Nutrisystem’s new owner names a boss to boost deliveries beyond COVID

Nutrisystem, the Fort Washington diet-meals distributor, is reorganizing under new owners who hope the recent boom in meal delivery lasts longer than the virus.

“Weight loss is very competitive. But we deliver healthy food to the door, and that’s a perfect place to be in, during COVID,” said Stephen Mikulak, named president this week by Kainos Capital, the Dallas investor that bought Nutrisystem two months ago.

Mikulak, 42, who heads a staff of 440, joined Nutrisystem in 2014. He was most recently the 45-year-old company’s chief revenue officer. Former chief executive Mike J. Hagan is also rejoining the company by taking a board seat.

Nutrisystem’s management team turned over under its previous owner, Tennessee-based Tivity Health. That firm paid $1.4 billion for Nutrisystem in 2018, operating it as its largest single business.

But top Nutrisystem leaders departed as it struggled to boost profits while meeting competition from the keto weight-loss program and other new diets.

Dawn M. Zier, who had run the company since 2012, left in December 2019, and her top aide and replacement, Kiera Krausz, resigned just three months later, leaving a Tivity executive, Tommy Lewis, temporarily in charge. Mikulak took over from Lewis.

Tivity sold the company in December to Kainos, which is an investor in food firms, and minority partner MSD Partners LP for just $575 million, less than half what it paid. Mikulak said Nutrisystem’s performance has improved.

In the first nine months of last year, Tivity lost $212 million on sales of $855 million. The firm’s annual report did not break out net income figures for Nutrisystem.

Sales had been flat at nearly $700 million a year since 2017. Rival Weight Watchers reported profits of $63 million on about $1 billion through the first nine months of last year.

Nutrisystem has offered discounts to keep orders coming. But Mikulak said sales turned up last year and 2021 “is off to a good start. The goal for me is continuing to grow,” with a busy smartphone app and other digital services.

The company’s meals retail for $250 to $350 a month, or “about $10 a day,” Mikulak said. He’s personally fond of the chicken parm.

“The melts are really good,” he said. “And I’ve got to go with the ice cream saucers.” Lately the company has been selling more “partners” specials for dieting couples. Men get an extra snack because they need more calories.

Kainos says it tripled sales at SlimFast, a Nutrisystem rival, and boosted profits by contracting to cheaper suppliers, after it brought the SlimFast brand from Unilever in 2014, before selling it to Glanbia Plc in 2018. The investor hopes for similar success at Nutrisystem. Mikulak said he expects to review new vendors, service providers, and food offerings.

Hagan headed VerticalNet, a Wayne-based dot.com company briefly worth $11 billion — 100 times its sales — during the internet bubble that ended in 2001. He led Nutrisystem as chairman and CEO from 2002 until 2008, and came back as chairman from 2012 until the Tivity acquisition.

Hagan also started the home-alarm service LifeShield, which he sold to DirecTV, and manages investments at his own firm, Hawk Capital, named for the team at his alma mater, St. Joseph’s University, where the basketball stadium is named for him.

“He’s passionate,” Mikulak said of Hagan. “I can always reach out to him about management and how do you strategize, balance, deal with situations in a leadership role.”