Vital Living buys out joint venture partner
acquiring 100 percent of Wellness Watchers Systems, its former
50/50 joint venture with health and nutrition company Wellness
Watchers International.
The deal sees Vital Living retain exclusive rights and title to WWS' proprietary software-driven health and lifestyle screening tools, nutritional supplements and foods, and sales operating systems and concepts relating to the products.
In return, WWI founders Dr Donald and Deonn Hayes have been issued 1 million restricted common shares of Vital Living.
Vital Living and WWI joined forces in August 2004 to form WWS with the aim of co-marketing both companies' nutritional and healthy food products to healthcare professionals worldwide.
But Vital Living's decision to buy out its partner did not take long. According to CEO Stuart Benson, it was governed by recognition of the company-wide benefits of applying WWS' technology-driven marketing platform and sell-through strategy across its other business units.
"Since late last summer, it has become increasingly evident to us that Wellness Watchers Systems' established sales and marketing channels represent a high-growth opportunity for Vital Living," he said.
WWS' operations, products and services will now become part of Vital Living's wholly-owned subsidiary Doctors For Nutrition (DFN), where it will be used to cross market DFN's products to and through healthcare providers nationwide.
"The operational and cost efficiencies realized are expected to improve Vital Living's financial performance on a consolidated basis," added Benson.
Earlier this year the company took the decision to focus on developing and marketing its proprietary product mix, divesting itself of other business interests in order to reduce its expenses.
Indeed, in 3Q 2004 it reported total administrative expenses of $2.7 million compared with $11.4 million for the prior year period, while revenue increased 26 percent to almost $1.1 million.
For the three months ended September 30 its net loss was $2.2 million in 2004, down from $11.4 million in 2003. Over the nine month period, however, the net loss increased from $14.4 to $17.9 million.
In October 2004 Vital Living was ranked #5 Rising Star on the 2004 Deloitte Technology Fast 500 list. The category ranks 25 companies that have been in business for between three and five years according to their percentage revenue growth.
Over the past three years Vital Life has seen 3072 percent revenue growth.
The WWI buyout is not the first time that Vital Living has made bold strategic moves to improve its market position. In August 2003 it merged with privately held nutraceutical-based drug development company Enhanced Nutriceuticals (ENI), an agreement which say all of the issued and outstanding common shares of ENI exchanged for Vital Living common shares.
As part of the transaction, SkyePharma, an ENI shareholder, also made a separate equity investment in Vital Living and gave the company exclusive rights to market its patented Geomatrix oral drug-delivery technology in China, and the development of nutraceuticals on a global basis.
