A life-science company that packed up shop and moved the bulk of its business to the South Carolina coast from the mountainous West a few years ago has taken another big leap.
Only not quite as big as it had hoped.
Supplements researcher and manufacturer Thorne HealthTech Inc. launched its initial public offering last week, but not before dramatically downsizing the size of the deal.
The company had been hoping to haul in as much as $135 million by selling shares for as much as $15 each. It backed off that number last week and ended up raising $70 million.
The Nasdaq-listed shares started trading when the opening bell rang Thursday under the symbol “THRN” and stumbled badly out of the gate, falling 24 percent by the end of the session.
It was a decidedly chilly market debut for a company that’s aiming to make deeper inroads into the growing and highly fragmented personal health-and-wellness industry, where no single player has amassed more than 5 percent of the market, according to Thorne’s calculations. A report by Grand View Research earlier this year forecast the size of the dietary supplement business to nearly double to $271 billion by 2028 from $140.3 billion in 2020.
Against that backdrop, Thorne said its goal is to redefine “consumer health and building a brand with science-backed personalized products that meet the highest standards of quality, safety and efficacy.”
“We have a significant opportunity to continue to penetrate the product categories and channels we compete in today,’” according to its IPO filings.
The stock offering is the latest step in that plan. Up to $20 million of investor proceeds. along with existing cash reserves, will fund the development and testing of new dietary supplements as well as the company’s recently acquired Onegivity Health clinical research platform. As much as $30 million will go toward sales and marketing initiatives and Thorne’s expansion into new global locations. The rest will be used to pay off debt from a Japanese lender that matures next year and for other general purposes.
“Our organization has never been more excited about the future growth potential for and impact of our company as we are today,” CEO Paul Jacobson wrote in a letter to prospective investors.
While it lists New York City as its home office, Thorne is essentially a South Carolina business.
It was nearly five years ago when the company announced plans to move most of its key operations to a new 270,000-square-foot building in Summerville from northern Idaho. The deal included a $35 million capital investment and 350 jobs of all varieties.
“This facility consists of manufacturing and production, research and development, medical affairs, engineering, quality management, laboratory testing, brand marketing, inside sales, customer service, finance, legal, human resources, warehousing and materials management, procurement and safety functions,” Thorne said in a recent filing with the Securities and Exchange Commission.
It also noted that it recently inked a new five-year lease for an additional 115,500 square feet of storage and distribution space in Summerville.
“This will expand our finished goods warehousing and shipping capabilities to the eastern United States and international markets,” the company said.
The business went by Thorne Research when it embarked on its cross-country relocation quest in 2014. By then, it had outgrown its manufacturing base in Sandpoint, Idaho, and wasn’t sure it could add onto its building or even extend its lease. Over the next two years, it scouted dozens of sites around the country. The Lowcountry and York County near Charlotte emerged as the two top contenders.
Jacobson thought the Charleston region would be appealing to customers and other visitors. Also, Thorne thought it was a plus that the area was growing and home to several colleges, an established medical research community and a major U.S. seaport.
“It didn’t hurt any that Charleston is a culturally diverse and interesting place,” Jacobson said in a 2016 interview. “That’s important to us because it allows us to attract the kind of people we want to recruit.”
The former Goldman Sachs banker forged an equally unconventional path to the corner office at Thorne, which was started in Seattle in 1984 and relocated six years later to Sandpoint, not far from Spokane in eastern Washington. He recounted in his investor letter how he came to acquire the business with some partners in 2010, inspired in part by a former drug industry boss he met while serving on a board of directors.
“He was tired of me asking how big pharma could turn compounds that barely outperformed placebo or natural products into multibillion-dollar drugs, and one day turned to me and said, ‘If you think you’re so smart, go start a natural products company.’ He said that in order to do it right we would need to compile clinical data to demonstrate the efficacy of a more natural approach to health. … This sparked my interest to determine whether he was correct, driving me to spend several years researching the natural product industry,” Jacobson wrote.
Thorne now develops, manufactures and ships about 300 different supplements, health testing kits and other wellness products that it sells to 3 million customers through wholesalers, retail stores, online resellers and a growing subscription business. The company also said it works with 42,000 health care professionals and thousands of pro athletes.
The IPO documents put some hard numbers on the Thorne’s financial trajectory.
Sales jumped 35 percent last year to $138.5 million, suggesting the company benefited from the health-and-fitness boom that emerged during the COVID-19 crisis.
And while Thorne hasn’t turned a net profit on an annual basis — it lost $4 million last year — it was in the black as of June 30 by a margin of $4.4 million. Meanwhile, revenue continues to climb sharply, rising 38 percent from the first six months to $87.4 million.
“We have experienced significant sales growth of our supplements and health tests through the acquisition of new customers and strong customer retention,” Thorne said.
While its debut on Wall Street was a bit on the cold side, Wall Street appeared to warm up a bit to the newcomer on its second day in the public markets. Shares rebounded 10 percent Friday to close at $8.35.