Shares in Neutrahealth nose dive

The Quackometer has just pointed out that Neutrahealth’s share have been going down since last year – and have recently nose-dived. Neutrahealth are the company that owns Biocare (who own Holford’s Health Products for life, and who have Holford as their Head of Science and Eduction). The Quackometer notes that

In the last few days, vitamin pill company Neutrahealth…has seen a precipitous drop in its share price…When Neutrahealth floated on the stock market in 2005 its shares were sold at 10p. This year, pharmaceutical company Elder invested heavily in the company at 16p per share, already a significant premium over their then current price. Now the stock is trading at about 2p after collapsing last week.

The reasons for this are twofold. The company has a stated dual strategy of growth through increased sales of its pills to consumers and by acquisition of other companies to add to its market share. So, firstly, the subsidiary companies of Neutrahealth are struggling to increase sales for a number of reasons. Even before the current financial turmoil, it was becoming obvious to them that consumers were not going to nutritionists to buy expensive pills from the ‘Practitioner channel’. Despite rule changes to the code of ‘ethics’ at BANT that allowed registered nutritional therapists to take kick backs on pills they sold to their customers without disclosing them, it would appear that consumers of vitamins would prefer to take their advice from the Internet than pay for a consultation. Neutrahealth have then been hoping for a pick up in their ‘direct to consumer channels’, principally Patrick Holford’s ‘Health Products for Life’ website…

Neutrahealth issued a profits warning on the 25th of September, saying that it will fall short of the market’s expectations. The market has not taken kindly to this news. It cites consumer spending as a problem and the raised cost of raw materials, such as fish oil. But this situation has lead to a more serious threat to the business.

The second part of the ‘double whammy’ is that Neutrahealth can no longer execute their desire to grow through acquisition. Investors have bought into the company on the basis that their capital will grow through the value created from ‘synergies’ between acquired companies. Companies were bought on the strength of their share price by, effectively, buying companies through the value of their own equity. That, pretty much, does not exist now. And, it is unlikely they will be able to raise cash through loans in the current climate. By pushing the company into the penny shares bracket, it would prove near impossible to raise cash from investors as they might have done twelve months ago.

Read the rest of the post here.

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3 Comments

Filed under Holford, patrick holford

3 responses to “Shares in Neutrahealth nose dive

  1. Claire

    I’m not sure if much credence should be given to this industry-sponsored survey but passing on the link. The headline writer is obviously a ‘glass half-full’ type.

  2. valueaddedwater

    2p a share?

    50 for a quid

    Does that mean I could become a majority shareholder for the price of a good sit down curry (with a few lagers) for two people?

    Oh the joys of the AGM when the board have to justify the prescence of such august advisors as Patrick Holford.

    I feel an evil plan involving a whip-round, and some sharks fitted with big frikkin lasers

  3. VAW – not just the presence of Patrick Holford but the fact that the company spent £1.1 million on advertising support to promote both his range of pills and CoQ10. That can not be looking like the smartest investment decision with the luxury of hindsight. Interims.

    Marketing spend of £1.1m (2007 interim: £0.57m) supporting Patrick Holford and CoQ10 roll out…The Patrick Holford range of product continues to expand and the initial results have been encouraging…The area of the vitamins and supplements market that is suffering most from the economic climate is the independent high street retailers.
    We only have limited exposure to this market, and the downturn in this business is more than compensated for by the Patrick Holford brand growth. [Emphasis added.]

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