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*** Week of March 3, 2014 ***
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The Latest News...
NutriSystem Reports Q4and Full year 2013 Results
Q4 2013:
- Revenues of $69.9 million, an increase of 12% from revenues of $62.5 million in the fourth quarter of 2012;
Year 2013:
- Revenues of $358.1 million, a decrease of 10% from 2012, although revenues were up 8% in the second half of 2013 versus the same period last year;
- Adjusted EBITDA of $31.6 million, an increase of 16% from $27.3 million in 2012;
- Adjusted net income of $11.6 million, an increase of 111% from adjusted net income of $5.5 million in 2012;
Dawn Zier, President and Chief Executive Officer, said, “With a second consecutive quarter of year-over-year revenue growth and our ongoing track record of improving bottom line results, we are achieving our financial goals and continuing to progress with our turnaround. Revenue growth reflects the success of our product and program innovation as well as improvements in our marketing, segmentation and sales channel diversification efforts. In a market that has become increasingly noisy, we believe winning is all about innovating and connecting with customers in a more personalized way. We are very pleased to see that more consumers are choosing Nutrisystem as the solution they can trust to help them navigate their weight loss journey.”
Ms. Zier continued, “While our performance over the second half of 2013 has created momentum heading into 2014, the real test for our new management team was this diet season. Based on year-to-date sales of our new Nutrisystem® My Way® weight loss program with the Fast 5™ kit, we are off to a good start. We expect this critical first quarter to be our third consecutive quarter of year-over-year top line growth, driven by revenue gains in both our direct-to-consumer and retail businesses. We continue to execute on our four-point plan as we begin the growth phase of our turnaround and expect to achieve full year revenue growth in 2014 for the first time in five years.”
See the complete press release and financial tables here:http://finance.yahoo.com/news/nutrisystem-reports-second-consecutive-quarter-210100427.html
Weight Watchers Disappoints, On Multiple Levels:
Q4 and 2013 Financial Performance (2/13/2014)
Q4 Results
Revenues of $366.1 million in the quarter, down 11.0% versus the prior year, with total paid weeks down 8.5%. Fourth quarter 2013 meeting revenues for the North American meetings business (NACO) were down 15.0% versus the prior year, driven by a lower active base at the start of the quarter and lower enrollments. Q4 2013 meeting paid weeks and attendance decreased 10.8% and 13.1%, respectively, versus the prior year. Q4 2013 International meeting revenues were down 11.4% versus the prior year period, primarily driven by lower revenues in the United Kingdom.
The company's stock price tumbled 25% to $22.88 on Friday 2/14, after declining as much as 27% for the biggest intraday drop since the company’s initial public offering in 2001.
Full Year 2013 results
Full year fiscal 2013 revenues decreased 6.2% to $1.72 billion versus the prior year. This decrease resulted from lower revenues in the meetings business as it experienced weaker volumes globally, most notably in North America and the UK. This decline in meetings business revenues was partially offset by modest revenue growth in WeightWatchers.com.
Full year fiscal 2013 total paid weeks were down 3.9% compared to
the prior year. Online paid weeks increased 1.7% versus the prior year,
while meeting paid weeks declined 10.1%. Full year fiscal 2013 operating income decreased 9.7% versus the prior year.
2014 Guidance
The company expects 2014 revenues to decline further to $1.4 billion, with a decline in the 20% range. Wow!
Marketdata Commentary
Weight Watchers right now is like a ship adrift with no rudder. Sorry to say, but the firm has lost its mojo. Management is basically saying they're throwing in the towel for 2014 and there's nothing they can do. This is the attitude of an industry leader? We disagree. There's PLENTY they can do. They just aren't doing it! More Jessica Simpson ads, no mention of developing more customization, entering untapped markets, no new retail partners, blaming free apps for their decline. Fact is, the firm is being out-innovated by the likes of NutriSystem, Medifast and others. The company's focus is on controlling costs and reducing headcount (financial), when it should be on MARKETING and the development of new services. How about shifting $10 million of that $296 marketing spend, or some of the $175 million cash on hand toward developing new programs and services, and getting them to market quicker? And how about getting out of the UK market, where it has encountered really tough competitors for some time now? And, what happened to "re-imagining our core offerings" that management spoke about a few months ago? Exactly what have they done to re-imagine their program?
See the complete press release and financials here:
http://www.weightwatchersinternational.com/phoenix.zhtml?c=130178&p=irol-newsArticle&ID=1900030&highlight=
The Retail Healthcare Tsunami Is Coming - RediClinic Launches "Weigh Forward" Weight Loss Program
Marketdata has been talking about the entry of national drugstore chains into the weight loss market, via their in-store mini-clinics for some time now. First up was CVS with their Take Care Clinics. Now, a smaller chain, RediClinics has launched. Can Walgreens and other chains be far behind?
Wellness Layers, a leading provider of health and wellness engagement portals, and RediClinic, the nation's largest independent operator of retail-based convenient care clinics, today announced the launch of RediClinic's redesigned Weigh Forward portal.
Weigh Forward, offered at RediClinic's 30 locations inside H-E-B grocery stores in Texas and is licensed to other providers, is a 10 week, 1-on-1, medically supervised program developed in cooperation with Dr. David L. Katz, Director of Yale University's Prevention Research Center. The program offers an innovative behavior change program for weight loss with weekly clinic visits supplemented by an extensive online platform that supports both the clinicians who are delivering the program and the patients enrolled in it.
The
personalized planner is a suite of interconnected applications
including an action-triggered checklist, a weekly personal plan for
addressing behavior barriers, meal planning and tracking, fitness and
weight tracking, instructional videos from Dr. Katz, recipes and
articles to support each week's plan, bi-directional communication with
the clinician, and progress graphs. The clinician console includes
coaching applications for patient management and encouragement, training
resources, digital visit forms, scheduling, messaging, ecommerce,
medical history, calculation of risk, lab results and orders. The
experience is further enhanced with a social support network.
RediClinic’s
staff consists of more than 100 board certified Nurse Practitioners, Physician
Assistants, and Medical Assistants are thoroughly trained in the Weigh
Forward system.
Prices:
Jump Start Program - 2 visits $199 (labs, physical exam, body composition, sample meal replacement bards & supplements, quick start guide)
Complete 10-week program - $499 (weekly 15 min. visits, labs, 24/7 access to tech platform with meal plans, recipes, fitness videos, e-coaching, more)
Boost Program for Maintenance - $20/month (monthly in-clinic visits, access to MyWeighForward.com, ongoing coaching)
Marketdata Commentary
Here's the kicker, in terms of this program spreading to other locations (i.e. more competition for existing weight loss companies)....
The
complete Weigh Forward program and portal are available for white-label
license by certified care providers and can be configured
as a
standalone system or integrated with other systems.
The RediClinic weight loss program website with more details is:
http://www.rediclinic.com/weighforward/program.php
New Report: 2014 Weight Loss Market Forecast Released
New Marketdata Status Report Released
Marketdata Enterprises has just released a new 54-page "2014 Weight Loss Status Report & Forecast". This promises to be another challenging year for the diet market, as revenues were estimated to have actually declined 1.8% last year to $60.5 billion, and they are only expected to grow by 1.2% this year.
One of the major findings and predictions is that the market is entering a new phase, where SERVICES become more important and grow faster than diet PRODUCTS, due in part to the Affordable Care Act.
Sales of diet soft drinks, artificial sweeteners and diet dinner entrees are falling significantly as consumers turn away from high processed foods and non-natural ingredients. Commercial chains had a bad year and most other market segments were flat.
The report covers discussions of: 2013 market performance, recent competitor developments and top management turnover, Nestle’s sale of Jenny Craig, new programs for 2014 diet season (by Weight Watchers, Jenny Craig, Nutrisystem), the coming paradigm shift from diet PRODUCTS to diet SERVICES, dieter demographics/latest trends, why the Affordable Care Act can be profitable for companies providing counseling (who qualifies?), CVS drugstore chain enters market with mini-clinic program, threat posed by Walmart, weight loss & fitness apps – how big a threat?, new diet books, reasons why market growth is slow – how diet companies can execute better, customize programs, form new retail partnerships, and more.
See the Table of Contents here:
http://marketdataenterprises.com/Diet%20Mkt%202014%20Status%20Report%20TOC.pdf
To Order: Visit the Marketdata website's store here: (report # FS45)
http://www.mkt-data-ent.com/Merchant2/merchant.mvc?Store_Code=mkt-data-ent&Screen=PLST
Or, call us weekdays at: 813-907-9090
Dieting Habits in Britain
At least 55% of Briton tried to lose weight last year (almost exactly the 54% share reported in America by the Calorie Control Council's 2010 survey). 2.8 million adult Britons go on a diet each year.
According to Mintel research, the 5:2 diet, which encourages intermittent fasting where followers survive on as little as 400 calories on two ‘fasting’ days a week, is now the UK's favorite, chosen by 39 per cent of dieters. That is followed by low carbohydrate diets, such as the Atkins (32%), and low fat plans like Dukan (25%).
The Paleo Diet, which mimics the diet of cavemen, the Juice Cleanse Diet and Mediterranean Diet were also Google’s top trending diets in 2013.
When it comes to shifting unwanted pounds, exercise now tops the U.K.'s dieting choices however, with 60% of Britons
prioritizing it over dietary changes.
As for the cost of programs across the pond, it has been estimated that starting a new one, including joining a "slimming club", buying shakes or healthier foods, can cost about £160. The average diet, according to a survey by Engage Mutual, lasts just 19 days, and women, in particular, can start three diets per year (vs. 4-5 in America).
Diets that deliver food to your
door, such as Diet Chef (with 100,000 customers) will pay £245 a month to dine on specially formulated meals.
Weight Loss May Be Coming to A Walmart Near You!
You heard it here first...
It's no secret that NutriSystem has a partnership with Walmart and one can sign up for the diet program in 4,000 stores. However...did you know that in early 2011, Walmart acquired tech start-up Kosmix for $300 million, and in doing so, established a Mountain View, CA headquarters for innovation? Furthermore, it followed in 2013 with a second acquisition, this time in the patient-focused healthcare space, RightHealth.
According to Xconomy.com: "The dual acquisitions, combined with an influx of capital investment from the parent company, mean the retail giant is poised to make significant waves in healthcare in the coming months...Walmart Labs will likely use the next year to lay out new modes for connecting retail care back into the primary care communications loop."
"Given that Walmart is a global leader in quantifying retail decisions and automating communication, many have speculated about Walmart’s renewed fight for the healthcare space. This time around, I doubt they will try to convince physicians to use a particular electronic health record system, but rather look to develop a patient-centered platform that integrates consumer preferences and health habits to deliver, store, and transmit targeted information. For example, with the acquisition of Reclip.it, Walmart now has the ability to leverage advanced personalization technology and the startup’s big data expertise to develop a more targeted shopping experience."
Further: "As Walmart’s healthcare offerings expand, the record of services delivered (from eyeglass to wellness visits and blood pressure measurements) can also be stored and analyzed in a single mobile interface that the consumer controls.
Connecting this information to the primary care MD via the patient eliminates many cultural and technological barriers that foiled Walmart’s initial attempt at health record integration, while at the same time opening many doors for improving patients’ health and expanding on the scope of their services."
Expect this new legislation in CA to usher in a new
definition of what it means to “make a stop at the pharmacy.” California is becoming the first state to demonstrate a truly
integrated retail and community healthcare experience. And as is often
the case, where California goes, the rest of the country follows.
Marketdata Commentary
With 11,000 store nationwide, this could be a game changer for weight loss competition. The writing is on the wall. Just a matter of time before Walmart develops its own weight loss program, OR hooks up with a trusted partner. Will that partner be you?
British Supplement Maker Finds That Women Go On Twice As many Diets As They Have Lovers - 16 In Their Lifetime!
Jan. 20, 014... Women go on twice as many diets during their lives as they have lovers, according to new research. The average woman diets 16 times, shedding a total of five stone, and has eight lovers in her lifetime. More than half of those polled admitted they had been on more diets than they'd had sexual partners.
According to the study, the average diet lasts just one month, with women most commonly losing between 5lbs and 7lbs. However more than a quarter of women (27 per cent) confessed to ditching their diet after just a week.
The
number one reason for giving up a diet is a lack of willpower, followed
by boredom and a lapse after a night out with friends. By far the most popular reason for starting a diet is unhappiness with body shape, chosen by half of those polled.
The findings were revealed in a new survey of 1,000 women by the diet firm Forza Supplements.
College Women Are Heavy Dieters - 91%
According to the National Eating Disorders Association, a whopping 91% of college women attempt to control their weight with some form of dieting. This is well above the average for all adults of 54% (Source: Calorie Control Council). This is no surprise to us, since we've known that young women are heavy users of celebrity diets and easily accessible over-the-counter retail diet pills and meal replacements such as shakes and bars. Many female students flock to fad diets and inexpensive do-it-yourself diets such as the Paleo Diet, Special K diet and others, rather than joining costly structured commercial plans such as Jenny Craig, NutriSystem, or even Weight Watchers. Convenience and price are key factors for these college students. The question then becomes, how do weight loss companies reach this group of customers with their offerings? -- We would think online would be the best option. Perhaps testing some kiosks or "stores" at student unions at college campuses as well? (Think Starbucks mini-sites now operating on the college campus.)
$26 Million Cost of Doing Business?
FTC Comes Down on Sensa
The marketers of the weight loss additive Sensa will have to pony up $26 million in redress to consumers to settle charges that the company used deceptive advertising that claimed people could lose weight just by sprinkling the powder on regular food. The FTC said that the company used bogus clinical studies and paid endorsements, generating a whopping $364 million in sales between 2008 and 2012.
The FTC will also collect $7.3 million from LeanSpa, which promotes colon cleanse weight loss supplements via fake news websites.
The agency also announced charges against the marketers of two other products that made unfounded promises:
- L'Occitane, which claimed that its skin cream would slim users’ bodies but had no science to back up that claim, and
- HCG Diet Direct, which marketed an unproven human hormone that has been touted by hucksters for more than half a century as a weight-loss treatment.
The FTC charged that California-based Sensa Products, LLC, its parent, and two individuals deceptively advertised that the powdered food additive Sensa enhances food’s smell and taste, making users feel full faster, so they eat less and lose weight, without dieting, and without changing their exercise regime. The defendants did not have competent and reliable scientific evidence to support these claims, according to the FTC’s complaint.
The defendants typically charge $59 plus shipping and handling for a
one-month supply of Sensa. They provide the powder in twelve flavors,
and have marketed it through radio and print ads, retail
chains such as Costco and GNC, a promotional book, TV ads and
infomercials, Home Shopping Network, ShopNBC, telemarketing, and the
Internet.
The FTC’s complaint names parent company Sensa, Inc., Sensa Inc. CEO
Adam Goldenberg, and Sensa creator and endorser and Sensa Products
part-owner Dr. Alan Hirsch.
The Arizona-based company HCG Diet Direct, and its director Clint
Ethington, marketed liquid homeopathic hCG drops by falsely promising
they would cause consumers to rapidly lose substantial weight. The
defendants have agreed to enter into a settlement with the FTC that would bar such deceptive claims in the future.
The defendants sold HCG Diet Direct Drops, a diluted liquid form of human chorionic gonadotropin.
Marketdata Commentary
Let's see...$374 million over 5 years equals an average of about $73 million a year. Subtract production, packaging and advertising costs, plus the cost of what the FTC alleges are "bogus studies", and that still leaves a tidy profit. Would you be willing to spend $26+ million to make $364 million? The $26 million is just another "cost of doing business." About five years ago the FTC slapped a $10 million fine on the makers of Enforma, another bogus weight loss supplement, which was estimated to take in $70 million a year.
Fact is, by the time the FTC builds a case against you in 2-3 years and levies a fine (maybe longer, since the agency is understaffed), you've made a tidy profit. Who cares if you go out of business?! Unfortunately, that's the business model that any bogus weight loss supplement maker knows well and profits by. According to Nutrition Business Journal's annual "Sports Nutrition & Weight Loss" report, there are usually a half dozen weight loss supplements that generate $50+ million per year in sales. The situation has not changed in the past decade and is not likely to unless the FTC moves faster. America's gullible dieters will always try something new if the price is right and the marketing is clever enough.
The complete FTC press release can be found here:
http://www.ftc.gov/news-events/press-releases/2014/01/sensa-three-other-marketers-fad-weight-loss-products-settle-ftc
New Marketdata Study: Worksite Weight Loss Programs
Marketdata has just released a new study entitled: "Worksite Weight Loss Programs: A Market Analysis". At-work weight loss programs will become more popular under Obamacare, and as workers seek inexpensive and convenient ways to lose weight. This market is expected to grow 13% per year, from an estimated value of $859 million in 2012.
There are several dozen major players in this market, providing behavior modification and education counseling, health risk assessments, phone and online counseling. Weight Watchers has a good foothold but by no means dominates this market. Marketdata's study finds that the typical employer cost for at-work weight loss programs is $375/year. Some cover all of it, some just part of it.
This 147-page study examines that nature and structure of these programs, national receipts from 2005 to 2018 forecast, dieter demographics, a status report of the overall weight loss market, key market trends, types of programs, ROI, incentives and contests being used, participation rates, expected effects of Obamacare, and in-depth profiles of 24 providers.
The price of the study is $1,395, and it's also sold by chapters. Contact Marketdata to order or for a Table of contents. Call our office at: 813-907-9090. Also order online at www.marketdataenterprises.com.
2014 Diet Season Begins - What's New This Year?
Yes, the annual battle of the bulge has officially begun. The office parties are done, the holiday family gatherings are over, the pumpkin pie and egg nog have been consumed. Now it's time to pay the piper. If history is a guide, then the average American has put on 7 lbs. since Thanksgiving. Now the choice of companies to help them take it off.
Will the diet companies be able to eke out some growth this year? Will they introduce something compelling for dieters? Will they be able to partner with technology firms to address the electronic threats such as mobile apps? Will they begin to tap underserved niches? That's the $64,000 question. So far, the weather is not helping, as snowstorms and extreme cold blanket the Midwest and Northeast (not good for weight loss center meeting attendance). Let's examine some of the offerings...
Weight Watchers
Weight Watchers is responding to the technological changes
in the industry by hosting webcasts for members and will have
spokeswoman Ana Gasteyer, the former Saturday Night Live cast
member participate in a
webinar with clients. Jessica Simpson will tout its new two-week
Simple Start program, which gives clients a list of food to eat
and has a mobile app. Nothing earthshattering here.
Jenny Craig
Jenny Craig may not have much new this year until its
acquisition by North Castle Partners LLC, announced in November,
is complete. Fact is, its plan is still very pricey for the typical dieter. However, Obamacare may be a blessing since the company does provide coaching which may be covered under new insurance company rules. The key is whether the firm's coaches qualify as "qualified healthcare professionals" (such as a Nurse Practitioner of Physician's Assistant). We'll have to get more clarification.
NutriSystem
Nutrisystem is banking on customized diet programs to help
revive sales that have slumped for five years. The new My Way
diet is based on the Mifflin-St. Jeor equation, which uses age,
gender, height and weight to calculate the number of calories a
person needs. The company
aims to have its customers lose 1-2 pounds a week by
consuming 1,000 to 2,000 calories a day. Before signing up for My Way, customers answer an online
survey about how much they exercise, why they want to lose
weight and what they crave. The firm still faces headwinds with the price of its food.
Nutrisystem’s core 28-day menu of fare is $269.99. Also, many users complain about the shelf stable food's quality. We think that management DOES get it - that dieters need customized plans, not one size fits all.
Medifast
Medifast had 83 corporate stores and 36 franchises
as of Sept. 30, and is closing some underperforming centers and
plans to double the number of franchises in the next three
years. The company also is
improving its mobile business and making its website easier to
navigate with a simpler layout. The company is working with technology companies about
collaborating on potential products such as a mobile-phone
application to help its customers track daily activity. Medifast sells a
four-week starter weight-loss kit of food for $363.90, lower than Jenny Craig but still high in consumer's minds. To its credit, Medifast is exploring non-U.S. markets and has the most diversified distribution channels (MLM, medical clinics, direct to consumer).
NutriSystem Introduces Fast Five Plan
On December 10, the company announced its first product offering for the 2014 weight loss season, "The Fast
Five" -- a trial kit as part of traditional monthly package aimed at
attracting users by enabling them to lose 5lbs in their first week on
the program ("Fast Five - Lose 5 pounds in your 1st week FREE... It's
the jumpstart you need to get on the fast track to that weight loss
finish line with Nutrisystem My Way.").
In a conference call, it was revealed that the average customer stays on the program for less than 90 days. The
company has had virtually no online strategy and or community to help
existing members stay on the program. The company has stated that its
primary expenditures for 2014 will be to build out its online offering.
Slated for the second quarter of 2014 the company will unveil its online
community and mobile marketing strategy.
Add A New, Big Competitor To The List - CVS Mini-Clinics
Has Your Diet Company Missed The Opportunity?
We at Marketdata published a new report about Retail Healthcare Mini-Clinics, in Sept. 2012. We spoke about the opportunity for weight loss companies to align themselves with this growing number of clinics (about 1,500 now) as an entry point and new distribution channel for their programs. We talked about it in March 2013, when we published a new edition of "The US Weight Loss & Diet Control Market". Then we talked about it again and again on this website. Did anyone listen? Apparently not.
We recetly picked up a brochure at a local CVS in Tampa to find out that they are now offering a personalized weight loss program by a nurse practitioner. It includes: online tools, meal plans, exercise tips, recipes and coaching sessions.They'll do a health risk assessment, measure your body mass index (BMI), do an evaluation of your lifestyle, create a personalized plan, and give you a membership in DASH For Health (an online resource built around the DASH diet - Dietary Approaches to Stop Hypertension, rated the #1 diet by U.S. News).
This is a 6-month program. They will propose a number of coaching sessions for you, check your labs on an ongoing basis, and it's all covered by insurance.
Cost: $122 for the first exam, including lab blood tests. Then $59 per visit for the first 4 visits (weekly), then $59 per visit for the remaining 10 visits (once every 2 weeks). Total cost: $948.
We predicted it 15 months ago. We recommended that diet companies approach CVS, Walgreens and Rite Aid. So, now, instead of having another PARTNER and a new distribution channel, they have a significant new COMPETITOR! Hello...Is anyone in the top managements of the large diet companies listening? Walgreens and Rite Aid are still up for grabs.
Can You Be Overweight or Obese, But Still Healthy? - NO
A new review, conducted at the Lunenfeld-Tanenbaum Research
Institute at Toronto’s Mount Sinai Hospital, analyzed eight previous studies
from the past decade. Researchers concluded that obesity consistently carries a
higher risk of cardiovascular issues and premature death.
Despite the normal metabolic readings, the review found that an obese person had a 24% higher risk of experiencing cardiovascular events (like a heart attack or stroke) or premature death compared to an individual with normal weight. A person who was overweight, but not obese, had a 21% greater risk.
“We found that obesity stood out as the key risk factor for premature death from any cause, including cardiovascular events,” study co-author Bernard Zinman, MD, Senior Investigator at the Lunenfeld-Tanenbaum Research Institute, said in a news release. “That’s true for obese people with so-called healthy metabolic status as well as obese people with poor metabolic status.”
That’s an important finding from a policy perspective, says the study’s lead author, Caroline Kramer, MD, PhD, a post-doctoral fellow at the Institute. The notion that health care resources don’t need to be directed toward obese individuals whose lab tests are ‘normal’, she says, is simply mistaken.
Weight Watchers To Debut "Simple Start" 2-week Plan
Dec. 16, 2013.. According to a company press release:
"With weight loss being at the top of traditional resolution lists, we
know that the first couple of weeks are very important to one's
motivation and success. Focusing on a big weight loss goal at the start
can feel overwhelming, but we believe the powerful combination of Simple
Start and our supportive approach will bring added optimism to making
losing weight and getting healthy a reality," said Cheryl Callan, Senior
Vice President of Marketing, Weight Watchers.
- For two weeks, members can choose from a suggested menu of no-brainer meals built from good-for-you foods without a focus on tracking PointsPlus® values.
- Simple Start is built on a foundation of satisfying Power Foods, which are the healthiest and most filling food choices within categories, including whole grains, lean proteins, non-fat dairy and fresh fruits and vegetables.
- All the work has been done in advance: more than 30 simple and delicious meal ideas for breakfast, lunch and dinner along with mix-and-match DIY options for endless creativity; daily snacks and indulgences; beverage suggestions; ideas for swaps and flavor boosts; tips for dining out; and even photos of recommended portion sizes.
Launching December 25, the Weight Watchers 2014 winter ad campaign introduces the new Simple Start plan and features Jessica Simpson.
Marketdata Commentary
Will this new plan be enough to bring new customers to Weight Watchers meetings, and get existing customers excited? We don't think so, but time will tell. It's possible that the company may have some other changes planned and will roll them out soon or during the prime diet season. But if this constitutes all the changes, it could be another rough year. Customers have been voicing their needs about wanting a more customized program and the drawbacks of overly "competitive" meetings for some time. Is anyone listening?
Pastor Rick Warren Launches New Diet Plan
rRick Warren, one of the nation's best-known pastors and author of the bestseller The Purpose Driven Life, has been on a weight loss journey with his congregation for the past three years. Mr. Warren has a new book called The Daniel Plan: 40 Days to A Healthier Life - just in time for the new 2014 diet season. The book is based on He wanted to lose 90 lbs. several years ago and challenged his 22,000-member congregation to get healthier with him. Half of them joined him on the spot.
Warren then contacted Dr. Daniel Amen (a metabolic expert), Dr. Mark Hyman, and Dr. Mehmet Oz, to build a healthy lifestyle plan around faith, food, fitness, focus and friends - the five F's. Members met in small groups of 6-10, once a week. After one year, the congregation lost 250,000 total pounds. Obviously, this is one example of an "affinity" plan, where people that share a common interest join together to reach a goal
Once a week meetings or 6-10 people? Sounds like Weight Watchers, doesn't it? Also, it's no coincidence that Mr. Warren's new book comes out just 2 weeks before the prime diet season - he wants to maximize sales as well.
MDs Told To Be More Proactive In Fighting Obesity -
$ Opportunities For Weight Loss Counseling
Nov. 14, 2013... The medical profession (The Obesity Society, American heart Assn., American College of Cardiology) has issued new guidelines for fighting the national obesity epidemic, urging doctors to get more aggressive with their patients. In 2014, most insurance companies are expected to cover counseling and other obesity treatments.
These new guidelines advise doctors to:
* Once yearly, calculate their patients' BMI.
* Develop a weight loss plan that includes exercise and moderate calorie
reduction.
* Consider recommending weight loss surgery for those with a BMI of 40, or for those with a BMI of 35 with other risk factors for heart disease.
* Discuss with those who are overweight or obese enrollment in at least 14 in-person counseling sessions over 6 months, with a registered dietitian, psychologist, or other "professional" with training in weight management.
Marketdata Commentary
The key opportunity here is the last point - counseling. We'll need some more clarification of what they mean by "professional" in weight management. Does that include weight loss coaches without an RD, nutritionist, health educator or other formal certification (i.e. a person who went through the Jenny Craig or Weight Watchers program, lost weight, and had company training)? In any case, COUNSELING sessions will be reimbursed by insurance.
This presents two positive opportunities for weight loss firms:
1) Insurance coverage means that this will reduce the out-of-pocket cost of the program for customers. 3 months of $40 monthly passes for Weight Watchers meetings would be fully paid for. In Jenny Craig's case, they could put a value on counseling and break out of that cost from their food cost, and the customer can get reimbursed for that amount--lowering the total program cost.
2) Opportunity for extra income for those diet companies that are now just operating online or by phone, which may be able to charge for counseling (at no cost to the customer). At a typical session of $30 for 30 minutes x 14 sessions, that's $420 of revenue. This would also apply to sessions at a drugstore chain healthcare mini-clinic, usually run by a nurse practitioner, who would no doubt be qualified. (That's why the big diet companies need to partner with these clinics or miss out big time.)
This could stimulate a whole new cottage industry of weight loss counselors, people who don't sell any diet foods or supplements, but just give advice on nutrition, exercise and psych issues.
Nestle Sells Jenny Craig to North Castle Partners, Combines it With Curves Fitness Chain
Nov. 7, 2013... Nestle will divest Jenny Craig in North America, Australia and New Zealand, the Swiss company said today in a statement. The company was sold to a private equity firm, North castle partners, Greenwich, CT. The price was probably less than the approximately $600 million Nestle paid in 2006, analysts at Natixis and SNS Securities said. The French business isn’t part of the transaction.
North Castle will combine Jenny Craig with Curves Intl., creating a one-of-a kind wellness company that offers consumers an array of diet and fitness tools to meet their individual needs. North Castle acquired Curves International in August 2012. The Jenny Craig and Curves brands will continue to operate independently. Jenny Craig’s net annual sales were probably less than 400 million Swiss francs ($439 million), analysts estimated. Another analyst at Vontobel estimated that current year sales are around 300 million Swiss francs (or $329 million US).
North Castle’s combination of Jenny Craig with Curves, a fitness club chain it acquired last year, will offer nutrition planning and strength training “under one roof,” the company said in a statement. Monty Sharma, CEO of Waco, Texas-based Curves, will run the business.
Nestle bought Jenny Craig from private equity groups ACI Capital and MidOcean Partners in 2006, for $600 million, as part of a push into nutrition that has also seen the maker of KitKat and Crunch bars expand into baby food and sports nutrition.
The revitalization of Curves is well underway in its first year with the company planning to launch many new consumer-based initiatives in the next few months. Among other things, Curves has taken great steps to enhance its core fitness offering and, in a separate announcement introduced a new partnership with Jillian Michaels, the celebrity fitness trainer and health and wellness expert. Ms. Michaels is designing group exercise programs to be done in the famous Curves circuit.
The Curves fitness program is a customizable meal plan, with one-on-one coaching and support. Curves Complete has been shown to reduce fat, increase lean muscle, boost metabolism and help dieters lose weight and maintain weight loss. Each Curves Complete Coach has completed a certification program developed in conjunction with the Cleveland Clinic.
Upon completion of the transaction, Monty Sharma, the current chief executive officer of Curves, will become President and CEO of the combined Jenny Craig and Curves business.
Marketdata Commentary
This is major news, and the combination of Jenny Craig with Curves makes good strategic sense. Now, the entity will have access to a major women's exercise/fitness chain. Exercise is a key component of successful weight loss, along with food (nutrition) and the psychological aspects of weight loss. This new combination could present a significantly more robust competitor in the commercial weight loss arena. One has to remember that Jenny Craig, although focused on selling its diet food, is competing mainly as a SERVICE business. Nestle is a FOOD company, not a service company. The acquisition was doomed from the start. Marketdata's estimate of $342 million for Jenny revenues in 2012 appears to be dead on accurate, based on Vontobel's current year estimate of $329 million.
Medifast Reports 3rd Quarter Results:
Oct. 31, 2013..According to Michael C. MacDonald, Medifast's Chairman and CEO: "The consumer environment proved challenging for us in the quarter, and while we believe this will continue to impact our revenue in the fourth quarter, we anticipate full year revenue growth for 2013. Our team is optimistic we will return to stronger revenue growth in 2014 by implementing new strategic initiatives to attract and retain customers through our Take Shape for Life, Medifast Direct, Medifast Weight Control Centers, and Wholesale Physicians sales channels."
For the third quarter ended Sept. 30, 2013, Medifast net revenue fell 5% to $86.5 million from net revenue of $91.0 million in the third quarter of 2012.
Revenue in the direct sales channel, Take Shape for Life, increased
1% to $56.2 million in the third quarter, compared to $55.6
million in the same period last year.
Medifast Direct channel revenue decreased 19% to $17.1 million, compared to $21.2 million in the third quarter of 2012.
Medifast Weight Control Centers and Wholesale Physicians channel revenue decreased 7% to $13.2 million.
Gross profit for the third quarter of 2013 decreased 5% to $64.9
million, compared to $68.3 million in the third quarter of the prior
year.
For fiscal year 2013, the company expects net revenue in the range of
$360 million to $365 million and narrowed its earnings per share
guidance to $1.70 to 1.75. Revenues last year were $357 million, so this is basically zero growth for 2013.
Complete press release and financials can be found here:
http://finance.yahoo.com/news/medifast-inc-announces-third-quarter-210500076.html
Jenny Craig's New York Employees Obtain Class Action Certification - Dispute Over Work Hours
Oct. 31, 2013...A New York City trial judge has certified a class of 751 current and former Jenny Craig workers who claim the company changed their time cards to show that they had taken 30-minute meal breaks when, in fact, they were pushed to work through the pause. This, the complaint claims, was a policy that began in 2005. Despite denials by the company, "The court finds that plaintiffs have submitted sufficient evidence" to move forward as a group, the judge found.
Marketdata Commentary
First, Weight Watchers group leaders complained about low pay. Now, Jenny Craig employees are alleging a shaving of their hours by management. One more negative hit for Jenny. Sounds like this could be an industry-wide systemic problem with these low-pay, high-turnover weight loss coaches and counselors. Time to think about upgrading this job function?
Weight Watchers Reports 3rd Quarter Results: Suspends Dividend, Sees Tough 2014
On Oct. 31, 2013, the company reported Q3 revenues of $393.9 million, down 8.5% on a constant currency basis versus the prior year period. "While progress on cost cutting has allowed us to exceed our Q3
profit expectations, we expect Q4 revenues to be down low double digits
given our continuing negative recruitment trends," commented Jim
Chambers, the Company's President and Chief Executive Officer.
Highlights:
- Q3 2013 total paid weeks were down 6.6% vs. last year. Online paid weeks declined 11.2% vs. 2012.
- Third quarter 2013 meeting revenues for the North American meetings
business (NACO) were down 13.4% on a constant currency basis versus the
prior year period driven by lower enrollment volumes.
- Third quarter 2013 International meeting revenues were down 11.1% on a
constant currency basis versus the prior year period, primarily driven
by lower revenues in the United Kingdom (UK). UK: Third quarter 2013 UK meeting
revenues decreased 17.8% on a constant currency basis. Results were negatively impacted by a difficult
competitive climate. Third quarter 2013 paid weeks declined 21.1%. Continental Europe: Third quarter 2013 Continental Europe (CE)
meeting revenues decreased 5.4% on a constant currency basis versus the
prior year period
- Third quarter 2013 Internet revenues grew 0.9% on a constant currency
basis versus the prior year period. This growth in Internet revenues
was a deceleration from the period-over-period increase of 6.6%
experienced in Q2 2013. This deceleration was driven primarily by
declining sign-ups in the US business as consumer trial in the category
continued to be influenced by activity monitors and free apps.
- First nine months 2013 revenues decreased 5.0% on a constant currency basis versus the prior year period.
Commentary:
All in all, bad results across the board. Consequently, the company's stock price was hammered, down 20% for the day, settling at $32.11. Management admitted that it has a lot of work to do, that it's "one size fits all" approach is not working and more customization and personalization is needed. The problems run deeper than the competition for free apps and activity monitors. Progress has been made on cost controls, but the company admits being lax in keeping up with new technology and reaching customers in the early stages of their search for a weight loss program. More details to come on changes and 2014 program in a presentation next week.
Is a 5% decline in 9-month year to date revenues a disaster for a diet company in this consumer environment? No. Will the company be able to address its issues and engineer a turnaround? Not overnight. Will the company revamp its program and attract dieters for the upcoming 2014 diet season? We'll see. Is the stock a good investment for long-term investors at $32-33 currently --absolutely. It just has to leverage its assets and competitive advantages better, and develop programs to serve the niche markets that represent the market's future growth (i.e. men, Blacks, Hispanics, overweight adolescents, diabetics).
The complete press release and financials can be found here:
http://finance.yahoo.com/news/weight-watchers-announces-third-quarter-200500400.html
NutriSystem Reports 3rd Quarter Results
The company is projecting fourth quarter earnings per share in the range
of ($0.02) to $0.02, and expects year-over-year revenue growth in the mid-single digits in the fourth quarter.
The following are financial highlights for the 3rd quarter ended Sept. 30, 2013:
* Revenues for the quarter were $85.4 million, an increase of 5% from revenues of %81.3 million in the 3rd quarter a year ago.
* Supplier dispute over a historical contract was settled, resulting in a one-time charge reducing gross margin by $5 million and earnings per share by $0.14.
* Adjusted operating income, which is defined as operating income excluding the one-time supplier dispute charge,
* Adjusted net income for the quarter was $4.3 million or $0.15 per share versus $2.9 million or $0.10 per share in the third quarter of 2012. Net income for the quarter was $356,000 or $0.01 per share.
* Cash, cash equivalents and short term investments were $41 million at Sept. 30, 2013.
Complete financials and the press release can be found here:
http://finance.yahoo.com/news/nutrisystem-reports-5-growth-third-200100319.html
Medifast Warning Sign - Cuts Affiliate Program Commissions
In late October, Medifast informed its affiliate program partners that they will not be paid any commissions on sales for the balance of the year. Their statement was:
"Due to significant budget cutbacks, Medifast is having to drastically reduce spend, particularly in the affiliate channel for the remainder of 2013. Effective immediately, you have been pushed a 0% commission rate structure. This will take effect seven days from now (10/23) and remain through December 31st, 2013. Any sales from when the 0% structure takes effect will not generate any revenue for you.
We understand that you have made significant efforts to promote Medifast to date, and this effort is greatly appreciated. The current plan is to bring the program back to reasonable commission levels starting January 1, 2014. As you are considered a valuable partner, you will automatically be pushed the new terms at that time and you will not have to reapply to the program."
Medifast used to pay a 20% commission on sales made by affiliates, through their own program or via Commission Junction. The average sale was $250, so that's a $50 commission. When Medifast says that it wants to bring the program back to "reasonable" commission levels, that probably means only one thing--LOWER commissions, which will not make its partners happy.
The suspension of the affiliate program, and budget cutbacks, in our view, can only mean that sales for the most recent quarter ended Sept. 30 were bad, and they don't expect them to improve in the 4th quarter. The diet market slowdown looks like it has reached one of the few bright spots so far.
Naturhouse - Success in French Diet Market
Rarely do we obtain good information about weight loss competitors in other countries. Naturhouse is one example. Their original concept was born in Spain where it boomed in 2000. It was introduced in France back in 2006. Since then it became the #1 Diet system in the country. Today there are 400 weight loss centers (franchising…80 new centers per year since 2010) and the firm has hired 500+ dietitians. The business claims to generate $90 million per year, from zero 7 years ago. In Europe the company has nearly 1,800 centers operating as franchises.
Rx Diet Drug Sales Still Paltry
According to the popular stock advisory service The Motley Fool, Qsymia's sales have been minuscule since its launch in Sept. 2012. VIVUS' revenue from the drug in Q2 2013 was $5.5 million compared to $4.1 million in Q1 2013. At the same time, the company has reported a net loss of $55.5 million, which is primarily attributable to increased selling, general, and administrative expenses related to commercialization of Qsymia.
Drugs sales are highly correlated to the reimbursement coverage for the drug, hence Qsymia's challenge. The high cost burden on patients due to lack of reimbursement for Qsymia has been limiting the growth of the product Currently Qsymia is available at $150 per month without insurance coverage. The company is trying hard to increase Qsymia reimbursement coverage. As of July, Qsymia has increased coverage for approximately 36% of the 160 million people in the U.S. with private or self-insurance. The U.S. Veterans Administration became the first governmental entity to cover Qsymia at a $9 co-pay.
The company recently amended its agreement with Express Scripts and Medco Health Solutions, the top U.S. pharmacy benefit managers. PBMs are primarily responsible for processing and paying prescription drug claims, and their involvement helps patients get the drug at discounted rates. After the amendment, patients are required to pay only $25 to $30 for their co-payment, which was $50 to $60 earlier.
Clinton Group Buys 5.3% Stake in NutriSystem
Activist hedge fund Clinton Group discloses an expanded 5.3% stake (1.48M shares) stake in Nutrisystem.
In conjunction, the fund sent a letter to CEO Dawn Zier, lauding the company on its CEO change (which Clinton had agitated for) and urging the company to increase the dividend (current yield of 4.9%) as cash flow improves. Clinton cites Citigroup research that projects Nutrisystem will have enough FCF by 2014 to hike the dividend by 50%.
Clinton believes the stock's value will be in the mid-$30s by 2015 as the company once again realizes a successful turnaround and the market takes note.
Diet Monetary Incentive Programs Work
HealthyWage (healthywage.com), the purveyor of financial incentive-based weight loss programs for individuals and businesses, revealed that Weight Watchers® members who are complementing, "turbo charging" and cost supplementing their diet program endeavors with HealthyWage's varied weight loss wagering programs are profiting at a staggering level and pace, having collectively won more than $200,000 in the last 2 months, alone.
"Members of Weight Watchers and other popular diet programs like Jenny Craig®, Nutrisystem® and Atkins® are turning to our exciting incentive programs to make weight loss more fun and competitive, ultimately allowing them to capitalize on their success with cold hard cash that's paid out immediately," notes David Roddenberry, co-founder of HealthyWage.
HealthyWage is founded on research that proves cash rewards triple the effectiveness of weight loss programs. "Studies show that monetary incentives serve to enhance the effectiveness of, and duly complement, weight-loss programs of any and all sorts, especially when paid out quickly like our various programs," notes Roddenberry. "
eDiets.com Gets Out Of Meal Delivery Business
eDiets.com, now owned by As Seen On TV, Inc., Clearwater, FL, has agreed to sell its assets related to its fresh and frozen meal delivery business for approximately $1.1 million, to Chef's Diet National Co., LLC, a private company based in new York. The transaction is expected to close by Sept. 30. Sounds like a bargain price for Chef's Diet. The last data we have for eDiets' meal delivery business is that they had sales of $11.4 million for the 6-month period from Jan. 1 to June 30, 2012.
As Seen On TV's new management wants to return eDiets to its original roots - the sale of digital weight loss program subscriptions. The meal delivery business has much lower profit margins than online diet programs and was a major departure from its core business. It never really gained traction and was a failed attempt to jump on the once high growth meal delivery segment. The problem was mainly bad timing, since the economy was entering recession when they entered the market, and business remained soft over the past four years since then.
Obamacare Will Cover Diet Programs, With Conditions...
The Affordable Care Act is coming soon and a tidal wave of 40 million new people will enter the healthcare system. Many of them will be overweight. This could represent a shot in the arm that the weight loss market needs. However, not all parts of a given program will be covered by insurance.
Obesity screening and counseling will be covered with no patient co-payments, under the preventive services benefit. Plans vary widely. Some insurers will offer telephone counseling, while others cover visits to a health coach, and some cover group sessions that provide lifestyle advice. Some even refer people to Weight Watchers, with insurers picking up the tab for memberships or offering discounts. The task force does not address what insurance companies should specifically offer.
Insurers usually follow the lead of the CMS (Centers for Medicare & Medicaid Services). That means that for weight loss counseling to be reimbursed, it has to be by a primary care MD, a nurse practitioner, or a physician's assistant. A "health coach" or "diet consultant" or MLM distributor will not qualify. One thing is sure -- diet company food and supplements are definitely NOT covered.
Lots of questions remain. For example, if a person pays for a subscription to WeightWatchers.com or other weight loss website, and obtains email support, will that qualify as counseling? Will insurers be flexible on the qualifications of coaches or counselors?
In any case, the advantage seems to be shifting to medical weight loss programs, since they are more likely to have an MD, nurse practitioner or physician's assistant on staff. For the commercial diet companies, a prudent strategy would be to start hiring some NPs and PAs for their centers, or setting up a call center staffed by them, so that part of the cost of their program can be paid by insurers, thus reducing the total cost to the customer.
Since the service part of a weight loss program will be covered but not food, commercial companies may now have to assign a separate cost to that counseling portion. This will be a challenge. How does Jenny Craig separate out the counseling part of the program from the cost of the food? Ditto for NutriSystem, which now provides the counseling free of charge. It will be much easier for Weight Watchers, since customers already pay a service fee for the monthly pass, or a subscription to their online plan.
Advantage Weight Watchers. It is a SERVICE company, not a FOOD company.
These strategies will be an important factor in a weight loss company's plans for 2014, with ramifications on logistics, billing, and marketing. Bottom line - be ready for Obamacare, and take advantage of it, by providing a variety of advice delivery options.
MyFitnessPal - 40 Million Users?
Everyone in the market has been talking about the explosive growth of the free mobile app, MyFitnessPal, blaming it for their poor results. Marketdata contacted the head PR person at MyFitnessPal to get some clarification of this huge number being quoted. As we thought, the 40 million is NOT the current number of active users. Rather, it's the CUMULATIVE number of people that have registered at the company's website, or downloaded the app, since 2005, when the company was founded. Lyndsey Besser said that
the figure was 30 million in Oct. 2012 and the company has added 10 million new members since then. The share of that 40 million that are active ongoing users, a more meaningful number, is not disclosed since the company is private. It would also be great to know how long the typical person uses that app.
New Obesity Drug in Development - Zafgen
This drug works by targeting the body, not the mind, and unlike rivals tthat suppress appetite, Zafgen's drug, beloranib, is designed to make the body produce less fat and burn off the excess as fuel.
"This is in contrast with other agents that really only
affect hunger, and don't actually restore balance of the fat,"
according to Zafgen Chief Executive Thomas Hughes."
Preliminary data from a study testing beloranib showed the highest dose of the drug caused an average weight loss of about 22 lbs. (10 kg) after 12 weeks of treatment.
By comparison, patients taking the highest dose of Vivus's Qsymia in two separate late-stage trials lost about 30 lbs. and 37 lbs. on average after 56 weeks of treatment.
However, even if all goes well, the drug is years away from hitting the market.
Nestle Says Jenny Craig Not Doing Well - Really?
New Ad Campaign: "Eat. Live. Jenny"
Gee what a surprise! Nestle, in its latest quarterly report, says that Jenny Craig has not been doing well for two years, and has a turnaround plan for it. No details yet, although we at Marketdata can't wait to hear what it could possibly be. We've been saying that, although Nestle does not release financials for Jenny any more, sales HAVE to have been declining in the U.S., considering how other less costly diet progams have also been struggling.
Reduced price for Jenny food? Waiver of registration and service fees?
New celebrity ad campaign spokespersons? More and different food items? Closure of unprofitable centers? More emphasis on male clients? More emphasis on online support or new online program? There are only so many things one can do to "tweak" a brick & mortar weight loss center model.
Well, the news just broke that they are launching a new ad campaign that ditches the celebrities, with a simpler approach that focuses on its portion-controlled food and support. The new campaign, by Havas, New York, is timed for the back-to-school period. An ad agency review is planned by the end of the year as well.
In a strategy shift, Jenny will soon start selling its food online, with consults via email and other e-tools. They are going after those DIY dieters. Its core program with in-person meetings will remain. Jenny is rolling out new pricing, "Jenny As You Go", for $39.99/month where consumers can cancel at any time. This does NOT include food. Recently-hired Marketing Chief Leesa Eichberger is behind the new plan.
Sounds like the company finally listened to what Marketdata has been saying about the company for at least three years now - make the plan more flexible and affordable.
Nothing To See Here, Move Along...All Diet Companies In
The Same Boat...
OK, all the 2nd quarter results are in for the publicly owned diet companies, and it's bad across the board. Q2 was terrible. Plus, lots of top management changes.
Weight Watchers: CEO resigns. Trouble over group leaders low pay. Revenues down 3.9% in Q2 and down 3.5% for first half of 2013. WW.com growth slows to just 6.6%. Full year guidance lowered. Sales expected to decline in high single digits for 2013. No info. on new program ideas for 2014.
NutriSystem: In the middle of a turnaround, new management. Q2 revenues down 22%, but net income in line with expectations. First half revenues down 20%.
Medifast: Top line sales growth slows to just 6% for the year, vs. 20% the past several years. Actual declines (-20%) in same store sales reported for its medical clinics and Medifast Direct sales channel (-4%). Saving grace was TSFL MLM channel, sales up 10%.
Jenny Craig: Closed 100 centers during the quarter. Need we say more?
So, what's the story? We all know it's a "challenging environment", but WHY? What are consumers and dieters thinking? Are more dieters just attempting to lose weight themselves? Can we blame it all on free nutrition and fitness apps? Are consumers just tired of dieting, period?
No one, including the "learned" Wall Street stock analysts are asking the right questions--i.e. what are consumers saying and thinking about weight loss programs. The analysts seem to have tunnel vision, focusing on one company's quarterly SG&A expenses and EBIDTA. No one asks about the effect of competitors' programs, consumer trends - the macro picture.
Let's face it, the economy still sucks, and this administration isn't doing anything to improve good job creation sand small business. The jobs being created are $10-12/hr. service jobs in restaurants, retailers and call centers. $12/hr. is a $25,000/year job - not much discretionary income for a 3-4 month $1,000 diet program. Unfortunately, Marketdata doesn't see much light at the end of the tunnel.
This year and next, diet companies will have to really offer something compelling and vlaue-packed to get dieters to sign on, or start looking abroad for growth, or maybe some untapped niches? (Hispanics, men, diabetics, teens, seniors).
Medifast Reports Q2 Results
Medifast said its net income more than doubled and sales grew 4%. Revenue from its Take Shape for Life MLM coaching unit rose 10%, which made up for lower sales from the company's web site and phone orders and from company owned stores and wholesale physicians. The company has 86 corporate-owned locations and said Tuesday that it will sell them, transitioning to a franchise model.
It expects to complete the sales over the next year to 18 months.
Medifast net income grew to $7.1 million, or 51 cents per
share, from $2.8 million, or 20 cents per share. Revenue rose to $97.1
million from $93.6 million. Analysts were expecting net income of 51 cents per share and $101.3 million in revenue.
The company said it still expects to earn between $1.70 and $1.80 per
share in 2013, but it now forecasts $375 million to $385 million in
revenue. Medifast's last guidance called for $385 million to $400
million in revenue.
Considering the market condition and competitors' results, Medifast did not do badly. However, for a company used to reporting 20% top line sale gains, this definitely shows a slowdown, to an expected 6-7% for 2013.
Complete financial tables can be found here:
http://finance.yahoo.com/news/medifast-2q-net-income-grows-214143443.html
eDiets.com Prepares for Comeback
The company today (Aug. 5) announced the appointment of tabloid content writer John McGran
as Chief Editor along with health professional and registered dietitian
Susan Burke March as Chief Nutritionist. Mr. McGran and Ms. March join
the eDiets team as prior employees of the company, marking the brand's
transition back to a tabloid approach to news and weight loss advice.
The eDiets website will re-launch next month as a one-of-a kind
destination for people looking to lose weight and get in shape together
with their favorite celebrities.
Mr. McGran has a background in both the diet and tabloid industries. For
12 years, Mr. McGran worked for Globe Communications, where he became
editor. From 2000 to 2007, Mr. McGran was Editor-in-Chief of eDiets.com,
overseeing editorial growth from a single weekly newsletter and 770,000
subscribers to 17 weekly and bi-monthly newsletters and a combined 12
million subscribers.
Ms. March is a registered and licensed dietitian and certified diabetes
educator. Ms. March served as Chief Clinical Nutrition Manager at Mt.
Sinai Hospital, New York, and as Vice President of Nutrition Services
and Chief Nutritionist for eDiets for six years.
Industry veteran Richard Gray has also joined eDiets to manage Business
Development. Mr. Gray has over 25 years experience working with a wide
range of mid-size businesses to develop nutritional and culinary health
products, vitamins, nutraceuticals, functional foods, meal plans for
diet and chronic conditions, and consumer products packaging.
Weight Watchers Reports 2nd Quarter Results, CEO Resigns
Marketdata Commentary - Lots of Questions, No Answers
* Why did David Kirchoff abruptly resign, after 14 years with the company? No advance warning, not even 30 days? Troubling. Did he simply give up on the company after seeing that things are just not working?
* Why isn't management talking about the compensation situation with the group leaders' complaints about low pay? Did they raise wages and quell the rebellion, or not? Group leaders are a critical competitive advantage. If there's a mass exodus, that's major trouble.
* Why doesn't management discuss their progress on revamping and modernizing the 850 U.S. leased retail sites? Is it done, 75% complete? Did it have a positive affect on attendance. What? They were supposed to extend hours open to capture walk-in traffic. Meetings only held one day a week--major underutilization of these facilities.
* Any tests in the China market? No news.
* Time to admit that WW.com is cannabalizing meetings business and deal with it?
* Any new plans on how to respond to the 2014 implementation of Obamacare and all the new people entering the healthcare system?
WHAT THE HECK IS GOING ON GUYS????
* And, just as surprising, why aren't the Wall Street analysts that follow Weight Watchers asking these questions during the Q&A portion of the conference call?
James Chambers has been appointed President and CEO
effective July 30, 2013. He has also been elected to the Company's Board
of Directors as of such date. Chambers succeeds David Kirchhoff who
notified the company's Board of Directors of his resignation, effective
as of July 30, 2013, as CEO and a Director of the company to pursue other opportunities. Mr. Kirchoff had been with the company for 14 years.
Second quarter 2013 revenues decreased 3.9% on a constant currency basis versus the prior year period, resulting from lower revenues in the meetings business as it experienced weaker volumes globally, most notably in North America and the UK.
Q2 2013 total paid weeks were down 2.5% as compared to the prior year period. Online paid weeks increased 4.4% versus the prior year period, while meeting paid weeks declined 10.4% versus the prior year period.
First half 2013 revenues decreased 3.5% on a constant currency basis versus the prior year period, to $952 million. This decrease resulted from lower revenues in the meetings business as it experienced weaker volumes globally, most notably in North America and the UK. This decline in meetings business revenues was partially offset by revenue growth in the WeightWatchers.com business.
First half 2013 total paid weeks were down 0.6% as compared to the prior year period. Online paid weeks increased 7.3% versus the prior year period, while meeting paid weeks declined 9.3% versus the prior year period.
First half 2013 operating income increased 0.6% on a constant currency basis versus the prior year period. The increase in operating income was driven by lower marketing expense, primarily in the United States from the elimination of inefficient digital advertising and the lack of a men's campaign in the first half 2013.
Full Year Fiscal 2013 Earnings Guidance
The company has revised its full year 2013 earnings guidance to a
range of between $3.55 and $3.70 per fully diluted share as compared to
its previously provided range of between $3.60 and $3.90 per fully
diluted share.
See complete financials and segment, regional breakdowns here:
http://finance.yahoo.com/news/weight-watchers-announces-second-quarter-200500950.html
Belvig Sales Start off Slowly
Arena reported $1.3 million in Belviq net product sales in the second quarter, which is 31.5% of the $4.1 million in net product sales recorded by Eisai.
Belviq hit pharmacy shelves in the beginning of June, so it's only about a month of sales in the second quarter. Still, $4.1 million in net product sales is light, especially considering that number includes inventory stocking.
Belviq's reported net sales underwhelmed, in part, because Eisai
is giving away tons of free samples--an estimated 60-70% of all Belviq prescriptions filled are gratis. Separately, Eisai reported $10 million in gross sales of Belviq,
which means the gross-to-net discount was a huge 60%.
NutriSystem Reports 2nd Quarter Results
Highlights:
- Revenues for the quarter were $97.5 million and operating income was $9.8 million, both of which were in line with the company’s expectations;
- Adjusted EBITDA for the quarter was $13.5 million. Adjusted EBITDA is defined as net income excluding non-cash employee compensation, interest, income taxes, depreciation and amortization;
- Net income for the quarter was $6.4 million, and net income per diluted share was 22 cents, exceeding the company’s projected range of 15 to 20 cents per share.
Ms. Zier continued, “On a parallel path we are working hard on initiatives to stabilize and then grow revenue in future quarters. We are focused on diversifying sales channels, building our innovation pipeline, and developing new creative and programs for the 2014 diet season launch. Results from our research show that our new product concepts, enhancements and messaging are resonating with customers and we believe this will help us to broaden appeal and interest in Nutrisystem for the upcoming diet season.”
Complete financial data for the quarter can be found here:http://finance.yahoo.com/news/nutrisystem-reports-second-quarter-2013-200100263.html
Prescription Diet Drugs Update
Last Fall, Vivus botched the commercial launch of its Qsymia prescription weight loss pill and is now fighting off a dissident shareholder, First Manhattan, which wants to replace the company's board of directors and management team. For Arena, the first few weeks of prescription data reported for the early Belviq launch have done nothing to impress anyone.
For the third new diet drug in the mix, producer Orexigen is still conducting a large cardiovascular safety study
of its obesity pill Contrave. An interim analysis and results are
expected in the third quarter. If Contrave gets a passing grade from the
study, the drug will be resubmitted to the FDA by the end of the year
or in early 2014, the company has said.
According to IMS Health,
which tracks prescriptions brought to pharmacies and sells the data to
stock analysts and drug companies, Belviq was prescribed 1,087 times in
its first week on the market, which ended June 14; 1,829 times in the
week ending June 21; and 2,222 times in the week ending June 28. That
includes scripts that are being given away free or with significant
rebates.
By comparison, Xenical, from Roche, the last big weight loss drug to hit the market,
managed those kinds of numbers from the very beginning when it went on sale in
April 1999. By May 28, 1999, it was being prescribed 40,000 times a
week, according to data in a 2000 Morgan Stanley Dean Witter analyst report. For its first month on the market, Xenical was prescribed 131,000 times.
Obesity Now Considered A Disease
Obesity is now it's a disease, according to the American Medical Association, considered the voice of America's doctors.
Some local doctors and who work with the obese are applauding the action, and predicting it will lead to better insurance coverage for weight loss counseling, drugs and surgery, while others worry it might cause people to expect a medical cure for a condition that is often best addressed by behavior changes.
Dr. Ann Rogers, the head of surgical weight loss at Penn State-Hershey, compared it to the recognition of alcoholism as a disease, which she said caused more people to seek treatment and made treatment easier to obtain.
She further expects the declaration
will reduce stigma associated with obesity, including perceptions that
it's mostly the result of lack of willpower. "There is definitely a huge
genetic and biological basis for obesity. It is not just lifestyle
issues," she said.
The federal government hasn't taken steps needed to assure that weight
loss surgery and weight management, although covered by Medicare, will
be covered by all coverage available through the Affordable Care Act. The hope is that the AMA action will lead to federal acknowledgement of obesity
as a chronic disease that should be fully covered.
NutriSystem Raises Production of NutriSystem D Jumpstart Kit, Expands to 3,700 Walmart Stores
June 13, 2013… In order to meet growing consumer demand for its Nutrisystem(R) D(R) 5-Day Jumpstart Weight Loss Kit, the company has ramped up production and will offer its product in 3,700 Walmart stores by the end of June. Nutrisystem is a national strategic partner of the American Diabetes Association and the Nutrisystem(R) D(R) plan meets the nutritional guidelines of the American Diabetes Association**.
This new retail program for the Nutrisystem D weight loss kit and its expansion marks important progress in Nutrisystem's overall turnaround plan, led by Chief Executive Officer Dawn Zier, who joined the company in late 2012. Nutrisystem D 5-day kits were first made available at retail earlier this year in 2,000 Walmart stores, making a renowned diet with proven benefits even more accessible to Americans nationwide.
The Nutrisystem D complete program, combined with counseling, is clinically proven and was developed specifically for people with type 2 diabetes who want to lose weight. It is a low glycemic diet (Low GI) based on more than 40 years of research. With six eating occasions a day, it is designed to help keep blood glucose levels stable and to prevent appetite spikes.
At $44.98, the Nutrisystem D kit is an economical option for consumers looking to make the most of their weekly grocery budget. The kit includes five breakfasts, lunches, snacks and dinners. Nutrisystem(R) foods are intended to be combined with fresh grocery additions such as low fat yogurt, salad, fruit and vegetables. A free sample meal planer and grocery shopping guide is included with all kits.
Purchase of a kit also includes unlimited access to Nutrisystem's Certified Diabetes Educators, registered dietitians and weight loss counselors.
Consumers can also take advantage of free online trackers to track glucose levels, fitness, food, weight, water and more.
Jenny Craig Slide Continues - 101 Centers Closed
Jenny Craig announced that it is closing 101 of its retail stores in North America, and that it will be devoting more attention to its online services (Jenny At Home), "as part of a long-term strategic plan". Closures will be completed by June 28th, and are centers that affect the least possible number of clients and clients will be referred to other centers within a 10- 20 mile radius. Existing clients will be given food discounts if they have to transfer to another center.
These closures bring the number of centers in the U.S. and Canada down to 497 sites. About 195 employees will be terminated and another 400 reassigned.
The company plans to roll out new online tools during the Summer, with more e-commerce and mobile tools available later in the year.
Marketdata Commentary:
Is this the beginning of the end for Jenny? Have they finally realized that maintaining a large network of high overhead centers is too difficult in today's DIY, low-cost diet environment? Are they trying to jump on the high-growth online bandwagon that WeightWatchers.com has had so much success with? Are they too late to the party? We'll see. They will have to create something really compelling online to bring people to their website.
We've said this before, from experience. When large conglomerates take over companies that were successful in their niche (i.e Unilever buying out Slim-Fast), its usually doesn't work out. Unilever did not support the Slim-Fast brand with enough marketing and turned it from a $600 million/year brand into a $180 million/year brand. We think the same outcome is possible with Jenny and Nestle. Nestle also owns Optifast. When was the last time you heard anyone mention Optifast? Unilever is a FOOD company, not a service company, and Jenny's food is just too expensive.
Diet Drug Belviq Finally Launches in The U.S.
Arena Pharmaceuticals says its prescriptionweight loss drug Belviq will be available to U.S. patients beginning next week, nearly a year after the drug was officially approved by federal regulators.
The FDA approved Belviq last June for adults who are obese or who are overweight and have at least one serious medical condition, such as diabetes or high cholesterol.
Belviq's launch was delayed for months by logistical hurdles, including classification by the DEA. According to the drug's label, Belviq will be classified as a Schedule IV controlled substance, which means it has a low potential for abuse. A small segment of patients in company studies reported experiencing euphoria and hallucinations.
Arena Pharmaceuticals and partner Eisai Co. said the drug will be available beginning Tuesday, June 11. Under an agreement between the companies, Arena will manufacture and supply the drug from its facility in Switzerland and Eisai will market the drug in the U.S.
Arena's studies showed that patients taking Belviq, known generically as lorcaserin, lost just 3% to 3.7% of their weight over a year. About 47% of patients without diabetes lost at least 5% of their weight or more, which was enough to meet FDA standards for effectiveness.
The FDA said patients should stop taking Belviq after three months if they fail to lose 5% of their body weight. Patients are unlikely to see any significant weight loss by staying on the drug, the agency said.
Side effects with the drug include depression, migraine and memory lapses.
Jenny Craig Pulls Out Of U.K. Market
Nestle, the owner of Jenny Craig since 2006, and which has seen sales stagnate in the US recently, entered the market in the United Kingdom in 2010 to take on dieting heavyweight Weight Watchers. The brand, whose ambassadors include Spice Girl Mel B, is closing from next month because sales have failed to meet expectations. Weight Watchers is not the only competitor there. Slimming World and others are also in the market and The Dukan Diet has been popular in Europe.
Rx Diet Drug - Q1 2013 Qsymia Sales Still Paltry
Qsymia sales for the first quarter were weighed down by continued reluctance of insurers to reimburse obesity treatments and the drug's retail unavailability.
Net product revenue, reflecting sales of Qsymia, doubled to $4.1 million from $2 million in the preceding quarter, but missed analysts' estimate of $5.2 million.
Despite the rising sales of the pill, first-quarter net loss
widened to $53.6 million, or 53 cents per share, from $18.8
million, or 20 cents per share, a year earlier.
Vivus Inc said it has begun talks
with large pharmaceutical companies to accelerate the marketing
of its diet pill after coming under pressure from hostile
investors over slow initial sales.
The checkered past of obesity drugs is often cited as a big
reason why physicians and patients are cautious while taking up
the use of Qsymia. That's why, in Marketdata's opinion, we don't expect Qsymia or Belviq for that matter, to be obesity "blockbusters" this year or in the foreseeable future.
Medifast Reports 1st Quarter Results
According to management: "Our ongoing efforts to execute on our strategic goals enabled us to
generate results ahead of our expectations with first quarter earnings
per share 48% higher than the prior year period," commented Michael C.
MacDonald, Medifast's Chairman and Chief Executive Officer. "For the
remainder of 2013, we remain optimistic that our profitable growth will
continue as we increase consumer reach and grow Medifast's brand
awareness. As the strength of our business continues, our team remains
focused on realizing further operational efficiency improvements to
maximize profitability throughout our Take Shape for Life, Medifast
Direct, Medifast Weight Control Centers, and Wholesale Physicians sales
channels."
For the first quarter ended March 31, 2013, Medifast net revenue increased 8% to $96.0 million from net revenue of $88.9 million in the first quarter of the prior year.
Revenue in the direct sales channel, Take Shape for Life, increased
12% to $59.4 million in the first quarter of 2013 compared to $53.0
million in the same period last year. Growth for Take Shape
for Life was driven by increased customer product sales. The company
ended the first quarter with 11,300 active health coaches
and the average revenue per health coach per month for the quarter
increased 4% to $1,720 compared to $1,650 in the first quarter of 2012.
Net income was $5.9 million, or $0.43 per diluted share based on
approximately 13.9 million shares outstanding compared to net income of
$4.0 million, or $0.29 per diluted share, for the comparable quarter
last year.
For fiscal year 2013 the Company reiterated its previous guidance of net
revenue to be in the range of $385 to $400 million and earnings per
diluted share in the range of $1.70 to $1.80.
Complete financial tables can be found here:
http://finance.yahoo.com/news/medifast-inc-announces-first-quarter-200500683.html
Packaged Diet Foods Produce More Weight Loss - Medifast Study
According to Dr. Michael Dansinger,
a nutrition expert at Tufts Medical Center, said having less freedom in
choosing meals seems to help people meet their dieting goals.
In a head-to-head comparison with a traditional diet,
people who stuck to a diet of portion-controlled packaged foods lost
almost twice as much weight as those who only got advice on how to trim
calories, according to a new study.
"When there's less structure, then participants are making more decisions, and I think too often they're making decisions that undermine their goal to stick to a calorie target," said Dansinger, who was not part of the study.
The diet the researchers studied was the Medifast
5 & 1 Plan. It consists of five pre-packaged meals each day, along
with one meal of vegetables and protein prepared by the dieter. (Note: Medifast funded this study and one of the researchers has performed paid consulting for the company.)
Weight Watchers Reports 1st Quarter Results
Following are financial highlights for the quarter ended March 31,
2013:
- Global engagement as measured by paid weeks up 1.4% versus the prior year period
- Internet revenues of $140.8 million, up 10.9% versus the prior year period, with Online paid weeks up 10.3% and end of period active Online subscribers up 6.2% versus the prior year period
- Early progress with the firm's cost savings program
- Following the quarter end on April 2, 2013, successfully refinanced and extended the maturity of company long-term debt to take advantage of favorable market conditions.
- First quarter 2013 revenues decreased 3.2% to $487 mill. on a constant currency basis versus the prior year period, resulting from lower sales in the meetings business as the company experienced weaker volumes globally, but most notably in North America and the UK.
- First quarter 2013 meeting revenues for the North American meetings business (NACO) were down 7.3%.
- First quarter 2013 International meeting revenues were down 10.8%.
- The WeightWatchers.com business continued to
deliver double-digit growth in the first quarter of fiscal 2013, with
Internet revenues up 10.9% to $140 million. Online paid weeks were up 10.3%, and end of period active Online subscribers were up 6.2%, versus Q1 2012.
"As we previously indicated, the winter diet season proved to be
challenging for recruitment across our businesses given a weak consumer
backdrop and an intensely competitive environment. In response, we have
made several adjustments to improve our position in the market with
consumers, including new advertising campaigns. Further, we are gaining
early traction with our cost savings program while continuing to work
to innovate our core product offerings to better enable us to
increasingly address the ever growing obesity epidemic," commented David Kirchhoff, CEO.
In the conference call on May 2, management did admit that the explosion of free weight loss apps were having an effect on their business. They also mentioned new online ads featuring Sat. Nite Live's Ana Gasteyer. Changes will be made to NACO group leader compensation, in response to the uproar over low wages.
The company will not be investing in ad campaigns targeted to male dieters, and the firm will cut its marketing spend by $40 million this year. Tight cost controls continue. Management said that WW spent $344 million on marketing in 2012, equal to 19% of total revenues. The UK market and continental Europe remain weak, but the firm cites success in the B2B market, hospital systems and Chico's.
Complete financial tables can be found here:
http://www.weightwatchersinternational.com/phoenix.zhtml?c=130178&p=irol-newsArticle&ID=1814661&highlight=
Drug Qsymia Approved For Retail Pharmacy Sales
On April 16, the FDA approved a modification of VIVUS' Risk Evaluation and Mitigation Strategy (REMS), to allow sales of the Rx obesity drug Qsymia in retail pharmacies. REMS are established by the FDA when drugs are potentially harmful. Initially, the FDA told VIVUS that it would only be able to sell Qsymia at mail order pharmacies.
The modified REMS will help boost sales of Qsymia, since patients are used to picking up prescriptions at pharmacies rather than ordering them via a mail-order pharmacy. The change will also make things easier for the physician. However, VIVUS still faces hurdles to get insurers to pay for the drug.
New Report: Marketdata Releases New Edition of
"The U.S. Weight Loss & Diet Control Market"
March 2103 420 Pages 160 tables 30+ Company Profiles
Marketdata today released the 12 edition of this incisive analysis of ALL 10 segments of the weight loss market. Some Major Findings:
- Growth of the total market slowed to just 1.7% last year, to $61.6 billion, as most market segments were flat or saw minimal growth. Revenues are forecast to grow 2.6% in 2013.
- The number of American dieters was raised to 108 million, but 82% of them now want a do-it-yourself, low-priced, home-based program, accessed by phone or the Internet.
- The diet food home delivery market contracted 7-8% to $858 million, as leader NutriSystem saw flat revenues in 2012.
- Multi-level Marketing (MLM) became the engine of strong growth for Herbalife, Visalis Sciences and Medifast. In fact, Herbalife took over the #2 spot among diet companies with $529 million in North American sales. Visalis' sales grew five-fold in 2011.
- Online dieting is a $1.1 billion market that's growing 8%/year. Dieters continue to patronize WeightWatchers.com, which leads by far with 1.7 million subscribers and $504 million in sales.
- Weight loss surgeries fell about 15% from 2009-2012, as new government data contradicts estimates by the American Society for Bariatric Surgery. There were 114,000 procedures performed - not 209,000.
- The new Rx drugs Qsymia and Belviq are NOT expected to be a significant threat to other weight loss products or programs this year. Qsymia sales were poor in Q4 2012. All Rx diet drugs last year had sales of $525 million.
- The B2B corporate worksite-based weight loss market is estimated to be worth $859 million, and is just one example of untapped niches that diet companies need to tap for future growth. Other untapped niches include programs for: Hispanic dieters, Blacks, adolescents, the Canadian market, diabetics, and men.
- Meal replacements are becoming more popular as an easy, low-cost DIY diet option. They are safe and easy to make, and are increasingly being private labeled for new start-ups.
** For a complete Report Table of Contents or to order
(single chapters may be purchased, with a BOGO 2 for 1 special) see Marketdata's website:
http://www.marketdataenterprises.com/FullIndustryStudies.htm (Report #FS22)
Or Call Us at: 813-907-9090 M-F, 9-5.
Marketdata's 1st Quarter 2013 Online Dieter Report - Findings:
Since 2005, Marketdata, via the online weight loss survey provided at its website BestDietForMe.com,
has tracked 110 online dieter metrics. This gives us an insight to what
dieters prefer, online and off-line. Our latest report, for Q1 2013
has recently been released. It is 78 pages long and costs $595 (price just
recently reduced). An annual subscription, 4 quarterly reports, is just
$2,195.
Here are some major findings:
- Starting weights were significantly higher than last year. Especially for those weighing 250 lbs. or more.
- Demand for medically supervised programs (based in a hospital, clinic, or doctor’s office) was up in the 1st quarter, a reflection of the heavier sample with more serious health issues.
- Interest in diet food home delivery services was down.
- Dieters were more willing to spend more on a diet program this year.
- Dieters more prone to use a one-on-one or group counseling approach this year.
- Interest in meal replacements was up, validating research Marketdata performed when updating its large study: “The U.S. Weight Loss & Diet Control Market”, March 2013..
Here's a link to Marktdata's website, for more information about this report and other weight loss market studies:
http://www.marketdataenterprises.com/DietMarket.htm
He's Baaack... Richard Simmons' New Venture
Gaiam, Inc., a leading distributor of lifestyle media, fitness and self-improvement products, recently announced
the launch of Richard Simmons' all new at-home fitness program called Project H.O.P.E. – Health, Optimism, Passion, and Energy. Available exclusively through
television and online, the new comprehensive 90-day weight loss system
features a combination of an effective workout routine, a three-month
meal plan, and Simmons' all new electronic FoodMover program, which
provides the tools necessary for one to achieve optimal fitness results.
Project H.O.P.E. is Simmons' most efficient exercise program yet. It
consists of nine workouts on three DVDs, which combine cardio and toning.
Project H.O.P.E also includes Simmons' brand new 3-part FoodMover
system, which provides a guide for making smart food choices and keeping
track of calories and intake. (Sounds like an electronic version of his previous Deal A Meal exchange card system.)
Two versions of Richards Simmons' Project H.O.P.E. are available at: RichardSimmonsHope.com. The Deluxe Edition is available for 2 payments of $29.99 plus
$9.99 S&H, while the Ultimate Edition is available for 3 payments of
$33.33 plus $12.99 S&H. Both versions come with a complete 90-day
money back guarantee.
NYC Super-Sized Soda Ban Fizzles Out
A judge on Monday march 11 invalidated New York City's plan to
ban large sugary drinks from restaurants and other eateries, one day
before the new law was to take effect.
State Supreme Court Justice Milton Tingling in
Manhattan ruled the new regulation was "arbitrary and capricious" and
declared it invalid, after the American Beverage Association and other
business groups had sued the city challenging the ban.
Mayor Michael Bloomberg had touted the ban as a way to
reduce obesity. But beverage manufacturers and business groups had
called the law an illegal overreach that would infringe upon consumers'
personal liberty.
Are Weight Loss "Counselors" Obsolete?
Do dieters really need or want weight loss "counselors" (coaches, consultants, group leaders) today? That's a question we at Marketdata have been pondering lately. All the evidence seems to support the theory that weight loss counselors in general are not adequately trained to serve client needs, they are underpaid, they have high turnover and frequently, no career path, and dieters don't want to pay extra for their services.
We seem to be moving toward to more anonymous model in the diet market, shifting away from the high overhead brick & mortar weight loss center where the client meets with a diet coach once or several times per week.
Consider these facts:
1. NutriSystem provides FREE counseling as part of its program, yet management says that only 20% of their customers use this service.
2. The Jenny Direct service (food shipped to your home, no in-person counselor meeting) is the fastest-growing part of their business.
3. LA Weight Loss Centers was one of the largest commercial chains with 800+ centers, and it went bankrupt and closed all of them. Consumer complaints about high pressure and deceptive sales practices to buy company supplements brought the company down.
4. Weight Watchers is currently facing a rebellion of group leaders over low pay.
5. Most "counselors" have little or no training or background in nutrition, exercise physiology, or the psychological issues facing dieters. Rather, most are trained mainly in SALES and meeting quotas.
6. NutriSystem abandoned the brick & mortar model long ago.
7. The fastest-growing part of Weight Watchers (20%+ growth/year the past 4-5 years) has been WeightWatchers.com, which now generates $504 million in revenues - nearly 28% of their total. This is an anonymous model, especially favored by male dieters. North American meeting attendance was down significantly in 2012.
8. Commercial weight loss centers are used by 9% of U.S. dieters today, vs. 14-15% in the early 1990s.
9. Few commercial weight loss companies today are selling franchises.
10. Data from visitors to Marketdata's weight loss portal BestDietForMe.com reveal that the "preferred location of a weight loss program" were as follows in 2005 and 2012:
weight loss center: 26.6% preferred in 2005, 10.3% in 2012
In addition, the preferred counseling format percentages changed from 2005 to 2012 as follows:
self-directed: 60% in 2005, 81.6% in 2012
one-to-one: 26.9% in 2005, 13.0% in 2012
small group: 12.5% in 2005, 5.1% in 2012
large group: 0.5% in 2005, 0.2% in 2012.
Herein lies the disconnect.... Also according to BestDietForMe.com's 10-year data - 75% of dieters need emotional eating support and 57% need stimulus control support. So, if they're NOT getting it from weight loss counselors, who do they get it from? Their doctors? Not likely. Most MDs' schedules are packed and they have little time for meaningful discussions about weight, nutrition, etc. And they are afraid that they'll offend their patients.
Need
we say more? Maybe it's time to re-think the whole concept of
counseling. Most dieters don't seem to want it at all, or don't want to
pay extra for it. They'd rather just get the food and do the exercise
themselves. Maybe diet companies should just scrap counseling altogether, and lower program prices, because it just doesn't seem to be working. It would probably significantly improve diet companies' bottom line, profits, since they would no longer need to recruit and train coaches, pay them salary & benefits, motivate them to stay/train them in-house, etc.
Diet Companies' Dirty Little Secret - Low Pay
Today's article in the NY Times, about Weight Watchers group leaders and their complaints about low pay brings up a critical topic foe the weight loss industry that's been around since the beginning - poor pay for weight loss "coaches", "counselors" and "group leaders" - the people in the trenches that do the daily grunt work of signing up, meeting with and motivating members.
Weight Watchers has traditionally paid the best, and attracted some of the best people. But, with people struggling in a still bad economy, they have every right to complain if they are underpaid. This comes as somewhat of a surprise to us at Marketdata. We've all heard the horror stories about diet coaches at LA Weight Loss Centers and how they are forced to aggressively sell company bars and supplements, and browbeat clients into paying up front for yearly contracts. That's a big reason why they went bankrupt and nearly disappeared as 800A+ centers closed. LA Weight Loss was far from the only diet company with this problem, however.
Low pay and high turnover are par for the course in this industry, and it has been this way since Marketdata began tracking the market in 1989. In the early 1990s, when we published a newsletter called the Diet Busine$$Bulletin, we did extensive research and surveys, and found that the typical weight loss counselor made $15-19,000 per year, with a big part of that coming from commissions. Alas, little has changed with that pay scale in 20 years.
Weight Watchers group leaders are complaining about being paid the minimum wage and being pressured to work many hours unpaid--while celebrity spokespersons like Jennifer Hudson and Jessica Simpson earn millions. Some leaders say the $18 base rate for running 2-3 hr. meetings has not been raised in 10+ years. No mileage reimbursement either. Many leaders stay because they truly care about their clients, and were successful losing weight on the program.
These leaders are usually more highly educated people than the average weight loss consultant (which are usually just clients that lost weight with a program and are internally trained (mainly in sales). Two years ago, Weight Watchers reached a $6.2 million settlement to end a class action lawsuits in California where employees complained about minimum wage violations, off-the-clock work, and paychecks that didn't explain how wages were calculated.
We'll be watching to see how WW handles this situation. Its employees have always been one of its strongest assets, and it's critical to keep them happy.
Atkins Nutritionals Now Sells Diet Foods
yMarketdata analysts just noted a magazine ad in a women's magazine that features a line of new frozen meals, for breakfast, lunch and dinner. This is new for the company, which used to sell just meal replacements (shakes bars). A store locator on the Atkins website refers you to stores in your are (by zip code) that supposedly carry these meals. However, when we checked a few zip codes around the country, the only listing that came up were for Walmarts. Many cities or zip codes came up with "not available" results. Atkins also has a Quick Start kit consisting of 3 free bars, plus and workbook and guide.
Weight Watchers Reports Q4 and Full Year 2012 Results, Analysts Disappointed, Stock Price Falls
Feb. 13... Full year 2012 revenues increased 1.8% on a constant currency basis
versus the prior year as the Company continued to benefit from strong
global growth in the WeightWatchers.com business. Revenues for 2012 were $1.826 billion, vs. $1.819 billion in 2011. This growth in the
WeightWatchers.com business was in large part offset by lower sales in
the meetings business as the company experienced weaker volumes
particularly in North America and the UK.
Full year 2012 total paid weeks were up 9.3% as compared to the prior
year, on top of the 37.3% growth reported for the full year 2011 versus
the full year 2010. Full year 2012 meeting paid weeks and attendance
decreased 5.4% and 11.0%, respectively, versus the prior year. Online
paid weeks for the full year 2012 increased 26.7% versus the prior year,
on top of the 67.6% growth reported for the full year 2011 versus the
full year 2010.
Full year 2012 operating income decreased 5.3% on a constant currency basis versus the prior year.
Meeting fees for 2012 stood at $935 million. Product sales at these metting were $253 million. Internet revenues was the bright spot, rising 26% to $504 million. NACO (North American) meeting fees were down 5.6% to $799 mill. and International meeting fees were down 9.0% to $389 million. Total attendance was down 11%.
The company provided full year 2013 earnings guidance of between $3.50 and $4.00 per fully diluted share.
"While 2012 set a company record for combined global meetings members
and global Weight Watchers Online subscribers, we have been disappointed
by our recruitment trends thus far in 2013," commented David Kirchhoff,
Chief Executive Officer of the company. "Our current marketing has not
been as effective in this tough economic and increasingly competitive
environment."
Find details and financial tables here:
http://finance.yahoo.com/news/weight-watchers-announces-fourth-quarter-210500388.html
Marketdata Opinion & Conference Call Details
In the conference call after release of Q4 2012 and full year results, WW management revealed that early 2013 trends for the first 6 weeks of the new year are not good. Jessica Simpson getting pregnant again, after her success losing 50 lbs last year did not help. Also cited was the negative effect on consumer confidence related to the fiscal cliff situation and the higher payroll taxes that kicked in Jan. 1. Severe weather in the U.K. did not help either. Management also reported that they have not yet convinced many of its online users to convert to the regular program.
WW is retreating somewhat on the men's program, citing a too high cost per acquisition. As well, the firm is reducing its advertising spend on banner ads online. They are eliminating all non-productive ad spending.
The company doesn't see any real threat from mobile weight loss apps or from social media, and reports good progress in the B2B market. They also don't see much impact from the new Rx diet drug from VIVUS, since it still has a high out-of-pocket co-pay. The drug is also viewed as an adjunct to lifestyle changes, not a replacement for them. However, they do concede this could be a rough year. We'd also like to hear what progress the company has made in its multi-year retail site modernization. How many of the 850 or so leased sites have been refurbished? No one's talking about that.
All these factors may be true, but we at Marketdata don't think they fully explain why the response from consumers has been so weak. The simple fact, in our opinion, is that consumers (and Marketdata) just don't see much that's new with the 360 degree program. It's a very minor modification and tweaking of the Points system, but nothing to rave about. That said, in this environment of slow economic recovery, flat revenues or even a gain of 1-2% is no minor accomplishment. Flat is the "new growth". The company still generated $1.8 billion last year and its Internet revenues are still growing 20+% annually. When compared to other weight loss brands, that's not all that bad.
Jenny Craig Is New Partner of Canadian Obesity Network
Jan 29, 2013 --
The Canadian Obesity Network (CON-RCO) announced that
Jenny Craig has become its newest "Vision Partner". "Vision Partners"
commit significant support toward the network's operations and
provide their invaluable perspective as CON-RCO shapes the future of
obesity management and prevention in Canada.
CON-RCO is Canada's only not-for-profit organization that focuses on
the needs of Canadians coping with excess weight and related health
issues. Funded completely through its corporate partnership program
and individual donations, the network strives to identify and promote
best practices in prevention and treatment among health care
providers, researchers and policy makers while working to eradicate
widespread bias and discrimination against those living with obesity.
Diet Soda Sales Were Flat in 2012
Diet soda sales constitute a significant share of the total diet market sales - $21.78 billion in 2011. The latest data show that diet soft drink sales represented 30% of all soft drink sales--no change. The soda companies are working hard to develop zero or low-calorie natural sweeteners, but progress has been slow and consumers have turned to other beverages. Pressure from government agencies and cities such as New York, to cut down the consumption of sugary soft drinks, has not helped.
A recent Wall St. Journal article reported that the large beverage companies have been raising prices over the past 8 years, to keep sales growing, but lower volume consumption has outpaced the price rises. According to retail tracker SymphonyIRIGroup, total soft drink sales in dollar terms fell 2.5%, with volume dropping 1.8%. Symphony data do not include sales in restaurants, vending machines and other outlets. When taking these figures into account, industry analysts say that soft drink sales probably barley rose last year.
Meal Replacements Growth Outpaces OTC Diet Pills
As we at Marketdata had predicted in our May 2011 "U.S. Weight Loss & Diet Control market" report, growth of meal replacements (shakes, nutrition bars) has outpaced that of OTC (retail) diet pills/appetite suppressants. According to Chain Drug Review's May 2012 issue, retail sales of meal replacements by drug stores, for the year ended March 18, 2012, were up 10.6% to $243 million. On the other hand, sales of retail diet pills fell 3.2% to $148.7 million.
Of course, this is just one distribution channel of the market for such products - not including sales via supermarkets, mass merchants like Walmart, MLM channels, mail order, and the Internet. When you add these channels, the market is much bigger in dollars. However, this data (from Symphony/IRI Group) does show the direction these products are headed.
Costs Per Pound of Weight Lost by Top 3 Companies?
Savvy Spender host and personal finance expert Vera Gibbons reports that, taking into account all costs including food and services, the following are the estimated costs to lose a pound:
Weight Watchers $86
NutriSystem $120
Jenny Craig $163.
How Big Is The January Diet Surge?
According to a Dec. 31 article in the NY Times, in a recent unusual study, two psychologists sought an answer in data on diet-related searches provided by Google.
The researchers focused on a 6-year period beginning in 2005, during
which diet-related searches, involving keywords like “diet,” “Atkins,”
“Weight Watchers” and “Nutrisystem”, followed an annual trend. Searches
for these keywords spiked on average 29% nationwide from December through Jan. 31st, then fell month by month until the same period the next year.
No surprises - the greatest surges in diet-related searches in December and January occurred in states with the highest obesity rates. The greatest increases were in South Dakota (a 54 percent surge),
Tennessee (50 percent) and North Dakota (46 percent). States with lower
obesity rates had smaller keyword surges. Vermont had the lowest (18
percent), followed by Hawaii (22 percent) and California (27 percent).
Survey findings are only a crude indication of nationwide interest in dieting. But they correlate well with previous research showing that many people resolve to lose weight in January but gradually lose interest. The same is probably true for health club memberships.
Marketdata's 2013 Diet Market Forecasts
Dec. 31, 2012... As we transition into the 2013 "diet season", it's time to look back at what happened in the weight loss market in 2012 and look forward to what's in store for 2013. This next year promises to be as dynamic as ever, as diet companies tweak their programs with a new twist for the new year, new companies enter the market, advertising campaigns ramp up, new diet books are written, drug companies continue their search for the magic pill, and dieters look for the "next big thing".
We will not go into ALL the details and forecasts here, but here are a few of our predictions:
The total U.S. weight loss market is expected to grow 4.5% in 2013, to a value of $66.5 billion, as consumer discretionary income increases, new diet drugs enter the market, and the large players such as Weight Watchers boost enrollments. We see good growth in medical programs, and heavy advertising that should fuel demand.
For complete press release and financials, see this link:
http://finance.yahoo.com/news/medifast-inc-announces-fourth-quarter-210500588.html
- Marketdata expects two newly approved prescription diet drugs, Bleviq and Qysmia, to enter the market in 2013, adding $200 million to the size of the previously stagnant $450 million U.S. obesity drugs market.
- More foreign companies will enter the U.S. weight loss market this year. Several, such as Slimming World (U.K.), ITrim (Sweden), and The Dukan Diet (France) have already set up operations, either as brick & mortar centers or online.
-
More technology-based weight loss programs will appear in 2013, that are well funded by venture capital firms. One example is Retrofit. They will attempt to sell not only direct to consumers but via large healthcare systems and corporate wellness departments.
For the complete Press Release that just came out today, copy and paste this link into your browser. See the attachments for a table covering the 2011 diet market segments' values.
at http://www.prweb.com/releases/2012/12/prweb10278281.htm
Contact Marketdata if you new a fresh viewpoint, help with a business plan, or a competitor analysis or national/state/city/regional market potential analysis. We are here to help, wit a 24-year track record of following and analyzing this fickle market.
Need a custom project proposal? We do them all the time. Call us at: 813-907-9090. Contact: John LaRosa (john@marketdataenterprises.com)
Need an in-depth weight loss report? We have lots. Check out Marketdata's website, here:
http://www.marketdataenterprises.com/DietMarket.htm
Wishing you all a healthy & happy & prosperous 2013!
John LaRosa, President, Marketdata
Al Roker Releases New Diet Book
TV's well-known weatherman from the Today Show, Al Roker, is releasing a new diet book: Never Goin Back: Winning The Weight Loss Battle for Good. Mr. Roker tipped the scales at 340 lbs. (on a 5'8" frame) and had bariatric surgery in 2002. He did lose 100 lbs. but gained a lot of it back as he reverted to bad eating habits. He claims to have ended that cycle by changing his mindset and lifestyle, and is now 205 lbs. The book details his journey and his current tips for staying on path. You can listen to an excerpt from the book at: Parade.com/roker.
Marketdata Publishes New Self-improvement Market Study
Dec. 26, 2012... Marketdata Enterprises has released the 9th edition of its best-selling market research study entitled: "The U.S. Market for Self-improvement Products & Services". It's the ONLY business analysis of a huge $10.4 billion market that exists.
This 382-page study traces the market from 2003-2016, examining these markets: Infomercials, Holistic Institutes, Self-Help Books & Audiobooks, Motivational Speakers, Websites, Seminars, Personal Coaching, Online Education, Weight Loss and Stress Management Programs.
“The U.S. Market For Self-Improvement Products & Services”, Dec. 2012, is an independently researched multi-client study. The study contains 382 pages, 58 tables, 56 competitor profiles. It costs $2,495 and is also sold by chapters at lower cost (order online and save 10%). A table of contents is available from: Marketdata Enterprises, (813) 907-9090. A 41 pp. Overview is available to the public for $99.
Go here to view the Table of Contents:
http://www.marketdataenterprises.com/SIMktTOC2012.pdf
Medifast CFO Resigns
Medifast disclosed in a regulatory filing that on December 19 Edward Powers notified the company of his intent to resign from his position as acting Chief Financial Officer and principal accounting officer of the company, effective no later than January 4, 2013, to pursue other interests. Powers became acting CFO on November 13 after the resignation of CFO Brendan Connors. The company said it has been and is continuing to conduct a national search for the CFO position.
Medifast Launches New Ad Campaign
The company announced the launch of its first-ever national advertising campaign, titled "Conversations with Yourself," that will roll out January 1, 2013. The campaign will introduce viewers to three Medifast clients with real weight-loss success stories by asking the question: "What if you could have a conversation with your leaner, healthier self?"
This campaign features the "Become Yourself" journeys of Kimberley Vandlen, Tina Shelley and Joseph Garcia by showing their former, heavier selves having a conversation with their new, leaner, healthier selves. Over the course of eight months on the Medifast 5 & 1 Plan, Kimberley lost 47 lbs, Tina lost 31 lbs, and Joseph lost 38 lbs. Through the camera, Medifast captured not only the physical weight loss, but also the emotions of achievement, dedication and overall success.
Medifast will unveil an integrated marketing launch to include 60-second, 30-second and 15-second television commercials, national print advertising, a newly designed website landing page, and comprehensive social media elements.
Marketdata has viewed the commercials, and they are quite impressive, using technology to create something that hasn't been done before. Very creative.
Medifast Set To Expand in Latin America
On Dec. 17th, Medifast announced its increased international expansion intentions via a renewed strategic partnership with Productos Medix, which is a leader in pharmaceutical obesity products in Mexico. The former is a top domestic maker and supplier of clinically proven, portion-controlled weight-loss products and programs. Through a five-year exclusive licensing agreement, the firm plans to boost distribution of Medifast meal replacement products and programs to most of Latin America except Brazil, beginning in January.
Herbalife Now #2 Diet Company by Revenues
Success With Nutrition Clubs
Herbalife is a public company but one that flies "under the radar" in terms of its participation in the weight loss market. Based on the company's Q3 2012 report, the company had total North American net sales of $644 million. This represented 21% of the company's worldwide sales of $3.01 billion. Herbalife had total world wide sales of weight management products (meal replacement shakes, supplements) of $1.88 billion. Consequently, Marketdata estimates that the firm had North American sales of diet products worth $403 million for the first nine months of 2012. On an annual basis this would come out to $537 million. This ranks Herbalife among the largest diet market competitors, probably number two, ahead of Jenny Craig and NutriSystem.
Makes you wonder--should more diet companies use the MLM model to spur growth? Medifast seems to be the only other major diet company doing this, with its Take Shape For Life division.
Herbalife, as a multi-level marketing company, has used "nutrition clubs" to sell its weight loss products. The company has 36,000+ non-residential nutrition clubs operated by its distributors worldwide, accounting for about 40% of its volume. Herbalife requires these clubs to operate under very restrictive rules. The company defines these clubs as follows:
"Nutrition Clubs are social gatherings publicized exclusively through word of mouth and attended only by persons who are personally invited by the Club operator, another independent Distributor or a customer, either through oral conversation or through conversation accompanied by the provision of a written invitation. Nutrition Clubs are not intended to attract "walk-in" traffic, therefore, Nutrition Clubs' advertising is limited solely to promoting services that are offered at the Club's location, such as a Weight loss Challenge, a wellness evaluation or wellness presentation."
Club operators may offer rewards such as free products for the referral of new members, but are prohibited from paying cash for referrals. Many of these Nutrition Clubs have been around for years, and there are about 8,500 in the U.S.
Herbalife Nutrition Clubs are different from other types of popular businesses, which may see some customers 3 or 4 times per month, since most of their nutrition club customers (over 55% here in the U,S.) actually visit the club on a regular or even a daily basis as per the chart below which is based on a 2010 survey conducted by Herbalife. These clubs develop a loyal following which allows them to produce more sales from fewer customers.
Herbalife nutrition club members replace one or more unhealthy meals from some fast food joint on a daily basis with a low calorie healthy Herbalife shake. By visiting the nutrition club for their meal, they usually don't spend more money than they would have purchasing unhealthy food, and are getting a more nutritious meal. Over time this new healthier lifestyle for the club's customer usually ends up helping them to have a better more health outward appearance.
Over the years these clubs have refined their methodologies and have created a formula to increase daily sales based mainly on sales to a few loyal customers and using word of mouth to grow their business. This is why many people outside of Herbalife can't quite figure out where Herbalife's sales growth is coming from.
NutriSystem Replaces President
Nov. 2, 2012 - NutriSystem today announced that Dawn M. Zier will join the company as president and CEO. She will also serve on the Nutrisystem board of directors. She replaces Joe Redling, who is stepping down as president and CEO and resigning from the company’s board of directors. Ms. Zier is a 20-year veteran of Reader’s Digest Association, Inc., a leading global, multi-brand and multi-platform media and direct marketing company.
Dawn Zier added, “Joining Nutrisystem is a wonderful opportunity for me personally, and the logical next step in my career. The company has a strong portfolio of products that help consumers lose weight, improve their health, and live better lives. It has significant name recognition as a result of several decades of marketing investment in the brand. And it’s universally seen as one of the leaders in the weight loss sector. With a fresh and creative approach to the consumer, a thoughtful eye to new product development, and a careful effort to contain costs, I believe we can improve financial performance and build shareholder value. I look forward to working with Mike Hagan, the board of directors, and the entire Nutrisystem team to make this happen.”
Joe Redling will remain with the company as CEO through disclosure of the company’s third quarter financial results on November 9, 2012. David Clark, the company’s chief financial officer, will serve as interim chief executive officer between Mr. Redling’s departure date and Ms. Zier’s arrival at the company.
- Revenues were $396.9 million, compared to $401.3 million in 2011.
- One-time charges were $14.9 million for the year, or $9.7 million after tax. The majority of one-time charges were related to the company's management transition and other corporate matters.
- Operating loss for the year was $4.4 million. Excluding one-time charges mentioned above, operating income for the year was $10.6 million.
- Net loss for the year was $2.8 million, or 10 cents per diluted share. Excluding one-time charges mentioned above, net income for the year was $5.5 million or 18 cents per diluted share.
Dawn Zier, President and CEO of Nutrisystem, said, “Since my arrival at Nutrisystem in November, we have conducted a comprehensive review of the company, identifying our strengths while taking a clear-eyed view at our opportunities to improve. It’s evident we have a strong brand and a nutritionally-balanced and science-based weight loss program that works. That said, we need to aggressively attract new customers across broader segments to the brand, address a pricing strategy that has relied too heavily on discounting, and offer more flexible and varied program options coupled with new products and services across all phases of a customer’s weight loss journey.The first priority in our turnaround plan has been to focus on margin improvement and cash efficiency, because this immediately increases shareholder value and frees up financial resources to reinvest in our business to drive key strategic initiatives. We are already making progress on this front, as we have improved year-over-year gross margins, optimized marketing spend by channel, and reduced operating expenses.”
Ms. Zier added, “Re-energizing top-line growth will require the execution of a number of initiatives with varied lead times. Reinvigorating our creative assets, monetizing our customer database, and restoring direct marketing discipline to drive profitable new customer growth, length of stay, reactivation, and revenue per customer are critical to our short-term success. We are also focusing on product and program innovation to be able to offer consumers a more customized and personal approach to weight loss that meets their varied needs. In addition, we are optimistic about our long-term opportunities within the retail and digital space to attract new customers to our brand.
To view complete financials, see this link:
http://finance.yahoo.com/news/nutrisystem-reports-2012-results-210100531.html
Jenny Craig Has Online Fitness Program
Now Jenny offers an online personalized fitness program from a real trainer who will motivate you. These hand selected elite trainers will help you get your workouts in when your schedule allows. The company says that you can start moving and toning for as low as $13.00/week (When you sign-up for a minimum of 13 weeks. Offer expires 11/30/2012. My JennyFit Program enrollment required to receive discount price at 25% off.).
Swedish Weight Loss Chain Expanding in U.S. - iTrim
Since establishing this company's first Itrim center in Sweden in 2003, it has opened 30 franchise centers nationwide. By 2010, Itrim was represented by franchisees in Sweden's largest towns and cities. In order to reach and help a larger proportion of the population, It was then decided to also offer the Itrim program to successful fitness facilities in the country's smaller towns through licensing. At present they have six licensee centers and plans to open another ten during this year. The company is also looking at the international market, starting their expansion in the US and in Germany. The first center in the U.S. is opening in San Francisco 2012. In Germany, the first centers opens in Cologne 2012.
This firm's method is called the "Palm portion system". It is based on a well balanced diet, regular meal plans and correct portion sizes. The company has its own line of meal replacements. Itrim's weight loss program is for two years, you sign contracts for at least one year at a time. They divide the first year into two phases: The Weight loss phase and the Improvement phase. The program's second year is the "Balance phase".
A scientific study that reviewed Itrim's weight loss results shows that members on average lose 10.8 kg (23.8 lbs) with a waistline reduction of 11.8 cm (4.65 in) during the first weeks. The company claims that this result lasts even after an entire year.
website: www.itriminternational.com
Retail Health Clinics May Represent New Opportunity for Weight Loss Programs
Marketdata Enterprises just released a groundbreaking new study entitled:
"The Market For Retail Health Clinics & Urgent Care Centers, Sept. 2012, 132 pp. 17 company profiles, 25 Tables. Price: $1,495.
see the Press Release with some major findings and the Table of Contents here:
http://www.prweb.com/releases/2012/9/prweb9931728.htm
These 1,400 or so clinics are popping up more often in drug store chains such as CVS and Walgreens, as well as supermarket and big box mass merchants. Their numbers are expected to nearly double to 2,700 by 2016, fueled by the implementation of the Affordable Care Act in 2014.
The clinics handle a variety of minor ailments such as strep throats, ear infections, as well as flu shots and school physicals. However, they are quickly expanding into other areas like diabetes monitoring, and yes, weight loss. In fact, Lindora Clinics has an agreement with 9 Rite-Aid stores on the West Coast. The thing these clinics have in common is that profit margins are slim and demand is seasonal, peaking in the Fall with flu shots. They want to change that, and smooth out demand during other months.
The perfect fit? - selling weight loss programs. which can tip the scales for the clinics toward profitability. Walmart alone has the potential to add hundreds of clinics to its stores per year and CVS will build 100 more per year to 2015. The clinics are run by Nurse Practitioners and Physicians Assistants, who can easily provide detailed diet program info, get people registered, and even do counseling. NutriSystem sells its program via Costco, so why not CVS, Walgreens, Walmart and other retail sites, where the potential customer shops?
Get this new Marketdata report ASAP and find out who the players are and what they're looking for, before the "crowd" gets their foot in the door and discovers this promising new retail distribution channel!
Questions about the study? Call Marketdata at: 813-907-9090
Medifast To Pay FTC $3.7 Million to Settle Ad Claims
Medifast has agreed to pay $3.7 to settle charges that its ads for meal replacement products made unsupported claims in 2009 about users' success in losing weight. The FTC claims the firm made unsupported claims in radio, TV, Internet and print ads, that consumers could lose 2-5 lbs each week.
Medifast said that the FTC objected to the company's use of the words "up to" in its advertised weight loss claims of 2-5 lbs. per week. The company agreed to modify its weight loss claim to "lose 2-5 lbs. per week for the first 2 weeks and 1-2 lbs. per week thereafter."
Yes, Medicare Will Pay For Weight Loss
If you are officially obese - with a body mass index (BMI) of 30 or higher. Use an online BMI calculator or ask your doctor for your BMI number. Medicare will pay for one counseling session a week for the first month, and five more monthly sessions. If you've lost 6.6 pounds by the end of the sixth month, you can get six more monthly sessions. Otherwise, you must wait six months before Medicare will cover another weight-loss attempt. Sessions are covered under Medicare Part B, with no copayment or deductible if they're conducted by a qualified practitioner in a primary care setting. Doctors use the code GO447 to bill Medicare for the service.
The Shrewd Investor Behind Weight Watchers
According to a Forbes magazine article, Raymond Debbane is the man behind Weight Watchers Intl. which is the private equity deal of the century. This money-making relationship has been going on since 1999, largely unnoticed.
Mr. Debbane runs Invus Group, an investment firm headquartered in NYC that manages money for a few wealthy European families. 13 ago, Debbane had an insight about the obesity epidemic in America, figuring that people would form a life-long relationship with a top-branded weight-loss company. When H.J. Heinz put its Weight Watchers unit on the block in 1999,
Debbane got the fund Invus managed, Artal Group, to buy Weight Watchers in a $735 million leveraged buyout. Artal put down $224 million in the deal and the company financed the rest of the acquisition with debt, SEC filings show. SEC filings also show that since then Artal has pocketed $3.8 billion by selling stock, unloading its ownership in WeigthWatchers.com, and collecting dividends. In addition, Artal still retains a 52% stake in Weight Watchers, worth about $1.4 billion.
Put in other words, the $224 million Debbane invested in Weight Watchers in 1999 is now worth some $5.2 billion; most of it realized.
When Debbane bought Weight Watchers in 1999, the company had annual revenues of $365 million and profits of $47 million. In 2011, Weight Watchers had its best year ever-- earning $305 million on revenues of $1.8 billion. The stock soared to over $80 and in February the company completed a tender offer in which it repurchased shares for $780 million from Artal using mostly borrowed funds. The stock has recently traded around $47, on lower earnings expectations for the rest of the year.
Debbane’s roots are in Lebanon. He graduated from the American University of Beirut before getting his MBA at Stanford and is associated with several organizations involved in Lebanon. But according to SEC filings, Debbane, 57, is a citizen of Panama. Prior to founding Invus in 1985, he worked in Paris for the Boston Consulting Group.
Weight Watchers Stock Still A Bargain
Jim Cramer is Nuts!
I rarely offer opinions on diet company stocks, but this is an exception. With all due respect, I strongly disagree with Jim Kramer's recent take on Weight Watchers being a "dangerous" and "foolhardy" stock, along with his sell rating. I also disagree strongly with his latest comments about the company being "mismanaged". This company does $1.8 billion in sales and is the gold standard precisely BECAUSE of its quality management.
Ask yourself, the investor and diet market analyst, a few questions:
* Has any other diet company avoided negative PR, scandals, and dubious
marketing practices over the long term? NO
* Is any other diet company as geographically diversified as WW? NO
* How many other diet companies don't mandate you to buy their food as
part of the plan, spending $250+ per month? NOT MANY
* How many diet companies have a $400 million Internet division that's
growing 20%+ per year? NONE
Hey Jim, I guess you forgot that WW increased sales by 22% in 2011, during a lousy economy. Did any other diet company beat that? How many companies in ANY field did that?
WW is the undisputed best of breed weight loss stock around, leading the market with $1.5 billion in sales, geographically diversified internationally, with strong cash flow and the best quality diet company management and group leaders by far. Add to that, a very compelling advertising spokesperson in Jennifer Hudson and a safe and most affordable weight loss program on the market.--a $39 monthly pass, $16/month for the online program, and NO mandatory purchase of company diet food.
This fits in well with the current preference among dieters for a low-cost DIY program. By comparison, you have the Medifast plan ($250/month for company food), NutriSystem's program at $250-300+/month for company food, and Jenny Craig (Nestle) at $400+/month.
It doesn't take a rocket scientist to figure out which is the least costly plan. Plus, Weight Watchers hedges it bets with its online program, WeightWatchers.com, with 2.4 million paid subscribers and $400 million in revenues last year, a segment still growing 20+% per year! Add to that an unblemished 49-year history and strong brand name recognition. This is a company hitting on all cylinders, with a temporary slowdown in a weak economy. What company in the diet market can beat that combination?
What are Kramer and others worried about? What makes WW "dangerous"? Is it the recent approval of Arena's Rx drug Lorcaserin ? Well, the company still has to perform 6 post-marketing studies and we at Marketdata don't think that, with its very moderate weight loss results, it will be a blockbuster when it enters the market in 2013, despite some wild predictions by analysts that it could be a $2 billion/year blockbuster (How many times have we heard that before). So, the worry warts have created a short-term fire sale opportunity to get into Weight Watchers.
WW stock in the low $40s? I'd STILL jump on that like a cat on a mouse!
Happy returns, John LaRosa
Obesity Drug Sales Forecasts - Why They Are Out of Whack
How many times now have we heard about the next new anti-obesity drug blockbuster, that never met expectations? The next multi-billion dollar/year magic pill? Qnexa by Vivus is the latest to get a nod from an FDA review panel. Soon we'll be hearing the Wall Street analysts proclaim Qnexa's virtues, the growing global obesity problem and the sure fire $1 billion sales.
Don't believe all the hype. We've heard it before--with Accomplia, with Meridia, with Xenical, with phen/fen, with Contrave, etc. Some of these diet drugs achjieved short-term sales success, but they all petered out within a year or two, not able to sustain sales over the long term, due to side effects, being pulled off the market, or the simple fact that most overweight people simply don't stay on the drug for more than 6-9 months. Weight loss has been very moderate with these drugs so far, not exacvtly what dieters want to hear.
In 1996, when the phen/fen combination came out, it was a different story. This was the first new prescription weight loss drug in a long time, so dieters flocked to their physicians and avoided structured programs that required more work, and yes, exercise. Now, the public has seen a half dozen diet drugs come and go, each with their own side effects, and they are jaded, less inclined to jump on the bandwagon.
So the next time you see an analyst projecting $1+ billion sales for a prescription diet drug, remember that the landscape is littered with wildly overoptimistic forecasts. Remember also that Wall St. analysts are salesmen, trying to justify their "buy" rating on the stock. Touting a huge potential is one way to gt you to buy.
Here's a good article that we totally agree with, by Forbes magazine:
http://www.forbes.com/sites/matthewherper/2012/02/28/why-no-obesity-drug-will-ever-be-the-next-lipitor/2/
U.S. News Names Best Diets for 2012
The US News and World Report Best Diets 2012 also breaks the diets down in to multiple categories, naming the best diets for weight loss, heart health, diabetes, and even the easiest to follow.
The DASH diet consists of lowering sodium intake to less than 2400 mg per day, eating fresh fruits and vegetables and carbohydrate sources coming from whole grains. It also includes proteins coming from lean meats, fish and chicken, and moderate amounts of fats such as olive oil and nuts. This plan also has endorsements from the diet from the American Heart Association, The National Heart, Lung and Blood Institute, and the Mayo Clinic.
Also ranking highly was the TLC diet (The Low Cholesterol Diet), which was created by the National Cholesterol Education Program (NCEP). With the TLC diet, you create a mini profile of yourself by selecting your age, height, weight, gender and activity level. From this data, you are then given recommended levels of calories, saturated fat and cholesterol that you can consume each day. Then you create an online daily meal plan of what you are going to eat and how much you are going to eat. Based upon your selections for each meal, it gives you a report of how many calories, cholesterol, saturated fat, sodium, and total fat you will consume and how this compares to your recommended levels.
According to a release from US News, an impressive 22-person volunteer panel of industry experts work together using seven criteria, government reports, and data from scientific journals to rank the diets. Experts include Brian Wansink of the Cornell University Food and Brand lab and Dr. David Katz of the Yale-Griffin Prevention Research Center. government reports and scientific journals.
An Improved BMI Formula On The Horizon?
In my consulting travels, I come across some very interesting start-ups, entrepreneurs and ventures that launch new diet companies and products or services designed to augment the programs of existing companies. One such venture is the Weight Zone Factor, by a California mathematician and entrepreneur with a team of people under the name Virtual Wellness, Inc.. His name is Jay Weiner.
As many of you know, the Body Mass Index algorithm was developed over 100 years ago and is less than perfect in that it does not take factors such as a person's frame into account in determining their "ideal" weight. Rather than a specific number of pounds, the Weight Zone Factor software figures out your ideal weight "range" - based on 25 health and lifestyle variables.
Please see the website and take the questionnaire for your results. Mr. Weiner is seeking partners, diet companies that would like to differentiate themselves from competitors. He is also providing SEO and online ad enhancement services that will produce significantly higher click-through rates and conversions for online ad accounts, using the new formula.
Medicare To Pay For Obesity Counseling
Medicare will pick up the tab for obesity screening and intensive behavioral counseling, the Centers for Medicare and Medicaid announced late Tuesday.
CMS, which first floated the obesity coverage plan last September, said it expects more than 30% of the Medicare population to qualify for the new benefit.
Beneficiaries with body mass index values of 30 or more can receive weekly in-person intensive behavioral therapy visits for one month, followed by visits every two weeks for an additional five months, fully paid by Medicare with no co-payment.
Counseling must take place in a primary care setting such as a physician's office. It will not be covered when provided in skilled nursing facilities, hospitals, emergency departments, outpatient surgery centers, or hospices.However, may are already criticizing this restriction, pointing out that many good weight loss programs provided in other settings (hospitals, commercial and medical weight loss centers) would not qualify. Also, if people are obese when they reach old age, they probably have a lifetime of bad habits that will be difficult to break.
Global Anti-Obesity Drugs Market to Reach $10.3 Billion by 2017, According to New Report by Global Industry Analysts
According to GIA: "The landscape is vast with contenders including biotech companies such as Arena Pharmaceuticals and Orexigen Therapeutics to giant pharmaceutical companies gearing up to develop safer anti-obesity drugs with lower side effects."
The research report titled: "Anti-Obesity Drugs: A Global Strategic Business Report" announced by Global Industry Analysts, Inc., provides a comprehensive review of trends, issues, strategic industry activities, and profiles of major companies worldwide. The report provides market estimates and projections in US$Million across geographic markets such as the US, Europe (France, Germany, Italy, UK, and Rest of Europe), and rest of World.
For more details about this market research report, visit:
www.strategyr.com/Anti_Obesity_Drugs_Market_Report.asp
Diet e-Book Published By John LaRosa & Susan Burke March:
"The Common Cent$Diet For The Busy Girl: Simple Do-it-
Yourself Weight Loss" - October 2011
John LaRosa, Marketdata's President and the former VP of Nutrition for eDiets.com, Susan Burke March, RD, have teamed up to co-author a brand new e-book. The CommonCent$Diet For The Busy Girl: Simple Do-it-Yourself Weight Loss, is a plan based on the use of 2 microwave "healthy" frozen entree meals per day, plus snacks, salads, etc. This is a 1400 calorie/day plan that is lower in sodium than the recommended daily allowance of 2200 mg.
Best of all for the frugal consumer, this is basically a ZERO COST, home-based program that IS sustainable long-term, using tasty brands such as Weight Watchers Smart Ones, Healthy Choice, Lean Cuisine, Amy's and Kashi. And, frozen entrees are portable, easily microwaved at work.
The only cost is $1.99 for the e-book, plus the cost of food a person would have to buy anyway--about $5/day for 2 frozen entrees. The typical American now spends $12/day on food eaten at home and away from home.
The 115-page book contains a 14-day regular and lower sodium meal plan, plus tips on stress management, exercise, the true cost of all the major diet programs, and much more.
In addition, purchasers of the e-book get free access to a supporting website: www.TheCommonCentsDiet.com, which contains, articles, videos, news, tips for online dieting, weight tracking tools, and a Blog by John LaRosa and Susan Burke March.
See the Press Release with more details here:
Common Cents Diet, Oct. 17 Press Release
Purchase the e-book at Amazon.com (Kindle reader) here:
http://www.amazon.com/dp/B005VSJES0
Global Weight Loss Market to Reach $672 Billion? Really?
That's what a new study by MarketResearch.com says will happen by 2015. The report is entitled: "Global Weight Loss & Diet Management Products & Services Market (2010-2015)" and covers foods, beverages, drugs, surgeries, services, fitness equipment and accessories.
The global weight loss and diet management products & services market was expected to be worth $390 billion in 2010 and is estimated to grow to $672 billion by 2015, growing at a compound annual rate of 11.5% over that period.
The device and accessories market accounts for the largest chunk, worth $143 billion in 2010. According to MR.com, weight management services (i.e. programs) is growing at a fast pace and is expected to reach a size of $216 billion by 2015, growing at a CAGR of 16.2%.
Marketdata Commentary:
We don't know where all this enthusiasm is coming from but we certainly don't see commercial or medical programs growing anywhere near 16% per year. Surgeries have been flat for several years and the diet soft drinks market has been flat to slightly down. Health club revenues in "normal" years grow about 7% annually. Maybe we're missing something. Maybe MR.com is expecting some tidal wave of overseas growth in China and developing countries, a move away from the current frugal do-it-yourself dieting trend, or several blockbuster prescription obesity drugs to be approved and enter the market.
However, considering the state of consumer confidence and the weak global economy, we just don't see any justification for these wildly optimistic projections. An 11.5% CAGR for the industry is nearly DOUBLE the historical pace of the past 20 years (about 6%/year). Will the period 2010-2015 really be that good? We'd take this report's forecasts with a BIG grain of salt.
Weight Loss Conference - "Marketing To The Overweight American" - Key Takeaways...
John LaRosa here... Got back from the MDPA's first annual weight loss industry conference in Silver Spring, MD on 9/27-28. If you weren't there, you missed a great event. Small turnout but very high level and interesting presenters. See www.mdpaconference.com for the agenda.
* The industry's growth has slowed with the recession, but individual companies (like Weight Watchers, Medifast) can still post strong results with great ad campaigns, service and innovative thinking.
* Small weight loss companies can out-market and out-perform giants by being creative and entrepreneurial.
* Look for a major new health information portal called Sharecare to be launched for consumers in Q1 2012. Dr. Oz is a partner. Now offered to hospitals, MDs and other healthcare providers. Very robust platform of tools and community features. See www.droz.com for his $1 million Transformation Nation challenge.
* Weight Watchers recognized by all as the best performer right now - hitting on all cylinders.
* Social media is critical to include in a weight loss marketer's arsenal.
* FTC very active in policing diet frauds and outrageous claims, but staff is limited. They more than have their hands full. In 2007, 4.8 million Americans were victims of diet product/service frauds or scams--more than any other product. FTC has jurisdiction over diet PROGRAMS and SERVICES as well, not just products.
* Glaxo looking to divest itself of the Alli OTC brand.
* Revolution Health bought out by Everyday health.
* Red flag products today for the FTC: Hoodia, HCG, Acai Berry claims.
* Health is not a popular topic for mobile apps. People look for this information via websites, using their computer.
* TV advertising on diet products: Q2 is the biggest spending period--not the 1st quarter. Best to reach female dieters via early morning news, men at night. States where people really take action to lose weight are NOT where you'd expect (i.e. deep South with high obesity rates), but in KY, FL, TX, Montana, Idaho, Wyoming, Colorado.
* Newspapers ranked #3 in media watched by the obese. These people are more likely to treat their obesity. Obesity rates vary by state and by county, newspapers lend themselves well to local targeting.
* The best performing diet company advertisers are customer "advocates" rather than "advertisers". There's a big difference. An advocate finds a shared purpose--what can we do to help each other? Advocates listen and create "ambassadors" that multiply and go viral. Engage potential customers.
See John LaRosa's Powerpoint slides (industry status report, forecasts for 2011, 2014) from the conference here:
Dieting Is Big Business in Canada Too...
Obesity is apparently big business in Canada too--about one tenth the size of the United States market. Many of the large U.S. weight loss companies have outlets in Canada (Weight Watchers, jenny Craig), along with many home-grown chains. According to The Star, at least $6 billion is spent annually by Canadians for weight loss surgeries, diet pills, special diets and meal replacements.
However, say obesity experts north of the border, it's literally a "free-for -all", Wild West market, in terms of regulation. Almost a third of that $6 billion is spent by the highest risk persons that are obese.
Health Canada rules sate that "medical devices must not be advertised to the general public making any claims related to obesity." Medical procedures in general are a provincial responsibility..
A study by the Canadian Obesity Network claims that 3 million people considered obese in Canada spend an average of $580 per year for quick fix solutions. Much of that money goes to non-prescription weight loss products such as herbs and supplements. Those products are approved by Health Canada's Natural Health Products Directorate.
Regulations regarding marketing have essentially been abandoned amid the sheer volume of weight loss products, which makes monitoring almost impossible. The agency Health Canada has the power to crack down, but doesn't, say those following the market.
Diet Plans Ranked by The Magazines - How Good Are The Rankings?
U.S. News & World Report
U.S. News's first-ever rankings, released last week, evaluated diets in seven categories, including short-term weight loss, long-term weight loss, easiness to follow, and nutritional completeness. The government-endorsed DASH Diet (Dietary Approaches to Stop Hypertension) snagged the top spot overall.
Weight Watchers came in #1, while Jenny Craig and the Raw Food Diet came in #2. The Glycemic Index (used by NutriSystem) and the Paleo Diet came in at the bottom, due to their alleged lack of scientific evidence and long-term weight maintenance. The Dean Ornish diet came in best for heart health.
The best commercial diet plans included Weight Watchers, Jenny Craig, then Slim-Fast, while the Atkins Diet and Medifast came in last.
Best Diets cuts through the clutter of claims and half-truths to deliver the facts about 20 diets, including many, such as Weight Watchers, that are household names and others, such as the DASH Diet, that should be.
A U.S. News team spent six months researching the diets, mining medical journals, government reports, and other sources. An in-depth profile was then drawn up for every diet that explains how it works, whether its claims add up or fall short, and what risks it might pose, along with insights into living on the diet, not just reading about it.
A panel of 22 recognized experts in diet and nutrition and specialists in diabetes and heart disease reviewed the U.S. News profiles. Then the experts rated each diet from 1 to 5 in seven categories: short-term weight loss, long-term weight loss, how easy it is to follow, its nutritional completeness, its safety, its ability to prevent or manage diabetes, and its ability to prevent or manage heart disease.See results and methodology here:
http://health.usnews.com/best-diet
Commentary:
In Marketdata's opinion, this is NOT as good a ranking as it could be. Why? Because the researchers didn't rate the diet plans on two of the three key components of successful weight loss: exercise and motivational coaching/support. The emphasis here is all on the food and nutrition. In addition, they only analyzed 20 diet plans. Marketdata, via BestDietForMe.com's online survey, tracks 60 programs. Therefore, this ranking get a "thumbs down" from us.
Of course, the diet companies that came out on top will tout the results as proof that their program is best. But, in our opinion, both of these studies are incomplete.
Consumer Reports Magazine
In Mid-May, Consumer Reports released its own rankings on the leading diet programs on the market. They had Jenny Craig, Slim-Fast and Weight Watchers taking the top 3 spots, derived by aggregating hundreds of published studies over the past six years. They measured nutrition, daily calories, drop-out rates and both short and long-term weight loss scores from clinical studies.
The CR study does admit that it was not able to measure the effectiveness of counseling, community or a support system element in a successful diet program due to lack of published information. But, they note that Weight Watchers, Jenny Craig and NutriSystem all are known for their counseling and support--whether it's in-person or online.
National Institute of Health Obesity Plan
More than a third of adults and nearly 17% of children in the United States are obese, increasing their chances of developing health problems including type 2 diabetes, heart disease, high blood pressure, fatty liver disease and some cancers.
"This plan is a bold blueprint that will encourage the research community to examine the epidemic of obesity from diverse perspectives," National Institutes of Health (NIH) Director Dr. Francis Collins said in a statement.
The NIH spent $971 million in fiscal year 2010 on obesity research, with $147 million of that in one-time stimulus funds.
Under the plan, NIH will fund studies to test new ways to reach and maintain a healthy weight in real-world settings and diverse populations.
It also will focus on understanding biological processes that regulate weight, and factors that contribute to obesity and the health issues it causes.
Obesity-related diseases account for nearly 10% of U.S. medical spending, or an estimated $147 billion a year.
Studies have shown that obese children are more likely to stay obese as adults, and that they develop chronic conditions at younger ages, burdening the healthcare system.
