The Health Food Space Keeps Roaring (OTC US: SBEV) ($MED) ($WW)
November 25, 2020 at 08:45 AM EST
The functional foods market saw sales top $267 billion in February of this year on a global basis, with sales in the US reaching $63 billion, according to Euromonitor 2020.
This trend is part of a larger supportive momentum in the general category, with global sales of organic food and drink topping $105 billion in 2018. U.S. organic food sales also reached $47.9 billion, up 5.9% in 2018. In 2019, 77% of U.S. adults used dietary supplements, an all-time high.
U.S. supplement sales are estimated to have reached $49.3 billion in 2019, up 6.2% (NBJ 2019).
In other words, the structural trend in healthy foods, drinks, and supplements is “up and to the right”, as they say on Wall Street.
With that in mind, we take a close look at a few of the more interesting and compelling names in the space, including: WW International Inc. ($WW), Splash Beverage Group Inc. (OTC US:SBEV), and Medifast Inc. ($MED).
Medifast Inc. ($MED) offers bars, bites, pretzels, puffs, oatmeal and cereal crunch products, drinks, hearty choices, pancakes, puddings, soft serves, shakes, smoothies, soft bakes, and soups under the Medifast, OPTAVIA, Thrive by Medifast, Optimal Health by Take Shape for Life, and Flavors of Home brands.
It manufactures and distributes weight loss, weight management, healthy living products, and other consumable health and nutritional products in the United States and the Asia-Pacific.
Medifast Inc. ($MED) recently reported results for the third quarter ended September 30, 2020, including an increase in revenue of 42.8% to $271.5 million, 30.7% growth in active earning OPTAVIA Coaches to a record level of 42,100, and revenue per active earning OPTAVIA Coach up 8.2% over the second quarter to $6,329
“Our business continues to go from strength to strength, with high levels of client demand and engagement among independent OPTAVIA Coaches, accelerated growth and record levels of active earning Coaches,” said Dan Chard, Chief Executive Officer of Medifast. “Our programming efforts this year, along with enhancements to our organization, have given us a foundation for significant progress during the quarter. We continue to make investments to enhance our infrastructure to support our strong growth trajectory. We believe we are well positioned to capitalize on the ever-increasing focus on health and wellness across the United States and around the world. Our comprehensive solution is resonating with Coaches and Clients everywhere, and we will continue to focus on providing our Clients with the ability to achieve lifelong transformation one healthy habit at a time.”
If you’re long this stock, then you’re liking how the stock has responded to the announcement. MED shares have been moving higher over the past week overall, pushing about 11% to the upside on above average trading volume. Shares of the stock have powered higher over the past month, rallying roughly 26% in that time on strong overall action.
Medifast Inc. ($MED) managed to rope in revenues totaling $271.5M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 42.8%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($169.9M against $112M).
Splash Beverage Group Inc. (OTC US: SBEV) is clearly the most speculative name in this group, but it may also be the most interesting for aggressive speculative-minded market participants. With its recent move to connect in a strong channel through partnership with a major player in the Chinese market, SBEV has the potential to significantly ramp its operational performance
The company specializes in manufacturing, distribution, sales & marketing of various beverages across multiple channels, including TapouT sports drinks, an international lifestyle brand that has been at the forefront of Mixed Martial Arts since 1997. MMA is the fastest growing sport in the US over the past 10 years, and there’s no reason to believe that won’t be the case over the next ten years. The TapouT brand is big in MMA circles and stands to benefit from a return to full action and major MMA events over coming months.
Splash Beverage Group Inc. (OTC US: SBEV) most recently announced that it has moved up to the OTC Markets’ OTCQB tier, having met Eligibility, Reporting, Corporate Governance and Verification Requirements. This is a big accomplishment.
According to the company’s release, the OTCQB is a venture market operated by the OTC Markets Group, Inc. and is designed for developing companies in the U.S. and abroad. To be eligible for quotation on the OTCQB, companies must be current in their reporting and undergo an annual verification and management certification process. Companies must also meet a minimum bid price test and other financial conditions. The OTCQB is recognized by the Securities and Exchange Commission as an established public market and provides current public information to investors that need to analyze, value, and trade securities.
Splash CEO Robert Nistico comments, “This was a top priority for our company. The OTCQB offers investors increased transparency and overall accessibility and is conducive to additional market opportunities toward building shareholder value. We believe this also positions us to begin initiatives toward up-listing to a senior exchange as we continue to cultivate existing brands and execute our strategy to acquire additional impactful beverage brands and concepts.”
Splash Beverage Group Inc. (OTC US: SBEV) recently announced consolidated revenues for the three months ended September 30, which totaled $1,009,615, representing quarter-over-quarter growth of 65% compared to the three months ended June 30. This also represents sales for the nine months ended September 30 of $1,733,926. In addition, the company surpassed its estimated topline performance during Q3. Management forecasts $1.3-1.5 million in current quarter revenues for the three months ending December 31, 2020.
WW International Inc. ($WW) provides a range of products and services comprising nutritional, activity, behavioral, and lifestyle tools and approaches.
WW offers various digital subscription products to wellness and weight management business, which provide interactive and personalized resources that allow users to follow its weight management program via its Web-based and mobile app products, including personal coaching products; and allows members to support each other by sharing their experiences with other people on weight management and wellness journeys.
WW International Inc. ($WW) recently introduced myWW+ which offers a more holistic approach to weight loss and wellness that focuses on food, activity, mindset and sleep – pillars of health which have a measurable impact on success. Building on the massive success of the myWW program and through a deeply enriching, more interactive and personalized app experience, myWW+ offers members a plan that works best for them with new tools designed to make weight loss easier.
“As a human-centric technology company, we know how important it is for people to have a comprehensive app experience that helps them lose weight and get healthier so they can become the best version of themselves,” said Mindy Grossman, WW CEO and President. “Our myWW+ program offers a sought-after holistic wellness solution that is also highly customizable to fit your life, no matter where it takes you.”
If you’re long this stock, then you’re liking how the stock has responded to the announcement. WW shares have been moving higher over the past week overall, pushing about 20% to the upside on above average trading volume.
WW International Inc. ($WW) pulled in sales of $320.7M in its last reported quarterly financials, representing top line growth of -8%. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($204.4M against $364.3M, respectively).
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