Keto HEAL Clinics suddenly close

June 5 by , medical review by in Dr. Eric Westman, For doctors, Keto

A network of medically-supervised low-carb clinics across the US, co-founded by Dr. Eric Westman, announced this week that it was ceasing operations because the business model was not viable.

HEAL Clinics website: Heal Clinics will cease operations immediately

A well-respected, pioneering researcher and clinician in the low carb movement, Dr. Westman said he still believes strongly in the benefits of the keto lifestyle, but the premium-priced medical service the clinics offered to patients “is no longer suited to capitalize on the current enthusiasm for the keto lifestyle.”

Dr. Westman’s comments were made in a video posted on the company website and in an FAQ also posted on the site May 31, 2019.

My passion has always been to bring the benefits of a keto lifestyle and the remission of type 2 diabetes and obesity without medications to the masses. To that end, I hope HEAL Clinics has helped educate and spread awareness. But as a business model we’ve concluded that HEAL Clinics cannot be financially sustained.

In the video, Dr. Westman explains that the decision to close down arose after the company’s CEO Richard Koffler resigned May 20th, 2019, “for purely personal reasons to pursue other career opportunities.” Koffler began with the company in 2014 and took over as CEO in 2018. Dr. Westman said Koffler was critical to the creation and implementation of the company’s business strategy and to the raising of capital. With his departure, Dr. Westman said, the board of HEAL Clinics felt they were no longer in a position to continue operations.

The news came as a huge surprise to HEAL Clinic patients, investors, and the global low-carb community. Many comments on the HEAL Clinics Facebook page expressed deep sadness and thanked Dr. Westman for his hard work to spread the benefits of the low-carb lifestyle over the last 15 years.

However, a number of people — especially individual investors who believed in the power of low carb to improve health — expressed dismay, concern and even anger. That is because the company as recently as a month ago was still actively promoting shareholder investment opportunities in the clinics through an online public offering. Why didn’t they shut down HEAL Clinics prior to taking money from new investors? The FAQ said this:

We earnestly believed the Online Public Offering would carry us until our financial model turned cash-flow positive. It is clear it will not. We decided the best course of action in terms of all our stakeholders was to stop the continuing losses and wind down the business while we still had cash to pay our bills and make a “soft landing.”

The company said on its websites any funds remaining after paying final bills will be returned to shareholders on a pro rata basis. As well, they stated that patients with active subscriptions at the clinics will also receive a refund on unused portions and be sent an email listing medical resources to help them in continuing their low-carb care.

This is an unfortunate development for all concerned — patients, founders, doctors and staff who worked in the clinics, and long-time and recent investors who believed in the company’s future.

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11 comments

1
Guillermo
June 5 2
Somebody took the money and ran... Hope that I get most of it back...
2
Thomas
June 5 3
Most likely that people who want to follow this sort of diet to improve their health will just use a site like DietDoctor. Trying to make a business out of the way we have eaten forever is not going to work which is a good thing. Ever tried to give people advice on diet since starting a LCHF diet yourself? Exactly, takes 10 seconds really. Eric Westman is brilliant and he's done so much for so many but this business plan is doomed for all the right reasons.
3
Diane
June 5 2
I looked into this investment opportunity and thought it was a bit ahead of its time. It could have worked if they had been less ambitious and either stayed as an online business utilizing home test kits and online medical advice or even partnering with an existing network of clinics such as urgent care facilities. I feel for all those small investors that didn’t realize they were giving their savings to help save a business rather than launching a business that they wholeheartedly believed in.
1 comment removed
5
Dawn McVey
June 5 1
Dr Bernsteins doesn't have a weight loss business, it's a way of eating to control type 1.

Reply: #9
6
Jocelyn
June 6 1
It seems to me that the rapid uptake of LCHF and Keto in the general population has lead to the failure of this company, sadly becoming a victim of its own success. Once people become followers of this lifestyle they can then do their own research and there is so much information out there that there is no need to be in a paid program. Intelligent people can adapt their lifestyle to their own unique needs.
7
Michael
June 6 1
I contacted them about an investment 2 years ago. The valuation was huge considering it was basically a concept without revenue. The CEO kept saying "it was going to be a major player in this space". I told him I would invest at a later date when the revenue was growing. He never got back to me.
8
Samuel
June 6 2
It is ironic that Dr. Westman's success at spreading the word and educating people actually obviated the need for Heal Clinics. I was always wondering why Heal Clinics did not get down in the mud hole with Weight Watchers, Nutriystem, etc. That is probably the only way they were going to reach the masses that had a real problem and did not have a clue about keto, or any of the ramifications for type II and other chronic diseases. The big difference between Heal and the other companies was that it was not an outright fraud. The marketing for Heal always seemed to be basically aimed at the choir, and the choir did not need it. A push from the medical community to enroll in Heal certainly was not going to happen, except in rare cases. I think the reality of the business model only set in when Koffler resigned. The risk for the Heal investor was never about the science, but was purely of a business nature.

It will be interesting to see how Virta progresses. Their capitalization was always huge compared to Heal. They recently got a contract with the VA, and that is a giant step in the right direction. If the VA pushes it, you will indeed capture patients that never heard of the basic concepts before. And it will force doctors within the VA to get current.

I am one of the original Heal investors, and if I have any advice for Westman, it is to be joined at the hip with a law form and accounting firm that follows the law explicitly, no exceptions. It is no time to be fair, only to be legal. If not, the liquidation could drag out for years and you can forget about any immediate tax write off or even a return of remaining capital. It will all get eaten up in legal fees. In hindsight the phenomenally successful Start engine campaign should not have happened, but when the board of directors saw the writing on the wall they sought to shut down and preserve capital, and that was the right thing to do.
9
Reply to comment #5 by Dawn McVey
Anne Mullens
June 6 1

Dr Bernsteins doesn't have a weight loss business, it's a way of eating to control type 1.

Hi Dawn -- there are actually 2 Dr. Bernsteins. Dr. Richard Bernstein is the US type 1 expert who has made such a huge impact on the blood sugar management of type 1s.
Dr. STANLEY Bernstein is a Canadian doctor, originally out of Toronto, who has set up medically directed weight-loss clinics . There are some 50 of them in Canada (and I think he is only in Canada, but I could be wrong.) These clinics have from my understanding a very low-fat, low-calorie weight loss program -- sometimes as little as 500-800 calories a day. I am not sure whether they have updated or altered their program in recent years. But I have had friends go through the program over the last decade (for a large fee) and lose weight initially, but not be able to sustain it and rebound higher. One close girlfriend struggled with extreme hunger and fatigue on the diet and did initially lose 40 lbs, but then gained it all back. Both friends have now turned to keto and had much more sustainable success without hunger and fatigue.
10
Andy king
June 7
very sad to read that Dr Westman business is to close BUT that does not in any way affect the benefits of a low carb high fat lifestyle I wish him well for the future and thank him fo4 his valuabl3 contributions t9 help me lose 25% of my weight over last 12 months
11
HS
June 8 1
I feel duped. Could use my $480 right now for needed pet surgery
12
Barbara Lee
3 days ago
My heart breaks for Dr. Westman BUT his dream is a very good one and I hope he won't give up on it. Someday this will standard of care and covered by insurance. He is the reason my health and the health of thousands has been improved. I would back him again! All the best to Dr. Westman and his team.