Better Choice Company (NYSE: BTTR) (“Better Choice” or “the
Company”), a pet health and wellness company, Chairman, Michael
Young, today is issuing a letter to shareholders as the Company
continues to make progress towards the closing of its acquisition
of SRx Health Solutions Inc. (‘SRx Health’), a leading provider of
innovative healthcare solutions, in an all-stock transaction for
approximately $125 million.
Shareholders are encouraged to listen to the
fireside chat hosted on October 15, 2024 at 4:30 p.m. ET by the
management teams of Better Choice and SRx Health, which can be
accessed by visiting https://ir.betterchoicecompany.com/.
Better Choice Shareholders,
We believe that our transformational acquisition
of SRx Health will position Better Choice as a leading global
health and wellness company, providing better products and
solutions for pets, people, and families. The combination of the
two companies is expected to generate significant cash flow, yield
operational efficiencies, and cost savings, while providing large
growth opportunities that will drive sustainable organic growth for
each respective business. We expect the transaction to close in
late Q4 of this year or early Q1 of 2025.
To date, each business has generated steady
sales growth and cash flow.
Better Choice has established its premium pet
food brand Halo through our omni-channel distribution model. Gross
sales of the brand totaled approximately USD$49 million in 2023,
approximately half of which was e-commerce and 28% was
international, driven by growth in China. For the second quarter of
2024, Better Choice generated close to break-even adjusted EBITDA
of less than $(0.03) million4, which reflects our success in
stabilizing the business and resetting it to profitable growth.
SRx Health generated approximately CAD$180
million in revenue and generated positive adjusted EBITDA in 20235.
Today, SRx operates one of the largest specialty pharmacy networks
in Canada with 36 specialty pharmacy locations, 40 specialty
health/infusion clinics, 4 clinical trial sites, and 2 wholesale
distribution facilities. As one of only a few specialty pharma
operators with a network that extends across Canada, SRx Health is
one of the most comprehensive providers of specialty healthcare in
the country.
The combined companies for the trailing twelve
months have generated USD$235 million in revenue, increasing
approximately 25% quarter-over-quarter.
From an operational perspective, we expect to
achieve immediate cost savings estimated to be approximately
USD$1.7 million annually, with potential for further upside as we
continue to integrate the two companies. There are also new
verticals and geographic expansion opportunities as a combined
entity versus stand alone. As an example, our plan is to expand
into veterinary medicine in 2025 with our new initiative Better Pet
Rx. By leveraging the expertise of SRx Health’s management team,
with their pre-existing relationships in pharma, and their robust
infrastructure, Better Choice can complement the Halo portfolio of
premium and super-premium pet food products by expanding into this
new, large and growing market to support Halo’s momentum forward.
Additionally, there are new markets that each respective business
has not yet explored, including the United States in the case of
SRx Health, and European Union and Asia-Pacific regions in the case
of both Better Choice and SRx Health, which regions represent new
and untapped large total addressable markets.
On a pro forma basis, we project 2025 combined
revenue and EBITDA to be over USD$270 million and over USD$10
million, respectively1.
Pro forma fully diluted shares outstanding
including shares to be issued to SRx Health is 22,911,334 shares,
with insiders owning approximately 75% of the outstanding shares.
From a valuation perspective, net tangible book value is $4.072 per
share and net current asset value per share is $3.943, both well
below the current price of our equity.
As we near the closing of the transaction in the
coming months we will ask the Better Choice and SRx Health
shareholders to vote.
We sincerely appreciate your unwavering support
and trust as we strive to build a global health and wellness brand
by 2025, paving the way for a promising future together.
Thank you,
Michael YoungChairman of Better Choice
Company
About Better Choice Company
Inc.
Better Choice Company Inc. is a rapidly growing
pet health and wellness company committed to leading the industry
shift toward pet products and services that help dogs and cats live
healthier, happier, and longer lives. We take an alternative,
nutrition-based approach to pet health relative to conventional dog
and cat food offerings and position our portfolio of brands to
benefit from the mainstream trends of growing pet humanization and
consumer focus on health and wellness. We have a demonstrated,
multi-decade track record of success selling trusted pet health and
wellness products and leverage our established digital footprint to
provide pet parents with the knowledge to make informed decisions
about their pet’s health. We sell the majority of our dog food, cat
food and treats under the Halo brand, which is focused,
respectively, on providing sustainably sourced kibble and canned
food derived from real whole meat, and minimally processed raw-diet
dog food and treats. For more information, please
visit https://www.betterchoicecompany.com.
About SRX Health
SRx operates as a Canadian healthcare service
provider specializing in the Specialty Pharmacy segment of the
pharmaceutical industry. Distinguishing itself as a National
Specialty Pharmacy provider, SRx concentrates on overseeing a
patient's healthcare journey, spanning from acute pharmaceutical
needs to chronic and rare disease management. This unique focus
positions SRx to deliver a more holistic and integrated solution,
catering to the requirements of both patients and key healthcare
stakeholders. Our all-encompassing end-to-end offerings include
wholesale/distribution facilities, patient support programs,
infusion clinics, retail pharmacies, co-designed clinical programs,
clinical trials, and diagnostic services.
Our strategic growth plan is forward-thinking
and revolves around fostering increased collaboration with
pharmaceutical manufacturers and prescribers. With a specific
emphasis on the expanding market of chronic and rare diseases, we
target specialty drugs associated with closed and limited
distribution networks. The objective is to broaden their
distribution and improve accessibility. Our overarching goal is to
elevate our current presence from 34 to 100 specialty pharmacy
locations across mid-sized population centers throughout Canada,
thereby enhancing the scope of healthcare services and establishing
new industry benchmarks. In the subsequent phase of SRx's
evolution, we aim to extend our reach beyond the borders of Canada.
Leveraging our comprehensive approach, we aspire to simplify
healthcare on a global scale. For more information on SRx, please
visit https://www.srxhealth.ca.
Forward Looking StatementsThis
press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
The words “believe,” “may,” “estimate,” “continue,” “anticipate,”
“intend,” “should,” “plan,” “could,” “target,” “potential,” “is
likely,” “will,” “expect” and similar expressions, as they relate
to us, are intended to identify forward-looking statements. The
Company has based these forward-looking statements largely on our
current expectations and projections about future events and
financial trends that we believe may affect our financial
condition, results of operations, business strategy and financial
needs. Some or all of the results anticipated by these
forward-looking statements may not be achieved. Further information
on the Company’s risk factors is contained in our filings with the
SEC. Any forward-looking statement made by us herein speaks only as
of the date on which it is made. Factors or events that could cause
our actual results to differ may emerge from time to time, and it
is not possible for us to predict all of them. The Company
undertakes no obligation to publicly update any forward-looking
statement, whether as a result of new information, future
developments or otherwise, except as may be required by law.
(1) |
|
The pro forma financial information presented in this press release
is based on management's assumptions and is not audited. Key
assumptions include organic growth of 30%+, new pharma
collaborations and patient support program wins, and operating
leverage unlock. These pro forma figures are based on the company's
historical financial statements as of December 31, 2023, and should
be read in conjunction with the company's audited financial
statements. |
(2) |
|
Net tangible book value per share
as of 6/30/24 is determined by dividing our total tangible assets,
less total liabilities, by 2.7 million shares outstanding
immediately after the Offering assuming exercise of all 1,028,000
pre-funded warrants sold (the “Pre-Funded Warrants”), on a
pro-forma and as adjusted basis giving effect to the above
referenced items. |
(3) |
|
Net current asset value per share
as of 6/30/24 is determined by dividing total current assets, less
total current liabilities, by 2.7 million shares outstanding
immediately after the Offering assuming exercise of all the
Pre-Funded Warrants, on a pro-forma and as adjusted basis giving
effect to the above referenced items. |
(4) |
|
Adjusted EBITDA is a non-GAAP
measure. Reconciliation of Adjusted EBITDA to net income (loss),
the most directly comparable GAAP financial measure, is set forth
in a reconciliation table accompanying the Company’s second quarter
2024 earnings release published August 12, 2024. |
(5) |
|
Results of SRx Health
consolidated financial statements for the year ended September 30,
2023, prepared in accordance with IFRS. Pro Forma Adjusted EBITDA
is a non-GAAP measure. Reconciliation of Pro Forma Adjusted EBITDA
to net loss, the most directly comparable GAAP financial measure,
is set forth in a reconciliation table accompanying the Company’s
press release published September 3, 2024. Management is still
analyzing the financial statement impact upon conversion from IFRS
to GAAP. |
|
|
|
Company Contact:Better Choice Company, Inc.Kent
Cunningham, CEO
Investor Contact:KCSA Strategic
CommunicationsValter Pinto, Managing DirectorT:
212-896-1254Valter@KCSA.com
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