Medifast Reports Record Second Quarter 2009 Financial Results

Record Quarterly Revenues: $40.7 million vs. $27.5 million -- Increase of 48%

OWINGS MILLS, Md., July 30 /PRNewswire-FirstCall/ -- Medifast, Inc. (NYSE:
MED) announced today second quarter financial results for the period ended
June 30, 2009.

Second Quarter highlights included:
-- Second quarter revenues increased 48% compared to 2008 to $40.7
million;
-- Diluted EPS for the quarter increased 82% to $0.20 versus $0.11
year-over-year;
-- Direct sales segment, Take Shape for Life, increased sales 98%
year-over-year for the quarter;
-- Medifast Weight Control Centers quarterly revenues increased 111%;
-- Direct response revenue-to-spend ratio improves to 2.7 versus 2.5 a
year
ago;
-- Operating margins improve to 11.8% versus 8.7% in the comparable
quarter;

-- Free Cash Flow of $4.8 million generated.

For the second quarter ended June 30, 2009, Medifast reported revenue of $40.7
million, a 48% increase from $27.5 million in the second quarter of 2008. The
Company reported net income of $3.0 million, or $0.20 per fully diluted share,
compared with $1.5 million, or $0.11 per fully diluted share in the second
quarter of 2008, a diluted EPS increase of 82%.

For the six months ended June 30, 2009, Medifast reported revenue of $74.4
million, an increase of 41% from $52.7 million for the six months ended June
30, 2008. The Company reported net income of $5.5 million, or $0.37 per fully
diluted share, versus $2.9 million, or $0.21 per fully diluted share, in 2008.

"The second quarter of 2009 was another quarter of record revenues and net
income for Medifast that featured growth or improvement in all three of our
main distribution platforms," commented Michael S. McDevitt, Chief Executive
Officer of Medifast, Inc. "Medifast is showing that even in a weak economy,
the value proposition it provides its customers continued to be communicated
and accepted. Additionally, with the increasing focus that preventative
healthcare is currently experiencing, the Medifast program is perfectly
positioned to be the leader in the medical weight loss marketplace. Millions
of Americans are in need of an effective and safe solution to effectively
manage their body weight and to improve their quality of life. As a clinically
proven weight loss meal replacement program Medifast has been recommended by
more than 20,000 doctors over the past 30 years. This powerful endorsement by
the medical community coupled with the safety and efficacy profile of the
Medifast products and programs are powerful attributes that help in developing
customers that seek a safe and proven method to address their weight issues."

Revenues in the direct sales segment, Take Shape for Life, increased 98% to
$24.0 million compared with $12.1 million in the comparable quarter of 2008.
Growth in revenues for the segment was driven by increased customer product
sales as a result of an increase in the number of active health coaches as
well as an increase in the average product sales per health coach. The
number of active health coaches during the second quarter increased to
approximately 4,650 compared with 2,800 during the period a year ago, an
increase of 66% and up from 4,000 at the end of the first quarter of 2009. We
also experienced a 19% increase in the average product sales per health coach
compared with a year ago. It is clear that in today's environment where
individuals are looking to make the change to lead a healthier lifestyle but
sometimes find it difficult to achieve, the assistance of a health coach to
guide them along the way to success is a huge benefit. Additionally, the tools
and assistance that the Company has provided over the last number of years in
terms of training seminars, materials, and increased product offerings in
conjunction with our historic medical community support, provides the platform
for the Take Shape for Life health coaches to achieve their goals of getting
America healthy.

For the second consecutive quarter, we saw improvement in our direct response
segment's ability to operate on a much more effective basis. During the
second quarter, our revenue-to-spend improved to 2.7 to 1 versus 2.5 to 1 in
the second quarter of 2008 and versus 2.6 to 1 in the first quarter of 2009.
During the quarter, we spent $4.5 million on advertising in support of our
direct response segment, a decrease of $700,000 or 16% compared to a year ago.
However, revenues in our direct response segment decreased only 1% during
the quarter to $12.2 million compared to $12.4 million a year ago. This
dramatic improvement in the profitability of this segment is attributable to
much tighter controls on the platforms in which we advertise, increased
closing rates in our call centers and website, and a much more effective
messaging campaign. We continued to take advantage of our long-time
relationship with the medical community.

The Medifast Weight Control Centers saw its strongest quarter with substantial
increases in same store sales and the expansion into profitable markets," Mr.
McDevitt continued. "Sales increased during the second quarter to $4.1
million compared to $1.9 million, an increase of 111%. We experienced
increases in same store sales during the quarter as average monthly store
sales for clinics open greater than one year increased 25% to $52,000.
During the quarter we opened three clinics in the Austin, Texas market with
all three stores generating revenues well above traditional opening revenue
expectations. With the strength in new store openings as well the growth in
same-store sales, we plan on opening seven to ten additional corporate clinics
throughout the country before the end of the year to provide consumers with
the level of support that only a Medifast Weight Control Center can provide.

Ms. Meg Sheetz, President and COO of Medifast, Inc. commented, "Gross margins
increased during the quarter to 76% compared with 75.8% a year ago. Operating
margins improved significantly during the second quarter to 11.8% compared to
8.7% in the second quarter of last year as we continue to experience the
benefits of our vertically integrated business model and see improvement in
our advertising effectiveness ratios."

The Company's balance sheet remains strong with stockholders' equity of $45
million and working capital of $19.8 million as of June 30, 2009. Cash and
cash equivalents increased by $4.8 million or 11.7% as a percent of revenues
to $11.1 million at the end of the quarter as a result of operating cash flows
and the decrease of capital expenditures.

Colonel Brad MacDonald, USMC (Ret.), chairman of the Board of Directors of
Medifast, Inc. commented, "The Board of Directors of Medifast appreciates the
leadership of Michael McDevitt and Meg Sheetz, and congratulates the entire
Medifast team on their execution upon the 2009 strategic plan during the most
recent quarter. Importantly, the team has continued to maintain a culture
that is passionate about helping the millions of Americans who are overweight
or obese and trying to obtain a healthier lifestyle."

Mr. McDevitt concluded, "Americans continue to spend billions of dollars every
year on weight loss solutions, yet the number of individuals that are
overweight or obese continues to climb. For years, the marketplace has been
unable to provide a solution that is effective and strives to provide
long-lasting support. We are on the cutting edge of not only combating
obesity but also providing consumers with alternative support solutions - from
their physician's office, to a Medifast Weight Loss Center, to health coach
and online support. These various levels of support, along with a product and
program that allows users to experience rapid weight loss is finally making
its way into the consciousness of those that need it most. The entire Medifast
family is dedicated to providing innovative choices to support the health of
all those that need to address body weight and the attendant health issues to
do so in a compassionate, supportive and, ultimately in a successful manner.
That is our mission."

Second Quarter 2009 Conference Call
The Company will hold a conference call and web cast to discuss the results on
Thursday, July 30, 2009 at 11:00 a.m. ET.

Interested parties can access the call by dialing (877) 407-0782 or (201)
689-8567, or can listen via a live Internet web cast, which can be found at
www.choosemedifast.com in the section marked "Investor Relations." A replay of
the call is available via web cast at www.choosemedifast.com until October 30,
2009 or by playback at (877) 660-6853 or (201) 612-7415 through August 8,
2009. Please use account #286 and conference #328083 for the replay.

About Medifast:
Medifast (NYSE: MED) is the leading easy-to-use, clinically proven
portion-controlled weight loss program. Medifast has been recommended by
15,000 physicians and used by over one million customers. Medifast is
committed to enriching lives by providing innovative choices for lasting
health. Medifast programs have been proven effective through studies by major
university teaching hospitals. The company sells its products and programs via
four unique distribution channels: 1) the web and national call centers, 2)
national network of physicians, 3) medically supervised Medifast Weight
Control Centers, and 4) the Take Shape For Life direct-selling division, a
network of health coaches. Medifast was founded in 1980 and is located in
Owings Mills, Maryland. For more information, log onto
http://www.ChooseMedifast.com. MED-F

Safe Harbor:
Please Note: This release contains "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. These forward-looking statements generally can
be identified by use of phrases or terminology such as "intend" or other
similar words or the negative of such terminology. Similarly, descriptions of
Medifast's objectives, strategies, plans, goals or targets contained herein
are also considered forward-looking statements. Medifast believes this release
should be read in conjunction with all of its filings with the United States
Securities and Exchange Commission and cautions its readers that these
forward-looking statements are subject to certain events, risks,
uncertainties, and other factors. Some of these factors include, among others,
Medifast's inability to attract and retain independent Associates and Members,
stability in the pricing of print, TV and Direct Mail marketing initiatives
affecting the cost to acquire customers, increases in competition, litigation,
regulatory changes, and its planned growth into new domestic and international
markets and new channels of distribution. Although Medifast's believes that
the expectations, statements, and assumptions reflected in these forward-
looking statements are reasonable, it cautions readers to always consider all
of the risk factors and any other cautionary statements carefully in
evaluating each forward-looking statement in this release, as well as those
set forth in its latest Annual Report on Form 10-K and Quarterly Report on
Form 10-Q, and other filings filed with the United States Securities and
Exchange Commission, including its current reports on Form 8-K. All of the
forward-looking statements contained herein speak only as of the date of this
release.

Contact: Brendan Connors Lytham Partners, LLC
Vice President - Finance Joe Diaz
ir@choosemedifast.com Robert Blum
Joe Dorame
602-889-9700

Financial tables to follow:

MEDIFAST, INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

June 30, December 31,
2009 2008
ASSETS
Current assets:
Cash and cash equivalents $11,073,000 $1,841,000
Accounts receivable-net of allowance for
doubtful accounts of $100,000 582,000 448,000
Inventory 11,188,000 13,856,000
Investment securities 1,339,000 1,099,000
Deferred compensation 535,000 531,000
Prepaid expenses and other current assets 1,723,000 2,034,000
Prepaid income tax 1,777,000 1,131,000
Note receivable - current 180,000 180,000
Deferred tax asset 100,000 100,000
------- -------
Total Current Assets 28,497,000 21,220,000

Property, plant and equipment - net 21,880,000 21,709,000
Trademarks and intangibles - net 4,697,000 5,547,000
Deferred tax asset, net of current portion 1,351,000 1,131,000
Note receivable, net of current portion 1,012,000 1,080,000
Other assets 352,000 350,000
------- -------
TOTAL ASSETS $57,789,000 $51,037,000
=========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $5,711,000 $5,130,000
Line of credit 2,693,000 3,164,000
Current maturities of long-term debt 257,000 257,000
------- -------
Total Current liabilities 8,661,000 8,551,000

Long-term debt, net of current liabilities 4,185,000 4,313,000
--------- ---------
Total liabilities 12,846,000 12,864,000
---------- ----------
Stockholders' equity:

Common stock; par value $.001 per share;
20,000,000 authorized; 15,220,960 and
14,585,960 shares issued and outstanding,
respectively 15,000 15,000
Additional paid-in capital 34,705,000 30,787,000
Accumulated other comprehensive (loss) (173,000) (389,000)
Retained earnings 20,737,000 15,253,000
---------- ----------
55,284,000 45,666,000
Less: cost of 301,092 and 272,192 shares
of common stock in treasury, respectively (2,058,000) (1,956,000)
Less: unearned compensation (8,283,000) (5,537,000)
---------- ----------
Total Stockholders' Equity 44,943,000 38,173,000
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $57,789,000 $51,037,000
=========== ===========

MEDIFAST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)

Three Months Ended Six Months Ended
June 30, June 30,
2009 2008 2009 2008

Revenue $40,713,000 $27,537,000 $74,393,000 $52,706,000
Cost of sales 9,751,000 6,677,000 17,805,000 12,777,000
--------- --------- ---------- ----------
Gross Profit 30,962,000 20,860,000 56,588,000 39,929,000

Selling, general, and
administration 26,174,000 18,451,000 47,785,000 35,457,000

Income from operations 4,788,000 2,409,000 8,803,000 4,472,000

Other income/(expense)
Interest expense (37,000) (87,000) (74,000) (191,000)
Interest income 40,000 43,000 73,000 82,000
Other income/expense (32,000) (41,000) (67,000) (6,000)
-------- ------- -------- ------
(29,000) (85,000) (68,000) (115,000)

Income before provision
for income taxes 4,759,000 2,324,000 8,735,000 4,357,000
Provision for income
tax (expense) (1,760,000) (752,000) (3,251,000) (1,420,000)
---------- -------- ---------- ----------

Net income $2,999,000 $1,572,000 $5,484,000 $2,937,000
========== ========== ========== ==========

Basic earnings per
share $0.22 $0.12 $0.41 $0.22
===== ===== ===== =====
Diluted earnings per
share $0.20 $0.11 $0.37 $0.21
===== ===== ===== =====

Weighted average shares
outstanding -
Basic 13,417,667 13,138,202 13,277,293 13,119,497
========== ========== ========== ==========
Diluted 15,039,547 13,791,623 14,899,173 13,772,918
========== ========== ========== ==========

SOURCE Medifast, Inc.

Brendan Connors, Vice President - Finance of Medifast, Inc.,
ir@choosemedifast.com; or Joe Diaz, Robert Blum, or Joe Dorame, all of Lytham
Partners, LLC, +1-602-889-9700, for Medifast, Inc.