MIAMI - Smart for Life, Inc. (NASDAQ:SMFL), a prominent player in the health and wellness sector, announced today the signing of a definitive agreement to acquire Purely Optimal Nutrition Inc., a leading eCommerce nutraceuticals company. The acquisition, which is part of Smart for Life’s strategic "Buy-and-Build" initiative, aims to bolster the company's presence in the nutritional supplements market.
Purely Optimal Nutrition has been reported to generate over $8 million in revenue and more than $1 million in Adjusted EBITDA over the past twelve months. The merger is anticipated to not only increase Smart for Life's revenue but also to expand its margins significantly.
A.J. Cervantes, Jr., the founder and Chairman of Smart for Life, expressed enthusiasm about the acquisition, highlighting the quality of Purely Optimal's product line, which is crafted from globally sourced ingredients intended to support specific health and wellness needs.
Darren Minton, CEO of Smart for Life, remarked on the expected synergies between the companies, particularly in manufacturing operations, and the potential for brand extensions. Minton also commended the Purely Optimal management team for creating a world-class brand with a loyal customer base and foresees further growth through the development of Purely Optimal nutritional food products at Smart for Life's FDA-certified facility.
The transaction is expected to close within the next eight weeks, subject to financing and customary closing conditions. Smart for Life's growth strategy includes the acquisition of profitable companies and the development of proprietary products, aiming to create a vertically integrated company.
This acquisition is a continuation of Smart for Life's restructuring plan, which includes recapitalization through equity and debt financings, the sale of non-performing assets, and the conversion of certain debt obligations to equity to improve the company's balance sheet.
The information provided in this article is based on a press release statement by Smart for Life, Inc.
InvestingPro Insights
In light of Smart for Life, Inc.'s (NASDAQ:SMFL) recent announcement to acquire Purely Optimal Nutrition Inc., it's essential to consider the company's financial health and market performance. According to InvestingPro data, Smart for Life has a market capitalization of a mere $0.4 million USD, reflecting a very small company size within the market. The company's Price / Book ratio for the last twelve months as of Q3 2023 stands at 0.42, suggesting that the stock may be trading at a low valuation relative to the company's book value. This aligns with one of the InvestingPro Tips that the company is trading at a low Price / Book multiple.
Furthermore, the revenue for Smart for Life over the same period has seen a significant decline of 39.39%, indicating challenges in generating sales growth. This is coupled with a substantial operating income loss of $15.91 million USD, which could raise concerns about the company's profitability and efficiency in managing its operations. These metrics may be particularly relevant for investors considering the company's plans for expansion and acquisition.
InvestingPro Tips also point out that Smart for Life operates with a significant debt burden and may have trouble making interest payments on its debt. This is a critical consideration for investors, especially in the context of the company's "Buy-and-Build" strategy, which includes the recent agreement to acquire Purely Optimal Nutrition Inc. and could potentially strain the company's financial resources further.
For readers looking to delve deeper into the financial analysis of Smart for Life, Inc., InvestingPro offers additional insights and tips. There are 17 more InvestingPro Tips available, providing a comprehensive look at the company's financial health and stock performance. Interested investors can find these valuable tips at https://www.investing.com/pro/SMFL and can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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