Good day and welcome to the Medifast First Quarter 2015 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Katie Turner. Please go ahead.

Thank you. Good afternoon and welcome to Medifast first quarter 2015 earnings conference call. On the call with me today are Michael MacDonald, Chairman and Chief Executive Officer; Meg Sheetz, President and Chief Operating Officer; and Timothy Robinson, Chief Financial Officer. By now, everyone should have access to the earnings release for the period ending March 31, 2015 that went out this afternoon at approximately 4:05 p.m. Eastern Time. If you’ve not received the release, it’s available on the Investor Relations portion of Medifast’s website at www.medifastnow.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 generally identify forward-looking statements. These do not guarantee future performance and therefore undue reliance should not be placed on them. Actual results could differ materially from those projected in any forward-looking statements. Medifast assumes no obligation to update any forward-looking projections that may be made in today’s release or on today’s call. All forward-looking statements contained herein speak only as of the date of this call. And with that, I’d like to turn the call over to Medifast’s Chairman and CEO, Michael MacDonald.

Thank you, Katie. Good afternoon, everyone, and thank you for joining us. Today I will provide a brief recap of our first quarter performance, followed by an update on the progress we’re making on our key strategic initiatives for fiscal 2015. Tim will then review our financial results in greater details. After our prepared remarks, we will open up the call to take your questions. We are pleased with our first quarter results and our ability to exceed both the top and bottom line guidance we had shared. Revenue from continuing operations was $73.4 million, exceeding our guidance of $70 million to $73 million. Earnings from continuing operations was $0.36 per diluted share. When we excluded the extraordinary legal and advisory expenses resulting from recent 13D filings, earnings from continuing operations was $0.46 per diluted share, exceeding our guidance of $0.33 to $0.35 per diluted share. While total net revenues decreased 7% compared to the same period last year, we were pleased to see a sequential improvement from the double-digit year over year decrease in the fourth quarter of 2014. First quarter revenue was aided by our March 1 price increase, which when coupled with improved operational efficiencies enabled us to generate our strong earnings performance. I would now like to walk you through how we are progressing on each of our 2015 key focus areas. First, our team is committed to the growth and simplification of Take Shape For Life. In the first quarter, we placed increased emphasis on Health Coach sponsorship in order to drive new growth and our efforts have started to pay off. As announced on our last earnings call, February was our strongest Coach sponsorship month since mid-2013 and March followed with continued growth in strong Health Coach sponsorship numbers. As we work to provide…

Thank you, Mike. I’d now like to review our performance for the quarter ended March 31, 2015 in more detail. Please note that the financial information I reference today will focus on our results from continuing operations. For the first quarter of 2015, income from discontinued operations net of tax was $28,000. In the first quarter, net revenue decreased 7% to $73.4 million from net revenue of $79.2 million in the first quarter of the prior year. The Take Shape For Life sales channel accounted for approximately 71% of revenue, the Medifast Direct channel accounted for 20%, the Franchise Medifast Weight Control Centers accounted for 6%, and the Medifast Wholesale channel accounted for 3% of revenue. Focusing on our sales channels in more detail, revenue in our direct sales channel, Take Shape For Life, decreased approximately 9% to $52.1 million. The decrease in revenue for this channel was primarily driven by a decrease in the number of health coaches, along with a decline in revenue per health coach. We ended the first quarter with approximately 10,500 active health coaches based on our [Star] calculation and the average revenue per health coach per month during the quarter was $1,564. In order to provide a more accurate depiction of the number of health coaches contributing to Take Shape For Life revenues, we will be changing the way we report active health coaches and average revenue per health coach going forward. The health coach count will now be reported as the number of earning coaches each quarter instead of the number of earning coaches in the last month of the quarter. The average revenue per Health Coach will now be calculated on a quarterly basis instead of an average month within the quarter. These new quarterly measurements provide a more consistent metric for…

Thanks, Tim. In summary, we continue to expect that our strategic initiatives and the restructuring of our business operations will help us to generate improved results. The actions we’ve taken including the additions we made to our management team and board of directors set a strong foundation for Medifast in the future. We appreciate the efforts of our team at all levels, and expect that with their help and the actions we’ve taken, we will drive performance across our Take Shape For Life, Medifast Direct, Franchise Weight Control Centers and Medifast Wholesale channels. We appreciate your interest and support of Medifast. With that business review, Tim, Meg and I are available to take your questions. Operator?

[Operator Instructions] And our first question will come from Frank Camma of Sidoti.

A couple of questions. Just first on clarifications. The EPS guidance for the year that you’re giving, they’re staying the same, $1.85 to $1.95, I’m assuming that does exclude the $0.10, did I have that right?

Excludes the cost resulting from 13D filings, yes.

So just $0.46 for this quarter then, correct?

That is correct.

The other thing is your typical cadence of revenue in the direct side, at least, is the first quarter would historically be your highest revenue quarter. I’m assuming there was nothing unusual this year that would change that. Do I have that right?

You’re referring to Direct response or Direct selling?

Direct response, sorry, Medifast Direct.

For Direct response, we spent a little down this quarter, first quarter versus last year’s first quarter and we have a lot of things coming out later in the year that we’re excited to spend more. But I think we’re going to keep it pretty even field spend this year. That was our goal, to be more consistent in our spend than in previous years.

Just the one that I was getting at is, I mean, typically like if I’m looking at your competitor [Nature System] they typically have and you have in the past, I guess, at least for the last couple of years?

We [indiscernible] in the first quarter that we now...

Right, and that will benefit your revenue.

Yeah, we’re a little different though than the company that you mentioned in the timing of our spend. They are more front end loaded than we are. So they are a little bit more seasonal that we are, so to speak.

Frank, we’re not as big like – if you looked at our revenues historically, we’ve probably done 52% in the first half, 48% in the second half. There hasn’t been a huge...

Yeah, that’s fair. It’s obviously a smaller component of your business. So then turning to the most significant part of your business, Take Shape For Life, the only question I really had there or a couple of things, you mentioned price increase, could you just tell us what that was in percentage terms?

Yeah, we did a price increase different for our Direct response channel, our Medifast Direct channel. So the overall...

And it was product specific as well.

Right. So the overall...

The range – those products that did drop in price, the price increase ranged in the [indiscernible] range for just those products. So most of our newly launched product didn’t change, mostly our traditional products.

And the final question I have is just on the – you had mentioned that you used to take up to a month to sign people up and it sounds pretty relevant that you’re getting on a shorter timeframe. But I was just wondering why did it take so long before?

Yeah, I mean, I think the other thing was that when someone came on board, we haven’t fill out all of their paperwork. That was our goal. We want all the information we need to be able to pay you a check, we wanted right away, including when you’re signed up we would then send you your replicated site information. So what we’ve done is did everything in that process up. So initially when you go to sign up, you no longer have to fill out all the financial information that the company will need to pay you a check. You have 30 days to do that, it doesn’t prohibit you from signing up a new client and coach. And that’s what was happening in the past. Until you filled out those forms, you weren’t able to get your replicate, you weren’t able to get clients to sign up on their replicated site. And that was not the best process, so that was the update we did. We still have some of the information obviously to pay people their check, but now the second they sign up its very quick, easy forms, there is no test that anyone needs to take immediately, all those are behind it. So you can literally sit with someone and within five minutes you see the replicated site and sign someone up on your replicated site within 10 minutes. So that is a significant difference. And some people would probably do it in two to three days, who are really, really excited. But others would take 30 days and that was, as Mike alluded to, when people are motivated and ready to go, we need them to go [indiscernible].

And at this time, we will conclude the question-and-answer session. I’d like to turn the conference back to management for any closing remarks.

I’d like to thank everybody for your interest in Medifast and your participation in today’s call. We look forward to providing you with an update on the business when we report results for the second quarter. Thank you and have a great evening.

Ladies and gentlemen, the conference has now concluded. We thank you for attending today’s presentation. You may now disconnect your lines.