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ChromaDex Corporation Reports Third Quarter 2023 Financial Results

Total net sales of $19.5 million, a gross margin of 61.4% and a net loss of $1.0 million while achieving a positive Adjusted EBITDA of $0.5 million and positive operating cash flows for the three months ended September 30, 2023.

ChromaDex Corp. (NASDAQ: CDXC) today announced financial results for the third quarter of 2023.

Third Quarter 2023 and Recent Highlights

  • Total net sales were $19.5 million, with $17.4 million from Tru Niagen®, up 14% and 19% from the prior year quarter, respectively.
  • Strong gross margin of 61.4%, an increase of 160 basis points, compared to 59.8% from the prior year quarter.
  • Sales and marketing expense as a percentage of net sales was 31.0%, an improvement of 340 basis points, compared to 34.4% from the prior year quarter.
  • Net loss was $1.0 million or $(0.01) per share, remaining stable compared to the prior year quarter, a notable achievement as the prior year's results included the one-time Employee Retention Tax Credit recognition of $2.1 million ($0.03 per share).
  • Adjusted EBITDA, a non-GAAP measure, was a positive $0.5 million, a $1.7 million improvement from the prior year quarter.
  • In August 2023, launched Tru Niagen® on iHerb, a global destination for supplements, expanding ChromaDex’s worldwide reach.
  • Clinical study published in August 2023 in the peer-reviewed journal Cell Reports found that supplementation of NR effectively reduced inflammation in both healthy subjects and immune cells derived from psoriasis patients.
  • In October 2023, launched Tru Niagen® 1,000 mg, the most researched dosage in clinical studies, empowering customers to elevate their NAD levels by up to 150% after three weeks.
  • In October 2023, Zesty Paws, a prominent name in pet supplements, partnered with ChromaDex to launch a Healthy Aging NAD+ Precursor supplement for pets, featuring Niagen®. This partnership marks the entry into the longevity category for pets and extends the power of Niagen® to animal companions.

“We had a solid quarter, delivering 14% year-over-year revenue growth, a net loss of only $1.0 million, positive Adjusted EBITDA of $0.5 million, and positive operating cash flows for the third consecutive quarter, ending with $26.8 million in cash and no debt,” said ChromaDex Chief Executive Officer, Rob Fried. “These results serve as a testament to our commitment to financial discipline and operational efficiency. ChromaDex is in its strongest financial position to date, and we expect to unlock commercial opportunities driven by new innovation in 2024 and beyond.”

Results of operations for the three months ended September 30, 2023 compared to the prior year quarter

ChromaDex reported a net sales increase of 14%, or $2.4 million, to $19.5 million. The increase in total net sales was driven by growth in Tru Niagen® sales, partially offset by lower Niagen® ingredient sales.

Gross margin percentage improved 160 basis points to 61.4%. The improvement in gross margin percentage is primarily driven by supply chain management optimization efforts, including improvements in yield loss, and benefits from economies of scale, partly offset by changes in business mix.

Operating expense decreased 1%, or $0.2 million, to $13.1 million due to a $0.3 million reduction in general and administrative expense, partially offset by a slight increase in sales and marketing expense.

Net loss was $1.0 million, or $0.01 loss per share, consistent with the net loss of $1.0 million or $0.01 loss per share for the third quarter of 2022. Notably, the third quarter of 2022 included a one-time recognition of the Employee Retention Tax Credit recognition of $2.1 million, or $0.03 per share, further underlining the improvements in performance this quarter compared to the prior year quarter. Adjusted EBITDA, a non-GAAP measure, was a positive $0.5 million, a $1.7 million improvement from the third quarter of 2022. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of non-GAAP Adjusted EBITDA to net loss, the most directly comparable GAAP measure.

Net cash inflow from operating activities was $6.5 million for the nine months ended September 30, 2023, showing a significant improvement compared to a net cash outflow of $14.8 million in the prior year. This improvement can be attributed to a $10.1 million reduction in net loss and positive cash impacts of $4.1 million from inventory management, $3.0 million from lower prepaid expenses and other assets, $1.5 million from reduced trade receivables, $1.6 million from higher accrued expenses and $0.9 million from higher provisions for doubtful trade receivables.

2023 Full Year Outlook

Looking forward, for the full year, the Company expects between 14% - 16% revenue growth year-over-year, driven by its global e-commerce business, steady growth from new and existing partnerships, upside realized from new partnerships in the first nine months of 2023 and realistic opportunities in the pipeline for the fourth quarter of 2023. The Company projects that gross margin will remain stable year over year as cost savings initiatives and benefits from economies of scale are expected to largely offset continued inflationary pressures. Moreover, further optimization, coupled with new and focused customer acquisition strategies are expected to result in reduced selling and marketing expense as a percentage of net sales. The Company plans to increase investments in research and development to drive innovation, and expects general and administrative expense to be flat to down $1 million year over year.

Investor Conference Call

A live webcast will be held Wednesday, November 8, 2023 at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss ChromaDex’s third-quarter financial results and provide a general business update.

To listen to the webcast, or to view the earnings press release and its accompanying financial exhibits, please visit the Investors Relations section of ChromaDex’s website at http://chromadex.com. The toll-free dial-in information for this call is 1-888-330-2446 with Conference ID: 4126168.

The webcast will be recorded, and will be available for replay via the website from 7:30 p.m. Eastern time on November 8, 2023 through 11:59 p.m. Eastern time on November 15, 2023. The replay of the call can also be accessed by dialing 800-770-2030, using the Replay ID: 4126168.

Important Note on Forward-Looking Statements:

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. Statements that are not a description of historical facts constitute forward-looking statements and may often, but not always, be identified by the use of such words as “expects,” “anticipates,” “intends” “estimates,” “plans,” “potential,” “possible,” “probable,” “believes” “seeks,” “may,” “will,” “should,” “could,” “predicts,” “projects,” “continue,” “would” or the negative of such terms or other similar expressions. Forward-looking statements include statements regarding our intentions, beliefs, projections, outlook, analyses or current expectations concerning, among other things: the quotation from ChromaDex’s Chief Executive Officer, and statements related to the Company’s 2023 financial outlook including but not limited to revenue growth, gross margin, expenses, and investment plans. Risks that contribute to the uncertain nature of the forward-looking statements include: inflationary conditions and adverse economic conditions; our history of operating losses and need to obtain additional financing; the growth and profitability of our product sales; our ability to maintain sales, marketing and distribution capabilities; changing consumer perceptions of our products; our reliance on a single or limited number of third-party suppliers; risks of conducting business in China; and the risks and uncertainties associated with our business and financial condition in general, described in our filings with the Securities and Exchange Commission (SEC), including, without limitation, our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q as filed with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, and actual results may differ materially from those suggested by these forward-looking statements. All forward-looking statements are qualified in their entirety by this cautionary statement and ChromaDex undertakes no obligation to revise or update this release to reflect events or circumstances after the date hereof.

About ChromaDex:

ChromaDex Corporation is a global bioscience company dedicated to healthy aging. The ChromaDex team, which includes world-renowned scientists, is pioneering research on nicotinamide adenine dinucleotide (NAD+), an essential coenzyme that is a key regulator of cellular metabolism and is found in every cell of the human body. NAD+ levels in humans have been shown to decline with age, among other factors, and may be increased through supplementation with NAD+ precursors. ChromaDex is the innovator behind the NAD+ precursor nicotinamide riboside (NR), commercialized as the flagship ingredient Niagen®. Nicotinamide riboside and other NAD+ precursors are protected by ChromaDex’s patent portfolio.

The Company delivers Niagen® as the sole active ingredient in its consumer product Tru Niagen® available at www.truniagen.com and through partnerships with global retailers and distributors. The Company also develops and commercializes proprietary-based ingredient technologies and supplies these ingredients as raw materials to the manufacturers of consumer products. The Company further offers natural product fine chemicals, known as phytochemicals, and related research and development services. Follow us on X (formerly Twitter) @ChromaDex and Instagram @TruNiagen and subscribe to our latest news via our website accessible at www.chromadex.com to which ChromaDex regularly posts copies of its press releases as well as additional updates and financial information about the Company.

ChromaDex Corporation and Subsidiaries

Unaudited Condensed Consolidated Statements of Operations

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

(In thousands, except per share data)

 

 

 

 

 

 

 

Sales, net

$

19,495

 

 

$

17,063

 

 

$

62,374

 

 

$

51,054

 

Cost of sales

 

7,526

 

 

 

6,856

 

 

 

24,531

 

 

 

20,273

 

Gross profit

 

11,969

 

 

 

10,207

 

 

 

37,843

 

 

 

30,781

 

Operating expenses:

 

 

 

 

 

 

 

Sales and marketing

 

6,035

 

 

 

5,868

 

 

 

19,918

 

 

 

22,126

 

Research and development

 

1,241

 

 

 

1,224

 

 

 

3,799

 

 

 

3,547

 

General and administrative

 

5,840

 

 

 

6,180

 

 

 

19,557

 

 

 

22,292

 

Total operating expenses

 

13,116

 

 

 

13,272

 

 

 

43,274

 

 

 

47,965

 

Operating loss

 

(1,147

)

 

 

(3,065

)

 

 

(5,431

)

 

 

(17,184

)

 

 

 

 

 

 

 

 

Nonoperating income (expenses):

 

 

 

 

 

 

 

Other income, net - Employee Retention Tax Credit

 

 

 

 

2,085

 

 

 

 

 

 

2,085

 

Interest income (expense), net

 

188

 

 

 

(5

)

 

 

379

 

 

 

(23

)

Net loss

$

(959

)

 

$

(985

)

 

$

(5,052

)

 

$

(15,122

)

 

 

 

 

 

 

 

 

Basic and diluted loss per share attributable to common stockholders:

$

(0.01

)

 

$

(0.01

)

 

$

(0.07

)

 

$

(0.22

)

Basic and diluted weighted average common shares outstanding

 

75,050

 

 

 

68,345

 

 

 

74,938

 

 

 

68,331

 

 

ChromaDex Corporation and Subsidiaries

Unaudited Condensed Consolidated Balance Sheets

 

(In thousands except par values, unless otherwise indicated)

September 30, 2023

 

December 31, 2022

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents, including restricted cash of $152 for both periods presented

$

26,773

 

$

20,441

Trade receivables, net of allowances of $993 and $122, respectively; Including receivables from Related Party of $2.9 million and $3.1 million, respectively

 

5,601

 

 

 

8,482

 

Inventories

 

12,624

 

 

 

14,677

 

Prepaid expenses and other assets

 

2,183

 

 

 

2,967

 

Total current assets

 

47,181

 

 

 

46,567

 

 

 

 

 

Leasehold improvements and equipment, net

 

2,293

 

 

 

2,799

 

Intangible assets, net

 

552

 

 

 

671

 

Right-of-use assets

 

3,003

 

 

 

3,523

 

Other long-term assets

 

454

 

 

 

497

 

Total assets

$

53,483

 

 

$

54,057

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

9,198

 

 

$

9,679

 

Accrued expenses

 

9,193

 

 

 

7,337

 

Current maturities of operating lease obligations

 

854

 

 

 

680

 

Current maturities of finance lease obligations

 

10

 

 

 

16

 

Customer deposits

 

189

 

 

 

157

 

Total current liabilities

 

19,444

 

 

 

17,869

 

Deferred revenue

 

3,806

 

 

 

3,955

 

Operating lease obligations, less current maturities

 

2,911

 

 

 

3,539

 

Finance lease obligations, less current maturities

 

14

 

 

 

22

 

Total stockholders’ equity

 

27,308

 

 

 

28,672

 

Total liabilities and stockholders’ equity

$

53,483

 

 

$

54,057

 

ChromaDex Corporation and Subsidiaries

Unaudited Condensed Consolidated Statements of Cash Flows

 

 

Nine Months Ended September 30,

(In thousands)

 

2023

 

 

 

2022

 

Net cash provided by / (used in):

 

 

 

Operating activities

$

6,468

 

 

$

(14,770

)

Investing activities

 

(122

)

 

 

(162

)

Financing activities

 

(14

)

 

 

(25

)

Net increase (decrease) in cash and cash equivalents

 

6,332

 

 

 

(14,957

)

Cash and cash equivalents beginning of period

 

20,441

 

 

 

28,219

 

Cash and cash equivalents at end of period

$

26,773

 

 

$

13,262

 

 

ChromaDex Corporation and Subsidiaries

Unaudited Reconciliation of Non-GAAP Financial Measures 

 

Reconciliation of Net Loss to Adjusted EBITDA

(In thousands)

Q3 2023

 

Q2 2023

 

Q1 2023

 

Q4 2022

 

Q3 2022

 

 

 

 

 

 

 

 

 

 

Net loss, as reported

$

(959

)

 

$

(2,191

)

 

$

(1,902

)

 

$

(1,418

)

 

$

(985

)

Adjustments:

 

 

 

 

 

 

 

 

 

Interest (income) expense, net

 

(188

)

 

 

(125

)

 

 

(66

)

 

 

(26

)

 

 

5

 

Depreciation

 

233

 

 

 

232

 

 

 

228

 

 

 

221

 

 

 

235

 

Amortization of intangibles

 

39

 

 

 

39

 

 

 

41

 

 

 

43

 

 

 

44

 

Amortization of right of use assets

 

176

 

 

 

173

 

 

 

171

 

 

 

191

 

 

 

170

 

Share-based compensation

 

1,117

 

 

 

1,324

 

 

 

1,273

 

 

 

1,326

 

 

 

1,229

 

Severance and restructuring

 

86

 

 

 

766

 

 

 

186

 

 

 

13

 

 

 

181

 

Other income - Employee Retention Tax Credit

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,085

)

Adjusted EBITDA

$

504

 

 

$

218

 

 

$

(69

)

 

$

350

 

 

$

(1,206

)

Non-GAAP Financial Information:

To supplement ChromaDex’s unaudited financial data presented in accordance with generally accepted accounting principles (GAAP), the Company has presented Adjusted EBITDA, a non-GAAP financial measure. ChromaDex believes the presentation of such non-GAAP financial measure provides important supplemental information to management and investors and enhances the overall understanding of the Company’s historical and current financial operating performance. The Company believes disclosure of the non-GAAP financial measure has substance because the excluded expenses are infrequent in nature, are variable in nature or do not represent current cash expenditures. Further, such non-GAAP financial measure is among the indicators the Company uses as a basis for evaluating the Company’s financial performance as well as for planning and forecasting purposes. Accordingly, disclosure of this non-GAAP financial measure provides investors with the same information that management uses to understand the Company’s economic performance year-over-year.

Adjusted EBITDA is defined as net income before (a) interest, (b) depreciation, (c) amortization, (d) non-cash share-based compensation costs, (e) severance and restructuring expense and (f) Other income from the Employee Retention Tax Credit. While ChromaDex believes that this non-GAAP financial measure provides useful supplemental information to investors, there are limitations associated with the use of such measure. This measure is not prepared in accordance with GAAP and may not be directly comparable to similarly titled measures of other companies due to potential differences in the method of calculation. Management compensates for these limitations by relying primarily on the Company’s GAAP results and by using Adjusted EBITDA only supplementally and by reviewing the reconciliation of the non-GAAP financial measure to its most comparable GAAP financial measure.

Non-GAAP financial measures are not in accordance with, or an alternative for, generally accepted accounting principles in the United States. The Company’s non-GAAP financial measure is not meant to be considered in isolation or as a substitute for comparable GAAP financial measures and should be read only in conjunction with the company’s consolidated financial statements prepared in accordance with GAAP.

ChromaDex Reports Q3 2023 Financial Results

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