USANA Health Sciences (USNA) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition of Hiya expands presence in the fast-growing children's health and wellness market, filling a demographic gap and aligning with the vision to serve the entire family with wellness products.

• Hiya's clean-label, direct-to-consumer, subscription-based model and strong management team complement existing operations and provide immediate leadership in the children's wellness market.

• The deal diversifies customer demographics, sales channels, and geographic sales mix, strengthening the overall business profile.

• Hiya's focus on product innovation and engaging customer experience supports long-term growth and brand loyalty.

• Positions the acquirer as a leader in the $9.9B global pediatric supplements market with a 7% sales CAGR.

Financial terms and conditions

• 78.8% controlling stake acquired for $205 million in cash, funded by $200 million in cash reserves and the remainder from an existing credit facility; transaction enterprise value is $260 million.

• Deal includes a put-call feature for potential acquisition of remaining equity based on future performance.

• Combined net sales for the last 12 months exceed $960 million as of September 30, 2024.

• Hiya reported LTM net sales of $103 million, net income of $19 million, and adjusted EBITDA of $22 million as of September 30, 2024.

• The deal is expected to be immediately accretive to 2025 adjusted EBITDA.

Synergies and expected cost savings

• Manufacturing, R&D, and marketing synergies anticipated, with initial focus on leveraging in-house manufacturing capabilities and international expansion.

• No synergies were included in the initial deal analysis; any realized will be incremental.

• Hiya's efficient, low-capital-intensity operations minimize overlap and facilitate integration.

• Opportunity to reduce effective tax rate with improved domestic profitability.