As discussed in a recent Reuters article on Thorne, Thorne HealthTech (NASDAQ:THRN) is exploring a sale of the company which could possibly make it an interesting short term investment candidate. The company, recognized for its groundbreaking solutions in personalized health and wellness, is currently having a market capitalization around the $314 million mark but could command a massive premium in the event of a sale given its solid presence across consumer, professional, and corporate wellness landscapes. The increasing demand for personalized healthcare solutions and a heightened awareness of preventive care have been key drivers of the growth in this sector and we believe that there could be several healthcare and consumer goods players that could get meaningful synergies from acquiring Thorne.
What Does Thorne HealthTech Do?
Thorne HealthTech, Inc., a globally active wellness company founded in 1984 and headquartered in New York, New York, has dedicated itself to the pursuit of personalized health and wellness solutions. Through a diverse offering of health tests including those for sleep, stress, weight management, gut health, heavy metals, and biological age, the company creates detailed molecular portraits of its customers. This intricate information forms the basis for Thorne's development of nutritional supplements and the provisioning of targeted wellness education. Leveraging the Onegevity platform, Thorne integrates and interprets individual biological attributes to paint an insightful picture of a person’s overall health state. The platform’s strength lies in its actionable insights, offering personalized data, products, and services tailored to each individual. It enables users to adopt a proactive approach towards enhancing and preserving their health. The primary clientele of Thorne HealthTech encompasses healthcare professionals, professional athletes, as well as professional sports and Olympic teams, thus reinforcing its reputation as a leading, science-driven provider in the field of personalized health and wellness.
Thorne's Offerings Collaborations, and Growth Strategy
Thorne's recent advances in health technology have been marked by immense innovation and collaboration, specifically with Mayo Clinic, positioning the company as a leader in the highly competitive nutraceutical space. With 11 at-home testing products on offer, Thorne allows customers to monitor their health and formulate personalized wellness plans. The latest breakthrough in this area is a new gut health test featuring Thorne's patent-pending Microbiome wipe. Coupled with an intensive focus on research and development, Thorne has been part of several studies, such as a Mayo Clinic study on the impact of its SynaQuell supplement on neurological functioning in ice hockey players. SynaQuell, designed for high-contact sports athletes, showcases the company's ability to cater to specific niches.
In addition, Thorne has also launched a new at-home blood sampling device, which has received CE Market Certification in the European Union, marking potential expansions into other markets like Japan. Apart from strong D2C growth, Thorne's diversified portfolio and investment in R&D also contribute to this success. Despite Amazon's dominance with a 37.8% market share in ecommerce, Thorne has skillfully utilized its website and user experience (UX) design to attract customers, sustaining margins around 50% over the past three years, a favorable figure in comparison to typical supplements companies' gross profit margins of 20-50%.
Thorne's product range, including over 180 supplements, addresses various health issues and includes basic as well as advanced supplements, catering to top focus areas such as multivitamins, Vitamin D, and Omega-3. Thorne's nutraceuticals for sleep, cognitive products, bone and joint health supplements, and gut health supplements align with market trends and cater to current consumer preferences, setting it on a strong growth trajectory. From offering basic melatonin supplements for sleep or advanced products like GABA supplements to going as far as tapping into growing markets like cognitive enhancement or gut health, Thorne's strategic positioning and innovation point towards a company poised for continued success in the health and wellness landscape.
Who Could Be Interested In Acquiring Thorne?
Thorne HealthTech could easily be of interest not just to private equity funds but also a wide variety of strategic buyers. Some possible examples of such companies that could potentially see the most meaningful synergies from acquiring Thorne HealthTech are:
Unilever (NYSE:UL): This multinational consumer goods player boasts a robust portfolio of health and wellness brands, including Horlicks, Pukka Herbs, and Olly Nutrition. By acquiring Thorne HealthTech, Unilever could leverage their expertise in personalized nutrition and health intelligence, gaining a foothold in the professional and corporate wellness markets.
Nestlé (OTC:NSRGY): Nestlé is the world's largest food and beverage company and has been broadening its reach into the health and wellness sector through acquisitions like Atrium Innovations, Persona Nutrition, and Vital Proteins. The company could further enhance its position in the personalized nutrition space by incorporating Thorne HealthTech's science-based solutions and testing capabilities.
Abbott Laboratories (NYSE:ABT): This global healthcare behemoth offers a diversified portfolio encompassing medical devices, diagnostics, nutritionals, and branded generic medicines. Through the integration of Thorne HealthTech's specialized solutions, Abbott could potentially bolster its existing offerings, especially in critical areas such as diabetes care, cardiovascular health, and metabolic health.
Johnson & Johnson (NYSE:JNJ): Johnson & Johnson operates across a wide spectrum of domains, including consumer health, medical devices, pharmaceuticals, and wellness. The acquisition of Thorne HealthTech could prove beneficial to them as Thorne could be a valuable addition to their innovative approach to personalized health and wellness solutions especially given its strong partnerships with organizations like Mayo Clinic and professional sports teams.
Final thoughts
We can see Thorne's stock price being reasonably volatile and not showing much appreciation in the past year. However, the increasing rumors associated with a sale could change this. It is worth highlighting that the company's revenues have more than doubled in the past 4 years and it is also profitable now. Also, it is trading at a valuation of hardly 1.53x in terms of Enterprise Value/ Revenues. We believe the company's stock could appreciate immensely irrespective of whether it is acquired or not as there is huge scope for multiples expansion in Thorne's case especially given its scientific approach to product marketing and development that sets it apart in a crowded market with around 1,440 supplement companies in the United States. Overall, we believe that Thorne could prove to be an attractive investment opportunity given the recent developments.
