MEDIFAST INC

Good day and welcome to the MediFAST fourth quarter and full year 2020 earnings conference call. All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch tone phone. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Reed Anderson. Please go ahead.

Good afternoon, and welcome to the Medifast fourth quarter 2020 earnings conference call. On the call with me today are Dan Chard, Chairman and Chief Executive Officer, and Jim Maloney, Chief Financial Officer. By now, everyone should have access to the earnings release for the period ended December 31, 2020. It went out this afternoon at approximately 4 or 5 p.m. Eastern time. If you have not received the release, it is available on the investor relations portion of Medifast's website at www.medifastinc.com. This call is being webcast and a replay will be available on the company's website. Before we begin, We would like to remind everyone that the prepared remarks contain forward-looking statements and management may make additional forward-looking statements in response to your questions. The words believe, expect, anticipate, and other similar expressions generally identify forward-looking statements. These statements do not guarantee future performance and therefore undue reliance should not be placed on them. Actual results could differ materially from those projected in any forward-looking statements. MetaFast assumes no obligation to update any forward-looking projections that may be made in today's release or call. All of the forward-looking statements contained herein speak only as of the date of this call. And with that, I would like to turn the call over to MetaFast's Chairman and Chief Executive Officer, Dan Chard.

Thank you, Reid, and good afternoon to everyone. Thank you for taking time to be with us today. On the call with me today is Jim Maloney, our Chief Financial Officer. After I've provided some updates on our business performance, Jim will review the Q4 financial results in more detail. We'll then open up the call to take your questions. We closed the year on a strong note with accelerating top line growth over the third quarter. Revenue increased 55.3% to $264.9 million in the fourth quarter of 2020, and we continued to execute strongly across all areas of the business. Earnings per diluted share were $2.36, a 42.2% increase over the prior year period. However, due to significant differences in tax rates between the periods, we believe income from operations is a better gauge of how we perform from a profitability standpoint. Jim will discuss our tax rates in more detail when he covers our financial results. For the fourth quarter, income from operations was $38 million, an increase of 103% versus the same period last year. Growth was driven by significant year over year and sequential improvements in the number of active earning OPTAVIA coaches, which grew to 44,200 in the fourth quarter, another new record. Additionally, productivity per active earning coach increased 13.4% to $5,932 during the quarter compared to the prior year period. Our client community remains strong and we finished 2020 even better than expected with successful incentives coach programs in Q4 that position us well for 2021. The initiatives we've implemented over the past one to two years are delivering consistent, meaningful progress as evidenced by the results we announced today. The company's focus continues to be supporting our growing community of independent OPTAVIA coaches as they develop and focus on the four competencies that drive our business success. namely attracting new clients, supporting clients on the optimal weight five-in-one plan, and supporting new coaches and developing coach leaders. There's an ever-growing number of individuals seeking greater health and wellness, and we remain resolutely focused on targeting those for whom diets have failed and who desire a holistic approach to optimizing their overall health and well-being. The key insights supporting our sustained growth is that clients do better on their health and wellness journey when they have the support of a coach. Coach-led model has been clinically proven to be more effective in this regard. As such, we have combined the most powerful aspects of the direct selling model and direct to consumer offerings and created a model that puts the OPTAVIA coach at the center of helping clients on their health transformation journey. with the company providing the distribution infrastructure to supply products directly to the end consumer. We reach our target audience through the community of OPTAVIA coaches who leverage social media channels to relate their success with our proprietary Habits of Health transformation system and products. Our vision is to achieve long-term sustainable growth in the mid-teens by penetrating the large and growing addressable market in the United States, continuing our expansion into Asia Pacific markets and developing other large markets throughout the world. As we continue to grow at scale in both coaches and clients, it's essential that we place sharp focus on building an operational foundation through investments related to organization, technology, digital products, manufacturing and distribution. This will allow us to take full advantage of the long-term growth opportunity. Consistent with the business and brand strategy that we communicated last quarter, we are moving forward with the sunset of our Medifast Direct channel and Metafast branded products and anticipate this being complete by the end of the second quarter. By focusing on building capabilities in the areas that matter most to our OPTAVIA coaches and client-centered model, we will further enhance and solidify our competitive advantage in the health and wellness space in support of our long-term growth and profit vision. Last year, we initiated an important project to rationalize our SKUs. enabling us to place greater focus on the most popular and profitable products in our portfolio and place a more consistent emphasis on our OPTAVIA bread. We continue to enhance our supply chain capabilities to meet product demand across core items while also empowering further operational optimization across all aspects of the manufacturing and distribution network. The strategic value of having a strong supply chain has never been more important, and we continue to prioritize these investments, focusing on expanding capacity as well as driving operational excellence. We remain on track to support a $2 billion revenue business by the end of 2021, creating ample headroom for several years depending on the trajectory of future growth. We are scaling up new and existing co-manufacturers which mitigates the risk through the diversification while also adding capacity. We're also working closely with our third-party logistics partners to leverage their capacity as well as adding distribution assets to our facility in the Maryland area. Technology remains another key area of focus for METAFEST. We opened a new technology center in Utah roughly a year ago to become our pioneering digital lab for developing tools that create efficiencies for coaches and drive engagement for clients. Our OPTAVIA coaches continue to refine their use of technology and social media in attracting new clients and broadening their reach. Overall, the new coach-directed training regimen and technology support systems are increasingly effective at supporting more clients than has been historically possible. Deeper digital expertise will also allow us to further leverage the competitive advantages of the Coach model. During the first half of 2021, we will launch the beta version of the OPTAVIA Coach Connect app, a powerful productivity tool aimed at helping coaches manage clients. We will also launch the beta version of the OPTAVIA Client app, which focuses on meal planning on the OPTAVIA Weight 5-in-1 plan. Our team in Utah continues to work on a range of other tools to drive digital engagement with the field, and we're excited about the opportunities that lie ahead in this space. In 2020, our revenue growth rate was roughly two times our long-term growth rate, essentially pulling forward an entire year. While we're clearly pleased with this elevated growth rate, as a management team, we're focused on delivering long-term sustainable value. Our current business remains strong and I've never been more confident in the direction of the company and our ability to drive consistent and sustainable growth by delivering on our mission of lifelong transformation, one healthy habit at a time. For current stockholders and prospective investors, the Medifast story remains compelling for several reasons. First, our addressable market is large and growing. The US weight loss market that is core to Optivea's business has been growing at about 6% per annum and is worth $20 billion today. Roughly 70% of the US population is overweight or obese, and this segment is growing at 2% per annum, which highlights the importance of a proven health and wellness solution like the one we offer. Earlier this year, we commissioned an independent survey that showed that the pandemic has only heightened consumer focus on health and wellness. Around 63% of Americans report that they have adopted new positive health routines since March of 2020. And of those, 96% plan to continue embracing healthy habits this year. COVID-19 is causing people to put their personal health and wellness higher up in their priorities. And this presents a significant opportunity for our company. Second, our holistic coach-centered approach is supported by proprietary tools and a vibrant community that provides a clear competitive advantage in the health and wellness space. Again, it is clinically proven that people who want to lose weight do better when they have the support of a coach and a community. And that principle is at the very heart of the OPTAVIA offer. Third, we have a dynamic and agile organization that adapts quickly to changes in the marketplace. Even when those changes come at unexpected and rapid pace, such as what we saw last year as a result of COVID-19. That makes us more nimble and a better place to take advantage of tactical opportunities as they emerge. Finally, we have a strong financial position, efficient business and disciplined strategy for allocating capital, prioritizing organic growth opportunities, while returning a significant amount of value to stockholders through dividends and share repurchases. Before I turn the time over to Jim, let me note that our commitment to lifelong transformation is not just in our work with coaches and clients, but also through our active support of the communities in which we live and work. In this challenging time, our commitment to these groups remains a priority. As an example, in the fourth quarter, MediFAST behavioral health specialists and registered dietitians and nutritionists partnered with select Off the Via coaches to lead remote classes and activities for the second and fifth graders of the Living Classroom Foundation in Baltimore. For children, the pandemic has brought about increased feelings of stress and anxiety, and these classes were designed to promote the habit of healthy mind and to empower children to better handle stress. Proud of the work that the company, our employees, and our coaching community are doing to create opportunities for people from all walks of life to deliver the best possible version of themselves in whatever way possible. With that, let me now turn the time over to Jim Maloney, who will walk you through the financial results. Jim?