Nutrisystem 2009 Annual Report Download - page 11

In April 2009, we launched the marketing of our Nutrisystem D program, a low glycemic program
specifically designed for those with type 2 diabetes who need to lose weight. Results from a clinical study
conducted at the Temple University School of Medicine and published in the Journal of Postgraduate Medicine
show that a pre-packaged, portion controlled meal plan helped overweight individuals with type 2 diabetes lose
up to 16 times more weight and experience greater reductions in their A1C levels as compared to those in the
control group. This weight loss was also associated with reductions in blood pressure, cholesterol and waist
circumference. This research study was funded by Nutrisystem.
During 2009, we also began offering our program at Costco Wholesale Corporation’s warehouse club
outlets (“Costco”) through the use of prepaid program cards. Expanding further in the retail area, we now also
offer the Nutrisystem program in large retailers such as Walmart, Sam’s Club and Walgreens. Each retailer offers
its unique promotional package and pricing through the use of prepaid cards. In each case, customers redeem the
prepaid card online at our website and then the product is shipped to the customer. Currently, Costco has
continued to perform in accordance with our expectations, while the other retailers that offer our program have
struggled to meet our expectations. We expect to discontinue offering our program at underperforming retailers
by the second quarter of 2010 but will continue to evaluate other major retailers that may provide us with
additional opportunities to offer our program.
In December 2009, we launched Nutrisystem Jumpstart, a program for men and women designed to help
those who are looking to jumpstart their way to a healthier lifestyle. Nutrisystem Jumpstart showcased our 50
new foods and provided customers with extra tools and support to help them reach their weight-loss goals.
In October 2009, we announced the introduction of the Nutrisystem program in Japan. Under our license
agreement with House Foods International, the “Nutrisystem J Diet” was launched and the program will be
exclusively marketed at the House Foods ecommerce site. The Nutrisystem J Diet features nutritionally balanced
pre-packaged foods and beverages delivered directly to the home and supported by personalized weight loss
nutrition counseling. The new diet is a 14-day program consisting of two meals per day (meal menu plus light
menu) and beverages. The initial package will include a shaker and support kit.
In November 2008, we entered into an agreement with Schwan’s Home Service, a provider of fine frozen
foods, for the development and distribution of frozen foods under the Nutrisystem brand. The program, which
includes frozen foods (“Nutrisystem Select”), will enhance Nutrisystem’s tradition of effective weight loss and
weight management. The full national launch of Nutrisystem Select took place in the first quarter of 2009. The
program provides customers with premium fresh-frozen foods that complement Nutrisystem’s prepared food
weight loss programs and still adheres to Nutrisystem’s nutritional guidelines. When a customer orders
Nutrisystem Select, three separate shipments are delivered. The first shipment will be sent directly to the
customer and will contain Nutrisystem’s standard shelf-stable food. The second and third shipments will contain
the fresh-frozen foods and will be delivered right to the customer’s home by Schwan’s Home Service.
In July 2008, we acquired certain assets of Power Chow, LLC (d/b/a NuKitchen) (“NuKitchen”), a provider
of premium, fresh prepared meals designed to promote weight management and healthy living. NuKitchen
provides a full menu of fresh, restaurant-quality prepared meals delivered daily to customers.
In 2008, we also introduced the Flex program (“Nutrisystem Flex”), which is a 28-day program consisting
of 20 days of food, our “weekends off” program, which provides a less restrictive option to meet the needs and
lifestyle of an important segment of dieting consumers. Nutrisystem Flex includes a Recipe Book (Nutrisystem,
My Way) and a Dining Out Guide to help consumers make healthy choices and stay within the program
guidelines on their “flex” days.
Typically, our customers purchase monthly food packages of shelf-stable food containing 28 breakfasts,
lunches, dinners and desserts, which they supplement with fresh dairy, fruit, salad, vegetables and low-glycemic
carbohydrate items. In certain instances, depending on the promotional offers available, customers can receive
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