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NutriSystem, Inc. (NTRI) Reports Better than Expected Earnings and Revenues for the Second Quarter

NutriSystem, Inc. (NTRI), a provider of weight management meal plans for home delivery, reported second quarter results today after the close. Revenues declined 9.1% year-over-year to $194.0 million vs. $213.4 million, but came in ahead of analysts’ estimates of $185.3 million. Net income fell to $22.0 million, or 71 cents per share, vs. $33.6 million for the same period last year, a decrease of 34.5%. The Street was looking for earnings of 65 cents.

“We are pleased with our results for the second quarter in light of the current economic environment. Our marketing efficiency for the quarter was on target at 21.6% of revenue, resulting in strong revenues and adjusted EBITDA,” stated President and Chief Executive Officer Joe Redling. “We are proud of our $72 million in cash generated by operating activities in the first half of 2008, combined with our debt free balance sheet, available credit facility and our flexible business model. We are well positioned to weather continued economic challenges while we invest in the business for long term growth,” continued Redling.

The company also announced the continuation of its dividend policy. Shareholders of record as of August 5, 2008 will be eligible for the usual $0.175 per share, payable on August 15, 2008. Chief Financial Officer David Clark stated that NutriSystem repurchased approximately 1.0 million shares of the company’s stock on the open market since the end of the quarter for $15.2 million.

Guidance for the third quarter reflects a cautious tone. The company estimates that revenues will be between $160 million and $170 million, while analysts’ consensus is $180.5 million. Adjusted EBITDA is projected to be between $25 million and $30 million, well short of that necessary to meet analysts’ forecasts for 68 cents per share in net income next quarter. “Our guidance reflects expected stability in revenues and continued pressure on gross margins, a cautious outlook on demand, and increased G&A expenses driven by investments in initiatives designed to enhance profitability in 2009,” commented Mr. Clark.

Shares of NTRI closed down 8 cents at $17.88 today and have traded in a 52-week range of $12.55 – $71.00. Shares are trading over 10% higher after trading hours, topping $20 on volume of over 117,000 shares.

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