Disclosure: Delivra Health Brands Inc. has paid FRC a fee for research coverage and distribution of reports. See last page for other important disclosures, rating, and risk definitions.
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Price and Volume (1-year)
* Delivra Health has paid FRC a fee for research coverage and distribution of reports. All figures in C$ unless otherwise specified. See last page for other important disclosures, rating, and risk definitions.
Overview
Products
DHB’s product portfolio consists of sleep aid/anxiety relief formulations, and pain relief products
Follows an asset-light model by outsourcing manufacturing and packaging to established entities in North America
Two Primary Brands: Dream Water (sold in the U.S./Canada/the Middle East), and LivRelief (sold in Canada)
Dream Water drove ~90% of revenue this quarter, vs 84% a year ago
Extensive Distribution
Source: Company
Available at 30k+ outlets in the U.S., and Canada, including major retailers, airports, and pharmacy chains
Financials (Year-End: June 30th)
Q2 revenue fell 12% YoY, 14% below our estimate, mainly due to weaker Canadian sales, which management attributes to the timing of large customer orders
YTD direct-to-consumer e-commerce sales rose 27% YoY, indicating strong engagement and repeat purchasing
* Historically, quarterly revenue has been volatile due to the timing of orders from large customers
Gross margins declined 7 pp YoY, missing our estimate by 2 pp, mainly due to lower revenue; management noted that vendor pricing, customer mix, and product mix also affected margins, though details were undisclosed
SG&A expenses rose 3% YoY, but came in 2% below our estimate, a positive sign of cost control
Source: Company Filings, FRC
Marketing expenses fell 5 pp YoY to 16% of revenue, following last year’s unusually high spend on a major marketing program; for context, industry peers spend 10–20% of revenue
EBITDA declined due to lower revenue, and gross margins
Although EPS improved YoY, from ($0.03) to ($0.01), due to lower depreciation expenses, it still fell short of our forecasted modest profit of $0.001/ shar
Balance sheet remains healthy
Source: Company Filings, FRC
No outstanding options/warrants are in-the-money
FRC Projections and Valuation
Source: Company Filings, FRC
Following weaker-than-expected Q2 results, we are revising down our revenue and EPS forecasts, and now expect EPS to turn positive next year instead of this year
DCF Valuation
Source: FRC
As a result, our DCF valuation declined from $0.86 to $0.75/share
Comparables Valuation
Source: FRC/S&P Capital IQ
DHB is the most undervalued stock on our list within the Personal Care Products sector
Comparables Valuation
Source: FRC/S&P Capital IQ
The average sector forward EV/Revenue is down 11% since our previous report in November 2025
DHB is trading at a 69% discount to comparables (previously 54%)
Using the average sector EV/Revenue, we arrived at a comparables valuation of $0.45/share (previously $0.59/share)
We are reiterating our BUY rating, while adjusting our fair value estimate from $0.73 to $0.60/share (the average of our DCF and comparables valuations). Despite Q2 revenue weakness and margin pressure, we believe DHB’s strong e-commerce growth, near-term profitability, and undervalued balance sheet highlight significant upside potential.
Risks
We believe the company is exposed to the following key risks (not exhaustive):
We are maintaining our risk rating of 3 (Average)
APPENDIX
