Greetings and welcome to the Medifast Inc first quarter 2010 earnings conference call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions). As a reminder this conference is being recorded. It is now my pleasure to introduce your host, Katie Turner Investor Relations for Medifast Inc. thank you Ms. Turner you may now begin.

Thanks. Good afternoon and welcome to Medifast first quarter 2010 conference call. On the call with me today are Michael McDevitt Chief Executive Officer and Brendan Connors, Vice President of finance. By now everyone should have access to the first quarter earnings release for the period ending March 31 2010. This will release went out at approximately 4 pm eastern time today. If you have not received the release, it is available on Investor Relations portion of Medifast website at www.choosemedifast.com. This call is being webcast and a replay will be available on the company’s website. Before we begin we’d like to remind everyone that the prepared remarks contain forward-looking statements and management may make additional forward-looking statements in response to your questions. The words believe, expect, anticipate and other similar expressions are generally identifying forward-looking statements. These statements do not guarantee future performance and therefore undue reliance should not be placed on them. Also descriptions of Medifast objectives, strategies, plans, goals or targets contained herein are considered forward-looking statements. Actual results could differ materially from those projected in any forward-looking statements. Medifast assumes no obligation to update any forward-looking projections that maybe made in today’s release or on the call posted to their website. Medifast does not comment on issues or items currently or potentially in litigation with adversarial third parties and/or under investigation by appropriate regulatory or law enforcement agencies as the state or federal government. All of the forward-looking statements contained herein speak only as of the date of today’s call. And with that I would like to turn the call over to Medifast's Chief Executive Officer Michael McDevitt.

Thank you, Katie. Good afternoon everyone and thank you for joining us. On today’s call I’ll provide highlights of our first quarter results and then Brendan will review the financial results for the quarter in more detail. We will then open the call up for your questions. In the first quarter of 2010, we delivered record sales and earnings. This performance represents our 42 consecutive quarter of profitability. Revenue for the first quarter increased 75% to $60.6 million due to strong growth in each of our three primary distribution channels, including Take Shape For Life, Direct Response, and our Medifast weight control centers. This strong topline performance drove our first quarter profitability as we leveraged fixed costs and expenses with our vertically integrated operations. The first quarter of 2010 provided a strong starting point to what we believe will be another successful year for Medifast. We attribute our success to Medifast's strategy of providing the best selection of quality portion controlled weight loss products within a multi-platform program that allows Medifast to best meet the many different client support and education needs in their weight loss or weight maintenance. Increasingly the Take Shape For Life, Direct Response and Medifast Weight Control center channels provide a complimentary source of support for health coaches and clients to connect and share Medifast’s clinically proven weight loss programs. Each of our sales channels provide clients with a differentiated level of support they desire to achieve their health and weight loss goals. In the past thirty years, over 20,000 doctors have recommended our products to more than 1 million clients who have lost weight, and maintained their weights. The credibility of our products and the results they produce continues to resonate extremely well with new and existing clients. This credibility, our strong team members and…

Thanks Mike. Revenue for the three months ended March 31 2010 increased 75% to $60.6 million compared to $34.6 million in 2009. The Take Shape For Life sales channel accounted for 52% of total revenue. Direct response accounted for 27% and Medifast weight control centers accounted for 11% of total revenue. Focusing on our sales channels in more detail, our direct sales channel Take Shape For Life experienced revenue growth of 94% to $37.6 million compared to the same period last year. This growth was driven by increase client product sales and increased revenue generated per health coach as a result of the record increase in the number of active health coaches. The number of active health coaches increased 78% to approximately 7100 compared to 4000 in the first quarter of 2009. The Direct response sales channel, revenue increased 43% to $16.4 million in part due to 34% increase in advertising dollars spent as Medifast continues to experience a more effective advertising expense. As Mike mentioned earlier, we achieved a 2.8 to 1 revenue to spend ratio in the first quarter of 2010 as compared to a 2.6 to 1 ratio the same period last year. This more effective advertising spend contributed to the increase in the overall operating profit. In addition the company recognizes $2.1 million in revenue related to the freight bill to customers associated with the shipment of products sold in the quarter compared to $9,25,000 in the first quarter of 2009. Revenue in the Medifast weight control center sales channel increased 75% to $6.6 million. This is due to a 30% increase in comparable store sales for units opened greater than one year as well our 27 corporate centers being opened in the first quarter of 2010 compared to 21 in the first quarter of 2009.…

Thank you Brendan. I would like to conclude by thanking our employees, health coaches, franchise partners, Board of Directors and our valued clients for their continued support. We are very excited about our future and look forward to delivering great results in the second quarter and remainder of 2010. We would now like to open the call to your questions. Operator.

The first question is didn't you end February with 6650 distributors, that would imply if I am right there, there was a very big March, is that true and what drove that or are we just seeing that acceleration throughout the quarter?

It is true from month-over-month standpoint. in the first quarter, we did see the number of health coaches continue to grow which is very common when you are dealing with this kind of compound growth that we are seeing inside the health coaches, so March was a very strong month. March is commonly one of the stronger months in the weight loss period. A lot of people obviously assume that January is, but sometimes it takes a little bit of time for consumers to make the decision on what they want to choose in the weight loss industry before they actually put that purchasing, so you are correct in your assumption. March was very strong and I think that leads to a stronger function in what we continue to do for the remainder of the year.

Then I guess would be that April was good given the trend and now you had the Chicago event going on in May, can you talk a little bit about what you think, I think the advertising is already started, hasn't it?

The advertising has started for [minimal] basis. The event is towards the end of May, so we are going to be ramping up that advertising over the course of the month. We are very excited about what we continue to see in trending for the Take Shape For Life health coach recruiting business. This [Technical Difficulty] what this will do, we are very confident it's going to be builder for the business as it's a test of going into a new market. We talk on how we have those seven geographic areas that generate roughly 60% of sales for Take Shape For Life. We got a lot of Medifast Direct Response consumers who are unaware of what the Take Shape For Life offer is and we are going to do our best to really make that Take Shape For Life opportunity both available and make their awareness grow inside the Chicago market. So anxious to have this first test out there, expectations are always low on an initial test. But we are going to learn a lot and hopefully have many more these in the future

The shifting income or the shifting revenue in the quarter, did you give the dollar amount? And I am wondering what was the offset that makes sense, so I can (inaudible). I apparently missed that change and I don’t know if that came out near K or something, I didn’t catch it.

Sure, the revenue from shipping in the first quarter of 2010 was $2.1 million, last year it was $925,000. Expense is just included in our cost of sales figure.

Thank you, our next question comes from Tom Kaplan from East Shore Partners.

Just looking at that press release versus the 10-Q, but can you just explain to me why the revenue was restated in the press release and the cost of sales changed versus the 10-Q from Q1'09?

Year over year, it’s included in both Q1'09 and Q1 2010. The shipping revenue is now included, that is just because now it is material enough because of our growth, the per GAAP revenue recognition policy.

So the delta is just the offset, the shipping revenue and the shipping expense.

Yes, right.

If the 60.58 in the quarter is the revenue number and the Take Shape For Life is 37.6, 16.4 for Direct marketing and (inaudible) 6.6. That adds up to slightly greater, what does that imply about the sales from the doctor channel if anything?

Moving forward we are going to be including the doctor sales included in the franchisee sales. The physicians that we attract now are more so weight loss clinic type of physicians for the wholesale model which is a very similar model to our franchisees. So moving forward, all future doctor wholesale accounts be included in our franchisee figures. They are actually included in that clinic figure that we spoke to.

Thank you our next question comes as a follow up from Scott Van Winkle from Canaccord Adams

Brendan, were there any kind of one-time in mature expenses in that first quarter I mean you had some litigation, you had an auditor change. It looks like you spend some time evaluating second kind of auditor change after the acquisition of your original. I am wondering if there was anything kind of one time in that first quarter that bumped up SG&A.

The one piece that you will be able to see inside the balance sheet aspect, it didn’t have one time effect to SG&A because we did have an accelerated aspect to a vesting schedule for deferred compensation of roughly about $500,000 due to the schedule. That is a one-time impact and we will be looking forward and will not be carrying them.

Okay so that's non comp expense, that's just buried in SG&A, and what is that total number for non-comp expense in the quarter if you have it.

To speak on the change year-over-year in compensation expense is about $3.3 million change year-over-year in compensation expense. Included in that is about a $500,000 one-time impact that Mike just spoke on. I was wondering how much of that was non-cash.

That was all in cash aspect

Thank you. At this time, we have no further question. I would like to turn the call back over to the speakers for any closing comments.

Thank you very much for you participation today. We look forward to sharing our progress with you next quarter. And as a reminder we will be visiting with investors in the coming weeks and attending a number of investor conferences and we hope to see you there. Thank you very much.

Thank you. This does concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.