Relevium Technologies is building a portfolio of assets in health & wellness
Investing in the health and wellness sector can be confusing. It's a crowded space with so many companies staking competing claims to having the panacea for profits. Fortunately, Montreal-based Relevium Technologies Inc. (TSV.V: RLV) have cut through the confusion by developing a winning prescription that delivers value to the shareholders and health to consumers.
Relevium's unique business model focuses on strategic acquisitions of e-retail brands, products, and technologies contributing to a healthy and active lifestyle. They're building a portfolio of brands primarily in nutraceuticals, fitness nutrition, and skin care, with an aggressive acquisition strategy.
"It's about delivering value to our shareholders while at the same time assisting people with their conditions and making them better," says Relevium CEO, Aurelio Useche. "That is the essence of our approach."
Relevium is using Atrium Innovations as a model for their merger and acquisition strategy. Atrium is a Quebec-based company that successfully executed a roll-up strategy in the health and wellness markets until it was privatized in 2013. Relevium is taking the Atrium model and adding a sizable dose of technological innovations to the mix.
Useche says one of those innovations is Relevium's razor-sharp focus on e-commerce, which helps health-conscious customers switch from getting products over the counter, to straight out of their browser. Worldwide, the health and wellness sector is a $3.7 trillion industry. Online sales of health and wellness products currently sit at about 10% of sales and are forecast to grow at a rate of 17% per year — making it a fast-growing and sustainable market.
Another technological innovation in Relevium's pipeline is Big Data/Artificial Intelligence (AI). Using these, Relevium plans to identify trends in the health and wellness space before they take off. Whether it's charcoal toothpaste or some other up-and-coming product, they can spot it, buy it, or develop their own product line and market it quickly.
Also moving at high speed is Relevium’s growth strategy. The company’s goal is to achieve an acquisition every six months. They have a pipeline of eight potential merger and acquisition targets, whose revenues total over $130 million CAD and $24 million CAD (EBIT). Each target has an average EBIT rate of approximately 30 per cent.
Useche and the Relevium Board of Directors' formula for a healthy, growing company involves a thorough assessment process of all acquisition targets. Before acquiring a company, they evaluate it to ensure it's properly valued, is profitable with growing revenues, and the purchase price has to be right.
Once the new company is integrated, the Relevium team goes to work to optimize revenues by building brand awareness and driving traffic to it across multiple platforms. The goal is to significantly increase sales and profits once the target firm is integrated into the company. Often, they'll also add new product lines.
A case in point is Relevium Technologies' recent acquisition of BioGanix, a U.S. based natural health solutions company that supplies a wide range of cutting-edge weight-loss, health, beauty improvement, and fitness supplements products. The company has some of the best-selling products in the Health and Personal Care category on Amazon, and has built a loyal customer base. It generates $5 million CAD in gross revenues and has a cash flow of $1.3 million CAD from its existing product pipeline. Some 90% of sales are channeled through Amazon and 10% from their Shopify e-commerce platform.
Relevium acquired BioGanix for $5.8 million CAD (3.7X EBIT) in June. The sale included BioGanix's website properties, formulations, inventory, and product pipeline. Now the company has been integrated with Relevium, the plan is to swiftly add two to four new products to the BioGanix line to help significantly increase sales and profits. The acquisition has made Relevium Technologies a profitable company that's generating, on average, $100,000 a week in revenues.
Relevium can also add value to any newly-acquired company because it has a solid management team and staff who have the scientific experience and marketing know-how to get the best out of the targets they acquire, while developing their own product line internally. The company already has 25 products being sold on Amazon.
The company also builds partnerships with other firms to expand their product lines. Relevium has just announced an agreement with Salvenia Nutrition of Montreal and Biodevas Laboratoires to develop an exclusive brand and product line of nutraceuticals and phytoceuticals targeted to pet care owners on a direct-to-consumer basis. Relevium has retained Salvenia, a leading pet and livestock nutrition company, to lead the market research and the product line formulation process.
Salvenia is also an exclusive North American distributor of Biodevas Laboratoires, a French-based leading manufacturer of veterinary phytoceutical products. Similar exclusivity will be extended to Relevium’s newly developed pet product line for e-commerce for an initial 18-month period from the first product launch date, which is expected by spring of 2018. Salvenia, with the assistance of a local nutraceutical formulation lab, will develop new products in conjunction with the existing products currently available from the Biodevas Laboratoires.
Another project in Relevium's pipeline is an agreement between the company and Hempco Food and Fiber Inc., a trusted and respected pioneer, innovator and provider of premier hemp seed foods for over 15 years. Under the terms of the partnership, Relevium is working with Hempco to launch a vegan nutrition and vegan nutraceutical line, which will be ready for sale in the fall, pending marketing studies and analysis. The exclusive relationship for e-commerce deal will increase shareholder value by adding additional products to Relevium's current product line continuing to drive additional sales.
Relevium's product line development will be guided by Big Data and AI. The firm is uniquely placed to take advantage of these high-tech sources of information since Montreal is a worldwide centre for both.
What sort of edge can Big Data, AI and machine learning give an e-commerce entrepreneur like Relevium? The ability to analyze which nutraceutical and other products are gaining traction in the marketplace on Amazon and other e-commerce platforms. Based on the trends, the company can get up-and-coming products out into the market ahead of the competition.
That’s why Relevium has engaged agileDSS, a leading strategic data services consulting firm, headquartered in Montreal, to build a "recommendation engine" designed to offer quantitative methodology to launch profitable products ahead of trends in the appropriate jurisdictions. Useche says the company intends to build artificial intelligence and machine learning solutions to ensure it's at the leading edge of the industry, and position its portfolio of brands to outperform the market peer group.
"At the moment, the product development cycle is heavily reliant on human interpretations of vast amounts of data to decide what products to launch and where to launch them," he says.
"A recommendation engine will change that. These days, you have to be able to see the next big thing coming, not react to it after it's arrived, because if it's arrived, it's already too late from a business point of view."
Useche brings over 20 years of education and experience to Relevium's management team. A graduate of the MBA program at Queen's University, he has a CPA and a CMA, as well as a Masters Certificate in Risk Management from York University's Schulich School of Business. His business experience ranges from manufacturing, mining exploration, consumer goods, and entertainment. His roles past have included being COO and CFO in addition to being Relevium's CEO.
Michel Timperio, a veteran of the health and wellness sector and President of the cannabis business of Neptune Wellness Solutions, says Relevium's focus on acquiring profitable entrepreneurial brands on a portfolio basis to diversify risk is a winning formula in his book.
"It's a four-step process," says Timperio, who is also on the Relevium Board of Directors.
"You acquire, you optimize, create brand equity, grow organically, and then repeat. Relevium has the team, talent and know-how to keep on doing it and that's going to maximize shareholder value.”