Jenny Craig's online business sold to healthcare startup prescribing ...

The online business operated by weight-loss company Jenny Craig in Australia and New Zealand will be sold to an online healthcare start-up that rose to prominence prescribing weight-loss drugs, administrators announced on Wednesday.

Administrators FTI Consulting recommended Jenny Craig be placed into liquidation but agreed to sell the online capability of the business to Eucalyptus, a healthcare technology company, which will continue to offer online weight loss solutions to customers.

Administrators Vaughan Strawbridge, Kate Warwick and Joseph Hansell sought to sell the operations “with the intent of preserving as many jobs as possible” and limiting losses for creditors by seeking offers from interested bidders.

“Despite best efforts, the administrators were unable to find a buyer for the physical stores and employees of the Australian and New Zealand business,” said a statement issued by FTI Consulting on Wednesday.

Administrators advised all employees in Australia and New Zealand that a sale of the business, with the 91 stores continuing to trade and staff continuing their employment, was not achievable.

“This has resulted in a decision to immediately cease trading from stores and employees being made redundant,” the statement added. FTI Consulting described the decision as an “unfortunate outcome” and one which the administrators “had sought to avoid”.

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There were reportedly 15 interested parties involved in the bidding process, four of which submitted non-binding indicative offers.

The administrators said in Australia the company had 7,300 customers a week across the 73 stores and online, and employs approximately 306 staff in Australia and 71 in New Zealand.

The administrators said Covid-19 pandemic supply chain issues, several non-performing stores and the lack of working capital to address the issues likely contributed to the company’s demise.

Last month, Strawbridge said the brand’s management team were working to find a new owner and a number of parties were “interested in taking the businesses forward”.

Jenny Craig was founded in Melbourne in 1983 and grew to become a household name as one of the biggest weight management companies in the world. It has about 600 centres globally with more than 500 locations in North America.

Jenny Craig’s main services consist of one-on-one personalised support with nutrition and lifestyle planning.

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Various celebrities have featured as ambassadors over the years including the singer Mariah Carey and the former Spice Girl Melanie Brown, known as Mel B. Locally, the comedian Magda Szubanski and the late Barry Humphries and his alter ego Dame Edna Everage were also ambassadors.

Private equity investment firm HIG Capital bought Jenny Craig in 2019 for an undisclosed sum.

The next meeting of creditors for the Australian and New Zealand companies of the Jenny Craig group will be held on 14 June.

The announcement comes a month after Jenny Craig’s local operations had stressed it would continue operating despite its US global parent filing for bankruptcy. The administrator’s report for the Australian business notes that it had loaned its global parent company $3.1m, which falls into the $200m owed to the parent company’s creditors.

In response to the rise in services like Eucalyptus where customers can often get a prescription over a text chat or questionnaire, the Medical Board of Australia last month issued guidelines for doctors stating that video chat or phone call is preferred as the method of consultations for telehealth.

With Australian Associated Press.