Medifast, Inc. is engaged in the production, distribution, and sale of weight loss and weight management products and other consumable health and diet products. It operates through two segments, Medifast and MWCC and Wholesale. The company offers bars, bites, pretzels, puffs, cereal crunch, drinks, eggs, hearty choices, oatmeal, pancakes, pudding, soft serve, shakes, smoothies, soft bakes, and soups under the Medifast and Essential 1 brands and for private label customers. It also provides nutritional products; and meal replacements comprising vitamins and minerals, as well as other nutrients essential for good health. The company operates Medifast weight control centers that offer programs for weight loss and maintenance, customized patient counseling, InBody composition analysis, and monitoring with a BodyGem that determines resting metabolic rates. As of December 31, 2013, Medifast, Inc. operated weight control centers in 75 locations; and 41 franchise centers. The company sells its products through various channels of distribution comprising the Internet, call center, independent health advisors, medical professionals, weight loss clinics, and direct consumer marketing. Medifast, Inc. was founded in 1980 and is headquartered in Owings Mills, Maryland.
Not very exciting...but the angle is that MLNK will take over the distribution of their products and that will enhance both MLNK's and Medifast's bottom line...they will make money on both ends of the transaction...
At today's closing price, MLNK is up about $1.5M on their investment in MED.
I checked the nasdaq site for institutional holders, and found that tutes own 101% of the shares outstanding. That tells me there must be a fairly good-sized short position in this stock. The Yahoo profile is showing 2.57M shares short, which is considerable for a stock with less than 13M outstanding.
The market cap is around $370M, so I'm not sure MLNK could go for a takeover, though they might be able to leverage one, and MED might be amenable to some sort of partnership.
Med paid something like $11M in taxes (close to $1/share last year), their tax rate is around 34%. It would seem that with MLNK's net operating loss carryforward, they could take advantage of that.
Haven't been able to dig up any info on a possible "poison pill". Again, I'm not certain MLNK would go for a takeover. They do have a filing to issue $100M in securities and I think they got $100M from their convertible note offering. Additionally, H&H has an option to purchase 2M shares @ $5 which would add $10M to the coffers - last 10Q is showing $170M cash, so it looks as if they could do the deal, especially if you consider MED has around $65M in cash.
I'm scrambling around trying to do DD here, and this is by no means one of my big investments, though I'd love to see them utilize their tax assets.
I did consider that MLNK may be going for a deal to package & distribute MED products, which might replace some of the business lost.
Most of the information above is from my memory & any speculation on my part is just that, so do your own DD, and good luck to long-suffering MLNK stockholders...