What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2021-02-26 compared with 2020-03-02 · 249 added, 160 removed, 146 unchanged (74% of the section changed)

Medifast is the company behind one of the fastest-growing health and wellness communities called OPTA VIA ® , which offers Lifelong Transformation, One Healthy Habit at a Time ® .

Reflecting the success of its approach to health and wellness for its clients, Medifast has consistently grown revenue ahead of peers and competitors.

Of equal importance, our business model is expected to deliver long-term growth.

Medifast has redefined direct selling by combining the best aspects of the model, while eliminating those dimensions that have typically challenged other companies.

Medifast is often compared to diet and weight loss-only companies or to multi-level marketing companies, but our model is very different.

The company supports clients through independent OPTA VIA Coaches, majority of whom were clients first.

Our operations are conducted through our wholly owned subsidiaries, Jason Pharmaceuticals, Inc., OPTA VIA, LLC, Jason Enterprises, Inc., Jason Properties, LLC, Medifast Franchise Systems, Inc., Medifast Nutrition, Inc., Seven Crondall Associates, LLC, Corporate Events, Inc., OPTA VIA (Hong Kong) Limited, OPTA VIA (Singapore) PTE.

LTD and OPTA VIA Health Consultation (Shanghai) Co., Ltd.

OPTA VIA is a highly effective lifestyle solution for people for whom diets alone have failed.

Habits of Health ® , the approach developed by OPTA VIA Co-founder and independent OPTA VIA Coach, Dr.

Wayne Scott Andersen, combines clinically proven plans with scientifically developed products and the ongoing support of Coaches.

We sell a variety of weight loss, weight management and healthy living products all based on our proprietary formulas under the Medifast ® , OPTA VIA ® , Thrive by Medifast, Optimal Health by Take Shape for Life, and Flavors of Home ® brands.

Our product line includes more than 170 consumable options, including, but not limited to, bars, bites, pretzels, puffs, cereal crunch, drinks, hearty choices, oatmeal, pancakes, pudding, soft serve, shakes, smoothies, soft bakes, and soups.

The Thrive by Medifast and Optimal Health by Take Shape for Life lines include a variety of specially formulated bars, shakes, and smoothies for those who are maintaining their weight for long-term healthy living.

We identify opportunities to expand our product line by regularly surveying our clients and studying industry and consumer trends.

This allows us to introduce new, high quality products that meet consumer demand.

Our nutritional products are formulated with high-quality ingredients.

Products include individually portioned, calorie- and carbohydrate-controlled meal replacements that share a similar nutritional footprint and provide a balance of protein and good carbohydrates.

Our meal replacements are also fortified to contain vitamins and minerals, as well as other nutrients essential for good health.

We offer our OPTA VIA clients exclusive OPTA VIA-branded nutritional products, or “Fuelings,” and also offer a variety of other weight loss, weight management, and healthy living products under other brands.

OPTA VIA Fuelings come in a variety of flavors that appeal to a broad variety of tastes.

Our products are nutrient-dense, portion-controlled, nutritionally interchangeable and simple to use.

In March 2018, we announced a change in how our business is managed, operating performance is reviewed and resources are allocated.

As a result, beginning in the first quarter of 2018, we changed how we report financial performance to align with changes in the way we now manage the business and now operate and report as a single sales segment, OPTA VIA.

We previously disclosed entity-wide financial information for multiple segments (e.g.

OPTA VIA, Medifast Direct, Franchise Medifast Weight Control Centers and Medifast Wholesale).

Although we have one reportable segment we continue to market our products and programs through our Medifast Direct ecommerce platform and our Franchise Medifast Weight Control Center channels.

OPTA VIA encompasses our community of OPTA VIA Coaches, our OPTA VIA health and wellness programs, and our proprietary OPTA VIA-branded products.

The OPTA VIA Integrated Coaching Model is centered around providing focused, individualized attention to our clients.

Our OPTA VIA Coaches provide the support and encouragement for clients to successfully learn and adopt a more healthy lifestyle.

This clinically-proven plan translates into better client results when compared to programs that leave individuals to adopt and maintain healthy habits on their own.

Our clients receive personalized attention from our OPTA VIA Coaches who share, educate, motivate and pass along their passion for healthy living.

We believe this personal, direct-sales and service strategy is optimal for activating and supporting our

In a clinical study published in Obesity Science and Practice in 2018, the OPTA VIA model’s effectiveness was validated when its meal plan was combined with education and support from Coaches.

Our OPTA VIA Coaches are independent contractors, not employees, who support our clients and market our products and services primarily through word of mouth, email and via social media channels such as Facebook, Instagram, Twitter or Zoom.

As direct-sales entrepreneurs, OPTA VIA Coaches market our products to friends, family and other acquaintances with whom they have established strong relationships.

The entrepreneurial success of our OPTA VIA Coaches is the key to our success.

We are focused on scaling our OPTA VIA Integrated Coaching Model by offering economic incentives that are attractive to independent entrepreneurs and reflective of the new “gig economy.” Our successful clients frequently become enthusiastic health and wellness advocates themselves and choose to become OPTA VIA Coaches.

This process of clients becoming OPTA VIA Coaches underpins our growth.

The Coach model creates a continuous cycle of growth as clients become active earning OPTA VIA Coaches and activate new clients, many of whom also become Coaches.

Incentives are designed to support each client and Coach’s long-term success.

Coaches learn a simple success system to help candidates become clients.

Then Coaches provide their clients with the encouragement and inspiration they need at just the right time.

Becoming a Coach can help clients maintain their healthy weight as they become role models for their clients.

At the same time, OPTA VIA plays an important role in financial wellness, providing Coaches with the opportunity to improve their finances and change the health trajectory of families, communities and generations.

We manufacture the majority of our powder-based products at our manufacturing facility located in Owings Mills, Maryland and subcontract the production of all other products.

Substantially all OPTA VIA product sales are shipped directly to our clients who are working with an OPTA VIA Coach.

Medifast, Inc.

(“Medifast,” the “Company,” “we” or “us”) is the global company behind one of the fastest-growing health and wellness communities called OPTA VIA ® , which offers Lifelong Transformation, One Healthy Habit at a Time ® .

Reflecting the success of our holistic approach to health and wellness, we have consistently grown revenue over the past four years.

Of equal importance, we expect our differentiated model to deliver long-term growth in the foreseeable future.

Medifast has created a new business model by combining the most powerful aspects of direct selling, while eliminating those dimensions that have typically challenged other companies.

Medifast is often compared to diet and weight loss-only companies or to multi-level marketing companies, but our model is different.

We employ a differentiated direct-to-consumer sales model in which approximately 92.0% of our revenue comes from subscription-based meal-plan orders.

Our OPTA VIA brand offers a highly competitive and effective lifestyle solution centered on developing new healthy habits through smaller, foundational changes called micro-habits.

The program is built around four key components:

Independent OPTA VIA Coaches, the OPTA VIA Community, the Habits of Health® Transformational System, and Scientifically Developed Products and Clinically Proven Plans.

● Independent OPTAVIA Coaches:

Provide individualized support and guidance to clients on the path to optimal health and wellbeing.

● OPTA VIA Community :

A Community of like-hearted people providing each other with real-time connection and support.

● The Habits of Health® Transformational System:

A proprietary system which offers easy steps to a sustainably healthy lifestyle.

● Products & Plans:

Clinically proven plans and scientifically developed products, called “Fuelings,” backed by dietitians, scientists and physicians.

We help clients achieve their health goals through a network of more than 44,000 independent OPTA VIA Coaches, approximately 90.0% of whom were clients first, and have impacted almost 2.0 million lives to date.

OPTA VIA Coaches introduce clients to a set of healthy habits, in most cases starting with the habit of healthy eating, and offer exclusive OPTA VIA-branded nutritional products, or Fuelings.

Fuelings are nutrient-dense, portion-controlled, nutritionally interchangeable and simple to use.

They are formulated with high-quality ingredients and are fortified with probiotic cultures, vitamins and minerals, as well as other nutrients essential for good health.

Our products support the process of integrating healthy habits into their client’s day-to-day lives.

The OPTA VIA coaching model is client-centric and boasts an energized health and wellness community.

It promotes holistic health and wellness, and positions healthy weight as a catalyst to greater lifestyle changes.

OPTA VIA Coaches provide personalized support to their Clients and motivate them by sharing their passion for healthy living and lifestyle transformation.

We believe this personal coaching is an essential factor in client success based on findings from a clinical study published in Obesity Science and Practice in 2018 which validated the OPTA VIA model when its meal plan was combined with education and support consistent with that provided by OPTA VIA Coaches.

The entrepreneurial spirit of our OPTA VIA Coaches is another key to our success, as they create a continuous cycle of growth, activating new Clients, many of whom go on to become Coaches.

We offer economic incentives designed to support each Coach’s long-term success, which plays an important role in their financial wellness, providing the

opportunity to improve their finances while changing the health trajectory of families, communities and generations.

OPTA VIA Coaches are independent contractors, not employees, who support our clients and market our products and services primarily through word of mouth, email and via social media channels such as Facebook, Instagram, Twitter and video conferencing platforms.

As entrepreneurs, OPTA VIA Coaches market our products to friends, family and other acquaintances.

OPTA VIA products are shipped directly to OPTA VIA clients who are working with an OPTA VIA Coach.

OPTA VIA Coaches do not handle or deliver merchandise to clients.

This arrangement frees our OPTA VIA Coaches from having to manage inventory and allows them to maintain an arms-length transactional relationship while focusing their attention on support and encouragement.

Our success in creating the OPTA VIA community, and achieving the desired results for our clients, is reflected in the annual number of active earning OPTA VIA Coaches.

We measure our success by the results our clients are able to achieve.

The more OPTA VIA Coaches we have, the more clients we can serve.

The total number of active earning OPTA VIA Coaches as of December 31, 2020 was 44,200.

OPTA VIA’s success is further exemplified in our strong financial performance over the last several years.

As a result of our strategic investment in the introduction, marketing and development of our OPTA VIA brand, our OPTA VIA business accounted for 96.4% of our revenues for the year ended December 31, 2019.

Our revenues have been growing at a rapid pace.

Our growth is demonstrated by strong financial performance over the last several years.

We generated revenue of $934.8 million in 2020, $713.7 million in 2019 and $501.0 million in 2018, representing year-over-year increases of 31.0% in 2020 and 42.4% in 2019.

Income from operations was $134.2 million in 2020, $91.0 million in 2019 and $69.1 million in 2018, increases of 47.5% in 2020 and 31.8% in 2019.

(See “Selected Consolidated Financial Data.”)

Transparency is a core principal for our direct-sales business.

We adhere to the direct-selling industry’s highest ethical standards and best practices.

We are a member in good standing of the Direct Selling Association (“DSA”), a well-known and widely respected national trade association representing 120 direct selling companies in the United States.

As a member of the DSA, we underwent a comprehensive and rigorous review that included a detailed analysis of our direct-sales business model and practices.

We believe our continued investment, development and successes creating a robust community around our OPTA VIA brand and our OPTA VIA Integrated Coaching Model demonstrates a sustainable, repeatable business rhythm focused on our long-term goal and mission of offering the world Lifelong Transformation, One Healthy Habit at a Time.

As a result of our strategic investment in the development, introduction, and marketing of our OPTA VIA brand, our OPTA VIA business accounted for approximately 98.0% of our revenues for the year ended December 31, 2020.

We are one of the fastest growing health and wellness companies in the United States, with a large and growing market opportunity.

Our scalable coach-based approach drives both client success and growth.

We believe our continued investment in fostering a robust community around our OPTA VIA brand and our OPTA VIA Coaching Model will continue to drive a sustainable, repeatable business rhythm focused on our mission of offering the world Lifelong Transformation, One Healthy Habit at a Time.

Our operations are conducted through our wholly owned subsidiaries, Jason Pharmaceuticals, Inc., OPTA VIA, LLC, Jason Enterprises, Inc., Jason Properties, LLC, Medifast Franchise Systems, Inc., Seven Crondall Associates, LLC, Corporate Events, Inc., OPTA VIA (Hong Kong) Limited, OPTA VIA (Singapore) PTE.

LTD and OPTA VIA Health Consultation (Shanghai) Co., Ltd.

COVID-19 Update

In December 2019, a novel strain of coronavirus (“COVID-19”) was identified in Asia.

Over the next several months, COVID-19 quickly spread across the world.

In March 2020, the World Health Organization declared COVID-19 a worldwide pandemic.

As of February 2021, the virus continues to spread, infecting more than 110 million people worldwide, and impacting worldwide economic activity.

In response to the pandemic, many governments implemented policies intended to stop or slow the further spread of the disease, such as social distancing and shelter-in-place orders.

This has resulted in the temporary closure of schools and non-essential businesses.

Because the Company sells products that are essential to the daily lives of consumers, the COVID-19 pandemic has not had a material impact to our consolidated operating results for the year ended December 31, 2020.

While the duration and severity of this COVID-19 pandemic is uncertain, the extent to which the pandemic ultimately impacts the Company’s business, financial condition, results of operations, cash flows, and liquidity may differ from management’s current estimates.

The difference is due to inherent uncertainties regarding the duration and further spread of the outbreak, its severity, government actions taken to contain the virus or treat its impact, changes in consumer behavior resulting from the pandemic and how quickly and to what extent normal economic and operating conditions can resume.

1 OPTA VIA makes no guarantee of financial success.

1 unchanged sentence

Please see the OPTA VIA Income Disclosure Statement (http://bit.ly/ids OPTA VIA) for statistics on actual earnings of Coaches.

These uncertainties make it challenging for our management to estimate our future business performance.

However, we continue to actively monitor the impact of COVID-19 and related developments on our business.

Although the COVID-19 pandemic has impacted our business operations in multiple ways, our manufacturing facility remains fully operational to date and we have not experienced any meaningful disruption to our worldwide supply chain.

Additionally, nutritional supplements and health foods have been designated critical/essential infrastructure in the U.S.

and, as such, we have continued to actively manufacture and distribute our products in our markets around the world.

We will continue to communicate with our supply chain partners to identify and mitigate risk and to manage inventory levels.

While our manufacturing and distribution employees continue to work on site, they are following additional health and safety guidelines.

In response to the public health crisis posed by COVID-19, we took numerous actions, including:

● instituting enhanced safety protocols, limited visitation to our plant and distribution center and rolling out additional sick leave (crisis pay) for our onsite essential employees

● successfully implementing a work-from-home plan for all non-essential employees to comply with guidelines from government and health officials and also extended crisis pay;

● changing this year’s OPTA VIA convention from a live event in July to a virtual event;

● prioritizing production to our highest volume products limiting our stock keeping unit (“SKU”) assortment to ensure that we are able to meet anticipated product demand across core items;

● employing incentives and promotions to help OPTA VIA Coaches adjust to the adverse effect of overall economic conditions and the nationwide actions taken to control the spread of the virus;

● providing additional health and safety precautions in our headquarters, manufacturing and distribution centers, including use of personal protective equipment and frequent hand sanitization;

● process controls in relation to social distancing, visitors, travel and quarantine.

The Company’s priorities during the COVID-19 pandemic continue to be protecting the health and safety of our employees and OPTA VIA Coaches, and their families;

maximizing the availability of products that help consumers with their needs;

and the use of our employees’ talents and our resources to help society meet and overcome the current challenges.

The senior management team meets regularly to review and assess the status of the Company’s operations and health and safety of its various constituencies, and will continue to proactively respond to the situation and may take further actions that alter the Company’s business operations as may be required by governmental authorities, or that are determined to be in the best interests of employees, OPTA VIA Coaches and consumers.

Health & Wellness Consumers

We develop and market health and wellness products for consumers who want to lose weight and adopt a holistic approach to overall health and wellness.

According to the Center for Disease Control and Prevention (“CDC”), 71.6% of all adults in the United States aged 20 and above are overweight or obese in 2016.

We believe we offer these consumers a radically different approach to health, with weight loss and weight management serving as a catalyst to an overall improvement in health, confidence, vitality and general well-being.

We develop and market products for consumers who want to lose weight and adopt a holistic approach to overall health and wellness.

According to the Center for Disease Control and Prevention (“CDC”), over 70.0% of all adults in the United States (US) aged 20 and above were overweight or obese in 2017-2018, and is growing at approximately 2.0% per annum.

According to a proprietary analysis, the addressable market for weight loss is large and growing.

It’s worth about $20.0 billion today with a growth rate of approximately 6.0% per annum.

Additionally, roughly 75.0% of the US population above 18 wants to lose weight and is open to dieting, and approximately 65.0% of overweight/obese population considers paid meal plans effective.

The total potential pool of OPTA VIA clients is sizable;

there are about 175.0 million people looking to lose weight and willing to consider dieting in the US.

2 Consumer and OPTA VIA Client surveys February 2020, NCHS, team analysis

We offer clients a radically different approach to health, with weight loss and weight management serving as a catalyst to an overall improvement in health, confidence, vitality and general well-being.

Consumer Motivation

Our core clients are highly motivated to adopt a healthy lifestyle that is transformative and sustainable.

Many have tried weight loss programs previously, but have been unsuccessful maintaining a healthy weight and embracing healthy habits for the long-term.

Many have tried weight loss programs previously, but have been unsuccessful at maintaining a healthy weight and embracing healthy habits for the long-term.

Lifestyle issues our clients often seek to address and resolve include:

13 unchanged sentences

In 2013, The American Medical Association declared obesity a disease and the American Heart Association, the American College of Cardiology, and the Obesity Society jointly issued treatment guidelines recommending obesity be managed as a chronic disease.

The World Health Organization estimates that approximately 1.9 billion people 18 years and older are overweight worldwide in 2016, triple the rate since 1975.

In the United States, more than two-thirds of the adult population fall within the overweight or obese categories and approximately 42.4% are obese.

In 2016, the World Health Organization estimates that approximately 1.9 billion people 18 years and older were overweight worldwide, triple the rate since 1975.

Obesity is defined as a Body Mass Index (“BMI”) of 30 kg/m2 or greater, whereas overweight is defined as a BMI ranging between 25 and 29.9 kg/m.

In 2017, the United States had an obesity rate of 42.4%.

In the United States, more than two-thirds of the adult population fall within the overweight or obese categories and approximately 42.4% were obese in 2017.

By 2017, only two states and the District of Columbia had an obesity rate that was less than 25.0%;

1 unchanged sentence

Being overweight and/or obese is linked to a multitude of serious comorbidities including heart disease, stroke, Type 2 diabetes, certain types of cancers, arthritis, sleep apnea and depression.

In fact, the 2016 State of Obesity Report by Trust for America’s Health and the Robert Wood Johnson Foundation estimated 80% of people with diabetes are overweight or obese.

Consumers in the United States spend an estimated $190 billion annually on obesity-related medical conditions;

In fact, the 2016 State of Obesity Report by Trust for America’s Health and the Robert Wood Johnson Foundation estimated approximately 80.0% of people with diabetes were overweight or obese.

Consumers in the United States spend an estimated approximately $190.0 billion annually on obesity-related medical conditions;

the average annual medical costs for those who are obese are more than $1,400 higher than those of people in a normal weight range.

According to a 2019 study by Marketdata Enterprises, the United States weight loss market itself is estimated to be a $73 billion per year industry, including consumer spending on diet foods, drinks and low-calorie sweeteners, health clubs, fitness centers and workout videos;

According to a 2019 study by Marketdata Enterprises, the United States weight loss market itself is estimated to be a roughly $73.0 billion per year industry, including consumer spending on diet foods, drinks and low-calorie sweeteners, health clubs, fitness centers and workout videos;

medically supervised and commercial weight loss programs;

3 unchanged sentences

Direct Sellers

Direct selling is a key component of our business strategy and distribution model.

Direct sellers are highly motivated independent entrepreneurs.

Key motivating factors include:

● the opportunity to start, manage and grow their own business with minimal upfront capital investment;

● the flexibility of direct selling and the ability to earn supplemental income;

● the ability to enjoy a healthy work-life balance;

● the social nature of the industry and the opportunity to market products they believe in;

We have created a new business model by combining the most powerful aspects of direct selling, while eliminating those dimensions that have typically challenged other companies.

Our growth does not depend on recruiting thousands of distributors who take on inventory to sell to clients.

Rather, OPTA VIA Coaches help clients adopt healthy habits and learn the benefits of OPTA VIA products, which are shipped directly to the client.

We are often compared to diet and

weight loss-only companies or to multi-level marketing companies, but our model is different.

We support clients through independent OPTA VIA Coaches, about 90.0% of whom were clients first.

Our competitive advantages:

● OPTA VIA’s innovative model is client centric, it has one price and approximately 90.0% of its revenue is from clients.

● OPTA VIA Coaches focus on coaching and supporting clients.

They do not hold inventory or manage cash.

● OPTA VIA boasts an energized health and wellness community, where about 90.0% of Coaches come from the client base and have been in their clients’ shoes.

They promote a holistic wellness program and are not exclusively focused on product sales.

Our competitive commissions are also deliberately structured to incentivize coaching and support client success.

● The field promotes a unified training system that aligns its leaders around a common mission.

OPTA VIA offers an entrepreneurial opportunity that allows Coaches:

● to start, manage and grow their own business with minimal upfront capital investment;

● the ability to earn supplemental income;

● the ability to enjoy a work-life balance;

● the opportunity to market products they believe in;

● the opportunity to complement other business pursuits.

The DSA estimates that 16.5 million U.S.

adults are involved in the direct selling industry based on 2018 data.

The majority of direct sellers are women and over 90% of all direct sellers operate their businesses part-time.

The Direct Selling Association (“DSA”) estimates that approximately 6.8 million U.S.

adults participate in the direct selling industry as “sellers” based on 2019 data.

The majority of these direct sellers are women and nearly 90.0% of all direct sellers operate their businesses part-time.

We develop and market products and services that promote the success of our OPTA VIA Coaches, each a micro-entrepreneur who plays an integral role in our operating performance and growth.

OPTA VIA Coaches are effective advocates for the Company’s mission and the sale of its nutrition products and health and wellness programs.

OPTA VIA Coaches are effective advocates for our mission and the sale of our nutrition products and health and wellness programs.

We offer direct sellers business essentials, supplies and interactive marketing services that help them launch and organize their direct-selling business as an independent OPTA VIA Coach.

In 2020, we were ranked in the DSA’s Top 20 list, a recognition given annually to the largest direct selling companies in the United States.

Transparency is a core principal at Medifast.

We adhere to the direct-selling industry’s highest ethical standards and best practices.

We are a member in good standing of the DSA, a well-known and widely respected national trade association representing over 100 direct selling companies in the United States.

As a member of the DSA, we underwent a comprehensive and rigorous review that included a detailed analysis of our business model and practices.

United States

The United States is our principal market and we believe the United States continues to represent significant potential for growth given the high percentage of overweight or clinically obese adults, where approximately 71.6% of adults aged 20 and over are considered overweight or obese in 2016.

Sales of weight loss and health and wellness products and services are projected to grow at a compound average growth rate (“CAGR”) of 7% in the United States through 2022, according to industry research and analysis.

The United States is our principal market and continues to represent significant potential for growth given the high percentage of overweight or clinically obese adults, where over 70.0% of adults aged 20 and over were considered overweight or obese in 2017-2018.

Sales of weight loss and health and wellness products and services are projected to grow at a compound average growth rate (“CAGR”) of approximately 7.0% in the United States through 2022, according to industry research and analysis.

Industry growth is also being driven by growing consumer awareness and increasing demand for health and wellness products.

Additionally, growing urban populations and the corresponding increase in disposable income across age groups are enabling consumers with increased purchasing power to embrace healthier lifestyles.

The intensified interest in physical fitness, fitness center membership, increased public awareness and incidences of chronic diseases such as diabetes, hypertension, heart disease, stroke, osteoporosis and others have increased demand for health and wellness products.

4 unchanged sentences

In July 2019, we commenced our international operations, entering into the Asia Pacific markets of Hong Kong and Singapore.

The Company outsources a distribution center in Hong Kong to give the Company adequate product distribution capacity for the foreseeable future.

Our decision to enter these markets was based on industry market research that reflects a dynamic shift in how health care is being prioritized and consumed in those countries.

Like the United States, healthy lifestyles have increasingly become a priority to middle-class consumers in the Asia Pacific markets as disposable income grows.

Like the United States, we believe healthy lifestyles have increasingly become a priority to middle-class consumers in the Asia Pacific markets as disposable income grows.

Our research has found that while traditional remedies are still essential, consumers are increasingly incorporating healthy living products into their daily lives.

In-market testing of our products and programs evoked strong consumer response and acceptance.

Asia Pacific is the largest health and wellness marketplace in terms of revenue share, with robust growth projected over the next several years.

The region also is a leading direct-selling marketplace, with China recently surpassing the United States as the country with the most direct selling retail sales.

Asia Pacific is the largest health and wellness marketplace in the world, in terms of revenue share, with robust growth projected over the next several years.

The region also is a leading direct selling marketplace, with China representing the second largest market for direct selling retail sales as of 2019.

PRODUCTS AND PROGRAMS

Our proprietary products and programs have been scientifically-developed to help consumers achieve a healthy weight.

We work closely with our cross-disciplinary Scientific Advisory Board comprised of physicians and scientists who help guide the development of our comprehensive portfolio of offerings.

Our products are scientifically designed to provide the proper nutrition at every stage of a person’s journey toward a sustainable, healthy lifestyle.

Our offerings are nutrient dense, portion controlled, and nutritionally interchangeable.

Our trademarked Habits of Health provide the foundation for our successful optimal health plans and the OPTA VIA Integrated Coaching Model.

We incorporate healthy habits in all our consumer offerings.

The Habits of Health System is an innovative, mind and body lifestyle approach that encourages and educates consumers to replace unhealthy habits with healthy ones that contribute to their long-term success.

We identify opportunities to expand our product lines by regularly surveying our customer base and studying industry and consumer trends.

This allows us to introduce new, high quality products that meet consumer demand.

We take pride in our scientific heritage.

We authored 17 peer reviewed publications over the past 10 years.

Most recently, we conducted a double blind study that shows the effects that Coaching has on the program, that showed clients speaking with their OPTA VIA Coach more often may help them lose up to twice as much weight.

Our clinically proven plans and our scientifically developed products were developed by physicians, dietitians, and scientists to help consumers achieve a healthy weight.

We work closely with our cross-disciplinary Scientific Advisory Board comprised of physicians and scientists who help guide and provide valuable input into the development of our comprehensive portfolio of offerings.

Our products are scientifically designed to deliver proper nutrition at every stage of a person’s journey toward a sustainable, healthy lifestyle.

Fuelings, our hero product, are nutrient dense, portion controlled, and nutritionally interchangeable.

OPTA VIA- BRANDED PRODUCTS

1 unchanged sentence

OPTA VIA Essential Fuelings .

OPTA VIA Essential Fuelings contain 24 vitamins and minerals, high quality, complete protein, and no colors, flavors or sweeteners form artificial sources.

Each Fueling has a nearly identical nutritional profile designed by our team of food scientists and refined by our registered dietitians and nutrition team.

OPTA VIA Essential Fuelings contain 24 vitamins and minerals, high quality, complete protein, and no colors, flavors or sweeteners from artificial sources.

Each OPTA VIA Essential Fueling is scientifically formulated with the right balance of carbohydrates, protein and fat which helps promote a gentle, but efficient fat-burning state.

Our Fuelings help our clients retain lean muscle mass and each contains the patented probiotic GanedenBC30 ® to support digestive health.

Our OPTA VIA Coaches market OPTA VIA Essential Fuelings primarily through a suite of Optimal Weight Plans we have developed around the Habits of Health System.

Our Fuelings contain high-quality protein which helps our clients retain lean muscle mass and each contains the patented probiotic GanedenBC30 ® to support digestive health as part of a balanced diet and healthy lifestyle.

Our OPTA VIA Coaches market OPTA VIA Essential Fuelings primarily through a suite of Scientifically Proven Optimal Weight Plans.

Consumers purchase kits tailored to their individual needs on the advice and counsel of their OPTA VIA Coach.

Kits, ranging in price from approximately $415.00 to $458.00, include up to a 30-day supply of Fuelings and are purchased by our clients through either our ecommerce website, their OPTA VIA Coach’s personal website or our call center.

3 Based on the results of a 16-week clinical study, those who participated in at least 75% of their 23 assigned OPTA VIA Coaching calls lost 15.2 lbs.

compared to 6.7 lbs.

for those participating in fewer calls.

OPTA VIA Select Fuelings .

2 unchanged sentences

OPTA VIA Coach Business Kit .

We sell kits to direct-sales entrepreneurs who want to join the OPTA VIA Coach network.

The kits provide new OPTA VIA Coaches with business essentials needed to successfully start their independent business, including business tools, plan information, business supplies and 12 months of free access to a personalized OPTA VIA website.

Coaches are required to purchase a business kit to join our network.

The kits provide new OPTA VIA Coaches with business essentials to successfully start their independent business, including plan information and 12 months of free access to a personalized OPTA VIA website.

OPTA VIA- BRANDED PLANS

Our OPTA VIA-branded health and wellness plans help consumers enter a gentle and efficient fat-burning state.

Our OPTA VIA-branded health and wellness plans help consumers enter a gentle, but efficient fat-burning state.

Their success is enhanced by the personal attention, counseling, education, advice and motivation they receive from our OPTA VIA Coaches.

They also benefit from being members of a broader OPTA VIA Community of consumers with like-minded goals and objectives regarding their health.

We offer consumers incentives to join the OPTA VIA Community, including support calls with a caring community, access to our knowledgeable Nutrition Support Team, exclusive offers through our OPTA VIA Premier service that help our clients stay on plan, as well as qualifies them for discounts on purchased products and free shipping.

We focus our marketing efforts on providing daily support to our

clients during the initial 30 days – OPTA VIA 30 – of their integration to Lifelong Transformation, One Healthy Habit at a Time.

They also benefit from being members of a broader OPTA VIA Community of consumers with

like-minded goals and objectives regarding their health.

We offer consumers incentives to join the OPTA VIA Community, including support calls with a caring community, exclusive offers through our OPTA VIA Premier service that help our clients stay on plan, as well as qualifies them for discounts on purchased products and free shipping.

We encourage our clients to embrace our Six Steps to Optimal Health:

4 unchanged sentences

● Optimize health for your age.

● Realize the potential to live a longer healthier life.

The majority of our OPTA VIA Coaches began as weight-loss clients, who had success on the OPTA VIA program, and became OPTA VIA Coaches to help others through the weight-loss process.

● The potential to live a longer healthier life.

The majority of our OPTA VIA Coaches began as weight-loss clients, who had success on the OPTA VIA program, and became OPTA VIA Coaches, for a number of reasons, including to pay it forward and help others through their transformation journey.

Optimal Weight plans we market to consumers are:

11 unchanged sentences

Consumers are counseled by their OPTA VIA Coaches to eat three Optimal Health Fuelings and three balanced meals they prepare themselves daily.

4 No one can predict how long you are going to live, but research suggests that making an overall lifestyle change by taking an active role in your choices and behavior, including losing weight, eating healthier, moving more, and reducing stress, has the potential to help you live a longer, healthier life.

No matter what plan a client is on, they learn the Habits of Health through the Habits of Health® Transformational System which is a crucial tool for client success and provides the foundation for our community to learn and adopt healthy habits.

The Habits of Health Transformational System is an innovative, mind and body lifestyle approach that encourages and educates consumers to replace unhealthy habits with healthy ones that contribute to their long-term success.

THE MEDIFAST BRAND

While OPTA VIA now accounts for a majority of our revenue, we continue to market products under the Medifast brand name.

While OPTA VIA now accounts for a majority of our revenue, we also have products under the Medifast brand name.

About 16.0% of our consumable units sold in 2020 were tied to the Medifast brand.

We offer a variety of weight loss, weight management, and healthy living products under the Medifast, Thrive by Medifast, Optimal Health, and Flavors of Home brands.

As of December 31, 2019, our Medifast meal replacement line includes more than 40 options, including, but not limited to, bars, bites, pretzels, puffs, cereal crunch, drinks, hearty choices, oatmeal, pancakes, pudding, soft serve, shakes, smoothies, soft bakes, and soups.

Our Thrive by Medifast line includes a variety of specially formulated bars, shakes, and smoothies for our clients who are maintaining their weight for long-term healthy living.

MAJOR CUSTOMERS

Sales are made to clients.

No single client accounted for 10% or more of revenue.

2 *No one can predict how long you are going to live, but research suggests that making an overall lifestyle change by taking an active role in your choices and behavior, including losing weight, eating healthier, moving more, and reducing stress, has the potential to help you live a longer, healthier life.

Weight management products and programs are typically seasonal.

As of December 31, 2020, our Medifast meal replacement line includes more than 30 options, including, but not limited to, bars, bites, pretzels, puffs, cereal crunch, drinks, hearty choices, oatmeal, pancakes, pudding, shakes, and soft bakes.

We also offer a variety of weight loss, weight management, and healthy living products under the Medifast, Optimal Health, and Flavors of Home brands.

Consistent with business and brand strategy, we decided to sunset our Medifast Direct channel and Medifast branded products by the end of Q2, 2021.

By maintaining our commitment to building capabilities in the areas that matter most to our OPTA VIA Coaches and clients within the OPTA VIA channel, we believe we will enhance our ability to further grow our business over the next several years, enabling robust revenue growth while also maintaining our profitability in the long-term.

Sales are made to individual clients.

No single client accounted for 10% or more of our consolidated revenue for the year ended December 31, 2020.

Demand for weight management products and programs are typically seasonal.

Traditionally, the predisposition of consumers not to initiate a weight loss or management program during the holiday season impacts the fourth quarter with fewer sales of weight management products and services during these months.

January and February generally show increases in sales, as these months are considered the commencement of the “diet season.” We believe our sales pattern does not follow the seasonality of our industry, but rather is predicated on the growth of our OPTA VIA Coach network.

Selling, general, and administrative costs do exhibit some seasonality as our annual International Leadership Advancement Trip (“ILAT”) and annual convention are held during the second and third quarter of each fiscal year, respectively.

SCIENTIFIC ADVISORY BOARD

Medifast has a Scientific Advisory Board that consists of a multi-disciplinary, international panel that serves as the foundation for scientifically-valid, consumer-centric, high quality innovations for lasting health.

Its mission is to help guide Medifast in making informed decisions regarding medical, nutritional, and scientific matters by providing expertise and information on research and emerging trends.

The work of this cross-disciplinary group builds on Medifast’s heritage of medically sound approaches to weight loss and the incorporation of leading-edge clinical research into the Company’s products and programs.

Our Scientific Advisory Board consists of a multi-disciplinary, international panel that serves as the foundation for scientifically-valid, consumer-centric, high quality innovations for lasting health.

Its mission is to help guide us in making informed decisions regarding medical, nutritional, and scientific matters by providing expertise and information on research and emerging trends.

The work of this cross-disciplinary group builds on our scientific heritage and incorporates leading-edge clinical research into our products and programs.

The weight-loss industry is very competitive and encompasses various weight loss products and programs.

These include a wide variety of commercial weight-loss programs, pharmaceutical products, books, self-help diets, dietary meal replacements, and appetite suppressants, as well as, digital tools and wearable trackers.

The weight loss market is served by a diverse array of competitors.

Potential clients seeking to manage their weight can turn to other traditional center-based competitors, online diet oriented sites, self-directed dieting and self-administered products such as prescription drugs, over-the-counter drugs and supplements, as well as medically supervised programs.

Potential clients seeking to manage their weight can turn to other traditional center-based competitors, online diet-oriented sites, self-directed dieting and self-administered products such as prescription drugs, over-the-counter drugs and supplements, as well as

medically supervised programs.

We also compete with other direct selling organizations, some of which have a longer operating history, and greater visibility, name recognition and financial resources than we do.

Medifast’s identified publicly-traded peers and competitors in the general health and wellness diet industry include USANA Health Sciences Inc., WW International, Inc.

(formerly Weight Watchers International, Inc.), Nature’s Sunshine Products Inc., Herbalife Nutrition Ltd., Simply Good Foods Co., Lifevantage Corp., and Nutrisystem Inc., which was acquired by Tivity Health in 2019.

The Company believes its scientific and clinical heritage and commitment to evaluating its products and programs through clinical research are primary differentiators that allow it to compete in this market.

Our products were originally developed by a physician, and Medifast has been on the cutting edge in the development of nutritional and weight-management products since the Company was founded.

Medifast meals are individually portioned, calorie and carbohydrate-controlled meal replacements that share a similar nutritional “footprint” and provide a balance of protein and good carbohydrates, including fiber.

(formerly Weight Watchers International, Inc.), Nature’s Sunshine Products Inc., Herbalife Nutrition Ltd., and Simply Good Foods Co.

We have a competitive advantage over traditional diet companies.

The OPTA VIA model:

● Promotes a program that focuses on holistic wellness;

it views healthy weight as a catalyst to greater changes.

● Offers personalized, empathetic support from Coaches that have been in their clients’ shoes.

● Offers lifelong habit development supported by a proprietary integrated system, the Habits of Health Transformational System.

● Has a vibrant health and wellness community that has impacted almost 2.0 million lives.

We also have an advantage over traditional direct selling companies:

● OPTA VIA’s innovative model is client centric, it has one price and approximately 90.0% of its revenue is from clients.

● OPTA VIA boasts a health and wellness community, where about 90.0% of coaches come from the client base and have been in their clients’ shoes.

They promote a holistic health and wellness program and are not focused on product sales.

● OPTA VIA Coaches promote a unified training system that aligns its leaders around a common mission.

We believe our scientific and clinical heritage and commitment to evaluating products and programs through clinical research are primary differentiators that allow us to compete in this market.

Our products were originally developed by a physician, and we have been on the cutting edge in the development of nutritional and weight-management products since our founding.

Our products are individually portioned, calorie and carbohydrate-controlled meal replacements that share a similar nutritional “footprint” and provide a balance of protein and good carbohydrates, including fiber.

Our OPTA VIA Integrated Coaching Model offers the personal support of an OPTA VIA Coach, who is often a person who has achieved success with OPTA VIA and has turned their success into a business opportunity.

Medifast weight management programs utilize meal replacements as part of a structured meal plan that clinical research has shown to be effective for weight loss.

We continue to build and leverage our core brands through multiple marketing strategies.

1 unchanged sentence

These mediums are used to target new clients by stressing Medifast’s and OPTA VIA’s simple and effective approach to weight loss and management and long-term health.

Many of these programs are also utilized to

reactivate, encourage and support existing clients and OPTA VIA Coaches.

Many of these programs are also utilized to reactivate, encourage and support existing clients and OPTA VIA Coaches.

We are constantly working to enhance all of our Company materials and websites.

MANUFACTURING

Jason Pharmaceuticals, Inc., our wholly-owned subsidiary with facility in Owings Mills, Maryland, is the primary manufacturer of our powder-based products, which account for approximately 46% of our unit sales.

Jason Pharmaceuticals, Inc., our wholly-owned subsidiary with a manufacturing facility in Owings Mills, Maryland, is the primary manufacturer of our powder-based products, which account for approximately 46% of our unit sales.

We purchased the plant in July 2002 and have gradually increased production capacity and improved overall efficiencies with additional investments in blending and packaging equipment.

The remaining 54% of our unit sales are manufactured by third-party vendors in accordance with Medifast proprietary formulas and manufacturing standards.

Our Owings Mills manufacturing facility is regulated and inspected by the United States Food and Drug Administration (the “FDA”), the United States Department of Agriculture (the “USDA”) and the Maryland State Department of Health and Mental Hygiene.

It is certified by the Safe Qualified Food Institute as a Safe Quality Food Program Level 2 facility compliant with the Global Food Safety Initiative, a global non-profit collaboration to advance food safety.

Our Owings Mills manufacturing facility is regulated and inspected by the United States Food and Drug Administration (the “FDA”), the United States Department of Agriculture (the “USDA”), the Maryland State Department of Health and Mental Hygiene and Office of Food Protection.

It is certified by the Safe Qualified Food Institute as a Safe Quality

Food Program Level 2 facility compliant with the Global Food Safety Initiative, a global non-profit collaboration to advance food safety.

GOVERNMENTAL REGULATION

In every jurisdiction in which we operate, our business is subject to extensive governmental regulation.

These regulations exist at various national and local levels and pertain to our OPTA VIA Coaching marketing program, our products, and other aspects of our business.

We are subject to extensive foreign, federal, state, and local government laws and regulations, including those relating to the preparation and sale of food and beverages, in the various jurisdictions in which we operate, own, and lease properties, and market our offerings, including our OPTA VIA program, our products, and other aspects of our business.

We are also subject to laws governing our relationships with employees, including minimum wage requirements, overtime, working conditions, hiring and firing, non-discrimination for disabilities and other individual characteristics, work permits, and benefit offerings.

Further, we are subject to laws governing our relationships with our independent contractor OPTA VIA Coaches.

To date, compliance with federal, state and local environmental protection regulations has not had a material effect on our capital expenditures, earnings or competitive position.

In this section, we describe the regulations that are applicable to our business.

6 unchanged sentences

In the United States, for example, federal law provides law enforcement agencies, such as the Federal Trade Commission (the “FTC”), broad latitude in policing unfair or deceptive trade practices, but does not provide a bright-line test for identifying a pyramid scheme.

Several states have passed legislation that more clearly distinguishes between illegal pyramid schemes and legitimate multi-level marketing business models.

Several states have passed legislation that more clearly distinguishes between illegal pyramid schemes and legitimate multi-level marketing (“MLM”) business models.

Recent settlements between the FTC and other direct selling companies and guidance from the FTC have addressed inappropriate earnings and lifestyle claims and the importance of focusing on consumers.

These developments have created a level of ambiguity as to the proper interpretation of the law and related court decisions.

For example, in 2015, the FTC took aggressive actions against a multi-level marketing company, alleging an illegal business model and inappropriate earnings claims.

We have taken additional steps to educate our distributors on proper earnings claims.

If our distributors make improper claims, or if regulators determine we are making any improper claims, this could lead to an FTC investigation and could harm our business.

In 2016, the FTC entered into a settlement with another multi-level marketing company, requiring the company to modify its business model, including basing sales compensation and qualification only on sales to retail and preferred customers and on purchases by a distributor for personal consumption within allowable limits.

For example, in 2016, the FTC entered into a settlement with another multi-level marketing company, requiring the company to modify its business model, including basing sales compensation and qualification only on sales to retail and preferred customers and on purchases by a distributor for personal consumption within allowable limits.

Although this settlement does not represent judicial precedent or a new FTC rule, the FTC has indicated that the industry should look at this settlement, and the principles underlying its specific measures, for guidance.

If the requirements in this settlement lead to new industry standards or new rules, our business could be impacted and we may need to amend our global sales compensation plan.

With a majority of our revenue in the United States coming from sales to OPTA VIA clients, we believe that we can demonstrate consumer demand for our products, but we continue to monitor developments to assess whether we should make any changes to our business or global sales compensation plan.

If the requirements in this settlement lead to new industry standards or new rules, our business could be impacted and we may need to amend our compensation plan.

In 2018, the FTC released its nonbinding Business Guidance Concerning Multi-Level Marketing (“MLM Guidance”).

The MLM Guidance explains, among other things, the FTC’s views concerning lawful and unlawful compensation structures, whether personal consumption by participants can be used in determining a MLM organization’s compensation structure, and how a MLM organization should approach representations to current and prospective participants.

We believe our current business practices comply with the MLM Guidance.

In 2019, the FTC took aggressive actions against a multi-level marketing company, alleging that the company operated an illegal pyramid scheme that deceived consumers into believing that they could earn significant income as distributors of its health and wellness products.

The company eventually entered into a consent order with the FTC, pursuant to which the company was permanently prohibited from using a multilevel compensation plan in the United States.

We have taken additional steps to educate our Coaches on proper earnings claims.

If our Coaches make improper claims, or if regulators determine we are making any improper claims, this could lead to an FTC investigation and could harm our business.

Additionally, in 2009 the FTC promulgated nonbinding Guides Concerning the Use of Endorsements and Testimonials in Advertising (“Endorsement Guides”) which explained what endorsement practices the FTC views as being unfair or deceptive acts or practices.

In 2020, the FTC sought public comments on whether the Endorsement Guides should be amended.

The last time the FTC sought similar public comments led to a major revision of the Endorsement Guides.

Consequently, the FTC could bring an enforcement action based on practices that are inconsistent with the current Endorsement Guides as it considers revisions.

Under the current Endorsement Guides, advertisements that feature a consumer and convey his or her atypical experience with a product or service are required to clearly disclose the typical results that consumers can generally expect.

OPTA VIA has adapted its rules regarding the practices of its Coaches in order to comply with the current Endorsement Guides, but we cannot be sure that the FTC will not challenge our advertising or other operations in the future.

We continue to monitor developments to assess whether we should make any changes to our business or compensation plan.

If we are required to make changes or if the FTC seeks to enforce similar measures in the industry, either through rulemaking or an enforcement action against our company, our business could be harmed.

14 unchanged sentences

The Company maintains insurance against product liability claims with respect to the products it manufactures.

With respect to the retail and direct marketing distribution of products produced by others, the Company’s principal form of insurance consists of arrangements with each of its suppliers of those products to name the Company a covered entity under each of such vendor’s product liability insurance policies.

of such vendor’s product liability insurance policies.

The Company does not buy products from suppliers who do not maintain such coverage.

Our products are typically shipped within 48 business hours after receipt of an order.

As of February 14, 2020, we had no significant backlog of orders.

WORKING CAPTIAL PRACTICES

WORKING CAPITAL PRACTICES

We maintain sufficient amounts of inventory in stock in order to provide a high level of service to our clients.

2 unchanged sentences

We are not aware of any instance in which we have contravened federal, state, or local laws relating to protection of the environment or in which we otherwise may be subject to liability for environmental conditions that could materially affect operations.

As of December 31, 2019, the Company employed 550 employees, of whom approximately 310 were engaged in manufacturing, logistics and supply chain support, and approximately 240 in marketing, administrative and corporate support functions.

None of the employees are subject to a collective bargaining agreement with the Company.

HUMAN CAPITAL MANAGEMENT

As of December 31, 2020, the Company employed 713 employees, of whom approximately 409 were engaged in manufacturing, logistics and supply chain support, and the remaining 304 in marketing, administrative and corporate support functions.

None of our employees are subject to a collective bargaining agreement with the Company.

We believe that we have a good relationship with our employees.

Of our total employees, approximately 540 are employed in the United States and approximately 10 are employed in Asia Pacific.

INFORMATION SYSTEMS INFRASTRUCTURE

Our websites are based on commercially developed software and are hosted by cloud service providers and at a colocation data center located in Baltimore, Maryland.

The hosting facilities provide carrier diverse network connectivity, redundant and emergency power, fire prevention and control, and robust physical security for the equipment on which our websites rely.

Our information systems and infrastructure are monitored 24 hours a day, seven days a week.

We evaluate the compliance of key service organizations with SSAE 18 standards annually by reviewing the relevant System and Organization Controls reports (SOC 1, SOC 2 and SOC 3), in addition to PCI-DSS compliance, where applicable.

We use a variety of security techniques to protect our confidential customer data, including regularly scheduled penetration security tests on our websites.

We also use an industry leading network monitoring service for our Intrusion Detection Services solution along with Intrusion Prevention System devices on our network’s perimeter.

When our clients place an order or access their account information, we use secure channels to encrypt and transmit information.

Our security certificates encrypt all information entered before it is sent to our servers.

We have a secondary firewall layer of security between our customer facing websites and the databases that house their information and we have deployed mitigation devices to protect against Distributed Denial of Service attacks.

Customer data is protected against unauthorized access.

We have a redundant network across our organization, which provides for inter-connectivity and redundancy for our corporate locations.

Of our total employees, 701 were employed in the United States and 12 were employed in Asia Pacific.

At Medifast, we are focused on nurturing a One Team mindset that celebrates strong cross-functional teaming and partnering.

Our culture emphasizes the importance of strong relationships between our team members to facilitate trust, understanding and empathy.

We have a Culture Compass that expresses:

● Our Mission … why we exist

● Our Focus … on Coaches and Clients

● Our Core Values … what we believe

● Our Success Drivers … how we lead

● Our Operating Principles … how we make choices

Together, these cultural elements enable us to prioritize our work, plan for the future and harness our combined energy to accomplish our company objectives.

Our Culture Compass is embedded in our core human capital processes to ensure our team members understand how their success translates to the success of the greater team and ultimately to amazing Coach and Client Experiences.

Building transparency and developing communication channels that allow us to cascade information and connect our teams are critical components of our people strategy.

We leverage our Workplace by the Facebook platform to connect, collaborate, incite conversations around topics that matter to us (like Wellness), foster greater comradery, celebrate our successes and build trust among peers.

We leverage our communication channels to remind team members of the significant impact they have on the Coach & Client Experience, help them understand our business model and get them engaged in opportunities to learn and increase empathy across functional teams.

Diversity is one of Medifast’s Core Values and an important part of our culture.

As an organization, we are committed to generating an open dialog with our team members as well as improving our learning on how we can foster a more inclusive work environment that enables all our team members to have a voice.

Currently, we deploy pulse surveys after significant events or programs so that we can gain a deeper understanding of how we can better serve our team members’ needs, ensure we are staying aligned with our mission and gauge our team members’ understanding of our company strategy and goals.

We regularly review our employees’ feedback to better align our human capital initiatives to the needs of our employees.

In 2020, the company established a relationship with an external partner to assess our work environment and identify

opportunities in the area of Diversity, Equity & Inclusion (“DEI”).

We have also planned leadership training and workshops, to occur in 2021, that will establish the future framework for our DEI program.

Medifast is focused on attracting and retaining top talent who are eager to participate in our mission.

Our Total Rewards Program is intended to deliver competitive compensation and benefits that align with our company mission and values.

Annually, we review our market reference ranges and the pay of our team members to ensure we are paying competitively, applying a consistent market pricing approach and ensure we are considering internal equity.

Our variable pay targets are performance based and tied to organizational results.

In 2020, in response to COVID-19, we immediately prioritized the health and wellbeing of our employees.

For our onsite essential employees, we instituted enhanced safety protocols, limited visitation to our plant and distribution center and rolled out additional sick leave (crisis pay) to allow our team members the time needed to cope should they get sick or have a sick family member.

For our non-essential employees, we successfully implemented a work-from-home plan and also extended crisis pay.

We leveraged our collaboration tools and continued to nurture our Medifast community.

In addition to our employees, our Human Capital also includes our independent contractor OPTA VIA Coaches.

They support our clients and market our products and services primarily through word of mouth, email and via social media channels such as Facebook, Instagram, Twitter and video conferencing platforms.

For information about our OPTA VIA Coaches, see “Summary” section in this Item 1.

INFORMATION SYSTEMS TECHNOLOGY

Our websites use commercially developed software which are hosted by data center colocation and cloud service providers.

The hosting facilities provide carrier-diverse network connectivity, information security technologies, redundant and emergency power, fire prevention and control, and physical security.

Our information systems and infrastructure are monitored continuously, 24x7.

Redundant carrier-diverse networks are also used to interconnect our corporate locations.

SSAE 18 compliance of key service organizations is evaluated annually by reviewing relevant System and Organization Controls (SOC) reports.

Where applicable, service provider PCI-DSS compliance is also reviewed annually.

A variety of information security methods are used to protect confidential customer and corporate data against unauthorized access, including periodic network and website penetration testing.

Network intrusion detection and prevention technologies are in use to prevent unauthorized access and distributed denial of service (DDOS) attacks, including bot mitigation.

Industry standard multi-factor authentication (MFA) and encryption secure customer and corporate data in transit and at rest.

As our operations grow in both size and scope, we will continue to improve and upgrade our information systems and infrastructure while maintaining their reliability and integrity.

7 unchanged sentences

Our corporate website is http://www.medifastinc.com.

All periodic and current reports, registration statements, code of conduct and other material that we are required to file with the SEC, including our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) of the Exchange Act are available free of charge through our investor relations page at https://ir.medifastinc.com.

relations page at https://ir.medifastinc.com.

Such documents are available as soon as reasonably practicable after electronic filing of the material with the SEC.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business