NutriSystem, Inc. Investor Presentation April 2008 Safe Harbor We make forward-looking statements in this presentation which represent our expectations or beliefs about future events and financial performance. Forward-looking statements are identifiable by words such as “believe,” “anticipate,” “expect,” “intend,” “plan,” “will,” “may” and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. Forward-looking statements are subject to known and unknown risks and uncertainties, including those described in the Company’s filings with the Securities and Exchange Commission. In addition, actual results could differ materially from those suggested by the forward-looking statements, and therefore you should not place undue reliance on the forward-looking statements. 2 Keys To Successful Growth Leverage Strategic Assets Innovate and Be Customer- Focused Continue to Build the Brand Marketing-Driven Culture 3 Revenue & EBITDA Growth = Revenue , CAGR = 173% = EBITDA, CAGR = 342% 2004 2005 2006 2007 Adjusted EBITDA – defined as income from continuing operations excluding non-cash employee compensation, other expense, equity loss, interest, income taxes and depreciation expense 4 The NutriSystem Platform Success MarketingDriven Formula Ease of Use & Convenience Value Internet Ordering & Counseling No Membership Fees / $10 Per Day Nutrition No Center Visits / Delicious Meals Already Prepared Anonymity Advanced: Sound Science / Effective Program NutriSystem is a weight loss program with a heart healthy menu that emphasizes Low Glycemic carbohydrates, optimal amounts of protein and healthy fats. 5 Multi Channel Marketing Internet Ads TV Commercials Magazine Ads DRTV Infomercial NutriSystem .com Call Center Outbound Telemarketing Direct Mail Email 6 Celebrity Endorsements The US Diet Industry Gallup Survey Diet Segments 58% of US adults have a BMI that classifies them as overweight or obese 99 million US adults are dieting at a given time (64 mm to lose, 35 mm to maintain) Commercial weight loss segment represents approximately 7 million dieters Dieters move between segments Majority share of commercial weight loss segment is controlled by a few companies 1 out of 3 dieters are men Largest projected increase over next ten years will be senior market Medical Diet 9% Commercial Weight Loss Program 7% Self Directed 57% Other Plans 7% Plan Followed on Own / No Fee 20% Source: Gallup Diet Study 2007 7 Dieters’ Motivation Source: The Gallup Organization (2006 Survey) 8 NutriSystem Delivers Results 82% Customer Satisfaction1 Clients lose an average of 9% of their starting weight2 Mean weight loss is 1.5 to 2.0 pounds per week2 Weight loss increased as weeks on program increased2 (1) Source: 3rd party research conducted by TARP Worldwide, 2008 Satisfaction defined as top two box. (2) Source: 3rd party research conducted by National Business Research Institute, 2006 9 Guaranteed Nutrition Everyday Nutritional Breakdown 10 Balanced Nutrition Calorie Controlled Heart Healthy - OmegaSolTM Controls Hunger High in Fiber Low in Sodium Assumes individual follows program including supplements Carbohydrates 55% Protein 25% Fat 20% Further Segmentation Marketing Channel Optimization International Expansion 2008 Strategy Customer Reactivation & Retention Product Innovation New Ecommerce Platform 11 Financial Overview 12 Increasing Revenue = Revenue per Customer, CAGR = 8% = Revenue in millions, CAGR = 173% 2004 13 2005 RPC is the trailing 9 month average for the initial diet cycle 2006 2007 Our Database Has Grown Substantially PNO On Program Inactive 5.0 M 5M 2.5 M .2 M Inactive = 2.0 M Active = .2 M 1.25 M PNO = 2.8 M 2000 2001 2002 2003 2004 2005 2006 2007 14 Increasing Reactivation Revenue Contribution = Reactivation revenue, CAGR = 202% = Reactivation contribution, CAGR = 220% 2005 15 Contribution margin is operating margin excluding the cost of marketing 2006 2007 Recurring Revenue Model through Retention and Reactivation Retention Drivers Customer Life Time Value Increase counseling support Improve the online experience Increase revenue per customer via promotions to lengthen stay New & Improved Foods Reactivation Drivers Call Center Salvage Efforts Database Marketing 16 New & Improved Foods Time NutriSystem Enjoys a Tremendous ROIC LTM Return on Invested Capital¹ 80% 73% 70% 60% 50% 40% 37% 37% 30% 20% 19% 18% 16% 10% 14% 12% 12% 10% 7% 7% NM NM ¹NOPAT / (Debt + Equity). 3/31/08 17 N au til u s m t ie ts .c o af Kr eD BT Y N N es G tle en er al M ills Sa ra Le e M Li ed fe ifa Ti st m e Fi tn es s N ut riS W ys ei te gh m tW at ch er s H er ba lif e U ni le ve r Ke llo gg 0% Adjusted EBITDA & Free Cash Flow = Adjusted EBITDA, CAGR = 112% = Free Cash Flow, CAGR = 163% 2005 2006 2007 Adjusted EBITDA – defined as income from continuing operations excluding non-cash employee compensation, other expense, equity loss, interest, income taxes and depreciation expense 18 Liquidity Profile/Shareholder Distribution Liquidity Profile • Debt Free • $200mm committed undrawn bank facility Shareholder Distribution • Q1 purchased $45mm of our stock, approximately 10% or 3.3mm shares • Plan to continue to buy back shares to increase shareholder value up to $138mm currently authorized • Paid quarterly $.175/share • Annualized dividend of $.70/share As of 3/31/08 19 Capitalization Summary Cash Flow Net income Depreciation, amort. & noncash comp Change in WC Capital expenditures Free cash flow Stock buy-back Other, net Change in cash & marketable securities Cash & marketable securities Inventory Accounts receivable Other current assets Accounts payable Accruals Other current liabilities 20 Long term debt Total shareholder equity FY 2007 $104.2 9.8 (11.9) (18.7) 83.4 Q1 2008 $14.1 3.2 27.1 (2.1) 42.3 (121.8) (1.1) ($39.4) (44.6) 2.8 $0.5 12/31/2007 42.4 82.5 19.1 15.4 46.1 4.4 5.6 3/31/2008 43.0 70.3 22.4 15.0 56.4 10.7 6.7 0 142 0 114 Q1 Results & Guidance Q1 Results • Revenue of $216 mm • 50.5% Gross Margin • Marketing 31% of Revenue • $26.6mm Adjusted EBITDA Guidance • Revenue • • • • • Q2 $180-$190 mm FY $700-$720 mm Adjusted EBITDA Q2 $36-$40 mm FY $125-$135 mm Adjusted EBITDA – defined as income from continuing operations excluding non-cash employee compensation, other expense, equity loss, interest, income taxes and depreciation expense 21 Key Takeaways Manage cash flow to invest for growth and maximize shareholder value Diversify product offering Expand into new markets Focus on customer experience and improving ROI Continue to build our brand 22 NutriSystem, Inc. Nasdaq: NTRI www.nutrisystem.com 300 Welsh Road, Building One Horsham, PA 19044 tel: (215) 706-5300