Isagenix majority sold off to undisclosed investors
Following months of financial uncertainty, Isagenix has been sold to a group of undisclosed investors.
Isagenix’s financial troubles have been brewing in the background for a while.
This is from a September 2022 Moody’s report;
Moody’s believes a deterioration in member base and weakening consumer demand is contributing to revenue declines, which combined with inflationary cost pressures is leading to significant EBITDA erosion.
Isagenix’s cash on hand of $19 million as of June 2022 is insufficient to repay the $29 million of revolver borrowings and term loan amortization of $18.8 million over the next 12 months.
Moody’s anticipates ongoing headwinds in the company’s recruiting efforts to continue.
Isagenix’s current capital structure is unsustainable, prompting Moody’s expectations of a rising likelihood of near-term restructuring and that the company will unlikely be able to raise sufficient new funds to refinance the maturing debt at a manageable interest cost.
That predicted restructuring was announced by Isagenix on February 27th;
Isagenix International … announced today that it has reached a definitive agreement with an ad hoc group of the Company’s investors to secure the long term future of the business.
This agreement, also known as a Restructuring Support Agreement or “RSA,” marks the positive culmination of discussions between the Company and its key financial stakeholders to recapitalize and support the business, eliminating approximately $130 million in senior secured debt.
Under the terms of the RSA, the Company’s investors will take a controlling stake in the business. (The) Coover family … will maintain minority ownership.
In addition to the cash injection, Isagenix co-founders Jim (right) and Kathy Coover are contributing
$95 million of value through the combination of new contributed cash and the forgiveness of debt.
Isagenix has also secured an additional $130 million in debt reduction from other secured lenders.
It’s astonishing that they’re celebrating as if they’ve achieved a victory when in reality, the same management responsible for the financial disaster is still in charge.
In my opinion, the individuals involved in the restructuring seem strikingly similar to those involved in the Arbonne negotiations 10 years ago. I believe this arrangement has been established to facilitate the future sale of the company.
From a business perspective, it has been a catastrophe for the lenders who seem to have been cheated out of over $100 million by being forced into a long debt forgiveness.
I’m referring to the numerous small investors who were part of the funds that loaned money to Isagenix.
I didn’t touch on that in the article but it’s a good point.
Management and ownership got Isagenix into this predicament. That’s not changing with the buyout/bailout.
Jim Coover is still Chairman of the company. Sharron Walsh was appointed Isagenix’s CEO in late 2020. Not sure how much of the financial mess she inherited vs. oversaw between 2020 and now.
I guess we’ll learn soon enough how Isagenix’s financials are doing over the next 12 months.
But wait, there’s more!
The reasons behind the sale of Isagenix include more than what has been expressed here so far. The company founders, Jim and Cathy Coover and John Anderson, have from the beginning said that they wanted Isagenix to be a legacy company, meaning an opportunity that would basically last indefinitely and one that field associates could count on to be around.
The challenge became that John Anderson has passed and Jim and Cathy Coover are 75 and 70 years old, respectively. They were grooming their son to take it over but he married an Isagenix rep in Australia and they have decided to raise their family in Australia.
This left Jim and Cathy with the question “Now what?” as far as keeping the company going.
What they ended up doing is selling majority ownership to an ad hoc group that has a track record of success with NWM companies. This group bought Arbonne out of bankruptcy and in the 12 years since has built it to almost $1 Billion dollars annual revenue and they want to do it again with Isagenix.
Jim Coover has stayed on board as a minority owner, but the company no longer rests entirely on his shoulders.
In summary, the company now has very deep pockets, a group of owners with successful track records all around, the continued support of founder Jim Coover and an assured future long term, beyond the lifespan of Jim and Cathy. W
hatever short term financial challenges there were, they came through them with flying colors.
Full disclosure: I am independent distributor with Isagenix. Have been with them for 12 years and frankly have wondered about what would happen to the company when the Coovers were no longer around. That is no longer a concern. I’m happy.
Thanks for the additional context.
re:
Answer: All good.
And what’s that based on?
Nothing has changed for the worse, regardless of Moody’s concerns.
Commissions are paid on time, new product development continues. Everything is running smoothly. There are no signs of trouble that can be seen from the field and never have been other than a few leaders left for what they thought might be greener pastures, but that’s just business.
Happens to the best and it’s ok. I believe I know who all of those folks are and they have all jumped ship a couple of times since…not a good sign that they are glad they left.
You said the next 12 months would tell the tale and there have been no negatives from my perspective. Just letting you know.
Wasn’t that the case when Moody’s 2022 report came out?
If you have insight into Isagenix’s debt as of 2024 by all means share it, but otherwise you’re just speculating no?
Isagenix’ debt became a non-issue with the new ownership. You said the next 12 months would prove to you if that were true, I am simply reporting that your 12 months has passed.
Peace out! ✌️
In that sense, yes. I’d still prefer to see a followup from Moodys or another third-party though.
Isagenix didn’t disclose their problems till that report came out – and only then when they minimize being hundreds of millions in debt.