eDiets.com, Inc. (NASDAQ: DIET), a leading
provider of convenient at-home diet, fitness and healthy lifestyle
solutions, today announced results for the second quarter ended
June 30, 2011.
Revenues for the second quarter of 2011 were $5.9 million, an
increase of approximately 9% from $5.4 million in the second
quarter of 2010. The net loss for the second quarter of 2011 was
$(0.9) million, or $(0.07) per diluted share on approximately 12.8
million shares outstanding, compared to a net loss of $(34.6)
million, or $(3.76) per diluted share on approximately 9.2 million
shares outstanding, in the second quarter of 2010. Results for the
second quarter of 2010 include a non-cash, impairment charge of
$6.9 million, or $0.75 per diluted share, and a non-cash charge of
$24.0 million, or $2.61 per diluted share, for the write-off of
total debt discounts and additional interest expense as a result of
the reduction in conversion prices associated with the conversion
of the Company's senior secured notes into common stock.
Adjusted EBITDA*, defined as net profit/loss before interest,
taxes, depreciation, amortization, stock-based compensation,
severance charges, and bad debt recovery or expense, for the
quarter ended June 30, 2011 was $(0.1) million, compared to $(1.9)
million in the second quarter of 2010.
For the six months ended June 30, 2011, the Company recorded
revenues of $12.9 million compared to $10.5 million for the same
period last year. The net loss was $(1.2) million, or $(0.10) per
share for the first six months of 2011, compared to $(38.4)
million, or $(5.49) per share, for the first six months of 2010.
Results for the first six months of 2010 include the aforementioned
non-cash, impairment charge of $6.9 million, or $0.98 per diluted
share, and the non-cash charge of $24.0 million, or $3.43 per
diluted share, for the write-off of total debt discounts and
additional interest expense as a result of the reduction in
conversion prices associated with the conversion of the Company's
senior secured notes into common stock. Adjusted EBITDA for the
first half of 2011 totaled $0.1 million compared to $(3.6) million
in the comparable prior year period.
Second Quarter and Recent Operating
Highlights:
- Grew meal delivery revenue 35% in the second quarter of 2011
compared to the second quarter of 2010
- Expanded the adjusted meal delivery gross margin* (excluding
depreciation) to 44% from 39% in the second quarter of 2010
- Improved meal delivery customer retention for active customers
to 11.7 weeks, up from approximately 9.5 weeks in the second
quarter of 2010
- Completed rights offering to holders of common stock on May 13,
with gross proceeds of approximately $2.0 million
- Effected 1-for-5 reverse stock split of its common stock on
June 1, reducing share count to approximately 13.2 million
"We are pleased with our second quarter performance and the
progress it represents toward achieving our goals," said Kevin
McGrath, President and Chief Executive Officer of eDiets.com. "As
anticipated, our second quarter revenue was up modestly
year-over-year and our loss from operations showed significant
improvement as we emphasized both cost controls and productivity
initiatives in our meal delivery business. In fact, our adjusted
EBITDA loss in the second quarter was significantly less than we
expected. A major contributor to our second quarter performance as
compared to last year was continued improvements in our call center
conversion rate for meal delivery. In addition, we selectively
tested a number of initiatives in the marketing arena, including
print advertising, to enable us to better target potential
customers at a lower cost per acquisition and are encouraged by the
initial results. We intend to use these findings to develop an
integrated television, print and online media campaign in advance
of the January diet season."
Mr. McGrath continued, "We are committed to demonstrating that
we can scale the business in 2011 and, as a result, we will
continue to maintain a disciplined cost structure relative to our
revenue run rates. As we've previously noted, we anticipate
negative adjusted EBITDA in the third quarter as we execute our
planned marketing initiatives and ramp our ad spend in the
fall."
Conference Call The company will host a
conference call to discuss the second quarter 2011 results at 5:00
p.m. Eastern Time on Thursday, August 11, 2011. Participants may
access the call by dialing 800-320-2978 (domestic) or 617-614-4923
(international), passcode 70241084. In addition, the call will be
webcast via the Investor Relations section of the company's web
site at http://www.eDiets.com, where it will also be archived. A
telephone replay will be available through Thursday, August 18,
2011. To access the replay, please dial 888-286-8010 (domestic) or
617-801-6888 (international), passcode 16571607.
About eDiets eDiets.com, Inc. is a leading
provider of personalized nutrition, fitness and weight-loss
programs. eDiets features its award-winning, fresh-prepared diet
meal delivery service as one of the more than 20 popular diet plans
sold directly to members on its flagship site, www.eDiets.com. The
company also provides a broad range of customized wellness and
weight management solutions for Fortune 500 clients. eDiets.com's
unique infrastructure offers businesses, as well as individuals, an
end-to-end solution strategically tailored to meet its customers'
specific goals of achieving a healthy lifestyle. For more
information, please call 310-954-1105 or visit www.eDiets.com.
* Use of Non-GAAP Financial Measures
In its earnings releases, conference calls, slide presentations
or webcasts, the Company may use or discuss adjusted EBITDA and
adjusted Meal Delivery gross margin, which are non-GAAP financial
measures as defined by SEC Regulation G. Management regularly
reviews adjusted EBITDA as an analytical indicator of the Company's
financial performance and believes that it is useful to investors
in evaluating operating performance. In addition, the Company uses
adjusted EBITDA as a measure of performance for its business
segments and for incentive compensation purposes. The Company does
not intend for adjusted EBITDA to be considered in isolation or as
a substitute for any GAAP measure. The Company believes that
Adjusted Meal Delivery Gross Margin is a useful measure of the
performance of our meal delivery business. Adjusted EBITDA and
Adjusted Meal Delivery Gross Margin, as presented, may not be
comparable to similarly titled measures of other companies.
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
(in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2011 2010 2011 2010
--------- --------- --------- ---------
Net loss $ (851) $ (34,602) $ (1,234) $ (38,361)
Interest expense (income),
includes capital lease int.
exp. 1 1 2 1
Interest expense on related
party notes 12 621 24 1,438
Amortization of related party
notes - 567 - 1,291
Interest expense incurred with
debt conversion - 23,961 - 23,961
Income tax provision (benefit) (4) - (4) -
Depreciation 151 362 416 724
Amortization of intangibles 3 12 7 24
Impairment of goodwill and
intangible assets - 6,865 - 6,865
Stock-based compensation 594 294 876 472
Bad debt expense (recovery) (6) (17) (7) (6)
Non-cash severance charges 12 - 67 -
--------- --------- --------- ---------
Adjusted EBITDA $ (88) $ (1,936) $ 147 $ (3,591)
========= ========= ========= =========
Adjusted Meal Delivery Gross Margin
(Unaudited)
(in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2011 2010 2011 2010
------------------------------------------
Revenue - meal delivery $ 4,755 $ 3,526 $ 10,301 $ 6,523
Interest expense (income),
includes capital lease int. exp. 2,739 2,344 5,890 4,356
Less: cost of revenue adjustments
for meal delivery
Depreciation (76) (205) (218) (401)
Revenue sharing - (3) (1) (9)
--------- --------- --------- ---------
Cost of revenues - adjusted 2,663 2,136 5,671 3,946
--------- --------- --------- ---------
Adjusted meal delivery gross
profit $ 2,092 $ 1,390 $ 4,630 $ 2,577
========= ========= ========= =========
Adjusted meal delivery gross
margin percentage 44.0% 39.4% 44.9% 39.5%
========= ========= ========= =========
Forward-Looking Statements In accordance
with the Private Securities Litigation Reform Act of 1995, we
caution you that, whether or not expressly stated, certain
statements made in this news release that reflect management's
expectations regarding future events and economic performance are
forward-looking in nature and, accordingly, are subject to risks
and uncertainties. This news release contains forward-looking
statements about the Company including (i) expectations regarding
the development of an integrated television, print and online media
campaign in advance of the January diet season; (ii) our
expectations regarding our cost structure relative to our revenue
run rates, and (iii) our expectations regarding our adjusted EBITDA
in the third and fourth quarter of 2011. This information is
qualified in its entirety by cautionary statements and risk factor
disclosures contained in the Company's Securities and Exchange
Commission filings, including the Company's annual report on Form
10-K filed with the Commission on March 31, 2011. The Company
wishes to caution readers that certain important factors may have
affected and could in the future affect the Company's actual
results and could cause the Company's actual results for subsequent
periods to differ materially from those expressed in any
forward-looking statement made by or on behalf of the Company. With
respect to the Company's expectations regarding all of these
statements such risk factors include, but are not limited to: (1)
our ability to raise additional capital; (2) our ability to
maintain compliance with applicable regulatory requirements; (3)
our ability to maintain our listing of our common stock under The
Nasdaq Capital Market; (4) our ability to attract and retain
customers in a profitable manner through advertising, and our
ability to secure advertising commitments; (5) our ability to
accurately assess market demand for our products; (6) our ability
to improve our meal delivery margin and its effect on total gross
margins; (7) our ability to sufficiently increase our revenues and
maintain expenses and cash capital expenditures at appropriate
levels; and (8) the state of the credit markets and capital
markets, including the level of volatility, illiquidity and
interest rates.
eDiets.com, Inc. Summary of Consolidated Financial Information
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2011 2010 2011 2010
--------- --------- --------- ---------
Revenues:
Digital plans $ 671 $ 1,018 $ 1,442 $ 2,058
Meal delivery 4,755 3,526 10,301 6,523
Business-to-business 317 674 711 1,390
Other 206 218 425 483
--------- --------- --------- ---------
Total revenues 5,949 5,436 12,879 10,454
Cost and expenses:
Cost of revenue
Digital plans 63 141 150 306
Meal delivery 2,739 2,344 5,890 4,356
Business-to-business 34 27 67 59
Other 25 52 75 95
--------- --------- --------- ---------
Total cost of revenue 2,861 2,564 6,182 4,816
Technology and development 293 852 610 1,704
Sales, marketing and support 2,465 3,329 5,225 6,306
General and administrative 1,169 1,267 2,067 2,409
Amortization of Intangibles 3 12 7 24
Impairment of goodwill and
intangible assets - 6,865 - 6,865
--------- --------- --------- ---------
Total cost and expenses 6,791 14,889 14,091 22,124
--------- --------- --------- ---------
Loss from operations (842) (9,453) (1,212) (11,670)
Interest income - 1 - 2
Interest expense (13) (1,189) (26) (2,732)
Interest expense incurred with
debt conversion - (23,961) - (23,961)
--------- --------- --------- ---------
Loss before income tax provision (855) (34,602) (1,238) (38,361)
Income tax benefit (provision) 4 - 4 -
--------- --------- --------- ---------
Net loss $ (851) $ (34,602) $ (1,234) $ (38,361)
========= ========= ========= =========
Loss per common share:
Basic and diluted $ (0.07) $ (3.76) $ (0.10) $ (5.49)
========= ========= ========= =========
Weighted average common and
common equivalent shares
outstanding:
Basic and diluted 12,755 9,197 12,342 6,983
========= ========= ========= =========
Six Months Ended June 30,
--------------------------
2011 2010
------------ ------------
STATEMENT OF CASH FLOW DATA:
Net cash provided by (used in):
Operations $ (516) $ (3,852)
Investing (92) (315)
Financing 3,224 5,513
June 30, December 31,
2011 2010
------------- ------------
BALANCE SHEET DATA:
Cash and cash equivalents $ 3,084 $ 468
Total assets 5,359 3,596
Deferred revenue 1,010 1,428
Debt (excluding capital
leases) 1,000 1,000
Stockholders' equity (deficit) 812 (1,970)
Investor Relations Contact: John Mills ICR, Inc. 310-954-1105
John.Mills@icrinc.com
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