Why Prestige Consumer Healthcare Is Struggling In The New COVID-19 E-Commerce Centric World

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About: Prestige Consumer Healthcare Inc. (PBH)
by: Ben Axler
This article is exclusive for subscribers.
Ben Axler
Hedge fund manager, long/short equity, tech, large-cap
Summary

Prestige Consumer Healthcare is a non-value accretive roll-up of OTC Healthcare consumer products. In the new COVID-19 environment, we believe it is a net-loser due to its weak e-commerce profile.

PBH's CFO and entire financial and accounting team came from Boulder Brands, a similar roll-up that collapsed after resetting expectations lower, impairing assets, and seeing its management team resign.

There are many similar behavioral characteristics being observed at PBH that foreshadowed the collapse of Boulder Brands; declining disclosures, financial reporting changes, and accounting changes.

Nielsen data, recent channel checks, and subtle data points from PBH's recent investor calls and yesterday's proxy filing omitting long-term targets indicate that financial stresses are increasing.

PBH trades at a premium to the sum of its acquire parts, and management has repeatedly failed to deliver organic growth. Consensus expectations are still too high. It's time for the CEO and CFO to resign. We estimate a 40-60% downside risk.

Executive Summary

Report Entitled: "Time to Nix Management"

We are pleased to issue a report outlining our concerns why Prestige Consumer Healthcare, Inc. (PBH, "Prestige Brands", or "the Company") faces 40-60% downside risk