Revenue for the Three-Month Period Ended September 30, 2020 Totals $14.2 Million, up 18% Year-over-Year, with Gross Margin of 59.6%, and Lower Operating Expenses
LOS ANGELES – ChromaDex Corp. (Nasdaq:CDXC) today reported third quarter financial results.
2020 Third Quarter and Recent Highlights
- Total net sales of $14.2 million, up 18% from $12.1 million from the year ago quarter.
- Tru Niagen® net sales of $11.9 million, a 22% increase from the year ago quarter.
- Net loss was ($4.2) million or ($0.07) per share, an improvement of $0.05 per share year-over-year.
- Adjusted EBITDA excluding total legal expense, a non-GAAP measure, was a loss of ($0.1) million, a $1.7 million improvement year-over-year.
- Announced Phase 2 results from study in Turkey showing nutritional protocol including nicotinamide riboside (“NR”) plus local standard of care reduced recovery time in COVID-19 patients by nearly 30%.
- Growing body of clinical research suggests that nicotinamide riboside (Niagen®) may support areas of human health with broad addressable markets, including cardiovascular and immune health, with additional studies underway.
- Nestlé Health Science’s new Celltrient™ Cellular Energy products featuring Tru Niagen® launched in the United States, following the launch of Tru Niagen® capsules on Persona, a Nestlé Health Science company and leading personalized vitamin subscription program, earlier this year.
“We delivered strong third quarter sales of Tru Niagen with sequential growth in our e-commerce business and with Watsons, and our partner Nestlé Health Science released their new product line Celltrient, featuring Tru Niagen,” says ChromaDex CEO Rob Fried. “Our scientists and research partners also published important new data furthering our understanding of increased NAD+ levels and immune health, including research on COVID-19.”
Results of operations for the three months ended September 30, 2020
For the three months ended September 30, 2020 (“Q3 2020”), ChromaDex reported net sales of $14.2 million, up 18% compared to $12.1 million in the third quarter of 2019 (“Q3 2019”). The increase in Q3 2020 revenues was driven by growth in sales of Tru Niagen.
Gross margin increased by 360 basis points to 59.6% in Q3 2020 compared to 56.0% in Q3 2019. The increase in gross margin was largely driven by the positive impact of increased Tru Niagen consumer product sales and product cost saving initiatives.
Operating expenses decreased by $1.0 million to $12.7 million in Q3 2020, compared to $13.6 million in Q3 2019. The decrease in operating expenses was driven by a decrease of $1.4 million in general and administrative expense, and a decrease of $0.2 million of research and development expense, partially offset by $0.6 million of higher selling and marketing expense. The decrease in general and administrative expense was driven by $1.0 million of lower legal expenses.
The net loss for Q3 2020 was ($4.2) million or ($0.07) per share compared to a net loss of ($7.2) million or ($0.12) per share for Q3 2019.
Adjusted EBITDA excluding total legal expense, a non-GAAP measure, was a loss of ($0.1) million for Q3 2020, compared to a loss of ($1.9) million for Q3 2019, a $1.7 million improvement.
ChromaDex defines Adjusted EBITDA excluding total legal expense as net income or (loss) which is adjusted for interest, income tax, depreciation, amortization, non-cash stock compensation costs, severance and restructuring expense, bad debt expense related to Elysium Health and total legal expense.
For Q3 2020, the net cash used in operating activities was ($3.8) million versus ($7.8) million in Q3 2019.
2020 Outlook
The Company’s full year financial outlook is unchanged from last quarter. Based on the Company’s current financial outlook, revenue growth will be driven by its U.S. ecommerce business, new international market launches with its partners and distributors, such as in the U.K. and Australia, new online platforms, including Persona Nutrition, a Nestlé Health Science company, and the Company’s new product, Tru Niagen® Beauty. The Company expects continued gross margin improvement driven by a higher mix of Tru Niagen® sales, product design changes implemented in late 2019, and additional supply chain cost savings initiatives in 2020. The Company expects lower selling, marketing and advertising as well as general and administrative expenses as a percentage of net sales driven by strong growth from returning customers and scale on our fixed overhead costs driven by organizational realignment initiatives, as well as new systems and processes. The Company does not expect any supply chain disruption related to the impact of COVID-19 at this time and, while the revenue impact is difficult to predict, the Company is managing expenses to mitigate the bottom-line impact.
Investor Conference Call
ChromaDex management will host an investor conference call to discuss the third quarter results and provide a general business update on Wednesday, November 4, at 4:30 p.m. ET.
Participants should call in at least 10 minutes prior to the call. The dial-in information is as follows:
Date: Wednesday, November 4, 2020
Time: 4:30 p.m. Eastern time (1:30 p.m. Pacific time)
Toll-free dial-in number: (833) 979-2703
International dial-in number: (236) 714-2223
Conference ID: 4699759
Webcast link: ChromaDex Third Quarter 2020 Earnings Conference Call
The conference call will be broadcast live and available for replay here and via the investor relations section of the Company’s website at www.chromadex.com.
A replay of the conference call will be available after 7:30 p.m. ET.
Toll-free replay number: 800-585-8367
Replay ID: 4699759
About Non-GAAP Financial Measures:
Adjusted EBITDA excluding total legal expense excludes interest, income tax, depreciation, amortization, non-cash share-based compensation costs, severance and restructuring expense, bad debt expense related to Elysium Health, and total legal expense. ChromaDex used these non-GAAP measures when evaluating its financial results as well as for internal resource management, planning and forecasting purposes. ChromaDex believes the presentation of its non-GAAP financial measures enhances the overall understanding of the company’s historical financial performance. These non-GAAP measures should not be viewed in isolation from or as a substitute for ChromaDex’s financial results in accordance with GAAP. Reconciliation of GAAP to non-GAAP measures are attached to this press release.
About ChromaDex:
ChromaDex Corp. is a science-based integrated nutraceutical company devoted to improving the way people age. ChromaDex scientists partner with leading universities and research institutions worldwide to discover, develop and create solutions to deliver the full potential of NAD and its impact on human health. Its flagship ingredient, NIAGEN® nicotinamide riboside, sold directly to consumers as TRU NIAGEN®, is backed with clinical and scientific research, as well as extensive IP protection. TRU NIAGEN® is helping the world AGE BETTER®. ChromaDex maintains a website at www.chromadex.com to which ChromaDex regularly posts copies of its press releases as well as additional and financial information about the Company.
Important Note on Forward Looking Statements:
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Such statements include the quotation from ChromaDex’s Chief Executive Officer, and statements related to the impact of COVID-19 on revenues and supply chain and ChromaDex’s management of expenses to mitigate the bottom-line impact; future revenue growth being driven by ChromaDex’s U.S. ecommerce business, new international market launches with ChromaDex’s partners and distributors, such as in the U.K. and Australia, new online platforms, including Persona Nutrition, a Nestlé Health Science company, and the ChromaDex’s new product, Tru Niagen® Beauty; the expectations of gross margin improvement driven by a by a higher mix of Tru Niagen® sales, product design changes implemented in late 2019, and additional supply chain cost savings initiatives in 2020; and the expectations of lower selling, marketing and advertising expenses and lower general and administrative expenses as a percentage of net sales driven by strong growth from returning customers and scale on fixed overhead costs driven by organizational realignment initiatives, as well as new systems and processes. Other risks that contribute to the uncertain nature of the forward-looking statements are reported in our most recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K 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.
| ChromaDex Corporation and Subsidiaries | ||||||
| Condensed Consolidated Statements of Operations | ||||||
| For the Three Month Periods Ended September 30, 2020 and September 30, 2019 | ||||||
| (In thousands, except per share data) | ||||||
| Three Months Ended | ||||||
| Sep. 30, 2020 | Sep. 30, 2019 | |||||
| Sales, net |
$ |
14,180 |
|
$ |
12,053 |
|
| Cost of sales |
|
5,726 |
|
|
5,304 |
|
| Gross profit |
|
8,454 |
|
|
6,749 |
|
| Operating expenses: | ||||||
| Sales and marketing |
|
5,223 |
|
|
4,626 |
|
| Research and development |
|
880 |
|
|
1,044 |
|
| General and administrative |
|
6,547 |
|
|
7,967 |
|
| Operating expenses |
|
12,650 |
|
|
13,637 |
|
| Operating loss |
|
(4,196 |
) |
|
(6,888 |
) |
| Nonoperating expense: | ||||||
| Interest expense, net |
|
(19 |
) |
|
(314 |
) |
| Nonoperating expense |
|
(19 |
) |
|
(314 |
) |
| Net loss |
$ |
(4,215 |
) |
$ |
(7,202 |
) |
| Basic and diluted loss per common share |
$ |
(0.07 |
) |
$ |
(0.12 |
) |
| Basic and diluted weighted average common shares outstanding |
|
61,695 |
|
|
57,658 |
|
| See Notes to Consolidated Financial Statements in Part I of ChromaDex’s Quarterly Report on Form 10-Q filed with Securities and Exchange Commission on November 4, 2020. | ||||||
| ChromaDex Corporation and Subsidiaries | |||||||
| Condensed Consolidated Balance Sheets | |||||||
| September 30, 2020 and December 31, 2019 | |||||||
| (In thousands, except per share data) | |||||||
| Sep. 30, 2020 | Dec. 31, 2019 | ||||||
| Assets | |||||||
| Current Assets | |||||||
| Cash, including restricted cash of $0.2 million and $0.2 million, respectively |
$ |
15,478 |
|
$ |
18,812 |
|
|
| Trade receivables, net of allowances of $0.0 million and $2.8 million, respectively; | |||||||
| Receivables from Related Party: $1.0 million and $0.8 million, respectively |
|
3,214 |
|
|
2,175 |
|
|
| Inventories |
|
11,031 |
|
|
11,535 |
|
|
| Prepaid expenses and other assets |
|
1,005 |
|
|
996 |
|
|
| Total current assets |
|
30,728 |
|
|
33,518 |
|
|
| Leasehold Improvements and Equipment, net |
|
3,307 |
|
|
3,765 |
|
|
| Intangible Assets, net |
|
1,147 |
|
|
1,311 |
|
|
| Right of Use Assets |
|
1,323 |
|
|
891 |
|
|
| Other Long-term Assets |
|
910 |
|
|
762 |
|
|
| Total assets |
$ |
37,415 |
|
$ |
40,247 |
|
|
| Liabilities and Stockholders’ Equity | |||||||
| Current Liabilities | |||||||
| Accounts payable |
$ |
6,881 |
|
$ |
9,626 |
|
|
| Accrued expenses |
|
5,173 |
|
|
4,415 |
|
|
| Current maturities of operating lease obligations |
|
650 |
|
|
595 |
|
|
| Current maturities of finance lease obligations |
|
83 |
|
|
258 |
|
|
| Customer deposits |
|
228 |
|
|
169 |
|
|
| Total current liabilities |
|
13,015 |
|
|
15,063 |
|
|
| Deferred Revenue |
|
3,820 |
|
|
3,873 |
|
|
| Operating Lease Obligations, Less Current Maturities |
|
1,070 |
|
|
848 |
|
|
| Finance Lease Obligations, Less Current Maturities |
|
23 |
|
|
18 |
|
|
| Total liabilities |
|
17,928 |
|
|
19,802 |
|
|
| Commitments and Contingencies | |||||||
| Stockholders’ Equity | |||||||
| Common stock, $.001 par value; authorized 150,000 shares; issued and outstanding September 30, 2020 61,587 shares and December 31, 2019 59,562 shares |
|
62 |
|
|
60 |
|
|
| Additional paid-in capital |
|
155,156 |
|
|
142,285 |
|
|
| Accumulated deficit |
|
(135,728 |
) |
|
(121,900 |
) |
|
| Cumulative translation adjustments |
|
(3 |
) |
|
– |
|
|
| Total stockholders’ equity |
|
19,487 |
|
|
20,445 |
|
|
| Total liabilities and stockholders’ equity |
$ |
37,415 |
|
$ |
40,247 |
|
|
| See Notes to Consolidated Financial Statements in Part I of ChromaDex’s Quarterly Report on Form 10-Q filed with Securities and Exchange Commission on November 4, 2020. | |||||||
| ChromaDex Corporation and Subsidiaries | ||||||||||||||||||||||||||||
| Reconciliation of Non-GAAP Financial Measures | ||||||||||||||||||||||||||||
| Adjusted EBITDA | ||||||||||||||||||||||||||||
| Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | Q1 2020 | Q2 2020 | Q3 2020 | ||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||
| Net loss, as reported |
$ |
(8,337 |
) |
$ |
(7,755 |
) |
$ |
(7,202 |
) |
$ |
(8,853 |
) |
$ |
(5,902 |
) |
$ |
(3,711 |
) |
$ |
(4,215 |
) |
|||||||
| Adjustments: | ||||||||||||||||||||||||||||
| Interest (income) expense |
|
(35 |
) |
|
575 |
|
|
314 |
|
|
(7 |
) |
|
12 |
|
|
24 |
|
|
19 |
|
|||||||
| Depreciation |
|
173 |
|
|
190 |
|
|
196 |
|
|
203 |
|
|
214 |
|
|
218 |
|
|
220 |
|
|||||||
| Amortization of intangibles |
|
61 |
|
|
61 |
|
|
62 |
|
|
62 |
|
|
62 |
|
|
60 |
|
|
60 |
|
|||||||
| Amortization of right of use assets |
|
138 |
|
|
141 |
|
|
144 |
|
|
92 |
|
|
92 |
|
|
95 |
|
|
97 |
|
|||||||
| Share-based compensation |
|
2,029 |
|
|
1,759 |
|
|
1,687 |
|
|
1,697 |
|
|
1,873 |
|
|
1,711 |
|
|
1,574 |
|
|||||||
| Severance and restructuring |
|
– |
|
|
– |
|
|
– |
|
|
200 |
|
|
953 |
|
|
284 |
|
|
224 |
|
|||||||
| Elysium-related bad debt expense |
|
– |
|
|
– |
|
|
– |
|
|
2,233 |
|
|
– |
|
|
– |
|
|
– |
|
|||||||
| Adjusted EBITDA |
$ |
(5,971 |
) |
$ |
(5,029 |
) |
$ |
(4,799 |
) |
$ |
(4,373 |
) |
$ |
(2,696 |
) |
$ |
(1,319 |
) |
$ |
(2,021 |
) |
|||||||
| Total legal expense |
|
3,250 |
|
|
2,926 |
|
|
2,944 |
|
|
2,226 |
|
|
2,380 |
|
|
1,844 |
|
|
1,896 |
|
|||||||
| Adjusted EBITDA excluding total legal expense |
$ |
(2,721 |
) |
$ |
(2,103 |
) |
$ |
(1,855 |
) |
$ |
(2,147 |
) |
$ |
(316 |
) |
$ |
525 |
|
$ |
(125 |
) |
|||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20201104005495/en/
ChromaDex Investor Relations Contact:
Brianna Gerber, Vice President of FP&A and Investor Relations
949-419-0288 ext. 127
briannag@chromadex.com
ChromaDex Media Contact:
Alex Worsham, Vice President of Global Marketing & Communications
310-388-6706 ext. 689
alexw@chromadex.com