The biggest winner

Bursting out: Scott Penn has big plans for SP Health this year, including a doubling of revenue Photograph by Nic Walker

COMPANY: SP Health

RANK: 11 (last year: 71)

CHIEF EXECUTIVE: Scott Penn

TURNOVER 2008-09: $9.5 million

GROWTH 2008-09: 465.7 per cent

For entrepreneur Scott Penn, helping people lose weight is an extremely personal issue. The chairman and chief executive of weight management business SP Health was an overweight teenager who attended his first Weight Watchers meeting at age 13.

“I was overweight basically through lack of exercise and overeating, so I have the personal experience,” he says. “Obesity is the only chronic health concern that you literally can’t give up.

“If you’re addicted to alcohol or smoking you can give it up eventually. But you have to eat every day, so over-eating is such a big challenge to overcome.”

Now aged 38, Penn is at the helm of the fastest-rising business on this year’s BRW Fast Starters with revenue growth of 465.7 per cent, ranking SP Health 11th on the list, up from 71st place last year.

SP Health is a consumer business that operates an online diet club and sells meal replacement products in conjunction with the hit Network Ten television show The Biggest Loser, on which contestants try to lose as much weight as possible through a combination of exercise and healthy diet.

SP Health’s licensing agreements with the producers of the show in Australia, Fremantle Media, allow it to use the Biggest Loser brand in two capacities: for its online diet club and its line of meal replacement products that are sold in supermarkets. Each accounts for about half of SP Health’s annual revenue, which reached $9.5 million in the 2008-09 financial year.

Penn says the Biggest Loser Club was an almost instant success. Launched during the first season of the television show in 2008, it now has more than 50,000 subscribers who pay $19.95 a month to join for a year (fees increase if membership is taken for a shorter period) and receive dietary and fitness advice.

“We have been committed to that online subscription model from the start and it has worked for us,” Penn says. “But in order to attract the members, we have to give them the compelling content and we do.”

The company has also found success with its meal replacement line, which it owns in a joint venture with listed Melbourne company Probiotec. The products, including breakfast bars and soups, are meant to be consumed instead of full meals.

“We launched it in November 2008 and by the following February our product was the number one in its sector,” Penn says. He says the line has captured about 40 per cent of the nutritional and health supplements market in less than two years.

Though SP Health has been a success in its short life – it was founded in 2006 – Penn still has big plans. The Biggest Loser recently has been broadcast in several Asian countries, including Malaysia and China, and Penn wants to expand the online diet club into those markets. He expects revenue in this financial year to more than double to reach the $20 million mark.

He also believes the technology platform that supports the club can be expanded to offer other services.

“The next step for us is to look for other partners,” he says. “That could be in the fitness area or even government one day. We believe we now have a consumer health product that could be helpful to governments ... with keeping health records, for example. We already have a storage system where people record the food they eat, their exercise habits and weight loss. So that can be expanded.”

Penn is a serial entrepreneur and SP Health is the latest of several health and sport ventures with which he has been associated. He is a joint owner of National Rugby League team Manly-Warringah (see Health League, page 51) and also owns the Aloha surf brand, which he bought five years ago.

“We saw an opportunity because it was an underperforming brand,” Penn says. “It used to be a big brand up there with the Rip Curls and Billabongs, so the next step is to realise its full potential.”

Aloha has signed an overseas distribution deal to sell its apparel and surfboards overseas. Penn says it is now breaking even.

Before establishing SP Health and buying into Aloha and Manly, Penn was chief executive of Weight Watchers in Australia and New Zealand. His father had been managing director there for 10 years and the family already had a 10 per cent stake in the business when Penn joined as marketing manager in 1994.

He became chief operating officer in 1999 when the company’s global owners sold to Luxembourg investment company Artal and later succeeded his father.

Artal listed the company in late 2001 and Penn became a global vice-president. “They wanted us to double the size of the business in six years but it took two,” he says.

In 2005, he struck out on his own, founding SP Health one year later after a non-compete clause expired. “I had that entrepreneurial spirit, so I was always going to do my own thing.”

SP Health takes up most of Penn’s time for now, though he is not ruling out other enterprises. “We could grow by acquisition, where it makes sense. We are looking for opportunities and what is best for us.”

Health League

Scott Pennwould probably be a lot wealthier if he had not bought a half stake in National Rugby League club Manly-Warringah in 2005. But he has no regrets. A life-long fan of the Sea Eagles, Penn has poured up to $10 million into the club during his stint as co-owner with property developer Max Delmege. Penn says he has derived a lot of enjoyment helping turn the club around, which culminated in it winning the NRL premiership in 2007. Penn and his family now own land adjacent to Manly’s home ground of Brookvale Oval. He plans to redevelop the land, perhaps incorporating fitness and community health facilities and maybe even a private hospital or health centre.

BRW

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