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NutriSystem Reports Q3 Results – Beats Forecasts

Oct. 27, 2016 – According to a press release quoting CEO Dawn Zier: “As we gear up for 2017, we’re excited about our Diet Season plans for our primary brand, Nutrisystem, and remain on track for the 2017 launch of the South Beach Diet program. We’re strongly positioned to achieve further long-term growth and value creation for our shareholders.”

Mike Monahan, CFO, commented, “Our third quarter and year-to-date results reflected strong top-line growth and solid cash flow even as we continue to invest in new opportunities that we believe will propel the long-term expansion of our business. As a result of this performance, we are raising our guidance ranges for the full year.”

Revenue increased 19% to $124.6 million in Q3, compared to $104.9 million.

Net income increased 9% to $7.9 million.

Fourth quarter revenue is expected to be in the range of $96.5 to $101.5 million, net income between $6.1 and $7.5 million.  Full year 2016 revenue is now expected to be in the range of $533 to $538 million compared to previous range of $520 to $532 million, net income between $32.8 and $34.1 million vs. to the previous range of $31.1 to $33.6 million. Retail revenues in the quarter were $7.5 million, and for the full year are expected to reach $33 million. The firm expects modest growth in retail sales for 2017. Walmart stores are pursuing an end cap strategy featuring the firm’s $49 Quick Start trial kit– nothing new or expanded.

The complete press release and financial tables can be viewed here:


Conference Call Information

Management reported that the firm posted top line sales growth across all segments, with a gross profit margin of 53.7%. It spent $33.5 million on marketing in Q3 and expects full-year capital expenditures of $14-15 million. The firm began beta tests in September of the South Beach Diet food line and saw very good results. The company attracted new customers to their database and management feels that the addressable market is big enough to support multiple brands for the company. Marginal profits for the South Beach Diet line are expected in 2017, as they build a customer base from scratch. Reactivation revenues were $32 million in Q3, up vs. last year.  New customer growth was +18%.

The firm reports having good success with TV ads in 2016, due to the election coverage resulting in higher viewership of ads. Digital marketing efforts are growing (digital app, e-newsletter, improved email program). This method of marketing has the advantage of immediate feedback.

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