Good afternoon. Welcome to Medifast’s first quarter 2020 earnings conference call. On the call with me today are Dan Chard, Chief Executive Officer, and Joe Kelleman, Interim Chief Financial Officer. By now, everyone should have access to the earnings release for the period ended March 31, 2020, that went out this afternoon at approximately 4:05 PM Eastern Time. If you’ve not received the release, it is available on the investor relations portion of Medifast’s website at www.medifastinc.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 statements do not guarantee future performance, and therefore, undue reliance should not be placed upon 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 call. All the 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 Chief Executive Officer, Dan Chard.

Thank you, Scott. And good afternoon to everyone joining us. Thank you for taking time to be with us today. On the call with me today is Joe Kelleman, who was appointed Interim Chief Financial Officer in early March. Joe has had a distinguished career with Medifast since joining in 2012, serving in a series of senior financial roles since that time, including Corporate Controller and Vice President of Finance. He also served as Interim Chief Financial Officer of the company in 2013. He will lead the finance function until a permanent appointment is made. We are currently conducting an extensive search for a CFO that will lead the company into our next phase of growth. I’ll start today’s call by giving you a brief overview of our first-quarter performance and an update on how our business was impacted during the quarter by the economic and social disruption related to the COVID-19 pandemic. I will also share with you what we’re doing in the current quarter to adapt to the new business environment to ensure that we continue to deliver long-term growth in the growing health and wellness marketplace. Then Joe will review Q1 financial results in more detail. I’m pleased to report that Medifast delivered above the high end of our guidance on both the top and bottom line during the first quarter, reporting revenues of $178.5 million. Non-GAAP adjusted earnings per diluted share, which excludes expenses in connection with the scheduled 13-D filing and severance costs, was $1.93 in the quarter. This growth was driven by continued improvement in the number of active earning coaches on both a year-over-year and a sequential basis, reporting the highest level in the company’s history, with 32,600 coaches at the end of the first quarter. The resumption of coach growth is a clear demonstration of the underlying health and strength of our business and an indication of how our differentiated offer continues to resonate with prospective clients and coaches as we focus on delivering our mission of offering the world lifelong transformation, one healthy habit at a time. We’ve been working diligently to build further momentum in attracting new clients and sponsoring new coaches and saw encouraging progress as we moved through the first quarter. Perhaps not surprisingly, there was some downward pressure with both client acquisition and coach sponsorship at the end of the first quarter and in early April, as the coronavirus pandemic began to impact the macro environment. However, we’ve been encouraged by the new client and new coach numbers we’ve seen in recent weeks as people adjust to the new normal and prospective coaches and clients respond to programming changes we made in late March and early April. The health and wellness services and products we offer provide a proven solution to help clients achieve their healthy weight, as well as learn and incorporate other healthy habits in their lives to achieve optimal health. Further, the addressable market remains significant as the focus on health and well-being is projected to continue its growth. In fact, as people slowly move out of a more sedentary period, as mandated by the stay-at-home orders, we believe there will be an increased demand for solutions that help people lose weight and regain fitness, and focus on their long-term health. As a company, we have worked and invested extensively in the past several years to fully integrate our operating infrastructure through cloud-based technology and remote training and communication practices. We feel confident in our ability to operate effectively in this new and changing environment. We’ve made all the necessary adjustments to our processes and procedures to ensure that we deliver excellence in service and can execute against our long-term growth opportunity. In particular, we have completed extensive work on our technology and supply chain infrastructure. And as a result, our performance in these areas continues to meet historical standards as we continue to see marked improvements in the key metrics we use to track, find and coach satisfaction. We believe our long-term sustainable revenue growth outlook will be unaffected and that our ability to drive shareholder value remains intact. As a result, we remain committed to our dividend policy, which reflects the strength of our balance sheet, our highly attractive business and financial model, and the confidence of the Board and the management team in our ability to deliver against our goals. Over 85% of our revenue is generated from subscription orders, providing a strong recurring revenue source, which has remained robust in the face of the pandemic and uncertain economic environment. Additionally, approximately 80% of our expenses are variable, which allows us to stay nimble and quickly adjust our spending where necessary. This combination provides important consistency and confidence in our financial outlook. This has obviously been a period of adjustment and adaptation for populations across the world, and consumers are distracted from their day-to-day activities as a result. However, our organization, including our network of more than 30,000 Optavia coaches, has been built to be highly adaptable, and that has been particularly evidenced during the past six weeks or so. I’m very encouraged by the resilience of our employees, our coaches, and our clients, and I’m appreciative of everybody’s efforts. Productivity across the organization is very high, providing a virtually seamless operating environment. While the vast majority of our employees have transitioned to working from home, our manufacturing and distribution facilities are operating uninterrupted as they provide essential food products. Our customer service and support functions are also operating very well, and we are delivering a high level of service to our coaches and clients with strong feedback from the field. Speaking of the field, we’ve already transitioned our annual convention from a live in-person event to a virtual conference to be held during the same period as our previously scheduled convention in July. We also postponed our annual leadership incentive trip from April to the late fall. Despite these changes, we remain highly engaged with our Optavia coaches, utilizing virtual events and communications to fill any voids. In many ways, the pandemic will provide us with an opportunity to test new digital approaches to build engagement, which bring with them the ability to reach farther and greater numbers of people than traditional in-person events at a fraction of the cost. We have some exciting plans in place for ensuring no level of drop-off in connection and energy and look forward to the long-term learnings such events can provide for our business. This is a business that has been operating for more than 18 years now, and the majority of our coaches started as clients who are successful using our programs, products, and services. That means that our leadership has strong personal experiences that work, putting it to successful use every day. Our field-led communications are particularly strong as a result. As an example, at the height of the pandemic in April, our coach leaders held a highly successful virtual coach training event called Business Momentum 2020 at home. This was attended by a remarkable 8,300 registered participants and included sessions for coaches and clients as well as guests. Training was provided around the four skills of acquiring new clients, supporting clients, fostering coaches, and developing coach leaders. This was a phenomenal response during a challenging time for individuals, and it was a demonstration of how much our offering resonates with people as they address issues around health and wellness. Along with engaging the field through top-down and bottom-up events, we continue to create new ways to maintain demand for our business and grow our client and coach base. As part of adjusting to the new operating environment, we have made several changes to our planned programming at the end of Q1 and in Q2. For example, in March, we introduced an incentive called Forward and Health, an incentive designed to support new client growth and new coach sponsorship, as well as the reactivation of former clients. In April, we also introduced a new promotion called Essential Start, which is a limited-time offer of a discounted essential five-in-one kit to help coaches assist new clients as they start their health journey. These promotions support new client enrollment in an Optavia Premier Subscription order and the habits of health transformation system. Because of the positive results in April, we have extended this promotion through May and expanded it into the Asia Pacific region as well. As a result of training, incentives, and promotions, we have seen a substantial improvement in new client acquisition and new coach sponsorship since mid-April. We’ve also seen significant increases in page views in our Optavia business management tool for coaches, which is an early indication of the engagement of our Optavia coaches. While we’re still in the early stages of the execution of these programs, the results have been encouraging. We will be working to build on this impact over the coming months. Our investment in technology and operations also continues. We launched our new Enterprise Resource Planning system or ERP system this month, with the support of our consultant, Deloitte. The new cloud-based ERP system is expected to improve production and forecasting, order management, inventory control, and provide the incremental capacity to support growth in the orders. Our testing over the last 12 months has been completed, and we are confident with the implementation. Our expansion into Asia Pacific markets remains an important part of our long-term mission and growth strategy. We are still at the early stages of development of our first two markets, Hong Kong, and Singapore. And we are encouraged by the development of these markets as we continue to increase service and support to improve coach and client experience. On April 6, we opened our Hong Kong distribution facility. The 20,000 square foot facility will significantly reduce delivery times and logistic costs in our open Asian markets and provide a base for future expansion across Asia in the future. We also plan to expand our support footprint by adding a contact center in Manila during Q2, provided the pandemic-related restrictions are lifted. As part of our strategy to build and innovate our mobile platform and other digital technologies, we have moved forward with plans to open a satellite office in Salt Lake City, Utah. Employees in that location will include the leadership team responsible for digital product management, QA engineering, and our global contact management operations. This office will open in August and will scale 15 to 20 employees over the next 12 to 18 months. The team will work in tandem with our Baltimore-based IT team to support the upcoming launch of our digital mobile platform, currently scheduled for a beta launch in the third quarter of this year. As I mentioned before, I’m very proud of the efforts of the entire organization and our coach network in giving back to the community, but particularly in today’s challenging times. In 2018, we announced our philanthropic initiative, healthy habits for all. The program is designed to provide the education and access necessary to make healthy habits a reality for everyone, especially those in underserved communities. We pledged to donate more than $2.5 million to local and national non-profits through 2023. As the public grapples with the devastating impact of COVID-19, we quickly mobilized our employees and coaches to provide additional relief for vulnerable populations across the country. We partnered with No Kid Hungry, which provides emergency grants and other assistance to help make sure that children who rely on free and reduced-price lunches at schools do not suffer from a lack of healthy food as schools have transitioned to virtual classes across the country. Also here in Baltimore, we are providing funding for laptops that will be distributed to vulnerable students at the East Harbor campus of Living Classrooms Foundation. These laptops will ensure that students in our local community have access to the tools they need to continue their education from home. Again, I’m very proud of our support of our local communities and appreciative of all the efforts that our employees and our coaches have made in adapting to today’s challenges and paying it forward to support our community. Our business is at the heart of a $230 billion health and wellness industry. This dedication is the foundation of our success. Like all companies, we must adapt to the health and economic challenges across the globe, but we are confident in our mission and our business and growth opportunities. We are in a very strong financial position in a large and growing addressable market with a competitive advantage that we are leveraging for sustainable growth for the long term. We enjoy a business model that can offer not only physical health but also financial health to our clients and coaches, positioning us well in both the short-term and the long-term. Now let me turn the call over to Joe.

Thank you, Dan. Good afternoon, everyone. It’s been a pleasure speaking with some of you over the last couple of months, and I’m honored to be supporting Medifast during a time when our mission is more critical than ever. Let me walk you through our financial results for the first quarter ending March 31, 2020. Revenue for the first quarter of 2020 increased 7.6% to $178.5 million versus $165.9 million in the first quarter of 2019. As Dan highlighted, we ended the quarter with our highest level of active earning coaches in the company’s history at 32,600. This represents 19.9% growth compared to 27,200 coaches in the same period last year. Average revenue per active earning coach for the quarter decreased 8.3% to $5,333 compared to $5,817 for the first quarter last year. Of note, however, is that this metric showed a sequential quarterly improvement of 2%. Discussed in our prior earnings call, the year-over-year decline in revenue per active earning coach was anticipated as a result of the operational headwinds experienced in 2019, which resulted in a reduction in the proportion of less tenured clients as a percentage of total clients. Less tenured clients represent a higher average spend compared to more tenured clients. This puts downward pressure on this metric. We expect revenue per active earnings coach to normalize in the future, as new client acquisition coach sponsorship improves. Also of note, Optavia-branded products grew to 79% of our total company consumable units sold in the first quarter, up from 73% in the prior period. Gross profit for the first quarter of 2020 increased 8.1% to $135.2 million compared to $125.1 million in the prior year period. Gross profit margin as a percentage of net revenue increased 40 basis points, 75.8% versus 75.4% in the first quarter of 2019. The improved gross margin was a result of our price increase taken mid-year 2019, coupled with a reduction of sales discounts realized during the first quarter of 2020 compared to a year ago. SG&A for the first quarter of 2020 increased $11.3 million to $111.7 million compared to $100.4 million for the first quarter of 2019. The increase was primarily a result of higher Optavia commission expense, incremental professional service costs in connection with the scheduled 13-D filing, and increased salaries, benefits, and severance. SG&A as a percentage of revenue increased 210 basis points year-over-year to 62.6% of revenue versus 60.5% in the first quarter of 2019. Non-GAAP adjusted SG&A increased $5.7 million to $106.1 million in the first quarter of 2020, as a percentage of revenue decreased 100 basis points year-over-year to 59.5%. Non-GAAP adjusted SG&A excludes expenses in connection with the scheduled 13-D filing of $4.6 million and severance costs of $1 million. Additionally, as we discussed last quarter, we began seeing a normalization of credit card bad debt expense after deploying enhanced order security last fall, and this trend has continued. In fact, our bad debt expense during the first quarter of 2020 was below 2019 levels and back to 2018 levels and has been holding relatively constant over the last five months, with some month-to-month improvements. Income from operations decreased $1.2 million to $23.5 million from $24.7 million in the prior year period, as increased gross profit was offset by increased SG&A expenses. Income from operations as a percentage of revenue was 13.2% for the quarter, a decrease of 170 basis points from the year-ago period. Non-GAAP adjusted income from operations, which excludes expenses in connection with the scheduled 13-D filing and severance costs increased $4.4 million to $29.1 million. Non-GAAP adjusted income from operations as a percentage of revenue was 16.3%, an increase of 140 basis points from the year-ago period. Our effective tax rate was 21.8% compared to 17.1% in the first quarter of 2019. The increase in the first-quarter effective tax rate primarily reflects the impact of an increase in the state tax rate and a decrease in the tax benefit of stock compensation. Net income in the first quarter of 2020 was $18.5 million, or $1.56 per diluted share based on approximately 11.8 million shares outstanding. Non-GAAP adjusted net income, which excludes expenses in connection with the 13-D filing and severance costs, was $22.9 million or $1.93 per diluted share. For the first quarter of 2019, net income was $20.8 million or $1.70 per diluted share based on approximately 12.2 million shares outstanding. Our balance sheet remains very strong with cash, cash equivalents and investment securities as of March 31, 2020 of $105.3 million compared to $92.7 million at December 31, 2019. The company remains free of interest-bearing debt and is very well positioned in this challenging near-term microeconomic environment. In addition to our strong financial position, we have worked to ensure our supply chain is well-positioned for the current market uncertainties, allowing us to effectively supply consumer demand. Each of our facilities continues to operate following recommended safety protocols, and our logistics partners continue to operate effectively as well. Our Board of Directors declared a quarterly cash dividend in the first quarter of $13.4 million or $1.13 per share, which is payable on May 6, 2020. This reflected a 50.7% increase in the quarterly dividend over the prior year period and is a direct result of our strong financial position and attractive business model. During the first quarter, the company did not repurchase any additional shares, leaving approximately 2,369,000 common shares remaining under our stock repurchase program. The company will continue to look for opportunities to responsibly repurchase its shares in the future at prices that it deems attractive. Of course, market volatility, lack of available debt financing, uncertain business prospects as a result of the COVID-19 pandemic, and an emphasis on preserving liquidity and financial flexibility make undertaking a stock repurchase in this environment a bit more challenging. We will, however, continue to assess these opportunities on an ongoing basis as we continue to monitor and evaluate our capital allocation strategy. We are in a position to capitalize on these opportunities as they arise. Due to the uncertain times resulting from the COVID-19 pandemic, we have decided not to provide guidance for the second quarter and are withdrawing the guidance for the full year 2020. We do not feel at this time that we can reasonably project the second quarter or full year due to the ever-changing environment we are in. However, to follow up on Dan’s earlier comment on our promotional activities and provide an indication of our most recent trends, during April, compared to the same period last year, our promotions are performing well and April revenue has ended with a slight improvement over the same period last year. Additionally, we have seen improved new client acquisition and coach sponsorship as a result of the programming changes we have made. We are also focused on controlling our spending for the remainder of the year. As Dan mentioned earlier, we have canceled our in-person convention, which will be replaced with a virtual event. We are also restructuring our 2021 programming, which will not require an expensive pool in the second half of 2020 or 2021 incentive trip. For your reference, expenses accrued in the second half of 2019 for the 2020 incentive trip totaled $5.6 million. Each of these changes yields significant savings in the back half of 2020, some of which we will redeploy into additional coach and client supporting initiatives. As we have discussed, we are navigating this very uncertain environment day-by-day with the health and safety of our Medifast and Optavia community remaining at the top of our priorities, while continuing to focus on and build for the future, one healthy habit at a time. With that, let me turn the call over for questions.

Thank you. Our first question comes from Steph Wissink with Jefferies. Please go ahead.

Thank you. Good evening, everyone. First question, Dan, is for you to just take us back a bit in time to your fourth-quarter report at the end of February, you were certainly posturing as quite a conservative outlook for the quarter and came in well above that. Maybe just help us reconcile what changed in the business relative to what you had set out for us? And then I just want to clarify your comments on the April quarter to date, that it’s up slightly year-over-year. Help us just contextualize that relative to your nearly 8% growth you reported for the March quarter?

Yeah. Sure, Steph. So, as you remember, coming out of the fourth quarter, that was a quarter where we - the third and fourth quarter were when we had some operational challenges that we focused on fixing in the fourth quarter. The headwinds associated with those challenges are what we faced in the early first quarter, which is what led us to guide on a relatively modest growth year-over-year. At the same time, we were dealing with toward the back end of the quarter, the impact of the pandemic, which also created a lot of uncertainty. So, at the same time, we were cutting expenses to ensure that we could understand how we would sustain profitability in an uncertain environment. So, we worked intensively to focus on creating a strong March, including putting in place an incentive to focus our coaches on client acquisition, and that helped us finish the quarter up stronger than we had anticipated. And with the expenses that we cut, that helped the bottom line over-deliver versus our guidance. To give you a little bit more context to April. April included two specific promotional - well, one promotion and one incentive. So, the incentive was the same one that we ran in March, which specifically encourages through a bonus structure for our coaches to acquire new clients. And the second is a price promotion on our essential kit, which is focused specifically on new clients. And so, with those two promotions - that one promotion and an incentive in place, we were able to achieve a year-over-year increase in April. So, that’s kind of the context - we faced challenging headwinds coming into the end of March and beginning of April that we’re able to turn around and achieve year-over-year growth. But we’re still very early in the quarter. We need to understand how that growth and momentum, or we’ll say, the growth will sustain through the rest of the quarter. And that’s what we’re specifically focused on understanding is how this new promotion that’s withstanding on the surface appears to have been very successful. We’ll maintain throughout the rest of the quarter.

Okay. That’s very helpful. And then just one final question is to take this one level deeper on the promotions. You did run a promotion, if I recall, in November and December or early part of December. It sounds like another - maybe more incentive-driven activation in the first quarter. April quarter to date, we’ve got another incentive and promotion. How should we think about, number one, the receptivity to some of these activation campaigns you’re putting in the market? And then I think you’ve mentioned now on all of them, it’s really about customer acquisition. So, help us think through also about the building of that customer base into future coaches and what you might look for over the course of the next couple of quarters to convert more of your customers into active coaches?

Sure. I mean, as you know, we don’t promote our business a lot, and certainly, this is a departure from what we’ve done in the past. And so, we - I mean we were specifically focused on a couple of things. Our main objective was giving our coaches the tools they needed to break through a challenging environment from a communication standpoint. I think it’s not lost on anybody that what’s been on people’s mind is the global pandemic. So, refocusing them on client acquisition was the first purpose and then giving them the tool in the form of a price discount was the mechanism to help execute that. And so, as Joe stated earlier, we saw that improvement in the April results being tied to increased client acquisition, as well as co-sponsorship. So, the question you’re asking is exactly what we’re focused on is now that we have a healthy influx of new clients, as we’re moving through April, how do we continue to maintain that through the rest of the quarter? So we’ve extended that promotion that we ran in April into May as well and our coaches are specifically focused on doing what they do very well, which is supporting those clients. And as they support them and those clients achieve a health result, a portion of those become coaches and go on to recreate that cycle of bringing in other new clients. So, I think we feel good about what we’ve seen so far. But we also recognize that along with every other company in the country and really the world, we’re trying to understand how the overall populations react and how the continuing changing economy is going to impact our business. But that’s as much as we know right now, and we wanted to make sure that we gave investors and you, as analysts, as much information as we have about our current situation.

Sure. I mean, it’s a little bit of both there. I mean, the Forward and Health actually had an impact on the SG&A cost for the business here. We’re looking at profit of roughly approximately 130 to 170 basis points impact regarding that. As far as the essential kit promotion, that would have an impact on our gross margin. And we will be seeing an impact on the gross margins here. But I believe that we’ve extended that into May; we’re not necessarily sure exactly how that’s going to play out for the third quarter.

Okay. Thank you. That’s it for us.

Thanks, Steph.

Our next question comes from Doug Lane with Lane Research. Please go ahead.

Yeah, hi. Good evening, everybody. Just looking at - there's a lot of cross currents here, and there has been for the past several quarters that we’ve been talking about. And I’m trying to get a feel for how operating margins, which were under pressure in the second half down 200 basis points or so, all of a sudden turned around and increased as much as they did to what are really - as far as I can tell, record operating margin levels. And meanwhile, your sales growth, although it was better than expected, is still decelerating. So help me understand what’s going on from a margin standpoint?

Yeah. Thanks, Doug. Since you asked about last year, you’re right, we were - our operating margins were under pressure, largely because of a quickly changing forecast. So we won’t revisit all the reasons for that, but it had to do with our ability to manage spending in the face of a decline in our revenue. Really just the opposite happened in the first quarter, meaning we were - because these were macro impacts and things, we were already aware of. We began adjusting our spending early in the quarter and then finished the quarter in March stronger than we had anticipated. And so, in that case, we had less spending than anticipated because we’re aggressively managing our SG&A and then we finished the quarter stronger than we had anticipated. So, that’s what created the outsized operating margin and it’s still very strong, but more modest offline revenue growth.

Okay. Well, that makes sense. And taking that out, Dan, you’re not spending as much on in-person meetings. I get that, given the environment, but that’s not a permanent change, right? I mean, you’re still going to have to have the in-person connectivity as a direct seller. So really should we think about perhaps unusually high margins this year and then maybe adjusting back to normal, assuming there is anything close to normal in 2021?

We’re taking this a quarter at a time and trying to understand what we learn as we go through it. So, I think we’ve - as you point out, we’ll achieve some savings in the back half of the year, which is typically - I mean, our two biggest expenses there are the convention and the accrual for the next year’s leadership advancement trip. So in the case of the convention, as you pointed out, we’re going to be doing a virtual event, which we anticipate will generate some savings. We’ll be using those savings either to ensure profit for the back half of the year, so operating margin or as we understand more about how to support our coaches, spend back to drive revenue as well. So, we’re kind of taking a wait-and-see approach to better understand what the environment is as we go forward. And in our favor - I mean what we favor is to continue to help our coaches grow through client acquisition and at the same time, make sure that we’re being responsible in managing our P&L effectively. As far as what it means for future years, I think there is very likely that there will be some things that we learn in this environment that we’ll continue to use as we transition. So, we’ll evaluate what this new – what we learned from these promotions. As Joe pointed out, we are not accruing in the back half of the year for the next year’s leadership advancement trip. We’ll look at how we use our funds to help support and recognize our leaders as they develop as coaches. And beyond that, again, we’re just - we’re trying to understand how to best support in a very different environment. So, we’re going to take it one quarter at a time. And as soon as we have more clarity into the environment and what we’re doing, we’ll be sharing it with you as analysts and with broader investors.

Okay. No, that’s fair. And I understand that Dan, but not everybody’s full guidance because of COVID. And certainly, companies like you that come in with a better sales and margin number, indicating demand seems to be in pretty good shape. You mentioned you grew in April. The supply chain seems to be in pretty good shape. So, as somebody here from the outside, what am I looking for from the COVID situation? Is this something you’re concerned about that might happen with - at the coach level or the demand level? I mean, you sell food products, but that’s a preferential product. Is there anything in the supply chain we should be looking for, or is it just general conservatism, which would be understandable as well?

No. I think what we’re looking at certainly is - we want to make sure that we understand what the impact is of an economic downturn on our business. I think that’s what we’re now potentially facing. It could be positive if we’re viewed as an income opportunity. It could also be negative if we’re viewed as an expense that goes beyond what people are willing to spend if their incomes are tightened up. So, we feel good about where we are, particularly as it relates to our very strong balance sheet with no debt and plenty of cash. So, in terms of - what we’re looking for or what you should be looking for is a return to an understanding of where the future is. So, with every state in a slightly different point in time in terms of returning to work, that has an impact. So, we want to see how the economy returns to normal. We want to make sure that we’re able to continue to keep our employees, particularly what are deemed as essential employees in our supply chain, healthy. We have gone to great lengths, including putting full-time nurses, both at our manufacturing facility as well as at our distribution facility. And we have a screening process. We also are going through a very strict policy around quarantining for anybody who travels. But this is all new to us. We haven’t had to worry about that in the past. And so, that’s - those are the uncertainties along with understanding how the long-term impact of promoting our business and what that looks like. So that’s kind of what we’re looking for, and those outcomes of those different activities are what we’ll be sharing with you.

Okay. Fair enough. Thanks, Dan.

Thank you.

Our next question comes from Bill Baker with GARP Research. Please go ahead.

Yes, hi. Kind of two questions that are interrelated, really. I’m kind of curious if you could put a little perspective on when you acquire new coaches, historically, versus what’s happening now in this COVID-19 kind of environment. I mean, historically, I think of you getting coaches from people who work in an office environment and being noticed for having lost a lot of weight and recruiting at their job site. And then I think of you adding new coaches from social media and relationships that aren’t in an office. And I’m wondering how important one is versus the other, historically, versus today where people may not be going to work, but they might be spending a lot of time on social media. And then the related question is, I know you don’t spend a lot of money on advertising anymore, but you have this whole tool set to help with social media. And I’m wondering if you’re seeing any changes in trends now that we’re in COVID-19 environment? And can you help your coaches and tweak things or advise them in this brave new dystopian world?

Sure. I think the first question, social versus in-person or virtual versus in-person. If you went back five or six years, I’d say there was probably more of a balance. In the last three years, in particular, our coaches have become far more adept at working through social media. And so, it’s far more important for us, which is why I think we feel like we’re in a good position to be able to operate successfully or help support our coaches in that endeavor, as they continue to use social media as a way to tell their story. And that’s - so that’s - because the majority of our approaches were clients first, that’s how they were attracted to coaching. And so, that, in turn, becomes how they move forward and continue to train other new clients. As far as advertising, that’s an interesting question because we actually view the 43% of revenue that we spend as compensation for our coaches for in-person advertising. And so, we view every year that we have a significant word-of-mouth campaign that goes on across the United States and in Hong Kong and Singapore to attract new clients. And as that relates to your last part of your question, which is do we help? How can we help? I think the answer is, yes, we started being - started to be far more proactive in leveraging our PR wins, which include everything from magazine placements to TV placements to then push out to our field of coaches, and they, in turn, share those things on social media. So, we think that that’s a - not only has been an important part of the last several years, but will become an increasingly important part of our future in terms of how we attract clients and support our coaches.

Okay. Are you finding that the message - I mean, one of the risk factors for COVID-19 is obesity? Is that a message that is resonating?

Yeah. We’ve deliberately told our coaches to kind of stay away from trying to focus on our products being a solution in the face of COVID-19. I think that’s maybe part of the question. But I think there’s an aspect that we’re seeing and we believe we’ll see more of, which is that the majority of the world being on lockdown are doing more eating and less exercising than they typically would. So, you can read about it. You can see what the trends are. So, I think we believe, particularly as the lockdown starts to loosen up that - and I think we’re seeing it already even through search trends. People are less consumed with understanding the pandemic, more focused on and understanding how they are going to emerge and become the person they want to be. If that means 10 or 15 pounds lighter, that’s part of it. But really, our focus goes far beyond weight. It focuses on achieving lifelong health. And so, I think being healthy is going to continue to be on everyone’s mind, which means we will continue to have a large addressable market. And the way they do that, we know from experience is helped by having the partnership or the support of a coach in doing that and a program that helps people learn healthy habits, which is exactly what we focus on. So, I think our coaches are in a great position to help the population emerge from the lockdowns and the focus on their collective health.

If I could just squeeze in one quick one here, too. Do you think the first quarter would have looked any different if COVID-19 hadn’t have happened and if so, how much at all?

I mean, the answer to the first part of the question is, yes. We saw significant pressure in the back half of March as soon as the country was going through a very uncertain time. In terms of projecting what the difference would be, I think, it’s likely, we would have been stronger. We haven’t tried to calculate and communicate that, but we did not - I mean, it didn’t have a negative impact on our business.

But did that sort of heal itself in the beginning of April, you were talking positively about April?

We feel good about where we ended April, but the growth in April was driven by a set of tools that we haven’t used before.

Okay.

And so, what we feel good about is that our coaches were extremely engaged and very successful in communicating our message, and we’re going to continue to monitor very closely to understand how those new clients are coming in perform compared to what our clients looked like in the past and then how they - what portion of those convert to coach. So, there is no reason for us to be pessimistic about that, but it’s one of those uncertain areas for us right now.

Thanks. Thanks for answering all my questions.

You bet. Thanks, Bill.

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Chard for any closing remarks.

I’d like to thank everybody for joining and appreciate all of our shareholders who have joined listening on the calls, in particular. Also I would want to recognize our coaches, our clients, and our employees during this challenging time. I think we feel good about how we’ve weathered the headwinds coming in. And we feel confident and good about our future and our long-term prospects as we continue to focus on helping the world become healthier. With that, look forward to speaking with many of you soon.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.