Waldencast plc (Waldencast) operates in the beauty and wellness industry.
Obagi is a global skincare company that develops, markets, and sells proprietary-topical aesthetic and therapeutic prescription-strength skincare systems and related products primarily in the physician-dispensed market. Obagi provides cosmetic, over the counter (‘OTC’) and prescription products.
Milk Makeup develops and sells cosmetic, skin care and other beauty products. The brand creates vegan, cruelty-free, clean form...
Waldencast plc (Waldencast) operates in the beauty and wellness industry.
Obagi is a global skincare company that develops, markets, and sells proprietary-topical aesthetic and therapeutic prescription-strength skincare systems and related products primarily in the physician-dispensed market. Obagi provides cosmetic, over the counter (‘OTC’) and prescription products.
Milk Makeup develops and sells cosmetic, skin care and other beauty products. The brand creates vegan, cruelty-free, clean formulas from its Milk headquarters in downtown New York City. Milk’s products are offered through its U.S. website, www.milkmakeup.com, and its retail partners including Sephora in North America, Europe, the Middle East, Australia, Cult Beauty, and ASOS online.
Professional Skincare Segment: Obagi Medical
The company’s Professional Skincare segment consists of the Obagi business.
Obagi Medical originates in science and is backed by over 35 years of clinical research leveraging cutting-edge technologies and pharma-grade ingredients that deliver transformative, visible results for all skin concerns, skin types, and skin tones. The product portfolio is formulated to address the most common, visible skin concerns such as fine lines and wrinkles, elasticity, photodamage, hyperpigmentation (spots or patches of skin that are darker than surrounding areas of skin), acne, oxidative stress, environmental damage, and dehydration. The company’s portfolio today includes over 125 cosmetic, OTC, and prescription products, sold in over 80 countries around the world.
The company’s core distribution is through the physician-dispensed channel, with a large account base consisting of more than 4,000 active medical provider accounts in the United States as of December 2024, resulting in broad distribution of Obagi products. Physicians’ offices include dermatologists, plastic surgeons, medical spas, and other physicians and licensed medical professionals who buy its products and then dispense the products in-office directly to their patients. Additionally, the company also sells its OTC and cosmetic products directly to consumers (DTC) via its website and through other e-commerce channels.
Obagi Medical
The Obagi Nu-Derm System and related products accounted for a significant portion of the total products shipped in the year ended December 31, 2024, the year ended December 31, 2023, the period from July 28, 2022, to December 31, 2022, and the period from January 1, 2022, to July 27, 2022 (Predecessor Period). Sales of Obagi Nu-Derm products experience seasonality. While the company has earned a strong reputation for offering premier hyperpigmentation solutions, its portfolio has expanded over time to include a line of Vitamin C powered antioxidant products, the Obagi Professional-C line, as well as the ELASTIderm line, which leverages its patented Bi-Mineral Contour Complex technology to address elasticity and firmness in the skin. Other products within the comprehensive Obagi Medical franchise include products to address hydration, sun protection, and acne. These solutions incorporate a range of individual prescription and non-prescription therapeutic agents, as well as cosmetic ingredients to address the needs of consumers who seek advanced skincare in a customized skincare regimen designed by a professional.
Certain of the company’s products, including Nu-Derm Clear, Blender and Sunfader, as well as the Obagi-C Rx C-Clarifying Serum and C-Night Therapy Cream, which are part of the Obagi-C Rx System, contain 4% HQ. These products are marketed as prescription-only drugs, however, the company has not sought nor obtained the required premarket approval from the FDA to market these products in the U.S.
Obagi Clinical
The company's Obagi Clinical line, launched in December 2018, was designed to meet the needs of skin-tellectual consumers who may not yet regularly visit a dermatologist or skincare professional. The product line was primarily targeted for Southeast Asian markets. In connection with the restructuring of Obagi Medical’s business in Southeast Asia, in 2023, the company decided to discontinue the Obagi Clinical range and focus on selling the flagship Obagi Medical range in the region.
Sales and Marketing
Domestic
In the U.S., the company sells its Obagi Medical systems and related products to physicians, including physicians on site at medical spas, through its direct sales force. The licensed medical professionals the company sells to then dispense its products in-office, directly to their patients, a distribution method commonly referred to as the physician-dispensed channel.
All of the Obagi Medical products for the physician-dispensed channel are sold through the Physician Channel Provider, which purchases products from the company to maintain a sufficient inventory for this channel and operates and manages the ordering portal for its physician customers receives and fulfills orders, and provides customer service functions (including call center services), processes product returns, runs customer credit checks, and offers invoicing, collection, accounts receivable, and chargeback services. Although the Physician Channel Provider is considered to be the company's customer as they purchase products for physicians and customers who purchase products on the company's e-commerce platform, the company maintains control of the product inventory in their warehouse and manages the relationship with the end customer until immediately prior to their sale and does not recognize revenue for sales to the Physician Channel Provider until sell-through to the end customer.
The company also sells products to consumers via e-commerce platforms through www.obagi.com and www.amazon.com, as well as a number of other authorized e-retailers and distributors. The company intends to continue to develop these sales channels to grow its brand awareness and footprint.
International
The company addresses international markets through 36 international distribution partners that have sales and marketing activities in over 82 countries outside of the U.S., and a trademark and know-how license agreement and a license distribution agreement for the retail drug store channel in Japan. The company targets distribution partners who are capable and willing to mirror its sales and distribution model in the U.S. and who have an established business and reputation with physicians. The products that the company sells internationally are generally the same formulations as those sold in the U.S.; however, in some instances, formulations have been modified to comply with the regulatory requirements of certain countries, particularly in the U.K., Europe, and Asia. These distributors use a model similar to the company’s business model in the U.S., addressing their territories through direct sales representatives who sell to physicians, or through alternative distribution channels, depending on regulatory requirements and industry practices. The company’s distribution agreements typically grant distributors the right to distribute and sell its products to licensed medical professionals and skincare clinics within a specified territory, require them to purchase a specified minimum amount of the company’s products each year, and have a term of two to five years.
Similar to the company’s domestic sales channels, it intends to increasingly develop its online and e-commerce distribution channels and generally reserve the rights to distribute the company’s products through other channels and e-commerce in such territories.
In March 2023, as part of the company’s strategy to internalize distribution channels in key markets, certain of Obagi’s subsidiaries entered into and consummated a Purchase Agreement (the Vietnam Purchase Agreement) with Obagi Vietnam and the company’s Southeast Asia Distributor (SA Distributor), pursuant to which, among other terms, Obagi acquired certain assets of Obagi Vietnam from the SA Distributor and in return, the SA Distributor received forty percent (40%) of the outstanding equity of Obagi Blue Sea Holding, LLC, an indirect subsidiary of Obagi and the parent company of Obagi Vietnam. The Vietnam Purchase Agreement also provided the SA Distributor with a potential earnout payment based upon the net revenue of the business of Obagi Vietnam during the twelve months ending December 31, 2026, subject to setoff for any owed obligations. The acquisition was determined to be an asset acquisition with the primary asset being the recovery of $1.6 million of inventory held by the SA Distributor. Further, the company concluded that it was unlikely that the earnout projections were going to be attained and therefore did not record an earnout liability. Due to non-performance by the SA Distributor of its obligations pursuant to the Vietnam Purchase Agreement and certain other matters, it took further steps in 2023 to restructure the business of Obagi Vietnam by hiring a new local management, finance and sales team to replace the previous SA Distributor team, entering into new on line and off line distribution agreements with reputable partners and re-applying for all product registrations, which were obtained in June 2023. In June 2024, Obagi entered into a Settlement and Release Agreement with the SA Distributor, which, among other things, extinguished the SA Distributor’s right to receive an earnout and the SA Distributor’s 40% interest in the outstanding equity of Obagi Blue Sea Holding, LLC.
The company intends to continue expanding its international presence in key locations, such as Asia, Europe and South America, by entering into strategic relationships or building its own distribution structure.
Licensing
In Japan, the company built an alternative model to build a presence and brand awareness for its products. It entered into a Trademark and Know-How License Agreement with Rohto to market and sell products in Japan using the Obagi brand name. Under the current agreement, Rohto is licensed to manufacture and sell a series of OTC and cosmetic products developed by it under the Obagi brand name in the Japanese drug store channel, for which it pays the company a license fee. In 2008, the company expanded that relationship to provide for collaboration on the development of new products and to pursue the higher-end department store channel in Japan.
Concurrently with the Business Combination, on the Closing Date the company entered into an Intellectual Property License Agreement (the ‘IP License Agreement’) and Global Supply Services Agreement (the ‘Supply Agreement’) with Obagi Hong Kong for the sale of Obagi products throughout the China Region. Under these agreements, the company will supply, or cause to be supplied through certain CMOs (as defined in the Supply Agreement) Obagi Medical products to Obagi Hong Kong and its affiliates, and Obagi Hong Kong will purchase such products, with the exclusive right to distribute and sell such products in the China Region.
Competition
The company’s main competitors are Unilever P.L.C., Coty Inc., e.l.f. Beauty Inc., L’Oreal S.A., LVMH Moet Hennessy Louis Vuitton SE, The Estee Lauder Companies Inc., P&G, Revlon Inc., and Shiseido Company, Limited.
Manufacturing
In the U.S., the company uses FDA-compliant CMOs who specialize in the manufacture of prescription and OTC pharmaceutical and/or cosmetic products. The CMOs manufacture products pursuant to its specifications. All of the company’s CMOs are required by law to comply with cGMPs.
Bausch Health, which formerly owned the business of Obagi Medical, is its only supplier and manufacturer of tretinoin. The company has a contract with Bausch Health that has an initial termination date in 2027.
Clean Makeup Segment: Milk
The company’s clean Makeup segment consists of the Milk Makeup business.
Milk Makeup was launched in 2016 with the goal of building a global movement to challenge and broaden the definition of beauty. Milk Makeup is a leading, award-winning clean prestige makeup brand with unique products, a strong following among Gen-Z and Gen-Alpha consumers and an emerging global presence.
The brand is currently distributed online via www.milkmakeup.com, in omni-channel retail through Sephora (in the U.S. (including Sephora at Kohl’s), Canada, EU, Middle East, India, and Australia), and on Amazon (in the U.S., Canada, United Kingdom, and Germany). In the U.K., the brand is distributed at Sephora, Space NK and online at Cult Beauty and ASOS.
Milk Makeup offers a portfolio of over 250 makeup and skincare SKUs. The company currently has bestselling products at Sephora in the U.S. in the primer, blush, and setting spray categories with its Hydro Grip Primer, Hydro Grip Set & Refresh Spray, Cooling Water Jelly Tint, and Lip + Cheek. It also has strong positions in the bronzer category with Matte Bronzer, the mascara category with Kush Mascara, and the brow category with Kush Brow, showcasing the versatility of the brand. The company currently has offerings in the foundation and concealer categories, as well as liner, eyeshadow, and lip color.
Sales and Distribution Strategy
Milk Makeup has had a strong exclusive relationship with Sephora covering most markets, including the U.S., Canada, Europe, the Middle East, India, Australia, and New Zealand. Selling through Sephora has also allowed the company to internationalize efficiently due to the synergies within the Sephora ecosystem in terms of common management, terms, and merchandising. For the year ended December 31, 2024, Milk Makeup’s international retail revenue accounted for a substantial portion of its total net revenue. Milk Makeup has entered into distribution or vendor agreements with Sephora North America, Sephora Canada, Sephora Middle East, and Sephora Australia and New Zealand. Pursuant to those agreements, the company grants Sephora the exclusive right to import and distribute its selected products within the territories described in the agreements. In addition, those agreements contain a term of exclusivity of up to three years, which can be automatically renewed by either party. Each of these agreements can be terminated without penalty by either party by giving advance written notice to the other party. None of the company's agreements with Sephora contain any minimum purchase requirements.
As of December 2024, Milk Makeup was present in approximately 1,430 Sephora locations in the U.S. and 100 in Canada, including Sephora inside JCPenney and Sephora at Kohl’s locations. In Europe, Milk Makeup was present through Sephora in France, Germany, Spain, Sweden, Denmark, India, Italy, Poland, Portugal, Switzerland, Greece, the Czech Republic, as well as the Balkans and Turkey.
The company’s e-commerce site, www.milkmakeup.com, is a direct-to-consumer, platform that currently ships across the U.S. For the year ended December 31, 2024, milkmakeup.com accounted for an insignificant portion of its net revenue.
Competition
Milk Makeup also competes directly with privately held brands, including ONE/SIZE, Merit Beauty, Pat McGrath Labs, Ilia, Kosas, Rare Beauty, Anastasia Beverly Hills, Huda Beauty, Forma, Saie, Tarte, and Tower 28. Merit Beauty, Ilia, Saie, Kosas, and Tarte, which are also clean beauty brands and have partnerships with Sephora, are the key competitors of Milk Makeup.
Intellectual Property
Milk Makeup’s primary intellectual property includes its brands and trademark rights, including the Milk Makeup brand, which has significant consumer recognition.
The company has trademarks registered and applications pending throughout the world for its stylized logos in Australia, Bahrain, Brazil, Canada, China, the EU, Hong Kong, India, Indonesia, Israel, Japan, Kuwait, Malaysia, Mexico, Qatar, Russia, Saudi Arabia, Singapore, South Korea, Thailand, the UAE, the U.K. and the U.S. From time to time, the company applies to register trademarks for its other brands in the U.S. and other countries. The registrations of these trademarks in the U.S. and foreign jurisdictions are generally effective for terms of ten years and require periodic renewals, which for its trademark registrations in the U.S., are presently scheduled between 2027 and 2031. In addition to trademark protection, Milk Makeup owns numerous domain name registrations, including milkmakeup.com. The company does not have any issued patents or pending patent applications.
Seasonality
Milk Makeup’s business is subject to moderate seasonal fluctuations driven by retail consumer purchasing habits and timing of purchases by the company’s retail customers.
Government Regulation
The company’s products are subject to regulation by the U.S. Food and Drug Administration (FDA) e Federal Trade Commission (FTC) and comparable state, local and foreign regulatory authorities and, over time, the regulatory landscape for the company’s products has become more complex with increasingly strict requirements.
The FTC, FDA, and other governmental authorities also regulate advertising and product claims regarding the safety, performance and benefits of the company’s products. The company’s advertising for products is also regulated by the FTC under the Federal Trade Commission Act.
The company’s products are also subject to regulation by the CPSC under the provisions of the Consumer Product Safety Act, as amended by the Consumer Product Safety Improvement Act of 2008. These statutes and the related regulations ban consumer products that fail to comply with applicable product safety laws, regulations and standards.
History
Waldencast plc was founded in 2020. The company was incorporated in 2020.
