November 01, 2014
Financial News, November 2014
Medifast Adopts One-Year Stockholder Rights Plan
The board of directors at Medifast Inc. (MED—NYSE) has put in place a one-year stockholder rights plan or “poison pill” intended to discourage a hostile takeover from outside the company. The weight-loss company adopted the plan “in response to the recent rapid accumulations of significant portions of Medifast’s outstanding common stock.” Waltham, Massachusetts-based ModusLink most recently built up a significant stake in Medifast. The supply chain and logistics company acquired 9.9 percent of Medifast stock through a series of transactions in July and August.
In its Securities and Exchange Commission filing, Medifast states that the plan was not adopted in response to any specific takeover bid or acquisition proposal. The rights plan would trigger should an outside investor acquire 10 percent or more of the company’s stock. Existing stockholders would then have the opportunity to purchase additional common stock at a discounted price.
Medifast markets its products through several channels, including the personal coaching division Take Shape For Life. The direct selling subsidiary is Medifast’s most profitable division. Take Shape For Life generated $229 million in revenue last year to claim the No. 52 spot on the DSN Global 100.
Youngevity Acquires Restart Your Life
Growing direct selling conglomerate Youngevity Essential Life Sciences, a wholly owned subsidiary of Youngevity International Inc. (YGYI—OTC.QX), announced that it completed the acquisition of the business of Restart Your Life, a dietary supplement company and provider of immune system support products and therapeutic skin lotions.
As a result of the business combination, Youngevity distributors and customers will have access to the unique line of high-quality products from Restart Your Life. In turn, Restart Your Life distributors and customers will gain access to more than 1,000 high-quality products offered by Youngevity, including health and wellness, lifestyle products and gourmet coffee.
Joyce Cordell, CEO of Restart Your Life, said, “The Restart Your Life story is one of scientific innovation and excellence in the field of immunology. By joining the Youngevity family we have become an international company with a solid foundation backed by the stability of an established leader in the direct selling industry. This expands the Restart brand globally and we could not be more excited for our entire distributor base.”
According to Steve Wallach, CEO of Youngevity, this represents Youngevity’s third strategic acquisition over the past three quarters of 2014.
In other company news, Youngevity International Inc. announced that its wholly owned subsidiary CLR Roasters has completed its previously announced $4.35 million secured convertible notes and financing for a total aggregate principal amount of $4.75 million. TriPoint Global Equities LLC acted as sole placement agent in the transaction.
The Notes, which mature in July 2019, are convertible into shares of the company’s common stock at 35 cents per share. The notes are secured by certain assets of the company’s wholly owned subsidiary, CLR Roasters LLC, personally guaranteed by CEO Steve Wallach, and bear interest at a rate of 8 percent per year. The warrants are exercisable for five years after the closing date of the purchase agreement. For each $100,000 of principal amount of notes, the holder received a warrant to purchase up to 391,304 shares of the company’s common stock at 23 cents per share.
ForeverGreen Growth Accelerates in Europe and Asia
ForeverGreen Worldwide Corp. (FVRG—OTC.BB) announced that growth is accelerating in several geographic regions, especially Europe and Asia.
“Several key indicators for Europe are trending strongly upward during the last several months. Our auto-ship orders, a key measure of brand loyalty and retention, have grown 64 percent since March. Total European sales have also grown significantly during this same time frame and now represent 36 percent of the company’s overall sales. I firmly believe that ForeverGreen Europe is positioned to continue its growth both in terms of sales and customer retention. We are working on several internal initiatives to make this possible, such as local distribution and the merger of the FG and FGX models. I could not be more confident of the direction we are headed and the initiatives in place to ensure continued upward growth,” stated Blake Schroeder, President of ForeverGreen Europe.
Bob Mower Steed, President of ForeverGreen Asia Pacific, has recently moved to Hong Kong to oversee the dynamic markets in the Far East.
“ForeverGreen Asia is experiencing unprecedented growth, and I jumped at the chance to play an active role in the build-out of one of the most dynamic, fast-paced regions in the world. With the product lines ForeverGreen currently has and some of those that we will be bringing to market in the near term, Asia represents a huge opportunity for us,” commented Mower Steed.
ForeverGreen is also seeing companywide sales growth, with August 2014 revenue (most recently reported) exceeding August 2013 sales by more than 300 percent.
“During August 2014, our sales exceeded $5 million for the third consecutive month,” said Jack Eldridge, CFO. “ForeverGreen is experiencing sales growth from every geographic region. We are continuing to meet or exceed our financial expectations and we are confident our sales will continue to accelerate quickly now that the summer months are done.”
LifeVantage Corp. (LFVN—NASDAQ), a company dedicated to helping people achieve healthy living through a combination of a compelling business opportunity and scientifically validated products, reported financial results for its fourth quarter and full fiscal year ended June 30, 2014.
Fourth Quarter Fiscal 2014
For the fourth fiscal quarter, the company reported revenue of $56.0 million, an increase of 8.8 percent compared to $51.5 million for the same period in fiscal 2013. Revenue for the quarter was negatively impacted $600,000, or 1.2 percent, by foreign currency fluctuation.
Operating income for the fourth fiscal quarter of 2014 was $4.8 million, generating an operating margin of 8.5 percent, compared to $200,000 and an operating margin of 0.5 percent in the same period last year. Operating income in the fourth fiscal quarter of 2013 included $3.3 million of one-time expenses.
Net income for the fourth fiscal quarter of 2014 was $2.4 million, or 2 cents per diluted share, calculated on 106 million fully diluted shares. This compares to a net loss of $200,000 in the fourth fiscal quarter of 2013, or zero cents per diluted share, calculated on 112 million fully diluted shares, including the aforementioned after tax-impact of one-time expenses.
Full Year Fiscal 2014
For the full year ended June 30, 2014, the company reported revenue of $214.0 million, compared to $208.2 million in fiscal year 2013. Revenue for fiscal year 2014 was also negatively impacted $10.4 million, or 5.0 percent, by foreign currency fluctuation.
Operating income for fiscal year 2014 was $19.5 million, generating an operating margin of 9.1 percent. This compares to operating income of $12.1 million, for an operating margin of 5.8 percent, in fiscal year 2013. Fiscal year 2013 operating income included approximately $8.3 million of one-time expenses associated with the company’s product recall. The remaining $3.3 million of expenses are associated with the aforementioned one-time costs.
Net income for fiscal year 2014 was $11.4 million, or 10 cents per diluted share, calculated on 112 million fully diluted shares, compared to $7.6 million, or 6 cents per diluted share for the prior year, including one-time expenses, calculated on 123 million fully diluted shares.
The company generated $12.1 million of cash flow from operations in fiscal year 2014, compared to $10.7 million in fiscal year 2013. The company’s cash and cash equivalents at June 30, 2014, were $20.4 million, compared to $26.3 million at the end of fiscal year 2013. The company repaid $16.2 million of debt during the year and throughout the year returned $46.2 million to shareholders in the form of share repurchases.
Immunotec Inc. (IMM—TSX VENTURE), a Canadian wellness company, released results for the three-month period ending on July 31, 2014. All amounts are noted in Canadian dollars unless otherwise indicated.
“In spite of the taxation challenges experienced by our industry in Mexico in the absence of clear laws, we are pleased to report year-to-date adjusted EBITDA of $3.8 million (US$3.4 million), reflecting continued leverage of our Canadian platform and our ability, via our direct-to-consumer model, to take advantage of significant growth opportunities in the U.S. and in Mexico,” said CEO Charles L. Orr.
“In 2010, we assumed control of the distribution channel in Mexico and, as a result, we have built a growing and sustainable business in that country. While business opportunities remain significant in Mexico, more importantly, we are confident in our ability to replicate our success in other countries in upcoming years.”
Revenues in the three-month period reached $22.3 million (US$20.0 million) compared to $14.4 million (US$12.9 million) for the same period in the previous year, representing an increase of 55.0 percent. The increase in revenues was due primarily to sales momentum in Mexico and the U.S. with currency-adjusted growth, respectively, of 99.4 percent and 27.0 percent.
For the three-month period, adjusted EBITDA was $1.7 million (US$1.5 million) compared to $700,000 (US$626,000) in the same period in the previous year, representing an increase of 151.7 percent over the same period in the previous year. This increase primarily reflects an improved product mix combined with operational leverage and is partially offset by higher field incentives reflecting the upfront costs related to new consultants.
Net loss for the three-month period ended July 31, 2014, totaled $4.3 million (US$3.8 million), as compared to a net loss of $100,000 (US$89,000) for the same period in the previous year. Total basic and fully diluted (loss) profit per common share for the three-month period ended July 31, 2014, was (6 cents) (US 5 cents), as compared to (zero cents) in the same period in the previous year.
Direct Selling News has accumulated this information from public sources, including press releases and SEC filings. The information is presumed accurate and reliable. However, it is not an endorsement of any investment opportunity. Proper and considerable due diligence should be completed before making any investment.