Mannatech sales slide; warning letter questions meaning of 'glyconutrients'

By Hank Schultz

- Last updated on GMT

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Mannatech sales slide; warning letter questions meaning of 'glyconutrients'
Network marketing company Mannatech is laboring under the twin burdens of a pronounced slide in earnings and stock valuation and a warning letter detailing numerous GMP violations.

Mannatech was flying high until recently.  The company celebrated its 100th international patent on its ‘glyconutrient’ vitamin and mineral supplement products. And it had expanded its global distribution, and now, like many other MLMs that started in the US, derives the majority of its earnings overseas, especially in Asia.

New compensation plan depresses sales

But like other MLMs, Mannatech, which is based in Coppell, TX, has had to reform its compensation practices in light of the high profile settlement that Herbalife came to with the US Federal Trade Commission.  Herbalife paid a $200 million fine levied by FTC and agreed to recast its relationship with its distributors to better account for and to reemphasize the sales of products to end users, do away with high buy in costs and to downplay the rewards sales associates earn for merely recruiting new distributors into their networks. The settlement aimed to keep the company on the side of a legitimate network marketing arrangement and keep it out of illegal pyramid scheme territory.  Other MLMs have decided to preemptively follow suit.

“The new compensation plan makes a clear distinction between preferred customer and those who choose to build the business. And the new plan mandatory pack sales have been replaced with a modest yearly associate fees of around $50,​ said CEO Al Bala during a recent earnings call with stock analysts.  The call was posted in transcript form on the site​.

The elimination of pack sales during the three months ending September 30, 2017, caused a pack sale decrease globally of $5.1 million as compared to the same period in 2016 and contributed to the overall sales decline that we experienced in the third quarter,​ he said.

Overall sales fell by $6.1 million, or 12.8% to $42 million in the third quarter of 2017, compared to net sales of $48.1 million in the third quarter of 2016. Sales fell most steeply in North America, followed by declines in Europe.  Sales in Asia retreated the least, falling by 4.3%.  Sales in Asia now bring in more than half of the company’s overall revenue.

 The company managed to actually slightly boost profitability, though, reported net income of $1.4 million, or $0.50 per diluted share, for the third quarter of 2017 as compared to a net income of $1.3 million, or $0.46 per diluted share, for the third quarter of 2016.  This was achieved with a rigorous program of cost cutting, reduced promotional activity and layoffs.  The company didn’t specify how many employees had been cut loose, but did report $400,000 in severance costs in the quarter.

The company’s stock is now trading at about $13 a share, down from a recent high of more than $25 in late 2015, when the stock price got a little bump from the past association of then Presidential candidate Dr Ben Carson with the company.  The company’s all-time stock high was more than $251 a share in 2005.

Warning letter questions company’s foundational nutritional principle

But earning issues aren’t the company’s only woes.  In early November FDA sent a warning letter ​to the company, which uses contract manufacturers to make its finished products.  The warning letter detailed a slew of GMP violations, including lack of sufficient product specifications, questions about how products were tested, and failures in the reporting of adverse events.  In addition, the warning letter listed a number of labeling violations, one of which seems to strike at the heart of what Mannatech claims its products to be.

Mannatech was founded on what it calls ‘Glyconutrients,’ which the company defines thusly: Simply put, they are specialized ingredients derived from plants and aloe that provide targeted nourishment for your cells.​  The company claims its products enhance intracellular signaling, which it alleges declines with age and accumlated toxins.  But FDA maintains in the warning letter that while that might be all fine and good (warning letters after all are not the place where the scientific backing of claims is vetted), it’s not something you can put on a label in connection with claims such as good source of.

The MannaBears product information sheet found on and the website state that the MannaBears product is a great source of Glyconutrients. However, glyconutrient does not appear to be a meaningful term that consumers would understand. The use of the term appears to be misleading,​ the warning letter stated.


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