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May 5, 2021, 7:31 a.m. EDT

Honest Co. IPO: 5 things to know about Jessica Alba’s ‘clean’ baby, beauty and household company before it goes public

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Tonya Garcia

The Honest Co., the company founded by actress Jessica Alba in 2012 with the conscious consumer in mind, has filed to go public.

The company is expected to start trading Wednesday on the Nasdaq under the ticker “HNST.”

The company late Tuesday priced its IPO at $16 a share , near the top of its $14-to-$17 range. A total of 25.81 million shares are being offered in the IPO, with the company offering 6.45 million shares to raise $103.2 million and selling shareholders offering 19.36 million shares to raise $309.8 million. The company expects to have 90.52 million shares outstanding after the IPO. 

The company is valued around $1.45 billion.

Lead underwriters for the initial public offering are: Morgan Stanley, JPMorgan and Jefferies.

See: Oatly IPO: 5 things to know about the plant-based dairy company before it goes public

Alba said in a founder’s letter included in the prospectus that the idea for Honest Co. /zigman2/quotes/226449347/composite HNST +1.68% came from her own experiences treating allergies and asthma, including long hospital stays, and her efforts to lobby legislators on Capitol Hill for chemical legislation reform.

Today, she serves as chief creative officer of the Los Angeles-based company and Nikolaos Vlahos, is chief executive. Vlahos joined Honest Co. in 2017 after working at Clorox Co. /zigman2/quotes/206443229/composite CLX -0.96% , where he was chief operating officer of household, lifestyle and core global functions.

Honest Co.’s revenue in 2020 totaled $300.5 million, up from $235.6 million in 2019. The company had a net loss for the year of $14.5 million.

Honest Co. has products across three categories: diapers and wipes, which represented 63% of 2020 revenue; skin and personal care, which rang up 26% of revenue in 2020; and household and wellness, with 11% of 2020 revenue.

Honest Co. is classified as an “emerging growth company,” which means it does not have to make the same disclosures required of bigger public companies. A business remains an emerging growth company until it reaches a number of milestones, including annual revenue of more than $1.07 billion.

The company warns that it has incurred net losses each year since it launched, and will likely increase expenses as it expands and grows.

Also: Nestle in talks to buy The Bountiful Co. before IPO

However, the company notes that, with consumer interest in health and wellness and “clean” products, it is doing business in growing categories.  Honest Co. estimates that in 2019 the U.S. clean and natural diaper category generated about $1 billion; skin and personal care generated $12 billion; and household and wellness totaled $4 billion in retail sales.

The compound annual growth rate (CAGR) of those three categories between 2019 and 2025, respectively, is expected to be 16%, 10% and 4%.

Honest Co. estimates that its market share is about 5% “providing significant room for growth,” the prospectus said.

Honest Co. is also digitally native at a time when consumer shopping behavior is trending online. In 2020, 55% of revenue was generated online and 45% through retail channels.

/zigman2/quotes/226449347/composite
US : U.S.: Nasdaq
$ 10.91
+0.18 +1.68%
Volume: 828,491
Sept. 22, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$968.62 million
Rev. per Employee
$1.57M
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/zigman2/quotes/206443229/composite
US : U.S.: NYSE
$ 162.19
-1.58 -0.96%
Volume: 1.06M
Sept. 22, 2021 4:00p
P/E Ratio
29.23
Dividend Yield
2.86%
Market Cap
$20.11 billion
Rev. per Employee
$815,667
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