HEALTH & WELLNESS NUTRITIONAL SUPPLEMENT DEMAND RISES AMID PANDEMIC
September 2020
3 Health & Wellness Nutritional Supplement Demand Rises Amid Pandemic
TABLE OF CONTENTS INDUSTRY OUTLOOK
Industry Outlook Growing nutritional awareness and rising consumer focus on weight management, health, and immunity have contributed to the $4.5 trillion COVID-19 Impacts market size (Global Wellness Institute)1 of the Health & Wellness industry. The M&A Overview highly-competitive Nutritional Supplements sector represents a key Notable Transactions component of this industry and has experienced robust demand, with a projected compound annual rate growth rate of 8.2% by 2027, according to Select Transactions Grand View Research.2 Existing consumer preferences towards nutritional Public Company Performance supplements and functional food products have been substantially accelerated Public Company Spotlights by COVID-19, evidenced by the 76% year-over-year (YOY) increase in Vitamin C supplement sales during the first half of 2020, which amounted to $209 Public Company Data million, according to Nielsen.3 E-commerce has proven to be a critical channel Consumer & Retail Group for industry participants to stimulate direct-to-consumer (DTC) and retail sales Firm Track Record growth amid widespread physical store closures. Leading nutritional products provider, Glanbia (ISE:GL9) has continued to invest in its e-commerce platform which was a key component of its €76.3 million capital expenditure in 2019. Through Q2 2020, 34% of Glanbia Performance Nutrition Product sales were through online channels, according to its earnings release.4
Top public companies in the Health & Wellness industry faced severe headwinds during the onset of the pandemic with valuations falling substantially following the World Health Organization (WHO) declaring COVID-19 a pandemic on March 11th. However, performance has rebounded significantly, with EBITDA multiples among supplements providers increasing 32.1% from March 11 to 11.3x. General health & wellness providers have also demonstrated resilience with multiples rising 24.2% and 10.8%, respectively, as CONTACTS of August 17th.
Lisa Tolliver Health & Wellness EBITDA Multiples Senior Director 773-791-9493 Supplements General Health & Wellness Food & Beverage [email protected]
25x March 11: WHO declares COVID-19 a pandemic 20x
15x
10x EV/EBITDA 5x
0x Aug-19 Oct-19 Dec-19 Feb-20 Apr-20 Jun-20 Aug-20 Source: Capital IQ
2 Health & Wellness | September 2020
COVID-19 IMPACTS
The Supplements industry has powered through COVID- provider, recorded an 8.6% increase in YOY revenue in Q2, 19 by leveraging e-commerce capabilities, which has been supported by strong volume growth in its U.S. markets, reflected in premium valuations, fueling what could be a according to its earnings release.7 In addition, new positive merger and acquisition (M&A) trend for business customers have increasingly been drawn to nutritional owners. While the pandemic has slowed personal products during the pandemic, as Herbalife has cited a consumption expenditures it has also fostered a 25% YOY increase in unique customers in the U.S. While heightened awareness for health-conscious products as demand has begun to normalize in the Vitamins and consumers have increasingly sought to boost immunity Supplements markets, sales remain elevated YOY and and overall wellness. The pandemic has facilitated a health and wellness products are forecast to continue to substantial increase in demand for vitamins, minerals, capture consumer spending post-pandemic. supplements, and other wellness solutions, which had projected to achieve a market size of $230.7 billion by The pandemic has reaffirmed consumer preferences for 2027 prior to COVID-19, according to Grandview Research. trusted brands offering quality products. Brand Notably, vitamin sales elevated significantly during the recognition plays a significant role in purchasing habits, onset of COVID-19 disruption, rising 44% YOY during the with online penetration becoming increasingly critical six weeks ending on April 5th, according to Nutritional amidst widespread lockdown and social distancing Outlook.5 In addition, nutritional supplements have also measures. However, as COVID-19 has accelerated the experienced a similar surge in demand and have shift to e-commerce channels, popular brands that have drastically outpaced 2019 levels. During the six weeks heavily relied on specialty stores have encountered severe ending on April 5th, nutritional supplement sales challenges. GNC, a mainstay in nutritional products, filed amounted to $435 million, surpassing 2019 full year totals for Chapter 11 bankruptcy in June following years-long of $345 million. Heightened interest in wellness products sales declines, accelerated by COVID-19 induced store is also supported by increased social media mentions for closures. Despite its e-commerce revenue increasing 25% specialty health ingredients and vitamins. Internet in Q1, same store sales (inclusive of e-commerce sales) fell searches for elderberry, a vitamin C-rich medicinal plant, 10.1% YOY as COVID-19 forced 30% of GNC’s company- have increased by 16 times compared to January of 2019, owned and franchise stores to close, according to its according to L.E.K.6 earnings release.8 The reliance on brick-and-mortar specialty stores, in conjunction with mounting debt, forced Top public players in the Health & Wellness industry have GNC into a fundamental restructuring and has showcased resilience despite supply chain and distribution underscored the importance of efficient DTC models. The challenges. Industry participants with robust e-commerce pandemic has driven the monumental shift to e- presences and sound supplier networks, coupled with commerce channels in the Supplements industry, with online brand recognition, have captured sustained online sales expected to grow 61.4% in 2020, compared to customer retention and sales growth. Notably, Herbalife 7.1% growth in brick-and-mortar, according to Nutrition Nutrition (NYSE:HLF), a leading nutritional products Business Journal.9 according Global Dietary Supplements Market Google Trends Search Data
$300 100 Elderberry 90 Vitamin D $250 $230.7 Vitamin C $213.3 80 Immunity Booster $197.3 70 $200 $182.4 $168.7 $155.9 60 $144.2 $133.3 $150 $123.3 50
40 $in Billions
$100 30 Search Interest Index SearchInterest 20 $50 10 $0 0 2019 2020 2021 2022 2023 2024 2025 2026 2027 Aug-19 Oct-19 Dec-19 Feb-20 Apr-20 Jun-20 Source: Grandview Research Source: Google Trends 3 Health & Wellness | September 2020
M&A OVERVIEW
Transaction activity has been volatile on a monthly basis in Monthly M&A Transactions YTD 2020, making the quantifiable impact of COVID-19 on merger and acquisition (M&A) volume difficult to assess. 2019 2020 However, despite a slowdown in the broader M&A market, 20 53 transactions have been announced or completed YTD, 15 13 modestly lower than 2019 levels of 61 deals. Total 11 11 11 11 10 10 disclosed deal value of $3.5 billion in YTD 2020 has 10 9 outpaced YTD 2019 dollar amounts of $2.6 billion. 7 7 4 Strategic buyers have continued to target attractive health 5 3 3 and wellness providers to diversify product offerings and 1 2 1 increase penetration into the Functional Food and ofTransactions Number 0 Nutrition markets. Notably, New Age Beverages (Nasdaq:NBEV) has agreed to acquire ARIIX (July, $206.1 million, 10.3x EBITDA), along with four additional e- commerce and direct selling companies, Zennoa, Shannen, Note: Year-to-date ended August 12 LIMU, and MaVie (undisclosed), to create a premier Source: Capital IQ, PitchBook, FactSet, and Capstone Research omnichannel health and wellness platform. ARIIX offers a leadingproductnutritional product portfolio and has experienced rapid growth, with penetration in over 35 countries and recording a compoundundisclosedannual growth rate exceeding 17% from 2015 to 2019, according to a press release.10 The combination creates an expansive portfolio of health and wellness brands, leveraging 400,000 independent representatives, with expected pro forma revenues of over $500 million. Private equity, which has comprised 11.5% of transactions, has sought health and wellness operators with robust DTC capabilities for platform investments. Brand Holdings, a holding company formed by Kidd & Company and T-street Capital acquired leading health and wellness supplements provider Dr. Emil Nutrition (see next page).
Outside entrants have utilized M&A to penetrate the fast-growing Vitamins & Supplements market, especially as consumers have grown increasingly health conscious. Notably, leading esports platform FaZe Clan acquired meal replacement startup CTRL Holdings in June for an undisclosed sum. CTRL offers powder-based meal replacement shakes in a variety of flavors. The transaction represents an intersection of the rapidly expanding Esports & Gaming industry and the Health & Wellness sector, CTRL will leverage FaZe Clan’s global following of 230 million users in its marketing and sales efforts.11 In addition, Gotham Cigars, a leading online retailer of cigars, acquired A1Supplements in July (undisclosed). Tennessee-based A1Supplements is an online provider of sports supplements, nutritional products, and training programs. A1Supplements e- commerce presence, loyal customer base, and recurring revenue model were key motivations for the transaction. In addition, Gotham Cigars will gain a robust suite of products outside of its typical offerings and it will leverage its digital analytics capabilities to drive increased efficiencies and scale. The transaction comes on the heels of a dramatic uptick in online shopping and heightened interest in online-based vitamin and supplements.
Key Value Drivers
Robust E-Commerce Capabilities Supply Chain Integrity Lockdowns have highlighted the importance of Strong manufacturing and distribution efficient direct-to-consumer models, especially as networks that are not reliant on single source specialty brick & mortar has struggled. geography or supplier are beneficial.
Trusted Products & Brand Recognition Diverse Product Portfolio Consumers have demonstrated propensity towards Expansive suite of nutritional or functional trusted brands with recognizable products amid health products that appeal to a variety of economic downturns. consumers to drive sales.
Healthy Balance Sheet Recurring Revenue Model Strong liquidity positions have proved to be critical Loyal customer base with repeat revenue through COVID-19, with retailers such as GNC have allowed top providers to weather the faltering due to excessive debt loads. COVID-19 disruption better than others. 4 Health & Wellness | September 2020
NOTABLE TRANSACTIONS
Several notable transactions have been announced or completed in the industry in 2020. Select transactions are outlined belo w, followed by a more comprehensive list on the following page.
Brand Holdings, LLC acquires Dr. Emil Nutrition (July 2020, Undisclosed)
Brand Holdings, a partnership between private equity firms Kidd & Company and T-street Capital, has acquired leading e-commerce nutritional products provider Dr. Emil Nutrition. Terms of the transaction and were not disclosed. Dr. Emil offers health and wellness supplements and sports nutrition products manufactured in an FDA-registered and good manufacturing practice (GMP) laboratory. Dr. Emil employs a science-backed approach, formulating products with clinically proven ingredients.
Brand Holdings focuses on acquiring DTC e-commerce companies with a specialization in the Health & Acquires Wellness, Sports Nutrition, Beauty, and Functional Foods industries. Brand Holdings plans to enhance the Dr. Emil product line and grow its presence in the Nutritional Supplements market. “The market for nutritional supplements is undergoing a momentous shift as e-commerce continues to play an increasingly critical role in consumer purchasing behavior. Dr. Emil has demonstrated proven success with online sales and is well positioned to benefit from these industry trends,” commented Gerry DeBiasi, partner at Kidd & Company in a press release.12
Nestlé Health Sciences S.A. acquires Vital Proteins, LLC (June 2020, Undisclosed)
Nestlé Health Sciences, a subsidiary of Nestlé (OTC:NSRGY) has agreed to acquire leading collagen brand and wellness platform Vital Proteins. Terms of the transaction were not disclosed. Vital Proteins offers collagen powders, beverages, capsules, and bars across North America and Europe. Its products are sold in approximately 35,000 retail locations including Whole Foods, Costco, Target, Walgreens, and Kroger. In addition, it sells its products through its e-commerce site, offering one-time and subscription Acquires purchase options.
“Joining NHSc allows us to take Vital Proteins to the next level by leveraging resources, scale and capabilities, and moving toward a future with an expanded offering of science-backed products,” commented Kurt Seidensticker, Founder and CEO of Vital Proteins in a press release.13 The acquisition enhances Nestle’s presence in the Functional Nutrition market, adding a robust portfolio of premium products. It also complements Nestle’s existing vitamin, mineral supplement, and wellness brands including Atrium Innovations, Garden of Life, Pure Encapsulations, and Persona.
LoveKind Inc. acquires ELXR Juicelab (June 2020, Undisclosed)
LoveKind has acquired ELXR Juicelab, a cold-pressed juice and superfood café, for an undisclosed sum. Toronto-based ELXR offers cold-pressed juices, protein-dense and plant-based milks, tonic waters, booster shots, wellness lattes, smoothies, and cleanse packages. It currently operates five superfood cafés and an online platform for home delivery. Acquires Lovekind is a hospitality and creative brands incubator with a product portfolio including Calii Love and Love Child Social House. ELXR will leverage Lovekind’s geographic reach and capital resources to expand into new markets and diversify and enhance its product offerings. In addition, ELXR plans to launch several new retail locations in Canada over the next two years and develop a state-of-the-art production facility in the Greater Toronto Area. The acquisition also significantly bolster’s Lovekinds portfolio in the Food and Beverage market, especially as consumers increasingly focus on health and wellness products. 5 Health & Wellness | September 2020
SELECT TRANSACTIONS
Enterprise EV / LTM Date Target Acquirer Target Business Description Value (mm) Revenue EBITDA New Age Manufactures nutritional supplements 07/20/20 ARIXX $206.1 0.9x 10.3x Beverages including weight loss products. Brand Provides health and wellness supplements and 07/07/20 Dr. Emil Nutrition - - - Holdings sports nutrition products. Assets of Kayla Modern 06/30/20 Comprises vegan protein burger recipe. - - - Dhaliwall Meat
06/18/20 CTRL FaZe Clan Provides healthy meal replacement drinks. - - -
Metabolic 06/18/20 TSI Health Sciences Produced health and nutritional products. - - - Technologies Nestlé Health Manufactures and sells collagen products including 06/10/20 Vital Proteins - - - Science waters, bars, and supplements. Provides cold-pressed juices and plan-based milks, 06/02/20 ELXR Juicelab LoveKind - - - tonic waters, smoothies, and cleanse packages.
Offers online supplements and educational 05/20/20 Bodybuilding.com Najafi - - - content for fitness brands and customers.
Rudi’s Organic Promise 05/07/20 Produces organic breads and bakery products. - - - Bakery Gluten Free Assets of Pure Provides stevia-based natural ingredients for 05/05/20 Ingredion $319.6 2.6x - Cultures the Food & Beverage industry. Uncle Matt’s 03/31/20 Harmoni Offers organic fruit juices. - - - Organic Ultimate Cambridge Comprises the raw and organic superfood ingredient 03/25/20 - - - Superfoods Commodities business of Ultimate Superfoods. Provides organic food and snack products for babies 03/24/20 First Start Grays Peak - - - and toddlers. Casbah Sahara US Durum Produces vegetarian prepared mixes and side dishes 03/18/20 - - - Natural Foods Products including organic couscous and falafel. CBIO Brand 03/11/20 Brand X Lifestyle Offers hemp infused cannabidiol products. - - - Development Sells and distributes natural products to groceries, 03/02/20 Island Natural Nassau Candy - - - supermarkets, and natural food stores.
Amarantus 01/30/20 Hempori Manufactures and retails cannabidiol products. - - - BioScience Provides oral care products including mouthwashes, 01/23/20 Hello Products Colgate-Palmolive $351.0 - - toothbrushes, and toothpaste.
01/22/20 Zija Isagenix Offers health and wellness products online. - - -
01/22/20 Sweet Nature Green Boy Group Offers specialty non-GMO organic syrups. - - -
MyoCore Indo Global 01/22/20 Manufactures nutritional supplements. - - - Sports Exchange VitalFit 01/15/20 TB12 Provides nutritional supplements. - - - Nutrition Next Generation Produces cannabidiol and hemp products 01/13/20 Budding Botanicals - - - Farming including capsules and tinctures.
Source: Capital IQ, PitchBook, FactSet, and Capstone Research 6 Health & Wellness | September 2020
PUBLIC COMPANY PERFORMANCE
YEAR-OVER-YEAR 2019 2020 EBITDA MULTIPLES 30.0x
25.0x 23.2x 23.4x
20.0x 17.7x Public players in the 16.9x 16.0x Supplements industry 13.1x 15.0x 11.3x 11.3x have displayed 10.9x10.6x 10.4x 9.8x 9.3x strong YOY EBITDA 10.0x 8.1x multiple growth 5.0x
0.0x Blackmores Glanbia Herbalife Jamieson Medifast TCI WW Wellness International
Source: Capital IQ as of August 17, 2020
YEAR-OVER-YEAR 2019 2020
EBITDA MARGIN 35.0% 29% 30.0% 26% 25% 25.0% 23% 19% EBITDA margins have 20.0% 17% 18% 15% 14% 15% declined slightly YOY 15.0% 12% 13% among public players, 10% 10.0% 9% although Jamieson has recorded a modest uptick 5.0% 0.0% Blackmores Glanbia Herbalife Jamieson Medifast TCI WW Wellness International
Source: Capital IQ as of August 17, 2020
LAST TWELVE-MONTH 30.0% REVENUE GROWTH 19.0% 20.0% 14.6% 11.3% 10.0% 4.8%
Medifast and Glanbia 0.0% -0.9% have led other public -10.0% players in LTM -5.8% revenue growth -20.0% through YTD 2020 -18.9% -30.0% Blackmores Glanbia Herbalife Jamieson Medifast TCI WW Wellness International
Source: Capital IQ as of August 17, 2020
7 Health & Wellness | September 2020
Ticker: ISE:GL9 Headquarters: Ireland Business Description: Provides high-quality nutritional ingredients and branded consumer products globally Key Segments: Glanbia Performance Nutrition, Glanbia Nutritionals, Joint Ventures & Associates
Valuation & Trading Metrics
52-Week Pricing (08/13/20) EV/Revenue EV/EBITDA EPS
Price Low High Q2 2020 Q2 2019 % Q2 2020 Q2 2019 % Q2 2020 Q2 2019 % €9.35 €7.44 €11.91 0.9x 2.0x -55.0% 10.2x 13.5x -24.4% €18.73 €28.22 -33.6%
Operating Metrics
Revenue Glanbia Performance Nutrition Glanbia Nutritionals
HY 2020 HY 2019 % HY 2020 HY 2019 % HY 2020 HY 2019 % Half Year Totals (millions) €1,836.7 €1,758.4 2.3% €532.4 €620.1 -15.6% €1,304.3 €1,138.3 12.0%
Note: Percent change in constant currency Source: Capital IQ and company earnings release
Earnings Report Insights Retailers are simplifying product offerings as consumers stock up more Results: “ versus pre-COVID. Having the #1 • Wholly-owned revenue amounted to €1,836.7 million brand in Performance Nutrition and through the first half of 2020, an increase of 2.3% the #2 brand in weight management constant currency YOY puts us front of mind when retailers are • Glanbia Performance Nutrition (GPN) segment revenue making these choices. declined 15.6% constant currency YOY • Glanbia Nutritionals segment revenue increased 12.0% constant currency YOY - Siobhán Talbot, Group MD ”& Executive Director14
Analysis: Following strong performance in Q1, Glanbia encountered Glanbia Pricing and Volume significant COVID-19 related disruption in its specialty and distributor channels in North America, which negatively affected sales in its GPN segment. However, towards the Volume (mm) Price end of the quarter and into July, sales and consumption $14 5.0 have displayed improvement. In late 2019, Glanbia $13 launched a transformation initiative to boost organic 4.0 $12 growth and profit margins in the GPN segment, with its $11 DTC channel serving as a significant focus. Glanbia 3.0 expects GPN EBITA margin between 12% and 13% by $10 2.0 2022. While GPN sales struggled, Glanbia Nutritionals $9 $8 experienced 12.0% revenue growth in the first half of 2020 1.0 supported by strong growth in its nutritional solutions and $7 U.S. cheese divisions. $6 0.0 Jan-20 Mar-20 May-20 Jul-20
Source: FactSet
8 Health & Wellness | September 2020
Ticker: NYSE:HLF Headquarters: Los Angeles, California Business Description: Provides nutritional solutions for weight management, specialized nutrition, energy & fitness, and skin & hair Key Segments: North America, EMEA, Asia Pacific, Mexico, China, South & Central America
Valuation & Trading Metrics
52-Week Pricing (08/13/20) EV/Revenue EV/EBITDA EPS
Price Low High Q2 2020 Q2 2019 % Q2 2020 Q2 2019 % Q2 2020 Q2 2019 % $47.62 $20.73 $52.89 1.5x 1.5x 0.0% 10.7x 8.9x 20.2% $0.82 $0.54 51.9%
Operating Metrics
Revenue North America Region* EMEA Region*
Q2 2020 Q2 2019 % Q2 2020 Q2 2019 % Q2 2020 Q2 2019 % Q2 Totals (millions) $1,346.9 $1,240.1 8.6% $386.0 $278.3 38.7% $300.3 $262.9 14.2%
* = Represent top revenue producing regions in Q2 Source: Capital IQ and company earnings release Earnings Report Insights From a demand perspective, our business is backed by favorable Results: “ consumer trends in an environment that • Net sales increased 8.6% YOY to $1.3 billion in Q2, has never been more responsive to what setting a quarterly record we bring to the table. • Volume points increased 12.4% YOY to 1.7 billion • Adjusted earnings per share increased 36% in Q2 YOY - John O. Agwunobi”, Chairman & CEO15 Analysis: Herbalife experienced headwinds early Q2 with volume declining 1% in April, however strong growth in May and Herbalife Pricing and Volume June led to increases of over 12% in the quarter. The U.S. market exhibited robust performance with volume Volume (mm) Price growing 38%, representing an all-time high. Herbalife trading metrics have also rebounded substantially in $55 6.0 $50 recent months. Since March 11 when the WHO declared 5.0 COVID-19 a pandemic, Herbalife’s stock price has risen $45 64.3%. The company has also focused on technological $40 4.0 $35 expansion to improve distributor scalability and 3.0 distributor-to-customer connectivity. Herbalife has noted $30 heightened usage of its digital platforms including HN- $25 2.0 connect, HN MyClub, and Engage. Herbalife is not $20 1.0 providing forward guidance, citing the uncertainty of $15 future impacts COVID-19 will have on the business. $10 0.0 Jan-20 Mar-20 May-20 Jul-20
Source: FactSet
9 Health & Wellness | September 2020
PUBLIC COMPANY TRADING & OPERATING DATA: SUPPLEMENTS
Price % 52 Wk Market Enterprise LTM EV / LTM Company 08/17/20 High Cap Value Revenue EBITDA Margin Revenue EBITDA Blackmores Limited $54.39 78.9% $1,052.3 $1,152.0 $419.7 $48.7 11.6% 2.7x 23.7x Glanbia plc $10.99 77.8% $3,245.4 $4,168.9 $4,445.2 $392.7 8.8% 0.9x 10.6x Herbalife Nutrition Ltd. $47.28 89.4% $6,503.6 $7,392.9 $5,074.1 $717.8 14.1% 1.5x 10.3x Jamieson Wellness Inc. $27.33 91.9% $1,084.2 $1,213.2 $271.7 $51.8 19.1% 4.5x 23.4x Medifast, Inc. $161.80 88.2% $1,894.9 $1,761.5 $759.2 $100.1 13.2% 2.3x 17.6x TCI Co., Ltd. $10.47 89.5% $1,231.8 $1,103.6 $285.8 $71.0 24.8% 3.9x 15.5x WW International, Inc. $23.92 50.7% $1,626.8 $3,210.6 $1,415.1 $331.3 23.4% 2.3x 9.7x
Mean 16.4% 2.6x 15.8x EV = enterprise value; LTM = last twelve months Median 14.1% 2.3x 15.5x $ in millions, except per share data NM = Not Meaningful Harmonic Mean 14.5% 2.0x 14.0x
PUBLIC COMPANY TRADING & OPERATING DATA: GENERAL HEALTH & WELLNESS
Price % 52 Wk Market Enterprise LTM EV / LTM Company 08/17/20 High Cap Value Revenue EBITDA Margin Revenue EBITDA Abbott Laboratories $100.71 97.9% $178,310.1 $193,172.1 $31,444.0 $7,566.0 24.1% NM 25.5x By-health Co., Ltd. $3.51 89.7% $5,550.9 $5,202.7 $766.8 $226.4 29.5% NM 23.0x Church & Dwight Co., Inc. $95.79 99.0% $23,690.0 $25,282.7 $4,593.1 $1,152.6 25.1% NM 21.9x Colgate-Palmolive Company $77.21 99.3% $66,199.9 $73,041.9 $15,937.0 $4,191.0 26.3% 4.6x 17.4x Hypera S.A. $5.94 75.8% $3,751.2 $3,695.2 $694.1 $107.7 15.5% NM NM Nature's Sunshine Products, Inc. $11.09 94.7% $216.4 $175.6 $363.4 $39.9 11.0% 0.5x 4.4x Pharmanutra S.p.A. $27.41 90.6% $265.3 $250.6 $60.4 $14.9 24.6% 4.1x 16.8x Reckitt Benckiser Group plc $97.89 93.2% $69,622.5 $83,101.0 $16,736.4 $4,997.3 29.9% 5.0x 16.6x USANA Health Sciences, Inc. $83.52 90.5% $1,755.6 $1,545.0 $1,057.5 $182.6 17.3% 1.5x 8.5x Zydus Wellness Limited $21.79 87.6% $1,256.2 $1,433.9 $222.9 $39.7 17.8% NM NM
Mean 22.1% 3.1x 16.8x Median 24.3% 4.1x 17.1x Harmonic Mean 20.1% 1.5x 12.3x
Source: Capital IQ as of August 17, 2020
10 Health & Wellness | September 2020
PUBLIC COMPANY TRADING & OPERATING DATA: FOOD & BEVERAGE
Price % 52 Wk Market Enterprise LTM EV / LTM Company 08/17/20 High Cap Value Revenue EBITDA Margin Revenue EBITDA Danone S.A. $67.01 68.6% $43,518.0 $58,559.5 $27,940.6 $5,641.5 20.2% 2.1x 10.4x Freedom Foods Group Limited* $0.00 0.0% $573.7 $792.3 $398.2 $34.3 8.6% 2.0x 23.1x General Mills, Inc. $64.28 97.2% $39,269.8 $52,346.1 $17,626.6 $3,975.4 22.6% 3.0x 13.2x The Hain Celestial Group, Inc. $34.06 98.6% $3,472.6 $3,884.9 $2,245.3 $209.4 9.3% 1.7x 18.5x Kerry Group plc $130.52 87.0% $23,057.9 $25,657.4 $7,974.8 $1,129.6 14.2% 3.2x 22.7x Mondelez International, Inc. $56.52 94.3% $80,729.7 $99,415.7 $25,886.0 $6,166.0 23.8% 3.8x 16.1x Post Holdings, Inc. $86.81 77.2% $5,877.4 $12,302.7 $5,730.2 $1,070.2 18.7% 2.1x 11.5x The Simply Good Foods Company $24.85 79.3% $2,370.2 $2,936.9 $733.5 $137.4 18.7% 4.0x 21.4x
Mean 17.0% 2.7x 17.1x Median 18.7% 2.6x 17.3x Harmonic Mean 14.9% 2.5x 15.7x
Health & Wellness 2020 Total Return
Supplements General Health & Wellness Food & Beverage
140 March 11: WHO declares COVID-19 a pandemic 120
100
80 Index 100 = Index
60
40
20 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20
* = Trading currently suspended Source: Capital IQ and FactSet as of August 17, 2020
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HEALTH & WELLNESS REPORT CONTRIBUTORS
Lisa Tolliver Senior Director [email protected] | 773-791-9493
Lisa has 20 years of experience in the investment banking industry, primarily focused on advising middle market private business owners in liquidity related transactions. As a Senior Director in Capstone Headwaters’ Consumer practice, she works closely with clients to advise and execute domestic and cross-border M&A transactions, recapitalizations and capital raises. Lisa has deep M&A expertise and knowledge of businesses in the consumer and e-commerce sector, particularly related to those selling via direct-to-consumer, Amazon, mass and OTC channels.
Prior to Capstone, Lisa worked in the Capital Strategies Group at Morgan Stanley Smith Barney and also spent 10 years working for the middle market investment banking arm of Citigroup, where she was involved in the evaluation, marketing and closing of numerous transactions involving private businesses and corporate divestitures. Lisa received her BA on academic scholarship from Illinois State University and is a Series 7 and 63 Registered Securities Representative.
Brianna Conway Associate [email protected] | 312-674-4533
Brianna is an Associate in the firm’s Chicago office, working closely with private business owners to advise and execute mergers, acquisitions and strategic capital raises. Prior to joining Capstone Headwaters, Brianna was an Analyst at PwC Corporate Finance on their M&A team where she focused on healthcare provider and services sell-side transactions. Brianna graduated with honors from Indiana University’s Kelley School of Business with a major in Business Economics and Public Policy. She holds her Series 7, 63 and 79 licenses.
Connor McLeod Research Associate [email protected] | 617-619-3319
Connor is a Research Associate at Capstone Headwaters primarily specializing in Building Products & Construction Services, Healthcare, Business Services, and Cybersecurity. Prior to joining Capstone Headwaters, Connor was a specialist with the Investor Services team at BlackRock where he worked with mutual funds, closed end funds, and exchange traded funds and communicated fund performance, relevant market dynamics, and facilitated trades for shareholders, financial advisors, and institutional clients. Connor holds a BA in Economics from Bates College and is a Series 7 Registered Securities Representative.
2020 2020 2019 2019 2019
MIDDLE MARKET US MIDDLE MARKET INVESTMENT BANKING FIRM INVESTMENT BANKING FIRM INVESTMENT BANKING FIRM INVESTMENT BANK INVESTMENT BANK OF THE YEAR OF THE YEAR OF THE YEAR OF THE YEAR OF THE YEAR
INTERNATIONAL AWARDS TURNAROUND AWARDS
12 Consumer & Retail Group
John Ferrara Kenneth Wasik Founder & CEO Managing Director, 617-619-3325 Head of Consumer & Retail [email protected] 917-434-6124 [email protected]
Jeff Ackerman Sophea Chau Managing Director Managing Director 617-275-4401 617-619-3307 [email protected] [email protected]
Tom Elliott Paul Louie Managing Director Managing Director 813-251-7285 626-374-8856 [email protected] [email protected]
Lisa Tolliver Tracy Patch Senior Director Director 312-674-4532 949-220-0540 [email protected] [email protected]
Yogesh Punjabi Jesse Betzner Director Vice President 617-619-3305 617-619-3355 [email protected] [email protected]
To learn more about the Consumer & Retail Group and our most recent M&A Transactions visit Capstone Headwaters' Consumer & Retail Group
13 Health & Wellness | September 2020
FIRM TRACK RECORD
Capstone Headwaters professionals have represented clients across the Consumer Products & Services industry. This focus allows Capstone Headwaters to provide Health, Wellness and Fitness clients with real-time transaction feedback and immediate access to key decision makers among the industry’s most active acquirers and investors. A sampling of Capstone Headwaters' closed transactions is shown below:
CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL
Active Engagement Active Engagement Active Engagement Active Engagement
E-commerce Provider of E-commerce Provider of Branded Nutritional Branded Essential Vitamins & Supplements Sleep Products Supplements & Snack Oils Company Foods
CONFIDENTIAL
Active Engagement has partnered with has been acquired by has been acquired by
Branded Organic Coconut Amino Products Company
has been acquired by has been acquired by has been acquired by has been acquired by
a portfolio company of
14 Health & Wellness | September 2020
CITATIONS
1. Global Wellness Institute, “Wellness Now a $4.2 Trillion Global Industry – with a 12.8% Growth from 2015-2017,” https://globalwellnessinstitute.org/press-room/press-releases/wellness-now-a-4-2-trillion-global-industry/, accessed August 31, 2020. 2. Grand View Research, “Dietary Supplements Market Worth $230.7 Billion | CAGR 8.2%,” https://www.grandviewresearch.com/press- release/global-dietary-supplements-market, accessed August 14, 2020. 3. USA Today, “Vitamin C for COVID-19: sales of antioxidant surge amid pandemic,” https://www.usatoday.com/story/money/2020/07/21/coronavirus-vitamin-c-demand-surged-during-pandemic/5403847002/, accessed August 18, 2020. 4. Glanbia, “Glanbia plc 2020 Half Year,” https://www.glanbia.com/investors/results-reports-presentations/results-releases/2020, accessed August 14, 2020. 5. Nutritional Outlook, “Peak dietary supplement sales leveling off during COVID-19 pandemic, but growth still remains strong over last year, market researchers report during webcast,” https://www.nutritionaloutlook.com/view/peak-dietary-supplement-sales-leveling- during-covid-19-pandemic-growth-still-remains-strong, accessed August 13, 2020. 6. L.E.K., “Impact of COVID-19 pm Vitamins, Minerals and Supplements,” https://www.lek.com/insights/impact-covid-19-vitamins- minerals-and-supplements, accessed August 13, 2020. 7. Herbalife Nutrition, “Herbalife Nutrition Reports Record-breaking Quarterly Net Sales,” https://ir.herbalife.com/financial-information, accessed August 14, 2020. 8. GNC, “GNC Holdings Inc. Reports First Quarter 2020 Results,” https://gnc.gcs-web.com/news-releases/news-release-details/gnc- holdings-inc-reports-first-quarter-2020-results, accessed August 13, 2020. 9. Globe Newswire, “NBJ 2020 Supplement Business Report Predicts Supplement Sales Growth Will Spike Above 12% This Year Driven by Covid-19,” https://www.globenewswire.com/news-release/2020/07/13/2061357/0/en/NBJ-2020-Supplement-Business-Report- Predicts-Supplement-Sales-Growth-Will-Spike-Above-12-This-Year-Driven-by-Covid-19.html, accessed August 12, 2020. 10. Globe Newswire, “NewAge Agrees to Combine with ARIIX and Four Additional E-Commerce/Direct Selling Companies to Create a >$500 Million Global Enterprise,” https://www.globenewswire.com/news-release/2020/07/20/2064579/0/en/NewAge-Agrees-to- Combine-with-ARIIX-and-Four-Additional-E-Commerce-Direct-Selling-Companies-to-Create-a-500-Million-Global-Enterprise.html, accessed August 19, 2020. 11. Los Angeles Business Journal, “FaZe Clan Takes Ownership Stake in CTRL,” https://labusinessjournal.com/news/2020/jun/26/fazeclan-takes-ownership-stake- ctrl/#:~:text=FaZe%20Clan%20Inc.%2C%20the%20Hollywood,co%2Downer%20with%20another%20company., accessed August 13, 2020. 12. PR Newswire, “Kidd & Company and T-street Capital Create Direct-to-Consumer E-Commerce Strategy - First Acquisition is a Leading Health & Wellness Company,” https://www.prnewswire.com/news-releases/kidd--company-and-t-street-capital-partner-to- create-direct-to-consumer-e-commerce-strategy--first-acquisition-is-a-leading-health--wellness-company-301088825.html, accessed August 13, 2020. 13. Nestle, “Nestlé Health Science agrees to acquire majority stake in Vital Proteins,” https://www.nestle.com/media/pressreleases/allpressreleases/nestle-health-science-to-acquire-majority-stake-vital-proteins, accessed August 12, 2020. 14. Herbalife Nutrition, “Q2 2020 Herbalife Nutrition Ltd Earnings Call,” https://ir.herbalife.com/financial-information, accessed August 13, 2020. 15. Glanbia, “Half Year 2020, Glanbia PLC Earnings Call,” https://www.glanbia.com/investors/results-reports-presentations/results- releases/2020, accessed August 15, 2020.
Disclosure: This report is a periodic compilation of certain economic and corporate information, as well as completed and announced merger and acquisi- tion activity. Information contained in this report should not be construed as a recommendation to sell or buy any security. Any reference to or omission of any reference to any company in this report should not be construed as a recommendation to buy, sell or take any other action with respect to any security of any such company. We are not soliciting any action with respect to any security or company based on this report. The report is published solely for the general information of clients and friends of Capstone Headwaters. It does not take into account the particular investment objectives, financial situation or needs of individual recipients. Certain transactions, including those involving early-stage companies, give rise to substantial risk and are not suitable for all investors. This report is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. Prediction of future events is inherently subject to both known and unknown risks and other factors that may cause actual results to vary materially. We are under no obligation to update the information contained in this report. Opinions expressed are our present opinions only and are subject to change without notice. Additional information is available upon request. The companies mentioned in this report may be clients of Capstone Headwaters. The decisions to include any company in this report is unrelated in all respects to any service that Capstone Headwaters may provide to such company. This report may not be copied or reproduced in any form, or redistributed without the prior written consent of Capstone Headwaters. The information contained herein should not be construed as legal advice.
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