GNC Credit, Herbalife Q4, Industry Summit: Health And Wellness News

GNC approaches closing $300m Hayao investment with lenders' OK to re-work loans; Herbalife back to sales growth and prepares for management changes; and CFSAN's Education Resource Library is accessible as a catalog of nearly 300 publications and videos.

GNC lenders OK credit rearrangement

[GNC Holdings Inc.] expects to close a deal for a $300m investment from Chinese firm Harbin Pharmaceutical Group Holding Co. Ltd. (Hayao) after receiving approval from a sufficient number of lenders to extend the due date of its loans.

The nutritional, health and wellness manufacturer and retailer on Feb. 23 said around 87% of its term lenders have consented to extending the maturity date of the loans to March 2021 and make other modifications to the credit agreement. CEO Ken Martindale stated the development is "another important milestone in optimizing our balance sheet, and represents an important step towards completion of the Hayao transaction."

Following the closing of the amended and restated credit facility and the other related transactions, the maturity date of the loans will be extended by two years, GNC's existing revolving credit facility will be cancelled and it will enter into a new $100m asset-based loan revolver. Additionally, portion of the extended term loans will be exchanged for asset-based, first-in-last-out term loans and new loans borrowed on the closing date to combine for $275m aggregate principal amount. GNC expects the amendment and extension transaction will close by the end of February.

The Pittsburgh-based firm on Feb. 13 announced Hayao will become its largest shareholder, have five board seats and be a joint venture partner with its investment. In addition to approval from US and China regulators and from shareholders, closing the agreement is contingent on approval from GNC's largest term loan lenders to extend the credit facility and to permit it to concurrently enter into a new asset-based facility.

As GNC on Feb. 13 reported substantially trimming its net losses in its 2017 fourth-quarter and full-year results, it announced that Harbin Pharmaceutical, known as Hayao, will invest approximately $300m in GNC, becoming the single largest shareholder, and the two firms will form a JV for manufacturing, marketing and distributing GNC-branded products in China. GNC's board will be expanded from six to 11 members, comprising Martindale, five appointed by both Hayao and five by GNC.  (Also see "GNC's New Partner Brings China Access And Funding, Takes Board Seats" - HBW Insight, 14 Feb, 2018.)

Herbalife sales up, but tax changes cause loss

Herbalife Ltd. returned as it forecast to net sales growth in its fourth quarter although the nutrition and weight loss supplement direct seller reported a net loss of $63.4m, 87 cents per diluted share, partly due to a provisional $153.3m charge, $2.01 per adjusted diluted share, related to recent US tax code changes.

The results from the October-December period reported Feb. 22 followed net income of $99.4m, $1.16 per diluted share, in the prior-year quarter. For full-year 2017, the Los Angeles-based global marketer said it net income was $213.9m, $2.58 per diluted share, down from $260m, $3.02 per diluted share in 2016. Its net sales grew 4.6% in the quarter, including a 1.2% boost from currency exchange, to $1.1bn and slipped 1.4%, including 0.3% on currency exchange, to $4.4bn for the year.

For 2018, Herbalife stated diluted earnings-per-share guidance of $3.82 to $4.22 reported and $4.60 to $5.00 adjusted.

CEO Rich Goudis stated in Herbalife's earnings release that the fourth-quarter growth came "after a year of transition" of operating under the requirements imposed by a July 2016 settlement that ended a Federal Trade Commission investigation of its compensation practices for US distributors. (Also see "Herbalife Claims No Harm, But FTC Hails 'Unprecedented' Settlement's Impact" - HBW Insight, 15 Jul, 2016.)

The firm also announced management changes coming in May: President Des Walsh will move to the new role of executive vice-chairman. Chief Financial Officer John DeSimone and Chief Health and Nutrition Officer John Agwunobi both will add co-president to the their titles. DeSimone also will be chief strategic officer while continuing to lead financial planning and investor relations operations, and Agwunobi will expand his responsibilities to concentrate on enhancing the distributor and customer experience. Bosco Chiu, senior vice president and principal accounting officer, will be promoted to executive VP and CFO and current acting general counsel Richard Werber will become chief legal officer while Senior VP Deputy General Counsel and Chief compliance officer Henry Wang will move up to executive VP and general counsel. Goudis succeeded Michael Johnson as CEO in June 2017. (Also see "Herbalife CEO Plans Exit With FTC-Required Changes Underway" - HBW Insight, 3 Nov, 2016.)

Dietary Supplements Regulatory Summit registration open

Consumer health product industry trade groups are conducting the Dietary Supplements Regulatory Summit on May 16 at the Willard InterContinental Hotel in Washington, with presentations including FD officials' "report card" for the industry and discussion of a new dietary ingredient master file concept. Members of the groups --American Herbal Products Association, Consumer Healthcare Products Association, Council for Responsible Nutrition, Natural Products Association and United Natural Products Alliance -- as well as other stakeholders are invited to register for the summit designed specifically for manufacturers, marketers and regulators of dietary supplements focused in the regulatory and quality disciplines. It will feature updates and insights from FDA and industry regulatory experts and focus on the key regulatory compliance issues facing the supplements industry. Other presentation topics are regulatory reform under the Trump administration; an FDA update on Nutrition and Supplement Facts labeling issues, including dietary fiber; agency and industry sessions on GMP inspections after a decade and on priorities and opportunities for collaboration. CHPA's Regulatory, Scientific & Quality Conference will follow the summit on May 17-18 at the Renaissance DC Downtown Hotel in Washington.

CFSAN Resource Library accessibly cataloged

FDA's Center for Food Safety and Applied Nutrition makes its Education Resource Library accessible as a catalog of nearly 300 publications and videos covering dietary supplements, nutrition, cosmetic safety, food safety, and other information including food defense. Users can access the content alphabetically or narrow their searches with filters and uses prompts on the site to download content or order free copies. CFSAN designed the catalog to make its public health education information more accessible for individuals seeking science-based food safety, nutrition, and cosmetic safety information whether for professional or personal reasons.

From the editors of the Tan Sheet. Our dietary supplement industry coverage now is published in the Rose Sheet, with articles emailed to readers daily and available on this page of the website.