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Advisors, Private Equity

Health & Wellness in Q1 2016: Active Lifestyles & Dietary Consciousness Drive Consumer Demand

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An aging population increasingly concerned with health and natural living is driving demand for varied subsectors within the health and wellness industry, according to SDR Ventures’ Q1 2016 report on the space. “Dietary consciousness is a leading trend for aging consumers as sales for digestive and anti-aging supplements have risen, specifically products produced with natural and organic ingredients,” according to the report.

HealthcareWellness Q1 transactions

Active Lifestyle apparel and devices – including “ath-leisure” clothing lines and devices like fitness bands and heart monitors – were responsible for many of the transactions in the sector this past quarter.   “Consumers are trending toward spending their growing disposable income on affordable athletic wear for everyday use,” according to the report. SDR also notes that the social fitness trend – “where users on social media post about workouts, meal preparation, and active lifestyle” – seems to be here to stay, driving an increasing interest in products devoted to a healthy lifestyle.

Other trends include:

  • An increasing awareness of ingredients and additives. “The role of food science is being reframed to embrace the spirit of natural products while addressing societal concerns.”
  • A return to Prestige. “Prestige Beauty is one of the fastest growing subsectors of Home Personal Care, coming off nearly a double-digit growth year in 2015… Prestige brands that utilize natural ingredients are also seeing strong growth.”
  • Fitness meets the Internet of Things. “Notwithstanding Fitbit’s recent stock performance, consumers demand for fitness bands is still high.”
  • Preventative care and personal health in the workplace. “Employers are recognizing that healthy employees are more focused, productive, and easier to retain, which is why more and more employer wellness programs are being utilized.”

Overall M&A activity in the sector is slightly below 2015 levels, with approximately 400 deals projected for 2016, compared to 500 last year. Capital invested is also down, with approximately $5 billion anticipated this year vs. $15 billion in 2015.

The sector has seen average enterprise multiples of 15.83x, compared to the S&P 500 Average of 12.69x.

Read the full report from SDR Ventures here >

 

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