In January you acquired Zija International. What made this a good decision for Isagenix and what does it allow you to do in 2020 and beyond?
Over the last several years, we’ve considered acquiring multiple companies and taken a hard look at some, and not as hard of a look at others. Ultimately, when the Zija International opportunity came along we critically evaluated it and started our due diligence. The deeper we looked the more excited we became and decided to move forward with negotiations. There are several things that excited us and certainly being able to onboard their field leaders was at the top of the list. As you know, in this channel, the most valuable asset in any network marketing company is the field leadership. As we took a look at their field leadership we were certainly impressed with the caliber of leaders they have.
Next, looking at their product line, they’re primarily known for their plant-based products. Plant-based just happens to be a strategic initiative of ours right now. We just launched some new plant-based products a couple of months ago with more on the way. With the Zija acquisition we were able to augment our line with some additional proven plant-based products. The other benefit is the geographic footprint Zija has. They are in a few markets that we are not currently in, and by combining forces we were able to accelerate Isagenix’s path to getting into some of those same markets long term.
“…when the Zija International opportunity came along we critically evaluated it and started our due diligence. The deeper we looked the more excited we became and decided to move forward with negotiations.”
The compensation plan dynamic is probably why you don’t see a lot of mergers and acquisition activity in our channel. But the fact that our compensation plans are similar will make the transition much easier. In addition, we believe our plan offers some extra incentives and I know that Zija’s field leadership is certainly excited to be able to plug into our plan and leverage those unique aspects.
Another big benefit to acquiring Zija, was that of Josh Plant, Ph.D., who used to be the Chief Operating Officer of Zija. We hired him in April of last year to be our Chief Science Officer. He’s very well known and loved by Zija’s field. That certainly made the transition easier for Zija leaders because he’s already a known quantity within Isagenix. With the acquisition and the transition that we’re in right now, our number one goal is to make this transition as easy as possible for the Zija field in order to set them up for success.
Finally, at the end of the day, we feel as a combined company we can execute at a higher level on fulfilling our vision of impacting global health, freeing people from physical and financial pain, while creating the most trusted and respected health and wellness company in the world.
The Zija acquisition also alarmed Moody’s with a downgrading of Isagenix corporate family rating. What is Moody’s getting right, and what are they getting wrong?
I think it’s important to understand why we are subject to a Moody’s rating agency review, so I’ll give you some brief background. In mid 2018, we converted a minority portion of Isagenix shares to an employee stock ownership plan. The Coover family still owns the vast majority of the shares, and control the company from a board of directors standpoint.
Because of their long-term vision for Isagenix and ongoing legacy planning, we pursued this employee stock ownership plan. It was really a way to accomplish several things. One of them was to certainly help our employees have an ownership mindset, with eligible U.S. employees now owning a portion of Isagenix. These shares vest over time and it has become an additional retirement benefit for them as well as a retention and recruiting tool. As part of the employee stock ownership plan financing we were required to send this financial data to Moodys.
Regarding the Moody’s report, I’ll just say the record reflected that we did not meet the numbers we were expecting to meet for 2019. We did not grow last year. We were down 22 and a half percent year over year revenue. And so from the standpoint of what did Moody’s get right? Well, they got that right because they received our numbers.
It’s also important to note that the Moody’s report is a snapshot in time, based on financial numbers on a piece of paper. What the report doesn’t take into account is everything that’s going on right now in Isagenix, including what we’re going to be able to accomplish with the combined entity of Isagenix and Zija going forward. We are very excited in terms of our ability to perform at a much higher level as a combined company.
We just launched several new products at our NYKO (New Year Kick Off) event in the U.S. in January. We also announced some innovations with respect to new opportunities to earn money in our compensation plan, as well as the removal of a customer membership fee.
As we sit back and look at the evolution our channel is going through right now, I think we must recognize the need to stay relevant in regards to what consumers want in today’s digital age. This includes what they expect from a company that they’re interacting with online. We are removing as much friction as possible, wherever it exists, for those new customers looking at Isagenix. One of the main friction points was the customer membership fee, which we removed a few months ago. Traditionally, companies in our space charge a membership fee just to be able to start buying the product. At Isagenix, anyone can now come in as a customer, and for free, enjoy the benefits of our products at wholesale pricing.
You announced the appointment of Erik Coover, son of Isagenix Co-Founders Jim and Kathy Coover, to Chief Visionary Officer, to help drive the company’s strategic vision per your press release. How is Coover’s appointment going to help move the needle?
Erik is a great individual and a key member of our executive team. This appointment is more about aligning with the contribution he is making within Isagenix, as well as making it clear to the field and employees his role in the company as a key member of the team. He is laser focused on making sure the things we are working on now and into the future will be relevant to the upcoming generation. He successfully started several years ago the START movement, which hones in on to the 18 to 35 year-old associates in our company. More recently he has been leading our sustainability initiative, and we actually announced a zero-waste packaging goal by 2028. The other thing he is passionate about is our ISA Foundation that he has helped drive.
As CEO, what will be your main focus for the rest of 2020 and beyond?
My focus is always going to be on the associates and customers and making sure we’re executing on our plan to enable them to achieve their goals and dreams. This is a relationship business—it’s about the people. My role is really one of making sure that we’re providing everything they need. We think of our associates as partners. I look to strengthen relationships and make sure we execute on our plan to continuously improve our company.
I shared our vision statement earlier, and as we celebrate 18 years in business we are really looking to the next 18 years—where we’re going to go as well as what we will be able to accomplish. We feel we’re just scratching the surface and getting started on what Isagenix can—and will be—able to achieve in the future. We’re known for transforming lives and that’s what fires me up every day— hearing the stories of people that are transforming their own physical or financial well-being through the Isagenix vehicle.
Anything else you want to add?
I just want to share my excitement for what the future holds. Although our channel has been going through some changes—change can be good. We’re embracing it and looking at the changes happening in Isagenix as changes that are making us much stronger and healthier.
Some of the things that we launched at NYKO in January of this year, are already gaining traction. We’ve also had a fantastic few weeks from an enrollment and sales standpoint. We had positive year over year growth on our enrollments, which is one of our key indicators that we monitor for future direction. Our field is certainly responding to these changes we’re making. Although change can be scary to people sometimes, it definitely makes us stronger as we embrace it and look to the future and evolve.