Hiya is a fast-growing, emerging leader of high-quality
children’s health & wellness products.
Broadens USANA’s reach into the highly attractive
direct-to-consumer channel driven by Hiya’s powerful subscription
model with runway for sustainable future growth.
Expected to be immediately accretive to 2025 adjusted
EBITDA.
9/30/2024 LTM net sales of $103 million, LTM net income of $19
million, and LTM adjusted EBITDA of $22 million.
The Company will discuss the transaction during a conference
call on Monday, December 23, 2024, at 5:00 PM ET.
USANA Health Sciences, Inc. (NYSE: USNA) (the “Company,”
“USANA”), today announced its acquisition of a 78.8% controlling
ownership stake in Hiya Health Products, LLC (“Hiya”), a leading
direct-to-consumer provider of high-quality children’s health &
wellness products. The $205 million cash transaction closed on
December 23, 2024 and is anticipated to be accretive to USANA’s
2025 adjusted EBITDA. For the last twelve months ended September
30, 2024 (unaudited), Hiya generated net sales of $103 million, net
income of $19 million, and adjusted EBITDA of $22 million. As of
September 30, 2024, Hiya had more than 200,000 customers.
“The Hiya brand is a natural fit for USANA and this acquisition
represents a key strategic milestone for our business,” said Jim
Brown, President and Chief Executive Officer of USANA Health
Sciences, Inc. “Hiya’s co-founders, Darren Litt and Adam Gillman,
have disrupted the children’s health and wellness market by
building a high quality, better-for-you brand that aligns with our
vision of creating the healthiest family on Earth. This strategic
acquisition adds a diversified layer of growth to USANA’s overall
business, while maintaining our commitment to our core direct sales
business, where we continue to invest in initiatives to drive
growth. Notably, this acquisition will allow USANA to reach a
broader audience by diversifying distribution channels through
Hiya, which we believe will enhance our ability to generate
sustainable long-term growth and deliver value for our
stakeholders. Darren and Adam will continue to lead Hiya through
its next phase of growth. Their leadership and expertise is
instrumental to Hiya’s business, which is now part of USANA’s
mission and strategic objectives.”
Darren Litt, co-founder and CEO of Hiya, commented, “Today
represents an exciting chapter for Hiya and we are thrilled to join
the USANA family. As parents ourselves, we recognized that so many
wellness companies did not prioritize our children’s health
interests, so we created Hiya to give families the very best in
clean, honest nutrition. With the help of USANA's extensive
capabilities, support and international expertise, we can now
extend that commitment to create healthy products for more families
in more countries. USANA and Hiya share a deep commitment to
improving the lives of families everywhere by providing the best
nutritional products possible, and we look forward to continuing
this exciting journey as part of USANA.”
Strategic Rationale
- Fast-Growing, Emerging Leader in the Children’s Health and
Wellness Market. The acquisition of Hiya provides the
opportunity for USANA to expand its presence in the children’s
health & wellness market through Hiya. For the last twelve
months ended September 30, 2024, Hiya’s net sales of $103 million
grew 50% as compared to fiscal year 2023. For fiscal year 2025, the
Company currently anticipates Hiya’s net sales growth to approach
30% year-over-year.
- Strengthens USANA’s Financial Profile. Hiya offers a
compelling subscription model with attractive margins,
profitability, and cash flow generation, which is expected to
enhance the Company’s ability to deliver long-term growth and drive
shareholder value. Hiya’s domestic profitability diversifies
USANA’s geographic sales mix and is anticipated to lower the
Company’s consolidated effective tax rate and create a more
tax-efficient structure.
- Presents Opportunity to Accelerate Growth and Enhance
Profitability by Leveraging Synergies. Over the next several
years, USANA and Hiya will work together to take advantage of
identified synergies, assets and expertise across both companies to
create efficiencies, and to accelerate growth and profitability.
For example, there are opportunities for Hiya to leverage USANA’s
significant manufacturing and international expansion expertise.
Similarly, USANA may leverage Hiya’s market data insights,
marketing expertise, and children-focused products within its
direct sales channel.
- Channel Expansion into Direct-to-Consumer Wellness Market
with a Leading and Proven Brand. Hiya currently holds a leading
position in children’s Vitamins, Minerals & Supplements brand
sales in the United Statesⁱ and has a clear pathway and strong
growth strategy to become the #1 children’s wellness platform
through new product introductions, channel expansion, and
geographic expansion. Hiya’s commitment to being the most trusted
and preferred brand for wellness products in the 0-18 age range is
an additive category for the Company and is complimentary to
USANA’s vision of the healthiest family on Earth.
- Expands the Company’s United States Operations. The
transaction meaningfully expands and diversifies the Company’s
revenue mix as Hiya’s net sales are generated in the United States
through their direct-to-consumer subscription model, with plans to
enter other sales channels. This will allow USANA to reach a
broader audience of health-conscious consumers to grow the
enterprise’s overall customer base.
ⁱ Source: Nielsen
Transaction Highlights
- The Company made an initial cash investment of approximately
$205 million (subject to customary closing and post-closing
purchase price adjustments) in exchange for a 78.8% ownership stake
in Hiya.
- Transaction structure includes a put/call feature that provides
for USANA’s acquisition of the remaining rollover equity at a
pre-negotiated valuation scale, which is based on Hiya’s financial
performance.
- The transaction was financed with $200 million cash on hand
with the balance covered by the Company’s existing credit
facility.
BofA Securities acted as exclusive financial advisor to the
Company in connection with the transaction. Wilson Sonsini Goodrich
& Rosati, P.C. served as the Company’s legal advisor. William
Hood & Company, LLC acted as exclusive financial advisor to
Hiya. Bodman PLC acted as Hiya’s legal advisor.
Conference Call
The Company will provide a supplemental presentation and discuss
the transaction on a conference call on Monday, December 23, 2024
at 5:00 PM Eastern Time. The supplemental presentation and live
audio webcast of the conference call will be available on the
Company’s investor relations website at http://ir.usana.com.
Non-GAAP Financial Measures
This press release contains the non-GAAP financial measure LTM
adjusted EBITDA of Hiya. Adjusted EBITDA is a Non-GAAP financial
measure of earnings before interest, taxes, depreciation, and
amortization that also excludes certain adjustments as indicated
below in the reconciliation from net income.
The Company prepares its financial statements using U.S.
generally accepted accounting principles (“GAAP”) and investors
should not directly compare with or infer relationship from any of
the Company’s operating results presented in accordance with GAAP
to the LTM adjusted EBITDA of Hiya. We believe that this non-GAAP
financial information of Hiya may be helpful to investors as an
indication of future cash flow generation. Non-GAAP financial
measures have limitations in their usefulness to investors because
they have no standardized meaning prescribed by GAAP and are not
prepared under any comprehensive set of accounting rules or
principles. In addition, other companies, including companies in
our industry, may calculate similarly titled non-GAAP financial
measures differently or may use other measures to evaluate their
performance, all of which could reduce the usefulness of non-GAAP
financial information as a tool for comparison. As a result, the
non-GAAP financial information of Hiya is presented for
supplemental informational purposes only and should not be
considered in isolation from, or as a substitute for financial
information presented in accordance with GAAP.
The following is a reconciliation of net income, presented and
reported in accordance with GAAP, to Adjusted EBITDA:
(Unaudited)
Last Twelve Months Ended
($000's)
30-Sep-24
Net income
$
19,416
Definitional
Adjustments:
Interest expense
143
Depreciation and amortization
38
Income tax expense
80
EBITDA before Adjustments
19,677
Adjustments to
EBITDA:
Transaction expenses and other
non-recurring items
760
Non-operational costs
566
Normalizations
321
Timing adjustments
212
Management compensation
142
Adjusted EBITDA
$
21,678
About USANA
USANA develops and manufactures high-quality nutritional
supplements, functional foods and personal care products that are
sold directly to Associates and Preferred Customers throughout the
United States, Canada, Australia, New Zealand, Hong Kong, China,
Japan, Taiwan, South Korea, Singapore, Mexico, Malaysia, the
Philippines, the Netherlands, the United Kingdom, Thailand, France,
Belgium, Colombia, Indonesia, Germany, Spain, Romania, Italy, and
India. More information on USANA can be found at
www.usana.com.
About Hiya
Hiya is the leading children's health brand, re-imagining kids'
wellness with an inspired range of clean-label products. Offering a
delicious and high-quality line of powders and chewables, Hiya is
at the forefront of wellness with a focused assortment of
better-for-you products. Since its founding in 2020, Hiya has
established itself as a trusted name in the industry and is loved
by both parents and children with adherence to the highest clean
nutrition standards, ingredient transparency, and commitment to
continuous improvement through ongoing collaborations with experts.
More information on Hiya can be found at www.hiyahealth.com.
Safe Harbor
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act and Section 21E of
the Securities Exchange Act, including but not limited to
statements that: Hiya is fast growing; the Hiya acquisition will be
accretive to USANA’s 2025 adjusted EBITDA, experience net sales
growth approaching 30% year-over-year in fiscal 2025, allow USANA
to reach a broader audience, generate long-term growth, deliver
value for USANA stakeholders, scale the Hiya brand, bring better
health to children across the country and the world, enhance
USANA’s geographic sales mix and income tax efficiency in the near
and long-term, take advantage of synergies, create efficiencies,
accelerate growth and profitability, expand and diversify USANA’s
revenue mix, grow overall customer base, and strengthen USANA’s
overall financial profile; Mr. Litt and Mr. Gillman will continue
to lead Hiya through its next phase of growth; Hiya will have a
clear pathway and growth strategy to become the #1 children’s
wellness platform through new product introductions, channel
expansion, and geographic expansion; and other forward-looking
statements. These forward-looking statements are based on current
plans, expectations, estimates, forecasts, and projections as well
as the beliefs and assumptions of management. Words such as
“expect,” “vision,” “envision,” “evolving,” “drive,” “anticipate,”
“intend,” “maintain,” “should,” “believe,” “continue,” “plan,”
“goal,” “opportunity,” “estimate,” “predict,” “may,” “will,”
“could,” and “would,” and variations of these terms or the negative
of these terms and similar expressions are intended to identify
these forward-looking statements. Our actual results could differ
materially from those projected in these forward-looking
statements, which involve a number of risks and uncertainties, many
of which involve factors or circumstances that are beyond our
control, including: risks that the acquisition disrupts each
company’s current plans and operations; the diversion of the
attention of the management teams of USANA and Hiya from ongoing
business operations; the ability of to retain key personnel of
Hiya; the ability to realize the benefits of the acquisition,
including efficiencies and cost synergies; the ability to
successfully integrate Hiya’s business with USANA’s business, at
all or in a timely manner; the amount of the costs, fees, expenses
and charges related to the acquisition; global economic conditions
generally, including continued inflationary pressure around the
world and negative impact on our operating costs, consumer demand
and consumer behavior in general; reliance upon our network of
independent Associates; risk that our Associate compensation plan,
or changes that we make to the compensation plan, will not produce
desired results, benefit our business or, in some cases, could harm
our business; risk associated with governmental regulation of our
products, manufacturing and direct selling business model in the
United States, China and other key markets; potential negative
effects of deteriorating foreign and/or trade relations between or
among the United States, China and other key markets; potential
negative effects from geopolitical relations and conflicts around
the world, including the Russia-Ukraine conflict and the conflict
in Israel; compliance with data privacy and security laws and
regulations in our markets around the world; potential negative
effects of material breaches of our information technology systems
to the extent we experience a material breach; material failures of
our information technology systems; adverse publicity risks
globally; risks associated with commencing operations in India and
future international expansion and operations; uncertainty relating
to the fluctuation in U.S. and other international currencies; and
the potential for a resurgence of COVID-19, or another pandemic, in
any of our markets in the future and any related impact on consumer
health, domestic and world economies, including any negative impact
on discretionary spending, consumer demand, and consumer behavior
in general. The contents of this release should be considered in
conjunction with the risk factors, warnings, and cautionary
statements that are contained in our most recent filings with the
Securities and Exchange Commission. The forward-looking statements
in this press release set forth our beliefs as of the date hereof.
We do not undertake any obligation to update any forward-looking
statement after the date hereof or to conform such statements to
actual results or changes in the Company’s expectations, except as
required by law.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241222197799/en/
Investor contact: Andrew Masuda Investor Relations (801)
954-7201 investor.relations@usanainc.com
Media contact: Sarah Searle (801) 954-7626
media@usanainc.com
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