Please ensure Javascript is enabled for purposes of website accessibility

Shares of GNC Holdings Pop 30% After 4th-Quarter Results and Strategic Partnership

By Daniel Miller - Feb 13, 2018 at 1:17PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares of GNC are up today thanks to a narrowing bottom-line loss and $300 million investment from a Chinese pharmaceutical company.

What happened

Shares of GNC Holdings (GNC), a specialty retailer of health and wellness products including vitamins and diet products, are soaring nearly 30% higher as of 11:35 a.m. EST after the company released fourth-quarter results and made a large investor announcement.

So what

Starting with the quarterly results, GNC reported $557.7 million in fourth-quarter revenue, which was lower than the prior year's $569.9 million and below analysts' estimates calling for $568.8 million, per FactSet estimates. GNC's bottom-line loss also narrowed from the prior year's loss of $433.4 million to a loss of $209.8 million. When adjusted, GNC's fourth-quarter earnings checked in at $0.25 cents per share, in line with FactSet consensus estimates.

Scattered pill bottles and pills.

Image source: Getty Images.

Now what

Another driving force behind GNC's jump in price Tuesday was the announcement of a strategic partnership and China joint venture agreement with Harbin Pharmaceutical Group Holding Co., which will now invest roughly $300 million and become GNC's single-largest shareholder. Ken Martindale, GNC chief executive officer, said in a press release:

As a recognized leader in China, Hayao is an ideal partner as we look to leverage the strength of the GNC brand and capitalize on the demand for nutritional supplements in China. Hayao's strong distribution network and regulatory, operational and manufacturing expertise will enhance our ability to expand our local product assortment. We are confident this partnership will provide us with the expertise to navigate the competitive Chinese landscape and rapidly expand our brand in China 

After a rough 2017, the narrowing bottom-line loss and significant investment from Hayao has put GNC in a much better position than it was a few months ago, but make no mistake -- the company has much work to do if it wants to convince investors it has a growth story going forward.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

GNC Holdings Stock Quote
GNC Holdings
GNC

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
336%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.