Acquisition of BBI Healthcare Limited

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018.

For immediate release

Venture Life Group PLC

("VLG" or the "Company")

Acquisition of BBI Healthcare Limited

Venture Life Group PLC (AIM: VLG), a leader in developing, manufacturing and commercialising products for the international self-care market, announces that is has acquired BBI Healthcare Limited ("BBIH"), a global market leading Women's Health and Energy Management/Diabetes company, for a total consideration of up to £36.0m.  The acquisition of BBIH, which is expected to be immediately earnings enhancing, is from BBI Diagnostics Group Limited (the "Seller"), a company ultimately majority owned by Exponent Private Equity.

The Board consider the acquisition of BBIH is one of high strategic value for VLG.  BBIH joins the VLG Group as a growing and profitable business in its own right as well as presenting the opportunity for meaningful cost and revenue synergies to be realised.  Furthermore, and of significant strategic value to VLG, the acquisition of BBIH establishes VLG in two new high interest areas of Women's Health and Diabetes/Energy Management.

BBIH and its subsidiaries, headquartered in Crumlin, South Wales, has a manufacturing facility in Gnesta, Sweden, employs 21 people across the UK and Sweden and benefits from a strong management team, the majority of whom will transition to VLG as part of the acquisition.

BBIH produces and markets products within two key consumer healthcare segments of Women's Health and Diabetes/Energy Management.  In Women's Health, BBIH has the Balance Activ^â brand for the treatment of bacterial vaginosis ("BV") and also sells this product under customer brand names through a number of international partners.  In Diabetes/Energy Management BBIH has two brands of glucose supplements: Glucogel^â, which is prescribed for hypoglycemia and Lift^â, which is a range of glucose gels, shots and chewable tables.

Balance Activ is the leading UK brand for the BV indication by volume and Glucogel is the number one glucose gel prescribed in the UK for hypoglycemia.  Balance Activ and Lift are sold directly to retailers in the UK, including Boots, Superdrug and Tesco, as well as being available for purchase on Amazon UK.   Glucogel is primarily sold through pharmacy chains and independent pharmacies throughout the UK.  BBIH owns all the IP associated with these brands and its products are currently sold or partnered across 27 countries. The BV product has historically been sold as a gel but BBIH has recently developed and launched a nascent patented pessary formulation of the product.

Balance Activ is also sold through a number of well-known partners internationally under customers' brand names, where the product is currently marketed in 25 countries. In addition, BBIH recently developed a new Women's Health product, and in April 2021 signed a new agreement with a prominent international partner for the distribution of this product to be launched under their own well-known brand in a number of countries (in Europe, USA & China).  The first orders for this product have already been shipped in H1 2021.

For the year ended 31 December 2020, BBIH generated adjusted EBITDA of £2.6m (reported EBITDA £2.3m) on revenues of £10.2m. Net assets at 31 December 2020 were £2.4m. During the last quarter of 2020 and the first half of 2021, a number of areas of new business were put in place at BBIH that, whilst not impacting the 2020 numbers, the Board of VLG expects to deliver meaningful impact during 2021 through revenue growth and a corresponding material positive impact on 2021 profitability.  Amongst other things, this revenue growth is expected to be generated from the nascent BV patented pessary product and the new Women's Health product, as they launch with partners in new territories.  In addition to these recent product initiatives, the VLG Board has identified a number of immediate post acquisition cost synergies that are expected to further enhance BBIH's profitability as part of VLG.  The Board also expects the Group to benefit from future cross selling opportunities between BBIH and the existing VLG products and customers.

The Board of VLG considers that BBIH is highly complementary to VLG's strategy, fits well with VLG's stage of development and will propel VLG to a leader in the Women's Health and Energy Management/Diabetes categories.  The Board believes that VLG will be able to derive significant benefits from applying the operating leverage it has within the Company to BBIH and that the acquisition is consistent with the Group's long held strategy of growth by both organic and acquired means.

The total consideration payable is up to £36m made up of £35m in cash on completion (being £25.4m in respect of the BBIH shares and the balance by way of payment of amounts due to the Seller), and deferred consideration of a further £1m, payable to the Seller on receipt of FDA approval for the new Women's Health product for the US market. The consideration will be funded from VLG's existing cash resources. The Company expects to have a revolving credit facility in place shortly after completion of the transaction.

Jerry Randall, CEO commented: 'I am delighted to announce the acquisition of BBIH.  This is a strong and significant strategic acquisition, and is expected to be immediately earnings enhancing for VLG.

BBIH is a well-established, growing and profitable consumer healthcare business, with a strong offering both of its own brands and also customer brands. Products are currently sold or partnered in 27 countries, with a significant direct-to-retail presence in the UK, which will add to the already significant direct-to-retail presence VLG has in the UK.

We are conscious that the headline purchase multiple against BBIH's 2020 EBITDA appears higher than our normal target, however, this is a strategic acquisition for us, and both I and the Board believe we have achieved value for money; we have acquired a growing business with multiple new revenue initiatives that are already impacting 2021 as well as a business where we have identified immediate cost savings to derive further value and one that soundly establishes us in two new verticals.  In addition to this, we expect to realise attractive revenue synergies.  It is, therefore, our expectation that adjusted for a full year effect of immediate cost savings (and before we have achieved any revenue synergies), the acquisition would represent a high single digit EV/EBITDA multiple for FY21 and we expect further revenue growth in 2022 and beyond.

The business comes with its own manufacturing facility in Gnesta (near Stockholm), Sweden, which manufactures the BV gel product. This facility has been heavily invested in by the Seller and possesses fully automated production machinery that is currently running at circa 20% capacity. This facility has significant capacity for volume growth and provides VLG the opportunity to increase output to meet and generate new business.

The acquisition will initially utilise the cash raised in December 2020 and afterwards we intend to put in place a revolving credit facility to repatriate some of the cash back onto our balance sheet, which will still leave significant firepower in our resources for further acquisitions, such as Project Vulcan, which is still in progress and we expect to update the market on soon.  We are very grateful for the support shown by both our existing and new shareholders in our placing in December 2020, which, by virtue of the cash it put in our balance sheet, enabled VLG to enter into discussions to acquire this exciting business, which we otherwise would have been precluded from. This is validation of our strategy that, armed with cash on our balance sheet, we can be successful in acquiring attractive assets. This exciting and growing business is primed for more growth in our hands."

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About Venture Life (www.venture-life.com)

Venture Life is an international consumer self-care company focused on developing, manufacturing and commercialising products for the global self-care market. With operations in the UK, The Netherlands and Italy, the Group's product portfolio includes some key products such as the UltraDEX and Dentyl oral care product ranges, food supplements for maintaining brain function, medical devices for women's intimate healthcare, fungal infections and proctology, and dermo-cosmetics for addressing the signs of ageing.

The products, which are typically recommended by pharmacists or healthcare practitioners, are available primarily through pharmacies and grocery multiples. In the UK and The Netherlands these are supplied direct by the company to retailers, elsewhere they are supplied by the Group's international distribution partners. 

Through its Development & Manufacturing business in Italy, Biokosmes, the Group also provides development and manufacturing services to companies in the medical devices and cosmetic sectors.

Forward-looking Statements

This news release contains forward‐looking information. The statements are based on reasonable assumptions and expectations of management and VLG provides no assurance that actual events will meet management's expectations. In certain cases, forward‐looking information may be identified by such terms as "anticipates", "believes", "could", "estimates", "expects", "may", "shall", "will", or "would". Although VLG believes the expectations expressed in such forward‐looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those projected.

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