In an attempt to grow their overall wellness business by diversifying their brands, Elixinol Wellness (ASX: EXL) will acquire The Healthy Chef, a premium wellness brand, in a deal expected to accelerate revenue growth and strengthen their position in the clean nutrition sector.
The acquisition complements Elixinol’s existing portfolio and marks a significant step towards achieving positive cash flow and positive earnings by leveraging an established brand within their target audience.
The Healthy Chef, founded in 2006 by nutritionist and wellness coach Teresa Cutter, boasts a range of clean nutrition products, targeting women’s health, inner beauty, and overall wellbeing. With a portfolio of 28 products, the brand addresses key areas such as weight management, stress relief, menopause, and immunity. Over its 18 years in operation, The Healthy Chef has built a strong customer base in Australia and established a rich library of product innovations and digital content.
The acquisition aligns with Elixinol’s strategy of building a ‘House of Brands’ in clean nutrition according to Chairman, David Fenlon.
“We are thrilled to announce the acquisition of The Healthy Chef, which represents a strategic catalyst for our growth ambitions,” he said.
“This acquisition is expected to be margin accretive with synergies and cost savings projected to significantly improve Group gross margins. Additionally, it offers substantial growth potential in untapped consumer segments.
“We are delighted to welcome Teresa Cutter as a global brand ambassador, and look forward to working closely with her to unlock the full potential of The Healthy Chef brand.”
The total purchase price for The Healthy Chef will range between $3.1 million and $5.5 million, depending on the business’s performance over the next few years.
The payment structure includes an initial cash consideration of $600,000, followed by deferred payments tied to revenue targets. The final settlement, set for March 2028, will be determined by The Healthy Chef’s revenue in the 2027 financial year, incentivising the vendors to stay in the business and drive its growth, at least for the next three years.
Elixinol has also secured $1.1 million through an institutional Placement at an Issue Price of $0.0045 per share to fund the acquisition and support future growth initiatives. A further $500k will be sought from shareholders through a Share Purchase Plan offer with funds raised to support working capital required to drive expansion in both Australia and the US.
The acquisition strengthens Elixinol’s existing business by adding a brand that resonates with a health-conscious consumer base, particularly women. The Healthy Chef’s product range, which includes nutritional supplements, protein powders, and collagen products, is expected to complement Elixinol’s offerings under brands such as Hemp Foods Australia and Mt Elephant. The integration of The Healthy Chef into Elixinol’s operations is anticipated to deliver cost synergies, enhance gross margins, and create opportunities for cross-marketing and product development.
The combined business will also benefit from an expanded distribution network, leveraging Elixinol’s existing channels in both Australia and the US. The acquisition is expected to enhance brand scalability and reduce operational risks by diversifying revenue streams.
For the Half Year ended 30 June 2024, Elixinol reported $6.8 million revenue which represented a 96% increase on the previous corresponding period with a net loss after tax of $2.8 million, a 19% improvement over the same period.
Alfred Chan is a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, a bloodstock enthusiast and former equities analyst.
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