MEDIFAST INC

Good afternoon and welcome to Medifast's second quarter 2021 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Reed Anderson of ICR. Please go ahead.

Good afternoon and welcome to MediFast's second quarter 2021 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 June 30, 2021 that went out this afternoon at approximately 4.05 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 who's joined. Thanks for taking time to be with us today. On the call with me today is Jim Maloney, our Chief Financial Officer. I'm going to provide a brief overview of the second quarter, then Jim will run through our financial results in more detail. Following our prepared remarks, we will open up the call to take your questions. Our second quarter results were very strong, building on the momentum we experienced in the first quarter. The results reflected our strong performance in attracting and retaining coaches and empowering them with a unique infrastructure and education helped them be as effective and productive as possible in attracting and supporting clients. Revenue increased 79% to $394 million in the quarter, driven by growth in the number of independent Optivea coaches coupled with further improvements in coach productivity. The number of active earning Optivea coaches reached approximately 59,200 at the end of the second quarter, a record high that is 62% above the same quarter last year, and up nearly 13% sequentially. Revenue per active earning OPTAVIA coach was $6,662, another new record, up nearly 14% versus last year and 3% sequentially. The continued productivity gains we are seeing has been fueled by the development of infrastructure and education that help coaches learn how to support a greater number of clients than has historically been possible. This field-led training approach leverages social media and communication technology platforms to engage clients and support and train coaches. We've been investing substantially in technology and digital processes with an emphasis on creating unique infrastructure and education to help OPTAVIA coaches leverage their time and talents to efficiently serve clients. While it's still very early, we can already see the benefits from these efforts based on the strong trends in coach-level productivity, Our digital product teams have been developing two apps. The first is the OPTAVIA app, which primarily targets clients and features lean and green recipes, self-service options related to OPTAVIA premier orders and returns, and other key information to stay engaged. The OPTAVIA app went live in April for coaches and in July for clients. The second is the Connect app, which is for coaches on the go who need data and insights to help them manage their business efficiently. The beta version of the Connect app went live in April and is currently being utilized by nearly a third of coaches with a broader rollout expected over the balance of the year. In addition to our proprietary apps, Optivea coaches continue to refine their social media and other communication platforms to manage their business and drive deeper connections to serve existing customers and attract new clients. It's clear that interest in health and wellness across the board continues to be extremely strong. A recent study of consumer health priorities and motivators commissioned by Medifast found that 93% of US adults have health and wellness goals and 84% are actively working towards achieving them. Two-thirds of Americans say the biggest motivator for staying consistent with health and wellness goals is feeling good mentally and physically, defined by having more energy and reducing stress and anxiety. OPTAVIA's unique model has proven effectiveness in helping people achieve their individual goals around health and wellness, and the resonance of this model is demonstrated clearly in the results we've announced today. As we drive further demand through a growing number of coaches, it's important that we continue to develop our supply chain capabilities to be able to meet the needs of the field. We achieved our $2 billion manufacturing capacity target in the second quarter, six months ahead of the original goal through the expansion of relationships with co-manufacturers. Given our growth trajectory and outlook for the future, this additional capacity is crucial to meeting the needs of our coaches and clients as well as continuing to deliver strong returns for shareholders. Scaling our fulfillment capacity to an equivalent level is also in process with an expected completion date in the third quarter of this year, three months ahead of the original goal. We added an internally managed There were no promotions in the quarter as the strength of our coach-based model and field-led training continued to drive strong engagement and activation. Importantly, since we were lapping the Essential Start promotion from last year's second quarter, The absence of promotion provided a nice lift to gross margins, which improved by 210 basis points in the same quarter last year. This underscores a key differentiator with our model versus other direct selling models. That is that we focus on empowering coaches to serve clients by educating them on the habits of health system, using a holistic community-based approach to help them transform their lives one healthy habit at a time. Looking at the third quarter, we will repeat our Business Builder program and expect this to further grow the number of OPTAVIA coaches helping our business as we move ahead into 2022. Last week, we concluded our biggest ever annual convention, which was held in the new hybrid format and saw more than 15,000 global registrants. Recall that the 2020 event was modified to be virtual only due to the global pandemic. While partnering with the Georgia World Congress Center in Atlanta and following statewide COVID-19 safety regulations for the in-person experience, we also offered a livestream component for attendees who participated from home. Attendees experienced valuable coach-led educational sessions, panel discussions, and company updates, along with celebrations of their success in transforming lives around the world. This year's event also placed an increased focus on community engagement and team building following the 2020 virtual event. We believe OPTAVIA's unique offer complete with the support of a coach community, habits of health transformation system and our clinically proven plans and scientifically developed OPTAVIA brand nutritional products provides a holistic solution consumers need to make their health goals a reality. Before turning the call over to Jim, I want to share some comments on corporate social responsibility. We continue to join forces with the OPTAVIA community to support our philanthropic initiative, Healthy Habits for All, which empowers generations through education and access to healthy habits. As part of 2021 convention registration and outside donation opportunities, the OPTAVIA community gave back through the company's philanthropic initiative, Healthy Habits for All. This coach-led fundraising initiative raised over $100,000 for worthy nonprofits and advanced the company's mission providing children with education and access to resources that support healthy habits. To date, alongside with our OPTAVIA community, the company has funded up to 8 million nutritious meals for children facing hunger. METAFAST's commitment to lifelong transformation is not just the result of the work our OPTAVIA coaches do, but also a result of our active support of the communities in which we live and work. Let me now turn the call over to Jim Maloney, will walk us through the financial results. Jim?