eDiets.com, Inc. (NASDAQ: DIET), a leading
provider of convenient at-home diet, fitness and healthy lifestyle
solutions, today announced results for the third quarter ended
September 30, 2011. Revenues for the third quarter of 2011 were
$4.5 million, a decrease of approximately 25% from $6.0 million in
the third quarter of 2010. The net loss for the third quarter of
2011 was $(1.5) million, or $(0.11) per diluted share on
approximately 13.3 million shares outstanding, compared to a net
loss of $(3.6) million, or $(0.32) per diluted share on
approximately 11.5 million shares outstanding, in the third quarter
of 2010.
Adjusted EBITDA*, defined as net profit/loss before interest,
taxes, depreciation, amortization, impairment, stock-based
compensation, debt recovery or expense, and non-cash severance
charges for the quarter ended September 30, 2011 was $(1.1)
million, compared to $(2.7) million in the third quarter of
2010.
For the nine months ended September 30, 2011, the Company
recorded revenues of $17.4 million compared to $16.5 million for
the same period last year. The net loss was $(2.7) million, or
$(0.22) per share for the first nine months of 2011, compared to
$(42.0) million, or $(4.94) per share, for the first nine months of
2010. Results for the first nine months of 2010 include a non-cash,
impairment charge of $6.9 million, or $0.81 per diluted share, and
a non-cash charge of $24.0 million, or $2.82 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 nine months
of 2011 totaled $(1.0) million compared to $(6.3) million in the
comparable prior year period.
Third Quarter and Recent Operating
Highlights:
- Signed two-year licensing renewal agreement with NBC Universal
and Reveille LLC for Biggest Loser Meal Delivery Plan
- Appointed Robert Smedley as Senior Vice President of Sales and
Member Services
- Improved meal delivery customer retention for active customers
to 11.8 weeks, up from approximately 8 weeks in the third quarter
of 2010
- Expanded the adjusted meal delivery gross margin* (excluding
depreciation) to 42% from 41% in the third quarter of 2010
- Meal delivery advertising efficiency, defined as the ratio of
meal delivery ad spend divided by meal delivery revenue, improved
to 38% from 54% in the third quarter of 2010
"During the third quarter, we continued to maintain a
conservative approach toward spending on customer acquisition,"
said Kevin McGrath, President and Chief Executive Officer of
eDiets.com. "While this decrease in advertising expense resulted in
fewer new customers and lower revenues than the prior year, our
higher operating efficiencies enabled us to significantly improve
our EBITDA loss from the third quarter of 2010. In this regard,
sales conversion improved significantly during the third quarter.
We remain focused on driving sales through new marketing
initiatives and we continue to test and refine our advertising in
advance of the 2012 diet season. In October, we introduced a home
page redesign, which has shown encouraging initial results in
further increasing our overall conversion to sales. In addition, we
renewed our partnership with NBC Universal and Reveille LLC for The
Biggest Loser Meal Plan and we are scheduled to be integrated into
the reality show in November 2011 and January 2012."
Mr. McGrath continued, "For the fourth quarter, we are
anticipating a decrease in revenue and EBITDA from the same period
last year due to the carryover effect of the lower third quarter
customer base, higher call center expense, and weak demand during
the holiday season. However, given the ongoing improvements in our
call center, we are confident that we can continue to improve our
advertising efficiency and conversion to sales. We look forward to
continuing our progress with these metrics in 2012."
This press release introduces advertising efficiency, which the
Company believes is a useful metric for assessing operating
performance. Advertising efficiency is the amount spent on media
during a period, including amounts spent on television, online and
print media spending, divided by net revenue received during the
same period.
Conference Call The Company will host a
conference call to discuss the third quarter 2011 results at 5:00
p.m. Eastern Time on Monday, November 14, 2011. Participants may
access the call by dialing 877-299-4454 (domestic) or 617-597-5447
(international), passcode 38668545. 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 Monday, November 21,
2011. To access the replay, please dial 888-286-8010 (domestic) or
617-801-6888 (international), passcode 17540455.
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.
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 2012 diet season; (ii) expectations
regarding the results of our redesigned home page, (iii)
expectations regarding the impact of changes to our call center on
advertising efficiency; and (iv) expectations regarding our
adjusted EBITDA in the 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.
* 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 and Meal Delivery Advertising Efficiency are useful
measures of the performance of our meal delivery business. Adjusted
EBITDA, Adjusted Meal Delivery Gross Margin and Meal Delivery
Advertising Efficiency, 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 Nine Months Ended
Sept. 30, Sept. 30,
-------------------- --------------------
2011 2010 2011 2010
--------- --------- --------- ---------
Net loss $ (1,503) $ (3,647) $ (2,737) $ (42,008)
--------- --------- --------- ---------
Interest expense (income),
includes capital lease int.
exp. 1 1 2 2
--------- --------- --------- ---------
Interest expense on related
party notes 12 - 37 1,438
--------- --------- --------- ---------
Amortization of related party
notes - - - 1,291
--------- --------- --------- ---------
Interest expense incurred with
debt conversion - - - 23,961
--------- --------- --------- ---------
Loss on extinguishment of
related party debt - 213 - 213
--------- --------- --------- ---------
Income tax provision (benefit) - (1) (4) (1)
--------- --------- --------- ---------
Depreciation 97 413 513 1,136
--------- --------- --------- ---------
Amortization of intangibles 4 4 11 27
--------- --------- --------- ---------
Impairment of goodwill and
intangible assets - - - 6,865
--------- --------- --------- ---------
Stock-based compensation 260 293 1,136 765
--------- --------- --------- ---------
Bad debt expense (recovery) (3) (8) (10) (15)
--------- --------- --------- ---------
Non-cash severance charges - - 67 -
--------- --------- --------- ---------
--------- --------- --------- ---------
Adjusted EBITDA $ (1,132) $ (2,732) $ (985) $ (6,326)
========= ========= ========= =========
Adjusted Meal Delivery Gross Margin
(Unaudited)
(in thousands)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
-------------------- --------------------
2011 2010 2011 2010
--------- --------- --------- ---------
Revenue - meal delivery $ 3,542 $ 4,313 $ 13,843 $ 10,836
--------- --------- --------- ---------
Cost of revenues - meal delivery 2,082 2,767 7,972 7,123
--------- --------- --------- ---------
Less: cost of revenue
adjustments for meal delivery
Depreciation (36) (216) (254) (618)
--------- --------- --------- ---------
Revenue sharing - (1) (1) (10)
--------- --------- --------- ---------
--------- --------- --------- ---------
Cost of revenues - adjusted 2,046 2,550 7,717 6,495
--------- --------- --------- ---------
--------- --------- --------- ---------
Adjusted meal delivery gross
profit $ 1,496 $ 1,763 $ 6,126 $ 4,341
========= ========= ========= =========
Adjusted meal delivery gross
margin percentage 42.2% 40.9% 44.3% 40.1%
========= ========= ========= =========
Meal Delivery Advertising Efficiency
(Unaudited)
(in thousands)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
-------------------- --------------------
2011 2010 2011 2010
--------- --------- --------- ---------
Advertising Spend - meal
delivery $ 1,349 $ 2,306 $ 4,004 $ 5,730
--------- --------- --------- ---------
Revenue - meal delivery $ 3,542 $ 4,313 $ 13,843 $ 10,836
========= ========= ========= =========
Advertising Efficiency - meal
delivery 38.1% 53.5% 28.9% 52.9%
========= ========= ========= =========
eDiets.com, Inc.
Summary of Consolidated Financial Information
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2011 2010 2011 2010
--------- --------- --------- ---------
Revenues:
Digital plans $ 595 $ 912 $ 2,037 $ 2,970
--------- --------- --------- ---------
Meal delivery 3,542 4,313 13,843 10,836
--------- --------- --------- ---------
Business-to-business 223 597 934 1,987
--------- --------- --------- ---------
Other 180 191 605 674
========= ========= ========= =========
Total revenues 4,540 6,013 17,419 16,467
--------- --------- --------- ---------
Cost and expenses:
Cost of revenue
Digital plans 53 115 203 421
--------- --------- --------- ---------
Meal delivery 2,082 2,767 7,972 7,123
--------- --------- --------- ---------
Business-to-business 12 36 79 95
--------- --------- --------- ---------
Other 11 47 86 142
========= ========= ========= =========
Total cost of revenue 2,158 2,965 8,340 7,781
--------- --------- --------- ---------
Technology and development 247 706 857 2,410
--------- --------- --------- ---------
Sales, marketing and support 2,633 4,546 7,858 10,852
--------- --------- --------- ---------
General and administrative 988 1,227 3,055 3,636
--------- --------- --------- ---------
Amortization of Intangibles 4 3 11 27
--------- --------- --------- ---------
Impairment of goodwill and
intangible assets - - - 6,865
========= ========= ========= =========
Total cost and expenses 6,030 9,447 20,121 31,571
========= ========= ========= =========
Loss from operations (1,490) (3,434) (2,702) (15,104)
--------- --------- --------- ---------
Interest income - - - 2
--------- --------- --------- ---------
Interest expense (13) (1) (39) (2,733)
--------- --------- --------- ---------
Interest expense incurred with
debt conversion - - - (23,961)
--------- --------- --------- ---------
Loss on extinguishment of
related party debt - (213) (213)
========= ========= ========= =========
Loss before income tax provision (1,503) (3,648) (2,741) (42,009)
--------- --------- --------- ---------
Income tax benefit (provision) - 1 4 1
========= ========= ========= =========
Net loss $ (1,503) $ (3,647) $ (2,737) $ (42,008)
========= ========= ========= =========
Loss per common share:
Basic and diluted $ (0.11) $ (0.32) $ (0.22) $ (4.94)
========= ========= ========= =========
Weighted average common and
common equivalent shares
outstanding:
Basic and diluted 13,272 11,484 12,655 8,499
========= ========= ========= =========
Nine Months Ended September 30,
----------------------------------
2011 2010
---------------- ----------------
STATEMENT OF CASH FLOW DATA:
Net cash provided by (used in):
Operations $ (1,842) $ (5,589)
---------------- ----------------
Investing (103) (579)
---------------- ----------------
Financing 3,214 5,501
---------------- ----------------
September 30, December 31,
2011 2010
---------------- ----------------
BALANCE SHEET DATA:
Cash and cash equivalents $ 1,737 $ 468
---------------- ----------------
Total assets 3,965 3,596
---------------- ----------------
Deferred revenue 786 1,428
---------------- ----------------
Debt (excluding capital leases) 1,000 1,000
---------------- ----------------
Stockholders' deficit (314) (1,970)
---------------- ----------------
Investor Relations Contact: John Mills ICR, Inc. 310-954-1105
John.Mills@icrinc.com
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