Birchbox Owner Femtec Health Is Looking For A Buyer
Birchbox owner Femtec Health Inc. is up for sale, according to a sale memo soliciting potential buyers that was obtained by Beauty Independent.
The sale memo reveals the company, which is better known as FemTec Health, is looking to offload Birchbox along with three other businesses in its portfolio: membership-based direct-to-consumer wellness platform Awesome Woman, digital beauty shopping tool Mira Beauty and healthcare-focused social marketing platform Liquid Grids.
Intellectual property for Femtec and Birchbox is being included in a possible sales package. Social and digital assets for Femtec and Birchbox encompass nine global patents, 40 trademarks, customer and vendor lists, and social and digital media assets. Femtec’s two most recent acquisitions—digital diagnostics and therapeutics company Ava AG and nutrition platform Nutrimedy—aren’t mentioned among the assets available for purchase.
“Despite capturing the attention of tens of thousands of women and delivering both products and services that improve lives, Femtec has encountered operational and financial challenges as it works to scale its business,” the sale memo reads. “Birchbox has therefore stopped shipping products since about October 2022.”
Accounting firm Armanino LLP has been circulating the sale memo. Potential buyers were asked to submit letters of intent by a preliminary date of Friday, Jan. 27. Femtec didn’t respond to Beauty Independent’s request for comment.
The sale memo follows reporting in November by the publication Women’s Wear Daily that Femtec was weighing restructuring options, including filing for Chapter 11 bankruptcy. Femtec disclosed at the time that Birchbox’s revenue projections had dropped from $74 million to $47 million despite a $30 million infusion. Creditors were given the chance to receive Femtec shares in the full amount of their obligations.
Once valued at nearly half a billion dollars, Birchbox sold to Femtec for $45 million in 2021. In 2016, six years after it launched, Birchbox boasted more than 1 million beauty box subscribers. When it sold five years later, its subscriber base had shrunk to 300,000. Today, Birchbox has about 78,000 active subscribers.
Prior to its sale to Femtec, Birchbox co-founder and then CEO Katia Beauchamp had been shopping the subscription service around as early as 2017. Birchbox raised nearly $100 million in venture capital, but was a shell of its former self by 2020. It had ditched plans to spread branded brick-and-mortar stores in the United States as well as expand overseas and a shop-in-shop partnership with Walgreens that had put it in 11 locations fizzled. In 2020, Birchbox laid off 25% of its staff.
Once Femtec scooped up Birchbox, Beauchamp left the CEO post and sold her remaining stake in the company. She was previously a strategic advisor to Femtec, but moved on last year to become the CEO of Victoria Beckham Beauty.
Femtec aimed to inject new life into struggling Birchbox, but that hasn’t happened so far. Birchbox went radio silent in November last year, leaving customers and vendors scrabbling for answers. On Nov. 7, the company wrote on Instagram, “Birchbox is facing a host of unprecedented setbacks that are affecting all of you, our cherished members. Within the next couple of weeks, we will be able to share details about the future and what you can expect.”
Femtec and Birchbox are sitting on a trove of unpaid invoices amounting to as much as hundreds of thousands of dollars each from brands, according to coverage by the publication Retail Dive. The publication Axios discovered that Femtec owes Meta owner Facebook $527,000 for advertising fees. Femtec is facing legal action from companies seeking compensation, and Retail Dive mentions that a court last year granted the brand Aromatherapy Associates a certificate of default on the total Femtec owes it.
In an October interview with Axios, Femtec founder and executive chairman Kimon Angelides acknowledged that the company owes money to vendors, stating he hoped Femtec would make them whole by the end of the month or when it received funding. He underscored that the company’s struggles were the result of acquiring and merging five brands into its portfolio.
“I think we probably underestimated the amount of effort it takes to merge companies,” he said. “It’s a lot harder than we probably thought it was.”
Established in May 2020, Femtec bills itself on its website as a health and beauty sciences company “using technology and data to transform the total healthcare experience for women.” It launched publicly in October 2021 after it raised $38 million from Longmont Capital, Ithaca LifeSciences and HellasMed LLC.