Online health brand company Eucalyptus is using the $50 million it recently raised to acquire the online assets of Australian brand Jenny Craig from its trustees as the rest of the weight-loss company faces liquidation.
Voluntary trustees FTI Consulting were appointed on May 9, but a month later they have been unable to find a buyer for the Jenny Craig stores, which immediately ceased trading, laying off all employees. Some 73 stores in Australia have closed, with the loss of 306 jobs, in addition to 18 stores and 71 positions in New Zealand.
Administrators Vaughan Strawbridge and Joseph Hansell of FTI Consulting said it was “an unfortunate outcome” they were trying to avoid when they tried to sell the Jenny Craig Group’s Australian and New Zealand operations as an ongoing concern. They had 15 interested parties during the bidding and sales process, with four submission of non-binding indicative offers.
The only offer accepted by the administrators was from a health tech startup Eucalyptus, for Jenny Craig’s online opportunities, which will continue to offer online weight loss solutions to customers.
Eucalyptus already has a handle on the weight loss market, selling online medical products across four major demographic-focused brands. They are Pilot (men’s health, including weight and hair loss, erectile dysfunction and premature ejaculation), Juniper (female weight loss and menopause), Kin (fertility), and Software (prescription skin care). The company also started a sex toy brand, Normal, which it has since unloaded.
Doctor is concerned
ABC TVs Media Watch recently included Eucalyptus and Pilot after TV station Seven aired a story about former AFL player Dale Thomas, a pilot ambassador, in its news bulletin in a story about his weight loss that was criticized by viewers as an infomercial. The company said it does not sell the controversial drug Ozempic in Australia and was “misrepresented” in two programs on Seven.
The Royal Australian College of General Practitioners has expressed concern over Juniper, the women’s weight loss program, which prescribes daily injections of medicine after a quiz and textual consultation with a doctor.
The program costs $13 a day for prescription medication, Saxenda, which is approved by the TGA to aid in weight loss.
Last month, the Medical Board of Australia, which regulates GPs, revised its telehealth guidelines to ban so-called ‘tick and flick’ online prescribing from September.
It prevents doctors from prescribing without immediate direct consultation in real time, in person or via teleheath using video or phone.
The problem, the MBA said, is “asynchronous drug requests communicated by text, email, live chat or online that do not take place in the context of a continuous real-time consultation and are based on the patient filling out a health questionnaire when the practitioner has never spoken to the patient”.
Dr. Anne Tonkin, chair of the Medical Board, said: “Prescribing drugs is not a tap and click exercise. It relies on the skill and judgment of a doctor, who has consulted a patient, recognizing that prescription drugs can cause harm if they are not used properly.
Eucalyptus offers products through online applications that are reviewed by a physician. The company has indicated that it will adhere to the new guidelines.
Eucalyptus was founded in 2019 by Tim Doyle, Benny Kleist, Alexey Mitko and Charlie Gearside. It has raised nearly $150 million in venture capital funding over the past three years, including Blackbird, Woolworths venture capital fund W23, US investor Mary Meeker’s BOND Capital and Airtree. In April, Eucalyptus invested $50 million on a $520 million valuation. Previous rounds include an $8 million series A in May 2020, $30 million in a series B in July 2021 and 15 months ago $60 million in a series C in January 2022.
Startup Daily reached out to Eucalyptus for comment, and we’ll update the story if the company responds.
Trend cheap acquisition
Picking up distressed assets is the new black in scaling for Australian companies in the current economic climate, with several failed startups and other companies taken over by former rivals.
Most recently, Woolworths nabbed the Milkrun grocery delivery brand for a rumored $10 million — a tiny fraction of $86 million from VCs like Tiger Global and Airtree flowed into its short 19-month life.
After Sydney rival Voly folded in November last year after burning $18 million in seed money, the brand bounced back to life in February after meat subscription service Our Cow bought the assets from the trustees.
Melbourne ready meals company Efoodz. acquired gourmet marketplace CoLab from its trustees after it closed last month.
ASX-listed online retailer Kogan has also made a habit of buying failed brands, most recently acquiring the online assets of furniture retailer Brosa for $1.5 million. It also bankrupted imitation design furniture retailer Matt Blatt in March 2020, paying $4.4 million and $2.6 million for retailer Dick Smith Electronics after it collapsed way back in 2016.
Meanwhile, ifThe second meeting of creditors for the ANZ divisions of Jenny Craig Group will be held on Wednesday, June 14, where the trustees, given the lack of a proposed deed of corporate settlement, recommend that the companies be placed in liquidation.