Reviewing 2017 IPOs: Jamieson Wellness Inc.

Jamieson Wellness Inc. (TSX:JWEL) announced its IPO in July, and now investors are getting their first look at its second-quarter results.

| More on:

The Toronto-based vitamin and natural health products company Jamieson Wellness Inc. (TSX:JWEL) had its initial public offering (IPO) on July 7. It followed another high-profile IPO Canada Goose Holdings Inc. (TSX:GOOS)(NYSE:GOOS), which launched in March. Jamieson Wellness was acquired by U.S. private equity firm CCMP Capital Advisors in 2014.

The company plans to capitalize on rising global health and wellness consumer trends. It sold $300 million worth of shares and a secondary offering price of $15.75 per share. Shares of Jamieson Wellness have risen 10.92% since the IPO as of the end of trading on August 11. The company has plans to use the proceeds from the IPO for repayment of debt as well as payment of the dividend and return of capital to preferred shareholders.

The company controls close to 25% of the vitamin market in Canada. It also plans to expand further into eastern Europe, the Middle East, and Asia, where it already has a foothold in several key markets. The market research firm Euromonitor said the Canadian vitamin and multivitamin industry was worth $431.7 million in 2016.

On August 9, Jamieson Wellness announced its second-quarter results. Revenue saw 6.3% growth to $71.3 million compared to Q2 2016. Revenue growth was aided by the acquisition of natural health products manufacturer Body Plus. Gross profit increased 18.4% to $25.3 million from $21.4 million in the second quarter the previous year. Strategic Partners revenue saw a decline after a switch to a tolling from a turnkey arrangement for selected high-volume products with the partner’s customers. Operating income experienced growth of 29.8%, and operating margins increased to 15% from 12.3% in Q2 2016.

The company posted a net loss of $7 million compared to net income of $1.8 million in Q2 2016. Selling, general, and administrative costs saw a 10.7% increase to $13.2 million from $11.9 million in the same period the previous year. Interest income and financing costs made up $8.1 million of income compared to $5.7 million in the second quarter of 2016.

The third quarter is also expected to include IPO-related expenses; they are projected to total approximately $11.5 million for the year. At the end of the second quarter, the company received $232.1 million of net IPO proceeds.

Jamieson Wellness has a revenue target of $390 million for the year and hope that it will reach $410 million by 2021. The company is also planning to launch a line of vitamin-induced protein powder in 2018. A cough and cold prevention pill is slated for release in the fall of this year.

The stock rose 9.84% on the date of its IPO. CCMP Capital Advisors holds a +40% stake in the company, while management holds roughly 8%.

The health supplement industry is experiencing a great deal of growth in Canada and all of North America. An aging population with a great deal of disposable income will contribute to this uptrend, and it is a strategic outlook which Jamieson Wellness has explicitly endorsed.

Third-quarter results will take into account the next round of expenses from the IPO, but long term, the outlook is fantastic for this company. Jamieson Wellness holds a quarter stake in a booming industry and is a good growth stock to add to your portfolio.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any stocks mentioned.

More on Investing

Train cars pass over trestle bridge in the mountains
Dividend Stocks

Is CNR Stock a Buy, Sell, or Hold for 2025?

Can CNR stock continue its long-term outperformance into 2025 and beyond? Let's explore whether now is a good time to…

Read more »

engineer at wind farm
Energy Stocks

Invest $20,000 in This Dividend Stock for $100 in Monthly Passive Income

This dividend stock has it all – a strong outlook, monthly income, and even more to consider buying today.

Read more »

Hourglass and stock price chart
Stock Market

It’s Not Too Late: Invest in These TSX Growth Stocks Now

Solid fundamentals of these top TSX growth stocks could help them maintain strong upward momentum in the years to come.

Read more »

coins jump into piggy bank
Dividend Stocks

The Smartest Dividend Stocks to Buy With $500 Right Now

These top dividend stocks both offer attractive yields and trade off their highs, making them two of the best to…

Read more »

stocks climbing green bull market
Stocks for Beginners

3 TSX Stocks Soaring Higher With No Signs of Slowing

Don't ignore stocks just because they look like they're at a high price. Instead, see exactly why they've driven so…

Read more »

dividends can compound over time
Bank Stocks

Is TD Bank Stock a Buy for Its 5.2% Dividend Yield?

TD Bank stock offers a rare 5.2% dividend yield—can it rebound from challenges and reward contrarian investors? Here's what to…

Read more »

chart reflected in eyeglass lenses
Investing

How Should a Beginner Invest in Stocks? Start With This Index Fund

This Vanguard index fund is the perfect way to start a Canadian investment portfolio.

Read more »

analyze data
Bank Stocks

Is BMO Stock a Buy for its 4.7% Dividend Yield?

Bank of Montreal is up 20% since late August. Are more gains on the way?

Read more »