NutriSystem, Inc. Reports Second Quarter 2008 Results; Announces Quarterly Dividend of $0.175

Business Wire, July 23, 2008

* Solid Second Quarter Results for 2008, Revenues of $194 Million and Adjusted EBITDA of $39.4 Million, driven by continued stabilization and improved marketing efficiency over the first quarter.

HORSHAM, Pa. -- NutriSystem, Inc. (NASDAQ:NTRI), a leading provider of weight management and fitness products and services, today reported financial results for the second quarter ended June 30, 2008, including:

* Revenue of $194,029,000, compared to $213,384,000 in the second quarter of 2007;

* Income from continuing operations of $21,968,000, compared to $33,556,000 in the second quarter of 2007;

* Adjusted EBITDA, defined as income from continuing operations excluding non-cash employee compensation, other expense, equity loss, interest, income taxes and depreciation expense, of $39,375,000, compared to $55,399,000 in the second quarter 2007;

* Fully diluted earnings per share of $0.71, compared to $0.96 in the second quarter of 2007;

* Cash and cash equivalents of $61,980,000 at June 30, 2008, and no debt outstanding.

"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 Board of Directors declared the Company's quarterly dividend of $0.175 per share, payable August 15, 2008 to shareholders of record as of August 5, 2008. While the Company intends to continue to pay regular quarterly dividends; the declaration and payment of future dividends are discretionary and will be subject to determination by the Board of Directors each quarter following its review of the Company's financial performance.

Subsequent to the quarter end, the Company repurchased approximately 1.0 million shares of stock for $15.2 million. "We continue to use the excess cash flow generated after investment in growth initiatives to return capital to shareholders both in the form of dividends and share repurchase," stated Chief Financial Officer David Clark.

Third Quarter 2008 Outlook

For the third quarter of 2008, the Company estimates revenues will be between $160 million and $170 million and Adjusted EBITDA will be between $25 million and $30 million. The Company defines Adjusted EBITDA as income from continuing operations excluding non-cash employee compensation, other expense, equity loss, interest, income taxes and depreciation expense. Further, the Company continues to expect full year 2008 revenues to be between $700 million and $720 million, and Adjusted EBITDA is now expected to be between $110 million and $120 million. "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.

Conference Call and Webcast

Management will host a conference call at 4:30 PM Eastern Time Wednesday, July 23, 2008. The conference call will include remarks about the quarter and the Company's outlook from President and Chief Executive Officer Joe Redling, and Chief Financial Officer David Clark. Live audio of the conference call will be simultaneously webcast over the Internet on the Company's website, www.nutrisystem.com, please click through to the Investor Relations page at the bottom of the home page to locate the microphone icon.

About NutriSystem, Inc.

Founded in 1972, NutriSystem (NASDAQ:NTRI) is a leading provider of weight management and fitness products and services. The Company offers a weight loss program based on portion-controlled, lower Glycemic Index prepared meals. The program has no membership fees and provides free online and telephone counseling.

Forward-Looking Statement Disclaimer

This press release may contain forward-looking statements that are made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements regarding NutriSystem's outlook and guidance for the third quarter and full year 2008, its expectations regarding initiatives, its expectations regarding the effect of economic and competitive pressures, statements about the benefits to be achieved from investments made in 2007 and 2008, and from share repurchases, and other statements that are not statements of historical fact constitute forward-looking statements. These forward-looking statements involve a number of risks and uncertainties, which are described in NutriSystem, Inc.'s Annual Report on Form 10-K and its other filings with the Securities and Exchange Commission. The actual results may differ materially from any forward-looking statements due to such risks and uncertainties. NutriSystem, Inc. undertakes no obligation to revise or update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release.