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May 01, 2016

News in Brief

News in Brief, May 2016

Click here to order the May 2016 issue in which this article appeared or click here to download it to your mobile device.

Take Shape For Life Reports Higher Revenue

Amid a management shake-up, Medifast Inc. (MED—NYSE) posted fourth-quarter results that missed analysts’ estimates despite surprise gains in its Take Shape For Life direct selling business.

Net income for the quarter totaled $3.9 million, or 33 cents a share, compared with a net loss of $3.4 million, or 28 cents a share, a year ago. Analysts polled by Thomson Financial Network had expected 35 cents per share. In the fourth quarter of 2014, earnings were hurt by one-time charges as the company shut down its 34 corporate-owned Medifast Weight Control Centers.

The weight-loss brand said revenue from continuing operations was $61.3 million, down 2 percent from the prior-year period. On average, analysts had predicted $63 million. With revenue up 5 percent at $48.0 million, Take Shape For Life, the company’s largest division, bucked downward trends across other units and logged its first quarter of positive year-over-year growth since Q3 2013.

For the year, revenue from continuing operations dipped 4 percent to $272.8 million, versus $285.3 million in 2014. Net income was $20.1 million, or $1.68 per share, up from $13.2 million in 2014. Take Shape For Life accounted for 74 percent of annual revenue.

In April 2015, the company and its third-largest investor, Daniel Welling’s Engaged Capital fund, reached an agreement that included an overhaul of Medifast’s board of directors. Management said eight of the 12 board members would not stand for re-election, and five new directors—three nominated by Engaged and two jointly—would take their place. Among those who stepped down were Medifast President and COO Meg Sheetz, who also served as CEO of Take Shape For Life, and Executive Vice President and General Counsel Jason L. Groves.

Days before releasing 2015 results, officials announced that Sheetz planned to resign her position on April 8, after 16 years with the company. Sheetz is the daughter of late Medifast CEO Bradley MacDonald and niece of current CEO Michael MacDonald. “Meg contributed in many ways throughout the organization and she will certainly be missed,” MacDonald told investors. “I will be taking some time to assess our leadership needs, so we won’t be immediately filling Meg’s position.”

During the call, officials disclosed that ongoing management changes extend beyond Sheetz. Three executive vice presidents exited the company in February, and some changes have been made at lower levels as Medifast pursues higher profits and efficiency.

Jeunesse Opens Second Corporate Office in Western United States

TEXT Jeunesse West grand opening in Draper, Utah.

Anti-aging products seller Jeunesse Global has announced the opening of Jeunesse West, a second corporate outpost located in the Salt Lake City area. City officials and top company executives were on hand for a ribbon-cutting ceremony held March 9 at the new office, which currently houses about 150 employees. The building’s modern industrial design, comprising 30,250 square feet, earned the 2015 Excellence in Masonry Design Award from the Utah Masonry Council.

In six years of business Jeunesse has undergone tremendous growth, earning two consecutive rankings on the Inc. 5000/500, a list of the fastest-growing private companies in America. The company generated annual sales of $1 billion in 2015, and in the same year acquired a 130,000-square-foot corporate facility, currently undergoing renovations, in Heathrow, Florida. Jeunesse West will serve as a counterpart to the company’s East Coast headquarters.

Nu Skin Singled Out for Recognition at Utah Economic Summit

TEXT Nu Skin headquarters in Provo, Utah.

Nu Skin Enterprises Inc. was in the spotlight on April 15, when more than 1,000 business leaders gathered for the 10th Annual Utah Economic Summit, hosted by Utah Gov. Gary Herbert.

Each year, state officials and Utah Economic Summit partners recognize one company and one individual for their contributions to the local economy. In 2016, the theme of the event was innovation, and Nu Skin received the Outstanding Company Award alongside the Lifetime Achievement Award honoree, Jerry Atkin, former CEO and current Chairman of SkyWest Airlines.

“Economic movers and shakers like these truly deserve this recognition,” Val Hale, Executive Director of the Governor’s Office of Economic Development, said in a statement. “Each has made innovative contributions to their industry and their local economies. But the way they give back is especially noteworthy.”

Nu Skin got its start in Provo, Utah, in 1984. The seller of anti-aging skincare and nutrition products is one of the top direct selling companies in the world, with revenue of $2.25 billion in 2015. Currently operating in 54 markets, the company also makes a global impact through its charitable arm, the Nu Skin Force for Good Foundation, which serves children with a focus on healthcare, nutrition, education and economic opportunity.

Youngevity Says Revenue Rose 17% in Record 2015


Youngevity International Inc. (YGYI—OTCQX) announced that revenue was up 17 percent in 2015 to a record $156.6 million. The company’s direct-to-consumer business, comprising a wide range of nutrition and lifestyle products, accounted for 89 percent of sales, while its commercial coffee business made up the remaining 11 percent. Gross profit for the year was $92.9 million, up 22 percent from a year ago.

The Chula Vista, California-based company lost $1.7 million, compared to a net profit of $5.4 million in the prior year, as a result of changes in the valuation of net deferred taxes in 2014 and about $7.5 million in non-cash expenses last year, including an extinguishment loss on debt and higher interest expenses. Operating income rose 61 percent to $5.4 million. Adjusted EBITDA reflected a 40 percent increase at $9.2 million.

Management also noted that acquisitions made in 2014 and 2015 contributed $10.3 million in revenue to the direct selling segment, which grew by 20 percent in 2015. Thus, acquisitions drove 47 percent of revenue growth, versus organic growth of 53 percent.

After Temporary Halt, Vemma’s Sales Continue to Grow

More than six months after a Federal Trade Commission action temporarily shuttered its business, Arizona-based Vemma Nutrition Co. continues to regain sales traction.

The company restarted operations on a limited basis on Oct. 8, 2015, and since then has seen 2,985 new customers and 25 new Affiliates join Vemma, the company said in its quarterly report to the U.S. District Court for the District of Arizona on March 18, 2016. Monthly gross sales have increased nearly 65 percent from $723,750 in November 2015 to $1,192,726 in February 2016, with total gross sales exceeding $3.6 million during the period.

Restarting the business has been challenging. Vemma was hit unexpectedly by the temporary restraining order on Aug. 24, 2015, and within hours a court-appointed receiver laid off nearly the entire staff, stopped all sales and halted commission payments. Several weeks later, the company made its case to U.S. District Court Judge John J. Tuchi, who adjusted the terms of the TRO when he put in place a less-restrictive preliminary injunction while the case continues through the court process.

In early February, Vemma gained approval to revise its new compensation plan. The most recent plan continues to require that at least 51 percent of the total sales for an Affiliate’s entire organization come from sales to customers who are not participating in the business opportunity before that Affiliate qualifies for commissions or bonuses. It also maintains a binary structure but with some adjustments, including changes to the way bonuses are achieved and limits on how long organizational sales can be carried over. Compensation plan expert and CEO of InfoTrax Systems Mark Rawlins described the plan as containing clear rules that demonstrate to participants that “you not only need to do the work to get the benefits, you have to pay close attention to your downline activity, in order to get paid.”

While Vemma is selling product, marketing its business opportunity and paying commissions, many of the company’s operational decisions continue to be subject to FTC or court approval while the case is pending. The judge has ordered all parties to the case to hold good faith settlement discussions no later than June 3.

Country Singer Kelsea Ballerini Joins Mary Kay Global Day of Beauty


During its Global Day of Beauty initiative, slated for May 12, Mary Kay Inc. will shine a light on dating violence with the help of country music star Kelsea Ballerini. Healthy relationships are one focus of Don’t Look Away, Mary Kay’s corporate campaign to prevent and end domestic abuse.

The annual Mary Kay Global Day of Beauty serves women around the world who are recovering from abuse, pampering them with free makeovers by the brand’s Independent Beauty Consultants. Ballerini is taking part in this year’s event to help educate teens and young adults on healthy relationships and available support services, such as loveisrespect, a texting helpline sponsored by Mary Kay.

“The fact that one in three young people today are impacted by dating violence is a scary statistic. I’m excited to join forces with Mary Kay for this event to help draw awareness to this issue,” Ballerini said in a statement. “By partnering with Mary Kay’s Don’t Look Away program, I truly hope to help empower women and remind them of their beauty and self-worth.”

After winning over fans with hits like “Dibs” and “Love Me Like You Mean It,” Ballerini took home the award for New Female Vocalist of the Year at the 51st Academy of Country Music Awards in April. The 22-year-old artist is signed with Black River Entertainment.

Direct Selling Association Partners with The Latino Coalition

A new partnership between the Direct Selling Association and The Latino Coalition will highlight the work of Hispanic-Americans, a growing segment of direct selling entrepreneurs.

“More than one-fifth of the 18.2 million Americans involved in direct selling in every state, Congressional district and community in the United States are Hispanic,” Joseph Mariano, President of the DSA, said in a statement. “We are pleased to join forces with an organization that, like direct sellers, is committed to empowerment and opportunity.”

Promoting economic and social development of Latinos is the mission of The Latino Coalition, which was formed more than two decades ago by a group of Hispanic business owners. This year, the group will team up with the DSA to co-host two small business summits—one in Washington, D.C., and another in Los Angeles.

Taking a Cue from Distributors, AdvoCare Launches Annual Event for Women


When it comes to empowering and energizing the salesforce, it pays to listen to the experts—i.e., the salesforce. Case in point is AdvoCare Ladies Alive, a nationwide event the health and wellness company hosted for the first time in April.

Ladies Alive originated with Independent Distributors who wanted to lock arms with other women building an AdvoCare business. What began about 10 years ago as a one-off gathering grew in popularity, until 2014 when about 20 events were held under the Ladies Alive banner. At that point, AdvoCare’s corporate team took its cue. The company partnered with field leaders to capture the momentum behind Ladies Alive by launching an annual gathering for women entrepreneurs. Held April 9 and 16, Ladies Alive 2016 drew more than 19,000 women—the majority, but not all, affiliated with AdvoCare—to regional events in nine cities.

“Women today are busy. We do this event, basically, so we can fill them up,” said AdvoCare’s Sales VP in the West Region, Deb Fisser, one of the organizers behind Ladies Alive. “It’s a day that’s just about them, to renew and empower them to discover their gifts and talents, and an opportunity to spend time with other fabulous women.”

Upon arrival, guests received a 12-month Ladies Alive planner and a pouch filled with products, including the brand’s Formula W supplement for women. Many of those products were woven into training from the stage, where a living room set evoked the casual feel of The View. At each venue, attendees heard from fellow Independent Distributors—including a power message from a local leader—and a member of AdvoCare’s Scientific & Medical Advisory Board.

“It’s been incredible to watch, coming out of it, the positive energy that’s living on through texts, email and social media,” said Christina Helwig, VP of Global Events. “Whether this was their first or 50th event with AdvoCare, women felt that it was an incredible day, filled with balance between the theme of ‘Give to Give’ and practical education.”

Mannatech Reports Lower Q4 Earnings, Reveals Rebrand


Mannatech Inc. (MTEX—NASDAQ), which unveiled a comprehensive rebranding as well as new fat-loss and essential oils product lines at its annual salesforce event in April, said earnings slipped in the fourth quarter from the same period a year ago. The nutrition company reported income of $1.5 million, or 56 cents a share, versus $1.9 million, or 68 cents a share, a year ago.

Bolstered by sales growth in the Asia-Pacific region, quarterly revenue edged up 0.2 percent to $45.3 million, compared to analyst estimates of $45.20 million. Management said the results were hurt by currency rates and new product launches.

For the year, revenue fell 5.2 percent to $180.3 million, taking an $11.8 million hit from currency fluctuations. Management said the company closed out the year with $32.0 million in cash, up from $28.0 million a year ago.

Stream Expands Mobile Business with Launch of Stream Digital Voice

TEXT Stream unveiled its new service to Independent Associates at Ignition 2016.

Texas-based Stream continues to expand its service offerings with the launch of Stream Digital Voice, which aims to bridge the gap between a user’s home phone line and mobile line.

The essential services provider unveiled Stream Digital Voice at Ignition 2016, its annual salesforce conference held in April in Dallas. The theme of this year’s event—Evolution—is a nod to Stream’s ongoing transition from energy provider to direct selling company with a growing line of services. Under its Connected Home concept, the company has thus far added Mobile Services, Protective Services and Home Services to its flagship energy offerings.

“At Stream we listen carefully to the wants and needs of our customers, as they are our number one priority,” said Larry Mondry, who joined Stream as President and CEO in February. “We feel strongly that our new Home Services line, which includes Stream Digital Voice, will help our customers stay connected to their homes, wherever they are. Our newest service offering is a continuation of our company’s progression toward becoming a full-service provider of essential services.”

To take advantage of the new service, customers can choose from three equipment packages, starting at $99.99. The service requires a Digital Voice HUB or Internet phone adapter, but users can upgrade to the AIR wireless and Bluetooth adapter or BRIDGE remote phone jack. Features include three-way conference calling, voicemail-to-email and low-cost international calls. Users also can take their home phone on the go with the Stream Digital Voice app, which enables unlimited calls and app-to-app calling anywhere in the world.