President who sold Nutrisystem to Tivity is out; deputy Krausz will diversify

The people who run Nutrisystem, the Horsham-based diet-meals company, are seeking to convince shareholders that the sudden departure of former president Dawn M. Zier won’t knock owner Tivity Health Inc. off track by emphasizing that a familiar team headed by Zier’s top aide Keira Krausz remains in charge of the business.

Zier “was mutually terminated,” Tivity said in a statement Monday, one year after she announced that Tivity had agreed to buy Nutrisystem for $1.4 billion. Zier had run Nutrisystem since 2012, and as president and chief operating officer, had reported to CEO Donato Tramuto. The job paid a salary of $875,000, plus a bonus of $875,000, and stock options worth about $4.75 million a year.

Tivity shares were down as much as $2 on news of her departure — which “is not related to any disagreement” about “operations, policies or practices,” Tivity emphasized. The stock, which traded above $40 before the Nutrisystem acquisition was announced last year, ended the trading day at $20.23, up 2.43%.

Under the deal she negotiated with Tivity in late 2018, Zier could leave for any reason up to a year after the merger without losing her rights to a severance package. She also had incentives to stay — a $2 million bonus if she remained until next May, another bonus of up to $4 million more if she stayed through 2021 and the company hit financial targets.

But investors have taken a skeptical view of Tivity’s prospects lately, as reflected in the fallen share price.

The company did not announce a replacement for Zier, whose board seat has also been eliminated.

Nutrisystem will continue to be managed by Krausz, who had been Zier’s chief marketing officer starting in 2013 and was named president of the renamed Nutrition Business Unit after the merger, according to a Tuesday statement by the company. Top aides also remain, including chief operating officer David Burton, marketing chief Steve Mikuliak, and contact center leader Bill MacBride, all veterans of the Zier years.

In a statement, Tramuto called Krausz “a proven leader committed to aggressively pursuing” plans to “diversify the nutrition business.” He credited Krausz’s team with having “revamped its ecommerce team,” boosted revenue per customer by 30% by building a customer experience-and-retention team, and expanding the company’s South Beach Diet program.

Since the merger, headcount at Nutrisystem has grown to 600, from 544.

Tivity’s other businesses, including the SilverSneakers and Whole Health exercise programs for members of Medicare plans, collectively employed about 500. The company’s combined sales are expected by stock analysts to top $1 billion a year.

Zier gave no sign she was planning to leave in a conference call with investors Dec. 3. She boasted that the nutrition business was “on plan,” increasing digital marketing and “refining [our] creative messaging.”

She said the company would be launching a new line of Wisely Well, nondiet, nutrient-dense meals “to nurture and energize the body” and “fuel healthy living” for convalescents, starting next month, and will be more closely linking its senior care and diet services with partners such as Walmart stores and Humana hospitals.

In the same call, Krausz talked up Nutrisystem’s NuMi free smartphone app. The company noted such “digital marketing,” rather than advertising, now accounts for a majority of its new customers.