Dec. 14, 2020

I don’t know how we missed this news a few months ago, but we’ll catch up now. On Oct. 19, 2020 Kainos Capital, a private equity group, agreed to acquire NutriSystem, from Tivity Health, for $575 million. Kainos is well known for investing in weight loss brands, such as Slim-Fast.

So, NutriSystem became an independent company once again.

On Dec. 10, 2018, I wrote a blog post about the proposed acquisition, with my strong opinion that I thought this was a mistake for NutriSystem, that it was in fact NOT a good fit. Tivity Health operates the Silver Sneakers program and has a lot of senior citizens as clients. We (Marketdata) argued that these seniors did not represent good potential weight loss clients, since seniors don’t join weight loss programs in large number like Baby Boomers, Millennials and younger clients do. In addition, Tivity was only a regional player, not national. We just didn’t see the big benefit to NutriSystem, and that it probably would not get the marketing support and funds needed to compete, plus a probable loss of key personnel.

We predicted that within 3 years, Tivity would find that NutriSystem’s performance would lag, they would grow tired of the lackluster results, and would wind up selling NTRI to a private equity firm. Well, it only took less than two years. That’s exactly what happened.

Did that prediction come from a crystal ball or inside information? No, just common sense, and a long-term knowledge of the weight loss market and its players (Marketdata has tracked the diet market since 1989). Unilever’s acquisition of Slim-Fast didn’t work. Neither did Nestle’s acquisition of Jenny Craig. The weight loss market is tricky. It is fickle, it’s dynamic, changes and consumer fads and preferences happen rapidly. Large conglomerates don’t understand the nuances involved and can’t act fast enough to pivot and create new services/products in time. Weight loss is entrepreneurial. Large companies are not.

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Here’s the link to my Dec. 10, 2018 blog post:

Did NutriSystem Make The Right Choice? – J. LaRosa, Marketdata