Overview

Healthy Co supplies nutritional products, clinical services and wellness testing nationwide, selling most of its products and services on a subscription basis. Healthy Co is leading the health space in New Zealand and enabling customers to be proactive and take back control of their health.

Healthy Co was originally founded by Frank Munroe. Frank had a vision of happier and healthier communities across New Zealand, achieved by creating a new future for health. His vision has become our company mission.

Healthy Co has grown its revenue from $2.8m in FY16 to $10.4m in FY20 (a 39% CAGR), delivering consistently strong GP margins of between 44-57% and positive EBITDA over the same period.

General Update

In late 2019 Healthy Co raised $5m of new capital to fund stock purchases and development of the a home delivery system, as well as undertaking an upgrade of the Healthy Co ecommerce experience. During the last 8 months the business has largely tracked as planned - we have seen a continuation of excellent growth within Healthy Co Health, primarily driven by increased marketing spend, as well as a recent partnership with GreenCross.

Globally the wellness market continues its strong growth, and we have seen a number of high profile US based M&A transactions (Vitality Co and Eat Well Co) to multinationals already in 2020.

In March this year we entered into a formal partnership with GreenCross who own Unichem and Life Pharmacies. We had been in discussion with GreenCross for around year, before finalising the partnership agreement in March. Key to this agreement has been minimum order quantities which GreenCross has committed to for the next 36 months. This commitment amounts to $200k per month for the first 12 months (from March), $300k for the second 12 months, and $350k for the third. Distribution will be through Life Pharmacies nationwide.

As we move into the second half of the financial year, we are confident that we are on track to hit our group financial targets. At this stage we anticipate that Healthy Co home programme revenue to be broadly on budget.

We are targeting Australia as our first offshore market. We anticipate launching with our home programme in conjunction with a high profile partner, and quickly following this launch with our suite of consumer products. We have stepped up our online and social media marketing in the Australian market, but online sales are still modest (<5%) of total revenue.

Highlights - YTD

• Launched our new home programme
• Introduced 30 new products to market
• Increased sales for the same period by 20%
• Online sales have increased by 50% during COVID
• Subscription churn has been lowered to 5%

Lowlights - YTD

• Product packaging included incorrect labelling
• Workshop rent increased by 20%
• Trademark in Australia potentially taken

People Update - YTD

• 4 new sales reps starting in October
• Sarah Fergusson joins us in November as the new Marketing Manager
• Our accountant is now onboard full-time

FY20 Financial Performance

Please refer to FY20 accounts in shareholder update.

Company Valuation

In October 2019 Healthy Co raised $3m at a post money valuation of $13m ($1/share). Since this capital raise there have been no major transactions which have revalued the business. Over the last 12 months the business has performed broadly in line with financial projections, and has secured a significant commercial contract. Directors anticipate that the clearing price for shares traded will be in a range between $1-$1.40, but recognise that thinly traded, companies often trade outside of a ‘fair value’ range depending on a number of factors.

Key Disclosures

• Cash Remuneration: There has been no changes to remuneration for key people during F21. Any changes to key people remuneration need to be signed off by the independent directors

• ESOP: Under the shareholders agreement the board can at its discretion issue up to 5% ESOP to staff, providing the independent director provides approval.

• Transfer of Shares: There have been no transfers of shares within the last 12 months by executives. 47,000 shares have been transferred between minor shareholders (held within the nominee).

• Trading by Related Parties: No related parties, including staff intend to trade shares during the upcoming window. If any insiders do choose to trade, the market will be notified immediately.

• Future Funding: While there is no existing plan, or identified requirement, to raise additional funds after this funding round, the directors have received an approach from a potential strategic investor which may provide other benefits for Healthy Co, if it progresses further. The directors may also elect to raise additional capital in the future to accelerate growth plans or take advantage of other opportunities that will increase shareholder value, as they arise.

Shareholder Table
Immediately before trading event

Shareholder	Current shares	Current percentage
Mark Wallberg	11,000,000	52%
Frank Gherry	8,149,000	38%
Peter Wilkins	793,000	4%