.95 (14) 109.14 Outstanding at end of the period 54 $ 190.20 53 $ 157.80 |
Disclosure of Share-based Compensation Arrangements by Share-based Payment Award | The total expenses during the three months ended March 31, 2022 and 2021 are as follows (in thousands): Three months ended March 31, 2022 2021 Shares Share-Based Compensation Expense Shares Share-Based Compensation Expense Options and restricted stock 86 $ 1,087 103 $ 938 Performance-based share awards granted in 2022 25 79 — — Performance-based share awards granted in 2021 15 640 14 54 Performance-based share awards granted in 2020 26 469 28 495 Performance-based share awards granted in 2019 — — 17 711 Total share-based compensation 152 $ 2,275 162 $ 2,198 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Leases [Abstract] | |
Summary of Supplemental Cash Flow Information | Supplemental cash flow information related to the Company’s operating leases was as follows (in thousands): Three months ended March 31, 2022 2021 Cash paid for amounts included in the measurements of lease liabilities Operating cash flow used in operating leases $ 1,756 $ 1,002 Right-of-use assets obtained in exchange for lease obligations Operating leases $ 103 $ 11 |
Summary of Maturity of the Company's Operating Lease Liabilities | The following table presents the maturity of the Company’s operating lease liabilities as of March 31, 2022 (in thousands): 2022 (excluding the three months ended March 31, 2022) $ 5,443 2023 6,242 2024 5,693 2025 5,825 2026 4,160 Thereafter 5,412 Total lease payments $ 32,775 Less: imputed interest (1,733) Total $ 31,042 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Schedule of Accumulated Other Comprehensive Income | The following table sets forth the components of accumulated other comprehensive income, net of tax where applicable (in thousands): March 31, December 31, Foreign currency translation $ 120 $ 90 Unrealized gains on investment securities 7 21 Accumulated other comprehensive income $ 127 $ 111 |
FINANCIAL INSTRUMENTS (Tables)
FINANCIAL INSTRUMENTS (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Investments, All Other Investments [Abstract] | |
Schedule of Cash and Financial Assets That are Measured at Fair Value on a Recurring Basis for Each of the Hierarchy Levels | The following tables present the Company’s cash and financial assets that are measured at fair value on a recurring basis for each of the hierarchy levels (in thousands): March 31, 2022 Cost Unrealized Gains Accrued Interest Estimated Fair Cash & Cash Investment Cash $ 107,342 $ — $ — $ 107,342 $ 107,342 $ — Level 1: Money market accounts 10,661 — — 10,661 10,661 — Government & agency securities 1,401 5 8 1,414 — 1,414 12,062 5 8 12,075 10,661 1,414 Level 2: Municipal bonds 2,625 2 16 2,643 — 2,643 Total $ 122,029 $ 7 $ 24 $ 122,060 $ 118,003 $ 4,057 December 31, 2021 Cost Unrealized Gains Accrued Interest Estimated Fair Cash & Cash Investment Cash $ 94,824 $ — $ — $ 94,824 $ 94,824 $ — Level 1: Money market accounts 9,359 — — 9,359 9,359 — Government & agency securities 1,401 12 — 1,413 — 1,413 10,760 12 — 10,772 9,359 1,413 Level 2: Municipal bonds 3,880 9 59 3,948 — 3,948 Total $ 109,464 $ 21 $ 59 $ 109,544 $ 104,183 $ 5,361 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 15,340 | $ 15,196 |
Packaging | 3,640 | 3,641 |
Non-food finished goods | 13,316 | 15,991 |
Finished goods | 161,698 | 152,687 |
Reserve for obsolete inventory | (5,022) | (7,472) |
Total | $ 188,972 | $ 180,043 |
EARNINGS PER SHARE - Computatio
EARNINGS PER SHARE - Computation of Basic and Diluted EPS (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Numerator: | ||
Net income | $ 41,781 | $ 41,063 |
Denominator: | ||
Weighted average shares of common stock outstanding (in shares) | 11,557,000 | 11,772,000 |
Effect of dilutive common stock equivalents (in shares) | 81,000 | 109,000 |
Weighted average shares of common stock outstanding (in shares) | 11,638,000 | 11,881,000 |
Basic earnings per share | ||
Earnings per share - basic (in dollars per share) | $ 3.62 | $ 3.49 |
Diluted earnings per share | ||
Earnings per share - diluted (in dollars per share) | $ 3.59 | $ 3.46 |
EARNINGS PER SHARE - Narrative
EARNINGS PER SHARE - Narrative (Details) - shares | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Restricted Stock | ||
Anti-dilutive awards | 44 | 267 |
SHARE-BASED COMPENSATION - Narr
SHARE-BASED COMPENSATION - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation arrangement by share-based payment award, options, grants in period, gross | 0 | 0 |
Proceeds from stock options exercised | $ 0 | $ 481 |
Shares withheld for employee taxes | 8,000 | 7,000 |
Restricted Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting period | 5 years | |
Compensation cost recognition weighted average period | 2 years 4 months 24 days | |
Share-based compensation arrangement, fair value of awards vested | $ 3,200 | $ 3,900 |
Shares granted in period | 29 | 17 |
Total income tax benefit recognized related to restricted stock awards | $ 500 | $ 1,200 |
Unrecognized compensation costs | $ 8,800 | |
Stock Options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting period | 3 years | |
Award expiration period | 10 years | |
Share-based compensation, shares authorized under stock option plans, exercise price range, lower range limit | $ 26.52 | |
Share-based compensation, shares authorized under stock option plans, exercise price range, upper range limit | $ 66.68 | |
Weighted-average remaining contractual life of options outstanding | 5 years 1 month 6 days | |
Aggregate intrinsic value of options outstanding | $ 3,800 | |
Weighted-average remaining contractual life of options exercisable | 4 years 10 months 24 days | |
Aggregate intrinsic value of options exercisable | $ 3,300 | |
Employee service share based compensation nonvested awards total compensation cost not yet recognized | $ 100 | |
Compensation cost recognition weighted average period | 10 months 24 days | |
Intrinsic value of options exercised | $ 2,300 | |
Performance Shares | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Compensation cost recognition weighted average period | 2 years 1 month 6 days | |
Shares granted in period | 66,000 | |
Unrecognized compensation costs | $ 11,000 |
SHARE-BASED COMPENSATION - Stoc
SHARE-BASED COMPENSATION - Stock Options Activity (Details) - Stock Options - $ / shares | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares, Outstanding at beginning of period (in shares) | 32 | 61 |
Shares, Exercised (in shares) | 0 | (11) |
Shares, Outstanding at end of the period (in shares) | 32 | 50 |
Shares, Exercisable at end of the period (in shares) | 28 | 41 |
Weighted-Average Exercise Price, Outstanding at beginning of period (in dollars per share) | $ 54.98 | $ 48.19 |
Weighted-Average Exercise Price, Exercised (in dollars per share) | 0 | 42.62 |
Weighted-Average Exercise Price, Outstanding at end of the period (in dollars per share) | 54.98 | 49.43 |
Weighted-Average Exercise Price, Exercisable at end of the period (in dollars per share) | $ 52.76 | $ 44.93 |
SHARE-BASED COMPENSATION - Rest
SHARE-BASED COMPENSATION - Restricted Stock Activity (Details) - Restricted Stock - $ / shares | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Shares | ||
Outstanding at beginning of period (in shares) | 43 | 50 |
Granted (in shares) | 29 | 17 |
Vested (in shares) | (18) | (14) |
Outstanding at end of period (in shares) | 54 | 53 |
Weighted-Average Grant Date Fair Value | ||
Outstanding at beginning of period (in dollars per share) | $ 183.51 | $ 116.06 |
Granted (in dollars per share) | 175.66 | 253.03 |
Vested (in dollars per share) | 149.95 | 109.14 |
Outstanding at end of period (in dollars per share) | $ 190.20 | $ 157.80 |
SHARE-BASED COMPENSATION - Summ
SHARE-BASED COMPENSATION - Summary of Performance-based Share Awards (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options and restricted stock (in shares) | 152 | 162 |
Share-based payment arrangement, expense | $ 2,275 | $ 2,198 |
Options And Restricted Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options and restricted stock (in shares) | 86 | 103 |
Share-based payment arrangement, expense | $ 1,087 | $ 938 |
Performance Shares | Granted In 2022 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options and restricted stock (in shares) | 25 | 0 |
Share-based payment arrangement, expense | $ 79 | $ 0 |
Performance Shares | Granted In 2021 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options and restricted stock (in shares) | 15 | 14 |
Share-based payment arrangement, expense | $ 640 | $ 54 |
Performance Shares | Granted In 2020 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options and restricted stock (in shares) | 26 | 28 |
Share-based payment arrangement, expense | $ 469 | $ 495 |
Performance Shares | Granted In 2019 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options and restricted stock (in shares) | 0 | 17 |
Share-based payment arrangement, expense | $ 0 | $ 711 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Lessee, Lease, Description [Line Items] | ||
Finance leases | $ 0 | $ 0 |
Operating lease expense | $ 1,800 | $ 1,000 |
Minimum | Operating Lease Arrangement for Real Estate | ||
Lessee, Lease, Description [Line Items] | ||
Lease term | 18 months | |
Minimum | Operating Lease Arrangement for Equipment | ||
Lessee, Lease, Description [Line Items] | ||
Lease term | 24 months | |
Maximum | Operating Lease Arrangement for Real Estate | ||
Lessee, Lease, Description [Line Items] | ||
Lease term | 126 months | |
Maximum | Operating Lease Arrangement for Equipment | ||
Lessee, Lease, Description [Line Items] | ||
Lease term | 203 months |
LEASES - Supplemental Cash Flow
LEASES - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Leases [Abstract] | ||
Cash paid for amounts included in the measurements of lease liabilities - Operating cash flow used in operating leases | $ 1,756 | $ 1,002 |
Right-of-use assets obtained in exchange for lease obligations - Operating leases | $ 103 | $ 11 |
Weighted average remaining lease term | 5 years 3 months 18 days | |
Weighted average discount rate | 2.10% |
LEASES - Future Minimum Lease C
LEASES - Future Minimum Lease Commitments (Details) $ in Thousands | Mar. 31, 2022USD ($) |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | |
2022 (excluding the three months ended March 31, 2022) | $ 5,443 |
2023 | 6,242 |
2024 | 5,693 |
2025 | 5,825 |
2026 | 4,160 |
Thereafter | 5,412 |
Total lease payments | 32,775 |
Less: imputed interest | (1,733) |
Total | $ 31,042 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE INCOME - Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||
Foreign currency translation | $ 120 | $ 90 |
Unrealized gains on investment securities | 7 | 21 |
Accumulated other comprehensive income | $ 127 | $ 111 |
FINANCIAL INSTRUMENTS - Narrati
FINANCIAL INSTRUMENTS - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Investments, All Other Investments [Abstract] | ||
Realized loss or gains | $ 0 | $ 0 |
FINANCIAL INSTRUMENTS - Cash an
FINANCIAL INSTRUMENTS - Cash and Financial Assets That are Measured at Fair Value on a Recurring Basis for Each of the Hierarchy Levels (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Cash And Cash Equivalents And Marketable securities [Line Items] | |||
Cost | $ 122,029 | $ 109,464 | |
Unrealized Gains | 7 | 21 | |
Accrued Interest | 24 | 59 | |
Estimated Fair Value | 122,060 | 109,544 | |
Cash & Cash Equivalents | 118,003 | 104,183 | |
Investment Securities | 4,057 | 5,361 | |
Cash | |||
Cash And Cash Equivalents And Marketable securities [Line Items] | |||
Cost | 107,342 | 94,824 | |
Estimated Fair Value | 107,342 | 94,824 | |
Cash & Cash Equivalents | 107,342 | 94,824 | |
Level 1: | |||
Cash And Cash Equivalents And Marketable securities [Line Items] | |||
Cost | 12,062 | 10,760 | |
Unrealized Gains | 5 | 12 | |
Accrued Interest | 8 | ||
Estimated Fair Value | 12,075 | 10,772 | |
Cash & Cash Equivalents | 10,661 | 9,359 | |
Investment Securities | 1,414 | 1,413 | |
Level 1: | Money market accounts | |||
Cash And Cash Equivalents And Marketable securities [Line Items] | |||
Cost | 10,661 | 9,359 | |
Estimated Fair Value | 10,661 | 9,359 | |
Cash & Cash Equivalents | 10,661 | 9,359 | |
Level 1: | Government & agency securities | |||
Cash And Cash Equivalents And Marketable securities [Line Items] | |||
Cost | 1,401 | 1,401 | |
Unrealized Gains | 5 | 12 | |
Accrued Interest | 8 | ||
Estimated Fair Value | 1,414 | 1,413 | |
Investment Securities | 1,414 | 1,413 | |
Level 2: | Municipal bonds | |||
Cash And Cash Equivalents And Marketable securities [Line Items] | |||
Cost | 2,625 | 3,880 | |
Unrealized Gains | 2 | $ 9 | |
Accrued Interest | 16 | 59 | |
Estimated Fair Value | 2,643 | 3,948 | |
Investment Securities | $ 2,643 | $ 3,948 |
DEBT - Narrative (Details)
DEBT - Narrative (Details) - Credit Agreement | Apr. 13, 2021USD ($) | Mar. 31, 2022USD ($) |
Debt Instrument [Line Items] | ||
Maximum Total Net Leverage Ratio | 3 | |
Minimum Interest Coverage Ratio | 3.50 | |
Borrowings | $ 0 | |
Eurodollar | ||
Debt Instrument [Line Items] | ||
Applicable Rate | 1.25% | |
Base Rate | ||
Debt Instrument [Line Items] | ||
Applicable Rate | 0.25% | |
Senior Secured Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Credit facility maximum borrowing capacity | $ 125,000,000 | |
Letter of Credit | ||
Debt Instrument [Line Items] | ||
Credit facility maximum borrowing capacity | 20,000,000 | |
Uncommitted Incremental Facility | ||
Debt Instrument [Line Items] | ||
Credit facility maximum borrowing capacity | $ 100,000,000 | |
Minimum | ||
Debt Instrument [Line Items] | ||
Commitment fee percentage | 0.20% | |
Maximum | ||
Debt Instrument [Line Items] | ||
Commitment fee percentage | 0.40% |