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, leveraging Hiya's strong brand, direct-to-consumer subscription model, and clean-label products, aligning with the vision to serve the entire family.

• The deal diversifies revenue streams, broadens distribution channels, and expands the customer base by over 40%.

• Hiya's management and co-founders will remain in place, ensuring continuity and leveraging their expertise for future growth.

• Hiya's subscription model provides predictable revenue, strong customer relationships, and operational benefits.

• Positions the combined entity 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 a credit facility.

• Transaction enterprise value of $260 million, with $55 million rolled as equity for a 21.2% interest.

• Structure includes a put/call feature for potential acquisition of the remaining equity based on future performance.

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

• Combined net sales for the last 12 months exceed $960 million.

Synergies and expected cost savings

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

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

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