BY: Nicole Shan, Muen Yue Presented: April 30th, 2019

Agenda Introduction Industry Overview Company Overview Macroeconomic Overview Financial Analysis Valuation Recommendation

Introduction

Introduction Selection Criteria Watching List Company Small-Medium Size Growing Company Company Medifast, Inc (MED) Industry Weight Loss Service Life Cycle Stage Mature (US) Growth (Asia) Market Cap 1.84 Billion Shares Outstanding 12.08 Million Stock Price (as of 04/29/2019) $154.75 52 week range $95.88-260.98 P/E Ratio (TTM) 33.50 Forward Dividend 3.00

Introduction Aug 2 2Q18 Earnings Revenue 55% EPS 84% Jul 23, 2018 Mar 6, 2018 4Q17 Earnings Full Year Revenue Increased by 10% May 3, 2018 1Q18 Earnings Revenue Increased by 40% EPS 98% Jul 23, 2018 New Product Aug 2 2Q18 Earnings Revenue 55% EPS 84% Nov 7, 2018 3Q18 Earnings Revenue 80% EPS 107% Stock Price: -29% Introduction 3q18 outlook 120-125 million, EPS 1.05-1.10 139.2 million, eps 1.14 Stock price 212-151 Source: Yahoo Finance

Industry Overview

Industry Background - Weight Loss Service Industry Definition: Provide nonmedical services to clients and assist these individuals with losing or maintain a desired weight. Distribution model: Direct Selling Markets: US and Asia Pacific (Singapore and Hong Kong) Food Safety: Scientifically-valid, consumer-centric, high quality innovations for lasting health

Industry Performance Key External Driver: Growing number of overweight or obese citizens Healthy eating trend New market coverage in Asia Pacific Online services Target demographic is women ages 30-50 who wish to lose 20-30 pounds and who have tried and failed to achieve and maintain their healthy weight previously. Overweight is defined as body mass index (BMI) ≥ 25.0 but <30.0; BMI was calculated from self-reported weight and height (weight [kg]/ height [m²]). Source: https://www2.deloitte.com/content/dam/Deloitte/global/Documents/cb-2018-health-wellness-report-new.pdf https://www.cdc.gov/nccdphp/dnpao/data-trends-maps/index.html

Weight Loss Apps Fitness Center Hospital and Clinics Competition Peer Competition

M&A Trend EV/Sales 703.9 $1,337.4 ($111.45) $985.46 ($82.12) 89.2 Date Announced Acquirer Target EV/Sales EV/EBITDA 12/10/2018 1.9x 15.2x 10/06/2017 1.4x 8.1x 703.9 $1,337.4 ($111.45) $985.46 ($82.12) 89.2 $1355.84 ($112.99) $722.52 ($60.21) 2019F High Bound Low Bound EV/Sales EV/EBITDA US$ in Million Nutrisystem revenue growth rate 12.6%, 14.8%, 17.9%, 27.8%, (0.8%) Omega revenue growth rate 26.3%, 16.4%, 8.8%, (11.9%)

Direct Selling 2017 Direct Selling Business Activity Direct selling industry is regulated by various national, state and local government agencies, but generally do not include “bright line” rules and are inherently fact-based and subject to interpretation. 2017 Direct Selling Business Activity Source: https://www.dsa.org/docs/default-source/research/dsa_2017_factsanddata_2018.pdf

Market Strategy United States: Concentrate on building direct sales network in regions where the company is currently under-represented. Word of mouth and social media marketing toward increasingly younger demographics. Asia Pacific: Singapore and Hong Kong as gateway. Highest CAGR of 7.1%, compared with 4.3% globally. USANA Revenue Source: https://www.dairygold.ie/blog/its-about-your-health-and-wellness-5-key-trends-we-see-in-dairy-nutrition/ Euromonitor, Marketdata, LLC USANA 10-K, https://ir.usana.com/sec-filings/annual-reports/content/0001047469-19-000707/0001047469-19-000707.pdf

Business Overview

9 Wholly Owned Subsidiaries Overview Company Introduction 9 Wholly Owned Subsidiaries Medifast Inc. is a leading manufacturer and distributor of clinically proven healthy living products and programs The company manufactures weight loss, weight management, and other consumable health and nutritional products Focuses on four major businesses: nutrition, diagnostics, pharmaceutical, medical devices. Founded in 2980, based in Baltimore, Maryland Jason Pharmaceutical Inc OPTAVIA, LLC Jason Enterprises, Inc., Medifast Franchise Systems (“MFSI”), Inc., Jason Properties, LLC Medifast Nutrition, Inc., Seven Crondall Associates, LLC, Performance Products, LLC Corporate Events, Inc. Source: Company 2018 Annual Report; Capital IQ

Business Philosophies & Highlights +61% Number of Active Earning Coaches (Q4 2017 – Q4 2018) +26% of Net Sales Per Active Earning Coach (Q4 2017 – Q4 2018) +66% in Revenue (2017-2018) +74% Operating Income from 2017 to 2018 +102 % Diluted EPS from 2017 to 2018 Holistic approach to improve overall health and wellness Coach and community support clinically demonstrated to contribute meaningfully to success An effective lifestyle solution for people for whom diets have previously failed Empowering a new attitude towards food Lifelong transformation supported through the incorporation of Healthy Habits Source: Company Presentation

Products Easy-to-follow program that delivers fast results for busy people 30 day kits & Gluten Free kits 5 Medifast Meals + 1 lean and green meal each day Select Kit: lose weight while enjoying 4 Medifast Meals, 2 lean and green meals and 1 healthy snack each day Complete Kit: includes supplements - benefiting the digestive and heart health. Adding a 30-day Probiotic and Omega-3 supplement bundle Source: Company Website

Multiple Channels of Distribution OPTAVIA is the personal coaching unit of Medifast Direct to consumer business unit through word-of-mouth communication and personal one-on-one coaching This coach community is made up of OPTAVIA Coaches, who are independent contractors and trained to provide coaching and support to clients utilizing the OPTAVIA platform Provide online product and program information, tools and support, and access to our registered dieticians Future growth of the Company primarily depends on the growth of the OPTAVIA Coaches worldwide Direct to consumer business unit through our website and in-house call centers customers order Medifast products directly through the Company’s website, www.medifastnow.com or our in-house call center Upon request, customers can also be connected to an OPTAVIA Coach digital advertising, direct mail, email, public relations, word of mouth referrals, social media initiatives, and other means as deemed appropriate bricks and mortar-based customer support centers offering a fee-based consultation service and Medifast-branded products sells product through franchise and reseller locations These locations offer structured programs and a team of professionals to help customers achieve weight-loss and weight-management success at center locations Medifast Wholesale discontinued in 2017 Source: Company Website;

Revenue Segment Source: Company 2017 Annual Report

OPTAVIA Circle for Growth Strategy Launch in Hong Kong, Singapore gateway markets by June 30, 2019 Building global presence of successful optimal weight loss plans Nutrition Hydration Sleep Movement Accelerate our repeatable business rhythm Mobile app-based platform Improve use of data analytics Capitalize on OPTAVIA Brand and compelling health and wellness message Streamline the coach experience Accelerate Coach Success Utilize Technology to Optimize Effectiveness Expand Segments & Geographies Drive Product Innovation OPTAVIA Circle for Growth Growth Strategy Source: Company presentation;

SWOT Analysis SWOT Analysis Strength Opportunities Weakness Threats Leadership position in the market Strong distribution network Successful track record of developing new products – product innovation. Weakness Less new technologies lack of choice Not very good at product demand Opportunities Global Expansion Merger & Acquisition Threats Intense Competition High Uncertainty in new markets Source: Company website; Annual report 2018

Financial Analysis

Financial Analysis Sales Revenue Growth Gross Profit Growth EBIT Growth Gross Margin % EBITDA Margin % EBIT Margin % Source: Capital IQ

Financial Ratios & Dupont Analysis Short-term Liquidity Profitability

Valuation

Valuation-Comparable Comps WW International (NYSE:WW), formerly known as Weight Watchers International Inc, is an American company that offers various products and services to assist in healthy habits, including weight loss and maintenance, fitness, and mindset. It delivers its program in three combined ways: online via its mobile app and website, coaching online or by phone, and optional in-person meetings around the world. Mkt. Cap($MM)- 1,202 Rev.($MM)- 1,514.1 EBITDA($MM)- 433.0 P/E- 16.5x Herbalife Nutrition (NYSE:HLF) is a global multi-level marketing corporation that develops, markets, and sells dietary supplements, weight management, sports nutrition, and personal-care products. The company operates in 94 countries through a network of approximately 3.2 million independent distributors. Mkt. Cap($MM)- 7,493.5 Rev.($MM)- 4,891.8 EBITDA($MM)- 783.5 P/E-47.5x Usana Health Sciences, Inc., (NYSE:USNA) is a Utah-based multi-level marketing company that produces various nutritional products, dietary supplements and skincare products. Usana products, most of which are manufactured at the company’s West Valley City facility, are sold in 24 countries[1] via a network of independent distributors Mkt. Cap($MM)- 1,934.1 Rev.($MM)- 1,189.2 EBITDA($MM)- 204.5 P/E-32.9x VIVUS (NASDAQ:VVUS), aims to provide the solutions of obesity, sleep and other health issues. Vivus also developed an obesity drug, Qnexa (now called Qsymia), a combination of phentermine and topiramate, two existing weight-loss drugs Mkt. Cap($MM)-38.7 Rev.($MM)-65.1 EBITDA($MM)- 7.4 P/E-NA Source: Yahoo Finance, Capital IQ

Valuation-Comparable Comps Source: Capital IQ

Valuation-Comparable Comps Source: Capital IQ

Valuation-Comparable Comps   Enterprise Value / Price / Sales EBITDA EBIT EPS Company Ticker 2018 2019E 2020E WW International WW 1.8x 1.95x 1.88x 6.3x 8.73x 8.17x 0.0x 5.6x 13.65x 10.58x Herbalife Nutrition HLF 1.71x 1.64x 11.2x 10.71x 9.83x 0.1x 26.5x 16.49x 14.18x Usana Health Sciences, Inc USNA 1.4x 1.34x 1.22x 8.1x 7.91x 6.82x 0.4x 16.2x 15.98x 13.50x VIVUS VVUS 3.4x 3.39x 3.22x 30.0x -2.4x 0.00x Medifast MED 3.1x 2.28x 21.2x 14.76x 11.91x 2.0x 30.3x 22.22x 17.79x Maximum 3.2x 14.8x 11.9x 22.2x 17.8x 75th Percentile 2.3x 1.9x 10.7x 9.8x 16.5x 14.2x Median 8.7x 8.2x 16.0x 13.5x Mean 2.1x 15.4x 8.4x 7.3x 15.7x 13.7x 25th Percentile 1.7x 1.6x 7.9x 6.8x 13.6x 10.6x Minimum 1.3x 1.2x $184.3 Source: Capital IQ

New Market with High Uncertainty Revenue Driver: Continuous of US Market Miracle New Market Coverage in Hong Kong and Singapore YoY % Growth 2014 2015 2016 2017 2018 2019F 2020F Long-Term Revenue (Model*) -12% -4% 1% 10% 66% 41% 21% 8% Revenue (Official) 40%-44% N/A 25% Expense Driver: Commissions Fee increased faster than revenue growth New Market Marketing Expense % of Revenue 2014 2015 2016 2017 2018 2019F 2020F Long-Term Operating Expense (Model) -12% -4% 1% 10% 66% 64% 62% Commissions (Official) 30.0% 30.6% 33.7% 35.6% 39.6% N/A 43% Other SG&A (Official) 32.7% 31.4% 26.8% 22.4% 18% * Model means the downside case of our model

Other Risks Direct Selling Regulation Food Safety and Brand Reputation (Highly rely on word of mouth marketing) New Market Performance Uncertainty related to contract coaches

DCF Valuation (Downside Case) Target Price: $176.42 - 199.65 - 203.99 Current Price (April 29): $154.75 Discount Rate WACC 8% Terminal Growth Rate 3% Terminal Value 1.57 Billion Discount Rate 13% Shares Outstanding 12.08 Million

Recommendation

Recommendation Range: $184 - $200 Current Price: $155 Valuation Reasons Recommendation Range: $184 - $200 Current Price: $155 New Market Opportunity Leading Position in industry Regulation Risk Market Uncertainty Size of Our Portfolio Buy 80 shares @ market

Recommendation SELL 1,000 @ market