Vitamin and supplement retailer GNC Holdings Inc (NYSE:GNC) is probably glad to see the back of 2017. The firm’s share price fell 66% over the course of the year, as investors lost confidence in the company’s ability to shift with the times and operate in a new, more challenging, retail space. However, while GNC stock had a tough 2017, this year isn’t looking much better. In fact, GNC may be in for an even rockier road in the months to come.

Unsustainable Debt

The biggest concern about GNC stock is the company’s massive debt pile. The firm’s long-term debt load is a whopping $1.38 billion, a worrying figure when you consider the fact that, during the third quarter of 2017, GNC had just $40 million in cash on the books. Not only that, but the firm’s free cash flow for the year is expected to fall somewhere between $190 million and $201 million — not nearly enough to meet its debt obligations.

To make matters worse, GNC’s long-term debt is going to start coming due in just a matter of months. That will make 2018 sink-or-swim time for GNC.

The Case to Sink

Unfortunately for GNC investors, there’s a pretty good chance GNC will sink. At the moment, GNC’s management hasn’t revealed exactly how it plans to sidestep the upcoming debt obligations. Most agree that refinancing is very unlikely considering that the company has already tried to renegotiate its debt terms on three separate occasions and failed.

The fact is that, as it stands, GNC is unlikely to have the financial strength to pay off its upcoming debt. In March, GNC’s loan will go from being accounted as long-term debt to current debt. That change will likely put GNC in the spotlight, because the firm’s accountants could decide to issue their opinions on whether or not the company can continue as a going concern.

Spoiler alert: this would be really bad for GNC stock. Not only would talk of bankruptcy take investor confidence to all-time lows, but it could also cause the firm’s suppliers to abandon GNC for fear of not being paid.

GNC does have some options when it comes to paying back its loans — there’s still a chance that the firm can refinance or, at very least, come to some kind of credit agreement that will postpone the repayments. There’s also the possibility that GNC could sell off parts of its business in order to repay the loans.

The trouble with selling off parts of a failing business is that, although it brings in some much needed cash, it also takes away from revenue, which will put the company’s future further at risk. Sears Holdings Inc. (NASDAQ:SHLD) has been doing this for years and, although it’s kept the company afloat, most agree that the company is just postponing the inevitable.

The Case for a Sale

Perhaps the only thing that will save GNC investors at this point is if the company is able to pull off a sale. Earlier in 2017, GNC hired Goldman Sachs to help the firm explore the possibility of a sale and manage its debt going forward. The firm is likely hoping that someone, somewhere is interested in acquiring the business, but that possibility is looking very bleak.

First of all, it’s difficult to imagine that there’s a company or private investor out there who wants to take on a massive debt load that is imminently coming due. But more importantly, GNC’s business is stuck in a rut in the current retail environment and there looks to be no clear way for the firm to dig itself out.

Consumers have moved away from taking supplements, instead opting to eat healthy, organic foods. While there’s still a market for supplements and vitamins, it’s an increasingly smaller one and companies like Wal-Mart Stores Inc. (NYSE:WMT) are dominating it. You’d be hard-pressed to find any company with enough cash to manage GNC’s debt that is willing to take on the challenge of operating in a market that is losing customers rapidly.

The Bottom Line on GNC Stock

Things are looking bleak for GNC stock investors.

The chances of a sale are slim and the firm still hasn’t worked out how to handle its upcoming debt obligations. At this point, I think the best shareholders can hope for is that GNC makes a deal with its creditors to put off its loan repayments a little bit longer.

However, even that is unlikely to buy the firm enough time to find a suitable buyer.

As of this writing, Laura Hoy did not hold a position in any of the aforementioned securities.