GNC Holdings On June 23rd, 2020 GNC Holdings filed for Chapter 11 (reorganization) bankruptcy. GNC had long struggled with its debt, raising capital by issuing

GNC Holdings On June 23rd, 2020 GNC Holdings filed for Chapter 11 (reorganization) bankruptcy. GNC had long struggled with its debt, raising capital by issuing about $100 million in preferred stock in both the 4th quarter of 2018 and 1st quarter of 2019. When the Covid-19 pandemic hit, it forced the company to close about 40 percent of its stores (at least temporarily) and to write down $157 million in assets and record a $200 million loss. Five days prior to the bankruptcy filing GNC paid almost $4 million in cash bonuses to senior executives: $2.2 million to the CEO, $795,000 to the CFO, and a total of $918,000 to three other C-level executives. These individuals would have to return 25% of these bonuses if the company did not emerge from Chapter 11 within one year. On October 7th, 2020 GNC was acquired by Harbin Pharmaceutical Group Holding Co., Ltd. For $770 million. About 7% of the liabilities subject to compromise will be settled. This will reduce those liabilities to just under $81 million.

Assess and discuss a detailed analysis of the patterns you see. Do you think Hardin was wise to pay $760 million for GNC?

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Operating Profit Margin = Income/Revenue Jun-2020 Operating (loss) income Revenue (Note 4) Operating Profit Margin Dec-2017 Mar-2018 Jun-2018 Sep-2018 Dec-2018 Mar-2019 $ 40,346.00 $ 46,389.00 $ 48,884.00 $ 19,961.00 $ 20,799.00 $ 35,482.00 $ $ 557,737.00 $ 607,533.00 $ 617,944.00 $ 580,185.00 $ 547,861.00 $ 564,764.00 $ 7.23% 7.64% 7.91% 3.44% 3.80% 6.28% Jun-2019 Sep-2019 Dec-2019 48,718.00 $ 26,654.00 $ 13,889.00 $ 533,997.00 $ 499,076.00 $ 470,351.00 $ 9.12% 5.34% 2.95% Mar-2020 (166,034.00) $ 472,581.00 $ -35.13% (58,518.00) 343,538.00 -17.03% Asste Turnover = Revenue/Avg Total Assets Revenue (Note 4) Avg Total Assets Asset Turnover Dec-2017 Mar-2018 Jun-2018 Sep-2018 Dec-2018 Mar-2019 $ 557,737.00 $ 607,533.00 $ 617,944.00 $ 580,185.00 $ 547,861.00 $ 564,764.00 $ $ 1,519,763 $ 1,527,761 1 $ 1,499,074 $ 1,479,587 $ 1,527,850 $ 1,770,137 $ 36.70% 39.77% 41.22% 39.21% 35.86% 31.91% Jun-2019 Sep-2019 Dec-2019 533,997.00 $ 499,076.00 $ 470,351.00 $ 1,688,207 $ 1,683,881 $ 1,650,587 $ 31.63% 29.64% 28.50% Mar-2020 472,581.00 $ 1,415,957 $ 33.38% Jun-2020 343,538.00 1,243,062 27.64% Return on Assets = Operating Income/Avg Total Assets Dec-2019 Operating (loss) income Avg Total Assets Operating ROA $ $ Dec-2017 40,346.00 $ 1,519,763 $ 2.65% Mar-2018 46,389.00 $ 1,527,761 $ 3.04% Jun-2018 48,884.00 $ 1,499,074 | $ 3.26% Sep-2018 19,961.00 $ 1,479,587 $ 1.35% Dec-2018 20,799.00 $ 1,527,850 $ 1.36% Mar-2019 35,482.00 $ 1,770,137 $ 2.00% Jun-2019 48,718.00 $ 1,688,207 $ 2.89% Sep-2019 26,654.00 $ 1,683,881 $ 1.58% 13,889.00 $ 1,650,587$ 0.84% Mar-2020 (166,034.00) $ 1,415,957 $ -11.73% Jun-2020 (58,518.00) 1,243,062 -4.71% Year-to-Year Dec 2017-2018 Mar 2018-2019 Dec 2018-2019 Mar 2019-2020 June 2019-2020 Revenues Income Operating Profit Margin Asset Turnover Operating ROA Cash Total Assets Debt 1.77% 128.04% 47.52% 2.29% 48.72% 5.04% 0.53% 9.52% 7.04% 346.56% 17.72% 19.77% 33.99% 154.53% 15.86% 2.39% June 2018-2019 13.58% 20.37% 15.33% 23.27% 11.50% 121.19% 12.62% 0.87% Sept 2018-2019 13.98% 71.85% 55.23% 24.42% 17.33% 265.41% 13.81% 14.15% 156.92% 22.22% 20.53% 38.19% 74.11% 8.03% 6.68% 16.32% 1211.01% 659.22% 4.61% 684.99% 0.24% 20.01% 8.06% 35.67% 621.04% 286.71% 12.63% 263.13% 15.80% 26.37% 8.44% 0.13% Jun-2020 $ $ Quarters Revenue (Note 4) Net (loss) income Operating Profit Margin Asset Turnover Operating ROA Cash Dec-2017 557,737.00 $ (209,825.00) $ 7.23% 36.70% 2.65% 64,001 $ 1,519,763 $ 1,705,684 Mar-2018 607,533.00 $ 6,190.00 $ 7.64% 39.77% 3.04% 53,871 $ 1,527,761 $ 1,707,007 Jun-2018 617,944.00 $ 13,341.00 $ 7.91% 41.22% 3.26% 43,353 $ 1,499,074 $ 1,665,132 Sep-2018 580,185.00 $ (8,590.00 $ 3.44% 39.21% 1.35% 33,348 $ 1,479,587 $ 1,650,270 Dec-2018 547,861.00 $ 58,839.00 $ 3.80% 35.86% 1.36% 67,224 $ 1,527,850 $ 1,543,356 Mar-2019 564,764.00 $ (15,262.00) $ 6.28% 31.91% 2.00% 137,117 $ 1,770,137 $ 1,747,826 Jun-2019 Sep-2019 Dec-2019 533,997.00 $ 499,076.00 $ 470,351.00 $ 16,058.00 $ (2,418.00) $ (33,490.00) $ 9.12% 5.34% 2.95% 31.63% 29.64% 28.50% 2.89% 1.58% 0.84% 95,893 $ 121,857 $ 117,046 $ 1,688,207 $ 1,683,881 $ 1,650,587 $ 1,650,664 1,648,154 1,646,455 Mar-2020 472,581.00 $ (200,086.00) $ -35.13% 33.38% -11.73% 137,444 $ 1,415,957 $ 1,606,952 343,538.00 (83,669.00) -17.03% 27.64% -4.71% 80,740 1,243,062 1,511,387 $ $ Total Assets Debt 1548.35 0,334 2 13 Whisky to neprise rely at 22 Card bant crew directing wartade detribution des com Operating Profit Margin = Income/Revenue Jun-2020 Operating (loss) income Revenue (Note 4) Operating Profit Margin Dec-2017 Mar-2018 Jun-2018 Sep-2018 Dec-2018 Mar-2019 $ 40,346.00 $ 46,389.00 $ 48,884.00 $ 19,961.00 $ 20,799.00 $ 35,482.00 $ $ 557,737.00 $ 607,533.00 $ 617,944.00 $ 580,185.00 $ 547,861.00 $ 564,764.00 $ 7.23% 7.64% 7.91% 3.44% 3.80% 6.28% Jun-2019 Sep-2019 Dec-2019 48,718.00 $ 26,654.00 $ 13,889.00 $ 533,997.00 $ 499,076.00 $ 470,351.00 $ 9.12% 5.34% 2.95% Mar-2020 (166,034.00) $ 472,581.00 $ -35.13% (58,518.00) 343,538.00 -17.03% Asste Turnover = Revenue/Avg Total Assets Revenue (Note 4) Avg Total Assets Asset Turnover Dec-2017 Mar-2018 Jun-2018 Sep-2018 Dec-2018 Mar-2019 $ 557,737.00 $ 607,533.00 $ 617,944.00 $ 580,185.00 $ 547,861.00 $ 564,764.00 $ $ 1,519,763 $ 1,527,761 1 $ 1,499,074 $ 1,479,587 $ 1,527,850 $ 1,770,137 $ 36.70% 39.77% 41.22% 39.21% 35.86% 31.91% Jun-2019 Sep-2019 Dec-2019 533,997.00 $ 499,076.00 $ 470,351.00 $ 1,688,207 $ 1,683,881 $ 1,650,587 $ 31.63% 29.64% 28.50% Mar-2020 472,581.00 $ 1,415,957 $ 33.38% Jun-2020 343,538.00 1,243,062 27.64% Return on Assets = Operating Income/Avg Total Assets Dec-2019 Operating (loss) income Avg Total Assets Operating ROA $ $ Dec-2017 40,346.00 $ 1,519,763 $ 2.65% Mar-2018 46,389.00 $ 1,527,761 $ 3.04% Jun-2018 48,884.00 $ 1,499,074 | $ 3.26% Sep-2018 19,961.00 $ 1,479,587 $ 1.35% Dec-2018 20,799.00 $ 1,527,850 $ 1.36% Mar-2019 35,482.00 $ 1,770,137 $ 2.00% Jun-2019 48,718.00 $ 1,688,207 $ 2.89% Sep-2019 26,654.00 $ 1,683,881 $ 1.58% 13,889.00 $ 1,650,587$ 0.84% Mar-2020 (166,034.00) $ 1,415,957 $ -11.73% Jun-2020 (58,518.00) 1,243,062 -4.71% Year-to-Year Dec 2017-2018 Mar 2018-2019 Dec 2018-2019 Mar 2019-2020 June 2019-2020 Revenues Income Operating Profit Margin Asset Turnover Operating ROA Cash Total Assets Debt 1.77% 128.04% 47.52% 2.29% 48.72% 5.04% 0.53% 9.52% 7.04% 346.56% 17.72% 19.77% 33.99% 154.53% 15.86% 2.39% June 2018-2019 13.58% 20.37% 15.33% 23.27% 11.50% 121.19% 12.62% 0.87% Sept 2018-2019 13.98% 71.85% 55.23% 24.42% 17.33% 265.41% 13.81% 14.15% 156.92% 22.22% 20.53% 38.19% 74.11% 8.03% 6.68% 16.32% 1211.01% 659.22% 4.61% 684.99% 0.24% 20.01% 8.06% 35.67% 621.04% 286.71% 12.63% 263.13% 15.80% 26.37% 8.44% 0.13% Jun-2020 $ $ Quarters Revenue (Note 4) Net (loss) income Operating Profit Margin Asset Turnover Operating ROA Cash Dec-2017 557,737.00 $ (209,825.00) $ 7.23% 36.70% 2.65% 64,001 $ 1,519,763 $ 1,705,684 Mar-2018 607,533.00 $ 6,190.00 $ 7.64% 39.77% 3.04% 53,871 $ 1,527,761 $ 1,707,007 Jun-2018 617,944.00 $ 13,341.00 $ 7.91% 41.22% 3.26% 43,353 $ 1,499,074 $ 1,665,132 Sep-2018 580,185.00 $ (8,590.00 $ 3.44% 39.21% 1.35% 33,348 $ 1,479,587 $ 1,650,270 Dec-2018 547,861.00 $ 58,839.00 $ 3.80% 35.86% 1.36% 67,224 $ 1,527,850 $ 1,543,356 Mar-2019 564,764.00 $ (15,262.00) $ 6.28% 31.91% 2.00% 137,117 $ 1,770,137 $ 1,747,826 Jun-2019 Sep-2019 Dec-2019 533,997.00 $ 499,076.00 $ 470,351.00 $ 16,058.00 $ (2,418.00) $ (33,490.00) $ 9.12% 5.34% 2.95% 31.63% 29.64% 28.50% 2.89% 1.58% 0.84% 95,893 $ 121,857 $ 117,046 $ 1,688,207 $ 1,683,881 $ 1,650,587 $ 1,650,664 1,648,154 1,646,455 Mar-2020 472,581.00 $ (200,086.00) $ -35.13% 33.38% -11.73% 137,444 $ 1,415,957 $ 1,606,952 343,538.00 (83,669.00) -17.03% 27.64% -4.71% 80,740 1,243,062 1,511,387 $ $ Total Assets Debt 1548.35 0,334 2 13 Whisky to neprise rely at 22 Card bant crew directing wartade detribution des com