Jenny Craig parent and its lenders tap advisors to reshape debt

Rachel Butt

10 October 2024•2 min read

Health and wellness firm Wellful is working with Houlihan Lokey to explore ways to resize its debt, according to 9fin sources.

Meanwhile, a group of lenders is seeking advice from Gibson Dunn, sources said.

Backed by Kairos Capital, Wellful owns household brands including Jenny Craig and Nutrisystem. The company is facing weaker performance as well as upcoming maturities, including a $75m revolver due April 2026 and a $558m first lien term loan due April 2027.

Quotes on the first lien loan have been lingering in the low 60s, compared to nearly 89 at the start of 2024. The company also has a $10m incremental senior secured first lien term loan due April 2027 and $27m incremental senior secured first lien term loan due April 2028.

In December, Wellful agreed to convert cash interest on its second lien loan to be paid-in-kind, according to Moody's note. The company also opted to PIK the interest that was due at the end of December 2023 and converted $27m of its second lien loan principal to a first lien loan that will PIK, the rating agency said.

Wellful is struggling with weak liquidity and earnings deterioration, due to recruitment challenges and a more cost-conscious customer base amid inflationary pressures, Moody’s said. The company's leverage will likely reach 7.1x in 2023 and stay in the mid-to-high 6x range in 2024, according to Moody’s.

The switch to PIK will result in roughly $27m of cash interest saved over six quarters, which will help bolster its liquidity to reinvest in marketing, including former Jenny Craig customers, Moody’s said.

Wellful acquired the Jenny Craig brand in July 2023, shortly after the Jenny Craig company filed for Chapter 7 bankruptcy.

Representatives at Wellful, Kairos, Houlihan Lokey and Gibson Dunn didn’t respond to requests for comment.

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