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Thorne HealthTech

  • sam patrick posted an article
    Thorne Healthtech makes name for itself globally from base in Charleston, SC see more

    Compliments of Investment Monitor

    After visiting 100 potential sites across eight different states, nutraceutical company Thorne HealthTech began a huge relocation to Charleston, South Carolina, in 2014 and has never looked back. Here, Thorne COO Tom McKenna explains what drove its decision and subsequent success.

    There are many reasons why a life sciences business might make the monumental decision to relocate their company’s headquarters or manufacturing base either nationally or internationally. Choosing exactly where to move is a significant challenge that requires extensive research, visits and careful evaluation.

    This was a challenge that Tom McKenna, chief operating officer at Thorne HealthTech, faced first-hand when he led the company’s relocation some 3,500 miles (5,600km) across the US, from a small town in northern Idaho to one within greater Charleston, South Carolina. Here, he shares his experience of the big move and why he feels the relocation was more than worthwhile. 

    Thorne was founded in 1989 as a manufacturer of premium-quality nutritional supplements. We have since created digital health solutions providing diagnostics and analytics to identify unmet nutritional deficiencies and provide world-class wellness and prevention education. Our goal is to help people at all stages of life to live and age more gracefully.

    We believe the future of wellness is personal. For the first time in history, with the cutting-edge advancements in sequencing technology, artificial intelligence and nutritional research, we can now efficiently offer personalised approaches to wellness, which were previously reserved for late-stage disease care or academic research. We strive to be the differentiated leader in the wellness industry by deploying our scientifically rigorous approach to supporting personalised health and wellness.

    What prompted the move from Idaho and what were you looking for in your new location?

    In 2013, we recognised that by 2018 we would be out of capacity at our manufacturing facility. While there was plenty of available land in the area, our decision not to expand locally was based on utility capacity, lack of local labour and challenges in attracting talent, as well as the significant distance from the airport and major roadways.

    We first looked at around 1,000 different options across all 50 states. We narrowed it to 100, and I personally visited every one of those over a two-year period. During that time, we were introduced to South Carolina’s then governor of state, [Nikki Haley]. She suggested the Charleston region and we looked at some sites. The place we ended up was a no-brainer compared with all the other options. After two years of trying to find a home, when we finally came to Charleston we thought ‘that’s it’!

    The key criteria in our decision-making included a business-friendly environment; a robust, affordable and available talent pool with comparable salaries to Idaho; proximity to the local airport and major transit ways; an appealing area for staff to relocate; and attractive state and local incentives. Charleston ticked all these boxes.

    What are the risks during a business relocation and how did you mitigate these?

    One risk is losing or damaging a critical asset or transitional requirement among the significant multitude of moving parts. This required detailed, almost military-like planning and execution to move some 2,500 pieces of equipment, furnishings and tens of thousands of inventory items.

    Thorne HealthTech’s corporate office and manufacturing site is located at 620 Industrial Blvd, Summerville, South Carolina. (Photo courtesy of Thorne HealthTech)

    To make sure there are no operational disruptions, you also need a certain critical mass of existing staff to move with you, in many cases early, and to stay at least for a while to initiate operations, recruit and train new staff. We worked with Charleston’s economic development organisation called Charleston Regional Development Alliance (CRDA). CRDA helped facilitate and participate in 14 ‘familiarisation’ trips for a total of 140 employees and nearly 300 persons. We would kick the trip off with a seminar on the area and the community, led by CRDA. We would then hop on a bus and CRDA would take us on a three-hour tour around different neighbourhoods and areas, down to the beach and out for a barbeque.

    It was very informal and almost familial, and to their credit they showed up 14 times to do these things, each time with welcome bags. CRDA was very helpful in getting folks to see the value of the local community. In fact, CRDA was critical in helping us convince 40% of our Idaho-based staff to relocate to South Carolina. When we got here, they were very helpful on the hiring side too.

    What attracted your employees to the Charleston region?

    What the greater Charleston area provides is a culture that is perhaps not a lot different from the Pacific Northwest. Our employees love to be in the outdoors – they love to hunt, fish, camp and hike. You can do all those things that you could do in Idaho here in Charleston. The big difference is that instead of doing those things in a short window in the summer, in Charleston you can enjoy them for 12 months of the year, thanks to the climate.

    The ocean was another big attraction for folks, as was the proximity to multiple downtowns. In Idaho, the closest city was a two-hour drive away. Here, you can generally be in downtown Charleston in 30 minutes or less, depending on where you live. At the same time, it is not a huge metropolitan area like New York City, Philadelphia or Washington DC, for example.

    Are there any ways Thorne HealthTech is more competitive with operations in Charleston?

    We are now able to attract more diversified and talented staff, in greater numbers. The proximity to the airport and interstate highway transit has greatly reduced our freight costs and improved our supply chain management and timelines. When we wanted to ship and receive materials in northern Idaho, the largest interstate was an hour away. Here, it is just blocks away.

    Our new facility and others we are now expanding into have materially improved our productivity and lowered the cost of operations. We now produce more items in-house and have greater control over our supply, and as a result have dramatically reduced our order fulfilment timelines, which are now comparable to Amazon. We continue to feel we made the right decision in our move to Charleston.

  • sam patrick posted an article
    Thorne undertakes IPO for growth in SC see more

    Compliments of Post and Courier

    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. 

     September 27, 2021