GNC Holdings Sinks On Expanded Industry Probe

Dietary supplement makers fell sharply after a coalition of four attorneys general launched a probe of the $61 billion industry's business practices.

Led by New York Attorney General Eric T. Schneiderman, the investigation aims to ensure that the herbal supplements industry can validate marketing claims, including those concerning authenticity and purity.

Industry leader GNC Holdings Inc GNC shares plunged more than 9 percent to $44.50, Vitamin Shoppe Inc VSI fell 5 percent to $40.15.

Two smaller players also fell: Wellness Center USA Inc. WCUI was off nearly 10 percent to $0.86 a share.

Supplement manufacturer Nutraceutical International Corp. NUTR appeared unaffected by the news, changing hands recently at $18.04, up more than 2 percent.

The probe announced Tuesday follows a recent analysis by Schneiderman's office that found contaminants, unlabeled plant species, and other substances in certain store brand herbal supplements.

At least several scientists, while acknowledging shortcomings in supplements industry regulations, have questioned whether Schneiderman's office had used appropriate tests in the earlier analysis.

But Schneiderman last month ordered the removal of certain supplements from the shelves of New York stores operated by GNC, Target Corporation TGT, Walgreens Boots Alliance Inc. WAG and Wal-Mart Stores, Inc. WMT.

The newly expanded investigation includes law enforcement officials from Connecticut, Indiana and Puerto Rico.

The findings uncovered by Schneiderman's testing "raise serious public health and consumer protection concerns," Connecticut Attorney General George Jepsen said in a statement.