Updates Full-Year 2022 Guidance
NEW YORK, Nov. 9, 2022 /PRNewswire/ — Thorne HealthTech, Inc. (“Thorne HealthTech”, “Thorne” or the “Company”) (NASDAQ: THRN), a leader in developing personalized, innovative solutions that empower individuals to live healthier, longer lives, today announced its financial results for the third quarter ended September 30, 2022.
Third Quarter Highlights:
- Net sales grew 21.7% year-over-year to $58.4 million, with direct-to-consumer (“DTC”) sales growth of 47.2%
- Gross profit grew 10.3% year-over-year to $28.2 million; gross margin decreased 500 basis points year-over-year to 48.2%
- Net income attributable to common stockholders grew to $3.7 million; adjusted EBITDA grew to $8.3 million
- Diluted earnings per share (“EPS”) of $0.07; adjusted diluted EPS of $0.12
“People trust Thorne to support their daily wellness journeys because of the personalization we offer, the science behind our portfolio of solutions including our health tests and supplements, and our unmatched quality standards,” said Paul Jacobson, Thorne HealthTech’s chairman and CEO. “For these reasons, our high-end customer base has thus far been resilient. We saw no major changes in purchasing behavior and achieved record sales for the quarter driven by DTC channel growth of 47%. Our gross margins softened from proactive early actions, to secure a large supply of ingredients typically associated with lower margin products, in order to ensure product continuity for our customers ahead of anticipated supply chain risks. That decision allowed us to aggressively sell into a heightened demand environment as those risks materialized, increasing our brand awareness through product availability.”
Mr. Jacobson added, “We also made further strides bringing our OneDraw blood sample collection device into the home. In August, we achieved a major milestone by receiving DTC medical device clearance from Japanese regulators, while continuing to work towards DTC clearance in the U.S. We believe these clearances will offer significant business development opportunities, long-term. Our solid financial performance, continued efficiency gains from scale and recent cutting-edge developments will allow us to continue our long history of profitable growth and further strengthen our positioning heading into next year.”
Net Sales
The following tables provide a summary of sales by channel for the three and nine months ended September 30, 2022, compared to the three and nine months ended September 30, 2021:
|
Three Months Ended September 30, |
||||||||||||||||||||||||
|
Amounts |
Year-Over-Year |
As % of Net Sales |
||||||||||||||||||||||
|
2022 |
2021 |
$ Change |
% Change |
2022 |
2021 |
|||||||||||||||||||
|
(dollars in thousands) |
||||||||||||||||||||||||
|
DTC |
$ |
26,975 |
$ |
18,322 |
$ |
8,653 |
47.2 |
% |
46.2 |
% |
38.2 |
% |
||||||||||||
|
Professional/B2B (1) |
31,444 |
29,688 |
1,756 |
5.9 |
% |
53.8 |
% |
61.8 |
% |
|||||||||||||||
|
Net sales |
$ |
58,419 |
$ |
48,010 |
$ |
10,409 |
21.7 |
% |
100.0 |
% |
100.0 |
% |
||||||||||||
|
Nine Months Ended September 30, |
||||||||||||||||||||||||
|
Amounts |
Year-Over-Year |
As % of Net Sales |
||||||||||||||||||||||
|
2022 |
2021 |
$ Change |
% Change |
2022 |
2021 |
|||||||||||||||||||
|
(dollars in thousands) |
||||||||||||||||||||||||
|
DTC |
$ |
81,668 |
$ |
54,758 |
$ |
26,910 |
49.1 |
% |
48.3 |
% |
40.5 |
% |
||||||||||||
|
Professional/B2B (1) |
87,487 |
80,625 |
6,862 |
8.5 |
% |
51.7 |
% |
59.5 |
% |
|||||||||||||||
|
Net sales |
$ |
169,155 |
$ |
135,383 |
$ |
33,772 |
24.9 |
% |
100.0 |
% |
100.0 |
% |
||||||||||||
|
____________________________ |
||||||||||||||||||||||||
|
(1) “Professional” generally means the Company’s network of health professionals; and “B2B” generally means business-to-business customers. |
||||||||||||||||||||||||
The following table provides a summary of our annual life-time value (“LTV”) to customer acquisition cost (“CAC”) ratio for the three and nine months ended September 30, 2022, compared to the three and nine months ended September 30, 2021.
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
|
2022 |
2021 |
2022 |
2021 |
|||||||||||||
|
LTV to CAC (2) |
7.8 |
x |
2.4 |
x |
3.2 |
x |
3.7 |
x |
||||||||
|
____________ |
||||||||||||||||
|
(2) Refer to the “Key Financial and Operating Data” section below. |
||||||||||||||||
As of September 30, 2022, the number of active subscriptions grew 50.5% to 329,569, compared to 218,935 as of September 30, 2021. Refer to the “Key Financial and Operating Data” section below for further detail.
Cost of Sales and Gross Profit
The following tables provide a summary of cost of sales and gross profit for the three and nine months ended September 30, 2022, compared to the three and nine months ended September 30, 2021:
|
Three Months Ended September 30, |
||||||||||||||||||||||||
|
Amounts |
Year-Over-Year |
As % of Net Sales |
||||||||||||||||||||||
|
2022 |
2021 |
$ Change |
% Change |
2022 |
2021 |
|||||||||||||||||||
|
(dollars in thousands) |
||||||||||||||||||||||||
|
Net sales |
$ |
58,419 |
$ |
48,010 |
$ |
10,409 |
21.7 |
% |
100.0 |
% |
100.0 |
% |
||||||||||||
|
Cost of sales |
30,239 |
22,470 |
7,769 |
34.6 |
% |
51.8 |
% |
46.8 |
% |
|||||||||||||||
|
Gross profit |
$ |
28,180 |
$ |
25,540 |
$ |
2,640 |
10.3 |
% |
48.2 |
% |
53.2 |
% |
||||||||||||
|
Nine Months Ended September 30, |
||||||||||||||||||||||||
|
Amounts |
Year-Over-Year |
As % of Net Sales |
||||||||||||||||||||||
|
2022 |
2021 |
$ Change |
% Change |
2022 |
2021 |
|||||||||||||||||||
|
(dollars in thousands) |
||||||||||||||||||||||||
|
Net sales |
$ |
169,155 |
$ |
135,383 |
$ |
33,772 |
24.9 |
% |
100.0 |
% |
100.0 |
% |
||||||||||||
|
Cost of sales |
79,494 |
63,711 |
15,783 |
24.8 |
% |
47.0 |
% |
47.1 |
% |
|||||||||||||||
|
Gross profit |
$ |
89,661 |
$ |
71,672 |
$ |
17,989 |
25.1 |
% |
53.0 |
% |
52.9 |
% |
||||||||||||
For the three months ended September 30, 2022, the increase in cost of sales and decrease in gross profit as a percentage of net sales was primarily from (i) the sell-through of higher cost inventory that included raw materials purchased ahead of demand to mitigate against potential supply chain disruptions and (ii) the strength of sales that contribute lower gross profit margins because of our ability to meet demand utilizing our sources in an otherwise challenging market.
Operating Expenses
The following tables provide a summary of select operating expenses for the three and nine months ended September 30, 2022, compared to the three and nine months ended September 30, 2021:
|
Three Months Ended September 30, |
||||||||||||||||||||||||
|
Amounts |
Year-Over-Year |
As % of Net Sales |
||||||||||||||||||||||
|
2022 |
2021 |
$ Change |
% Change |
2022 |
2021 |
|||||||||||||||||||
|
(dollars in thousands) |
||||||||||||||||||||||||
|
Research and development |
$ |
1,815 |
$ |
2,237 |
$ |
(422) |
(18.9) |
% |
3.1 |
% |
4.7 |
% |
||||||||||||
|
Marketing |
4,510 |
10,792 |
(6,282) |
(58.2) |
% |
7.7 |
% |
22.5 |
% |
|||||||||||||||
|
Selling, general and administrative |
$ |
18,340 |
$ |
13,430 |
$ |
4,910 |
36.6 |
% |
31.4 |
% |
28.0 |
% |
||||||||||||
|
Nine Months Ended September 30, |
||||||||||||||||||||||||
|
Amounts |
Year-Over-Year |
As % of Net Sales |
||||||||||||||||||||||
|
2022 |
2021 |
$ Change |
% Change |
2022 |
2021 |
|||||||||||||||||||
|
(dollars in thousands) |
||||||||||||||||||||||||
|
Research and development |
$ |
5,526 |
$ |
4,280 |
$ |
1,246 |
29.1 |
% |
3.3 |
% |
3.2 |
% |
||||||||||||
|
Marketing |
27,508 |
20,077 |
7,431 |
37.0 |
% |
16.3 |
% |
14.8 |
% |
|||||||||||||||
|
Selling, general and administrative |
54,483 |
37,001 |
17,482 |
47.2 |
% |
32.2 |
% |
27.3 |
% |
|||||||||||||||
|
Write-off of acquired Drawbridge in-process research |
$ |
— |
$ |
1,563 |
$ |
(1,563) |
(100.0) |
% |
0 |
% |
1.2 |
% |
||||||||||||
The decrease in marketing as a percentage of net sales for the three months ended September 30, 2022 was primarily from the timing of the Company’s major brand campaigns, which primarily occurred during the second quarter of 2022 instead of the comparative third quarter of 2021.
Net Income and Diluted EPS
The following tables provide a summary of net income attributable to common stockholders, adjusted EBITDA, adjusted net income (loss), diluted EPS and adjusted diluted EPS for the three and nine months ended September 30, 2022, compared to the three and nine months ended September 30, 2021:
|
Three Months Ended September 30, |
||||||||||||||||
|
Amounts |
Year-Over-Year |
|||||||||||||||
|
2022 |
2021 |
$ Change |
% Change3 |
|||||||||||||
|
(dollars in thousands, except per share amounts) |
||||||||||||||||
|
Net income attributable to common stockholders |
$ |
3,739 |
$ |
476 |
$ |
3,263 |
685.9 |
% |
||||||||
|
Adjusted EBITDA |
8,343 |
1,077 |
7,266 |
674.4 |
% |
|||||||||||
|
Adjusted net income (loss) |
6,123 |
(17) |
6,140 |
n.m. |
||||||||||||
|
Diluted EPS |
$ |
0.07 |
$ |
0.01 |
$ |
0.06 |
600.0 |
% |
||||||||
|
Adjusted diluted EPS |
$ |
0.12 |
$ |
– |
$ |
0.12 |
n.m. |
|||||||||
|
Nine Months Ended September 30, |
||||||||||||||||
|
Amounts |
Year-Over-Year |
|||||||||||||||
|
2022 |
2021 |
$ Change |
% Change |
|||||||||||||
|
(dollars in thousands, except per share amounts) |
||||||||||||||||
|
Net income attributable to common stockholders |
$ |
3,127 |
$ |
476 |
$ |
2,651 |
557.3 |
% |
||||||||
|
Adjusted EBITDA |
15,552 |
15,146 |
406 |
2.7 |
% |
|||||||||||
|
Adjusted net income |
9,977 |
10,281 |
(304) |
(3.0) |
% |
|||||||||||
|
Diluted EPS |
$ |
0.06 |
$ |
0.01 |
$ |
0.05 |
500.0 |
% |
||||||||
|
Adjusted diluted EPS |
$ |
0.19 |
$ |
0.20 |
$ |
(0.01) |
(5.0) |
% |
||||||||
|
__________________ |
||||||||||||||||
|
(3) Not meaningful (n.m.) year-over-year comparison as it relates to the percentage change due to net earnings in the current period and net loss in the |
||||||||||||||||
Amounts reported in thousands within this press release are computed based on the amounts in whole dollars. As a result, the sum of the components reported in thousands may not equal the amounts reported in whole dollars due to rounding. Percentage changes presented are calculated from the underlying numbers in whole dollars.
Important disclosures about, and reconciliations of, non-GAAP measures to their most directly comparable GAAP measures, including adjusted EBITDA, adjusted net income (loss) and adjusted diluted earnings EPS are provided in the “Non-GAAP Financial Measures” section of this press release.
Financial Position
As of September 30, 2022, the Company had $22.5 million in unrestricted cash and cash equivalents and $1.9 million of debt outstanding, inclusive of $0.7 million attributable to finance lease liabilities.
Financial Guidance
The following table presents the Company’s (i) prior guidance, (ii) revised guidance, and (iii) the corresponding growth rates over full-year 2021 results at the low and high ends of the revised guidance ranges for each measure:
|
Revised Full-Year Guidance |
Prior Guidance |
||||||
|
Low – High |
Low – High (Y/Y%) |
Low – High |
|||||
|
Net sales |
$232 million – $235 million |
25.2% – 26.9% |
$ 235 million – $242 million |
||||
|
Gross margin |
52% – 53% |
— |
53% – 55% |
||||
|
Adjusted EBITDA |
$25.5 million – $28.5 million |
24.0% – 38.5% |
$28 million – $32 million |
||||
|
Adjusted EPS |
$0.34 – $0.37 |
n.m. |
$0.36 – $0.39 |
||||
The Company’s revised full-year guidance assumes the following:
- Marketing expenses of between 14% and 15% of net sales for the full-year
- For adjusted net income and adjusted EPS, revised guidance also assumes (i) depreciation and amortization of approximately 2.7% of net sales, (ii) an estimated full-year adjusted tax rate of 10% and (iii) diluted weighted-average shares outstanding of 53 million as of December 31, 2022
Webcast and Conference Call Details
The Company will host a conference call on Thursday, November 10, 2022, at 8 a.m. (U.S. Eastern Time) to discuss its third quarter 2022 financial results. A live webcast of the call can be accessed by logging onto the investors section of the Thorne HealthTech website at https://investors.thornehealthtech.com. A replay will be available on the same website after the call.
In addition, the conference call can be accessed over the phone by dialing +1 844 200 6205 for U.S. callers, or +1 929 526 1599 for international callers, approximately 10 minutes prior to the start time. The access code for the live call is 701723. An audio replay will be available for 7 days following the call. To access the replay, dial +1 866 813 9403 (U.S.) or +1 929 458 6194 (International). The access code for the replay is 356185.
About Thorne HealthTech
Thorne HealthTech is a leader in developing innovative solutions for delivering personalized approaches to health and wellness. As a science-driven wellness company that empowers individuals with the support, education, and solutions they need to achieve healthy aging – living healthier longer – Thorne utilizes testing and data to create improved product efficacy and to deliver personalized solutions to consumers, health professionals, and corporations. Predicated on the power of the individual, Thorne leverages artificial intelligence models to provide insights and personalized data, products, and services that help individuals take a proactive and actionable approach to improve and maintain their health over a lifetime. Thorne is the only supplement manufacturer that collaborates with Mayo Clinic on health and wellness research and content, and is trusted by more than five million customers, 46,000+ health-care professionals, thousands of professional athletes, and more than 100 professional sports teams and U.S. National Teams. For more information, visit Thorne.com.
Forward-Looking Statements
This news 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 and the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this news release, including, without limitation, statements regarding the conditions of our industry, our future results of operations and financial position, business strategy, development plans, expected research and development costs, regulatory strategy, product and service development, sales and marketing activities, international expansion efforts, timing and likelihood of success, as well as plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “guidance,” “may,” “will,” “should,” “would,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this news release include, but are not limited to, statements regarding financial guidance, market opportunity, ability to penetrate the market, expanded product offerings and expectations for growth. We have based these forward-looking statements largely on our current expectations and projections about our business, the industry in which we operate and financial trends that we believe may affect our business, financial condition, results of operations and prospects, and these forward-looking statements are not guarantees of future performance or development. These forward-looking statements are current only as of the date of this news release and are subject to a number of risks, uncertainties and assumptions described in the section titled “Risk Factors” and elsewhere in Thorne HealthTech’s filings made with the Securities and Exchange Commission, including our Annual Report on Form 10-K filed on March 16, 2022 and Quarterly Report on Form 10-Q, which we plan to file on or about November 10, 2022, and other SEC filings, copies of which are available free of charge on the SEC website at www.sec.gov. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events or otherwise.
Key Financial and Operating Data
To provide investors with additional information regarding its financial results, the Company has provided certain key financial and operating data metrics in this press release, including life-time value (LTV), customer acquisition costs (CAC), LTV to CAC ratio and number of subscriptions.
The Company defines LTV to CAC as LTV from a specific 12-month period divided by the CAC of a specific period. LTV is defined as the average gross contribution per purchasing DTC customer within a particular 12-month period divided by one less the customer retention rate (Churn Rate) during the same period. Average gross contribution is defined as the cumulative revenue from our DTC customers during a 12-month period, less the cost of goods, divided by the number of purchasing DTC customers in the same period. To arrive at the LTV for a particular period, the Company divides the average gross contribution by that period’s Churn Rate. CAC is defined as the total advertising and marketing expenses, less headcount expenses and associated benefit expenses, in a particular period divided by the number of customers who placed their first order during that same timeframe.
The Company defines subscriptions as orders resulting from direct-to-consumer (DTC) customers opting into automatic refills or orders that are recurring on Thorne.com and Amazon.com. Subscription programs on both platforms offer automatic ordering, payment and delivery of the products to a customer’s doorstep.
Non-GAAP Financial Measures
To provide investors with additional information regarding its financial results, the Company has provided certain financial measures that are not recognized under U.S. generally accepted accounting principles (GAAP) in this press release, including: earnings or loss before interest, taxes, depreciation and amortization (EBITDA), EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, adjusted net income (loss) and adjusted diluted earnings (loss) per share.
The Company calculates EBITDA, a non-GAAP financial measure, as net income or loss excluding depreciation and amortization, interest expense, net and income taxes. EBITDA margin represents EBITDA as a percentage of net sales. The Company calculates adjusted EBITDA, a non-GAAP financial measure, by further excluding non-cash items for stock-based compensation expenses, change in fair value of warrant liability, loss on Drawbridge step acquisition, loss on Drawbridge Transaction, guarantee fees, income or loss from equity interests in unconsolidated affiliates and transaction costs related to mergers and acquisitions. Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of net sales. The Company calculates adjusted net income or loss, a non-GAAP financial measure, as net income or loss excluding (i) stock-based compensation expenses, change in fair value of warrant liability, loss on Drawbridge step acquisition, loss on Drawbridge transaction, guarantee fees, income or loss from equity in unconsolidated affiliates and transaction costs related to mergers and acquisitions and (ii) utilizing an adjusted provision for income taxes based on the Company’s estimate of applicable statutory rates.
EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, adjusted net income (loss) and adjusted diluted earnings (loss) per share should be viewed as measures of operating performance that are supplements to, and not substitutes for, operating income or loss, net income or loss and other GAAP measures of income and loss. The Company has included EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, adjusted net income or loss and adjusted diluted earnings (loss) per share in this press release because they are key measures used by the Company’s management to evaluate and compare the Company’s financial and operational performance over multiple periods, identifying trends affecting the Company’s business, formulating business plans and making strategic decisions. In particular, the exclusion of certain expenses or income in calculating adjusted EBITDA and adjusted net income (loss) facilitates operating performance comparability across reporting periods by removing the effect of non-cash expenses and certain non-recurring variable charges. In addition, the Company believes that providing each of EBITDA and adjusted EBITDA and adjusted net income or loss, together with a reconciliation of net income or loss to each such measure, helps investors make comparisons between Thorne HealthTech and other companies that may have different capital structures, different tax rates and different forms of employee compensation. Each of EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, adjusted net income or loss and adjusted diluted earnings (loss) per share has inherent limitations because of the excluded items, and may not be directly comparable to similarly titled metrics used by other companies.
The Company has not reconciled the forward-looking adjusted EBITDA and adjusted diluted EPS guidance included in this press release to the most directly comparable GAAP measures because this cannot be done without unreasonable effort due to the variability and low visibility with respect to certain costs, the most significant of which are incentive compensation (including stock-based compensation), certain fair value measurements, acquisition transactions and integration, tax items and others that may arise during the year, each of which are potential adjustments to future earnings. The Company expects the variability of these items to have a potentially unpredictable, and a potentially significant, impact on our future GAAP financial results.
|
Thorne HealthTech, Inc. |
||||||||
|
Condensed Consolidated Balance Sheets |
||||||||
|
September 30, |
December 31, |
|||||||
|
2022 |
2021 |
|||||||
|
(unaudited) |
||||||||
|
Assets |
||||||||
|
Current Assets |
||||||||
|
Cash and cash equivalents |
$ |
22,508,492 |
$ |
51,100,915 |
||||
|
Accounts receivable, net |
13,411,032 |
5,285,321 |
||||||
|
Related party receivables |
9,450 |
366,590 |
||||||
|
Inventories, net |
60,875,809 |
41,012,124 |
||||||
|
Prepaid expenses and other current assets |
2,464,475 |
3,494,473 |
||||||
|
Total current assets |
99,269,258 |
101,259,423 |
||||||
|
Restricted cash |
4,900,000 |
4,900,000 |
||||||
|
Property and equipment, net |
32,868,069 |
27,030,400 |
||||||
|
Operating lease right-of-use assets, net |
17,716,629 |
17,836,756 |
||||||
|
Finance lease right-of-use assets |
641,853 |
883,076 |
||||||
|
Intangible assets, net |
15,608,266 |
6,592,316 |
||||||
|
Goodwill |
16,541,041 |
14,440,683 |
||||||
|
Investments |
1,400,000 |
400,000 |
||||||
|
Equity-method investments |
1,063,716 |
963,685 |
||||||
|
Other related party receivables |
152,424 |
— |
||||||
|
Other assets |
1,046,951 |
993,538 |
||||||
|
Total assets |
$ |
191,208,207 |
$ |
175,299,877 |
||||
|
Thorne HealthTech, Inc. |
||||||||
|
Condensed Consolidated Balance Sheets |
||||||||
|
September 30, |
December 31, |
|||||||
|
2022 |
2021 |
|||||||
|
(unaudited) |
||||||||
|
Liabilities, Convertible Preferred Stock and Stockholders’ Equity |
||||||||
|
Current Liabilities |
||||||||
|
Accounts payable |
$ |
19,171,370 |
$ |
16,889,756 |
||||
|
Accrued payroll |
3,021,403 |
2,526,917 |
||||||
|
Other accrued expenses |
1,941,968 |
1,144,573 |
||||||
|
Related party payable |
1,730,007 |
1,634,775 |
||||||
|
Current portion of operating lease liabilities |
2,228,088 |
2,633,236 |
||||||
|
Current portion of finance lease liabilities |
361,514 |
413,487 |
||||||
|
Current portion of long-term debt |
516,345 |
494,173 |
||||||
|
Total current liabilities |
28,970,695 |
25,736,917 |
||||||
|
Long-term Liabilities |
||||||||
|
Operating lease liabilities, net of current portion |
27,827,347 |
27,605,739 |
||||||
|
Finance lease liabilities, net of current portion |
301,773 |
482,544 |
||||||
|
Long-term debt, net of current portion |
693,554 |
1,083,634 |
||||||
|
Warrant liability |
1,491,660 |
2,058,566 |
||||||
|
Total liabilities |
59,285,029 |
56,967,400 |
||||||
|
Series E convertible preferred stock; par value $0.01, 0 shares authorized as of September |
— |
— |
||||||
|
Stockholders’ Equity |
||||||||
|
Common stock; par value $0.01, 200,000,000 shares authorized as of September 30, 2022 |
528,124 |
525,542 |
||||||
|
Common stock, Class B; no par value, 0 shares authorized as of September 30, 2022 and |
— |
— |
||||||
|
Additional paid-in capital |
258,951,528 |
250,163,984 |
||||||
|
Accumulated deficit |
(129,031,046) |
(132,158,016) |
||||||
|
Accumulated other comprehensive loss |
(332,141) |
— |
||||||
|
Total stockholders’ equity —Thorne HealthTech, Inc. |
130,116,465 |
118,531,510 |
||||||
|
Non-controlling interests |
1,806,713 |
(199,033) |
||||||
|
Total stockholders’ equity |
131,923,178 |
118,332,477 |
||||||
|
Total liabilities, convertible preferred stock and stockholders’ equity |
$ |
191,208,207 |
$ |
175,299,877 |
||||
|
Thorne HealthTech, Inc. |
||||||||||||||||
|
Condensed Consolidated Statements of Operations |
||||||||||||||||
|
(unaudited) |
||||||||||||||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
|
2022 |
2021 |
2022 |
2021 |
|||||||||||||
|
Net sales |
$ |
58,419,270 |
$ |
48,009,678 |
$ |
169,155,294 |
$ |
135,383,383 |
||||||||
|
Cost of sales |
30,239,482 |
22,469,952 |
79,494,367 |
63,710,703 |
||||||||||||
|
Gross profit |
28,179,788 |
25,539,726 |
89,660,927 |
71,672,680 |
||||||||||||
|
Operating expenses: |
||||||||||||||||
|
Research and development |
1,814,972 |
2,236,913 |
5,526,450 |
4,279,854 |
||||||||||||
|
Marketing |
4,510,223 |
10,792,331 |
27,507,937 |
20,077,293 |
||||||||||||
|
Selling, general and administrative |
18,339,657 |
13,430,325 |
54,482,948 |
37,001,465 |
||||||||||||
|
Write-off of acquired Drawbridge in-process research and |
— |
— |
— |
1,563,015 |
||||||||||||
|
Income (loss) from operations |
3,514,936 |
(919,843) |
2,143,592 |
8,751,053 |
||||||||||||
|
Other income (expense), net: |
||||||||||||||||
|
Interest income (expense), net |
33,673 |
(29,089) |
(27,998) |
(392,990) |
||||||||||||
|
Guarantee fees |
— |
(141,949) |
— |
(421,220) |
||||||||||||
|
Change in fair value of warrant liability |
37,926 |
2,212,554 |
566,906 |
902,528 |
||||||||||||
|
Loss on Drawbridge Transaction |
— |
— |
— |
(165,998) |
||||||||||||
|
Other income (expense), net |
391 |
39,473 |
44,485 |
77,616 |
||||||||||||
|
Total other income (expense), net |
71,990 |
2,080,989 |
583,393 |
(64) |
||||||||||||
|
Income before income taxes and gain (loss) from equity interests in |
3,586,926 |
1,161,146 |
2,726,985 |
8,750,989 |
||||||||||||
|
Income tax expense |
— |
78,914 |
207,098 |
122,452 |
||||||||||||
|
Net income before gain (loss) from equity interests in unconsolidated affiliates |
3,586,926 |
1,082,232 |
2,519,887 |
8,628,537 |
||||||||||||
|
Gain (loss) from equity interests in unconsolidated affiliates |
(14) |
(131,390) |
11,023 |
(3,304,496) |
||||||||||||
|
Net income |
3,586,912 |
950,842 |
2,530,910 |
5,324,041 |
||||||||||||
|
Net loss — non-controlling interests |
(151,704) |
(77,945) |
(596,060) |
(323,006) |
||||||||||||
|
Net income attributable to Thorne HealthTech, Inc. |
3,738,616 |
1,028,787 |
3,126,970 |
5,647,047 |
||||||||||||
|
Undistributed earnings attributable to Series E convertible preferred |
— |
553,078 |
— |
5,171,338 |
||||||||||||
|
Net income attributable to common stockholders |
$ |
3,738,616 |
$ |
475,709 |
$ |
3,126,970 |
$ |
475,709 |
||||||||
|
Earnings per share: |
||||||||||||||||
|
Basic |
$ |
0.07 |
$ |
0.02 |
$ |
0.06 |
$ |
0.02 |
||||||||
|
Diluted |
$ |
0.07 |
$ |
0.01 |
$ |
0.06 |
$ |
0.01 |
||||||||
|
Weighted average common shares outstanding: |
||||||||||||||||
|
Basic |
52,742,926 |
21,212,668 |
52,680,422 |
19,032,403 |
||||||||||||
|
Diluted |
52,742,926 |
51,222,522 |
52,921,051 |
50,327,893 |
||||||||||||
|
Thorne HealthTech, Inc. |
||||||||
|
Condensed Consolidated Statements of Cash Flows |
||||||||
|
(unaudited) |
||||||||
|
Nine Months Ended September 30, |
||||||||
|
2022 |
2021 |
|||||||
|
Cash Flows from Operating Activities |
||||||||
|
Net income |
$ |
2,530,910 |
$ |
5,324,041 |
||||
|
Adjustments to reconcile net income to net cash (used in) provided by operating activities: |
||||||||
|
Depreciation and amortization |
4,438,607 |
3,329,145 |
||||||
|
Change in fair value of warrant liability |
(566,906) |
(902,528) |
||||||
|
Non-cash lease expense |
2,811,428 |
4,897,207 |
||||||
|
Stock-based compensation |
8,405,873 |
1,425,192 |
||||||
|
Non-cash interest expense |
2,570 |
— |
||||||
|
Change in inventory and receivable reserves |
120,503 |
65,484 |
||||||
|
(Gain) loss from equity interests in unconsolidated affiliates |
(11,023) |
3,304,496 |
||||||
|
Loss on Drawbridge Transaction |
— |
165,998 |
||||||
|
Write-off of acquired Drawbridge in-process research and development |
— |
1,563,015 |
||||||
|
Other non-cash |
(39,062) |
— |
||||||
|
Change in operating assets and liabilities |
||||||||
|
Accounts receivable |
(8,042,351) |
(3,296,652) |
||||||
|
Related party receivables |
204,716 |
(563,291) |
||||||
|
Related party payables |
95,232 |
307,226 |
||||||
|
Inventories |
(20,061,241) |
(9,732,333) |
||||||
|
Prepaid expenses and other assets |
999,715 |
(3,164,633) |
||||||
|
Accounts payable and accrued liabilities |
2,863,414 |
8,211,866 |
||||||
|
Operating lease liabilities |
(2,553,593) |
(4,794,134) |
||||||
|
Net cash provided by (used in) operating activities |
(8,801,208) |
6,140,099 |
||||||
|
Cash Flows from Investing Activities |
||||||||
|
Purchase of property and equipment |
(5,233,668) |
(2,124,385) |
||||||
|
Acquisition of Nutrativa, net of cash acquired |
(14,862,287) |
— |
||||||
|
Acquisition of Drawbridge Health assets, net of cash acquired |
— |
(1,412,279) |
||||||
|
Purchase of investment in unconsolidated subsidiary |
(1,000,000) |
— |
||||||
|
Purchase of license agreements |
(562,500) |
(562,958) |
||||||
|
Net cash used in investing activities |
(21,658,455) |
(4,099,622) |
||||||
|
Cash Flows from Financing Activities |
||||||||
|
Proceeds from issuance of common stock in IPO |
— |
70,000,000 |
||||||
|
Payments on long-term debt and finance leases |
(680,677) |
(580,049) |
||||||
|
Debt issuance costs |
(25,700) |
— |
||||||
|
Common stock issuance costs |
— |
(10,031,797) |
||||||
|
Proceeds from issuance of ownership interest in consolidated subsidiary |
2,601,806 |
— |
||||||
|
Proceeds from exercise of stock options |
303,952 |
— |
||||||
|
Net cash provided by financing activities |
2,199,381 |
59,388,154 |
||||||
|
Effect of exchange rate changes on cash and restricted cash |
(332,141) |
— |
||||||
|
Net increase (decrease) in cash and restricted cash |
(28,592,423) |
61,428,631 |
||||||
|
Cash, cash equivalents and restricted cash, beginning of period |
56,000,915 |
15,262,094 |
||||||
|
Cash, cash equivalents and restricted cash, end of period |
$ |
27,408,492 |
$ |
76,690,725 |
||||
|
Thorne HealthTech, Inc. |
||||||||||||||||
|
Reconciliations of Non-GAAP Financial Measures |
||||||||||||||||
|
(unaudited) |
||||||||||||||||
|
Three Months Ended |
Nine Months Ended |
|||||||||||||||
|
2022 |
2021 |
2022 |
2021 |
|||||||||||||
|
Net income attributable to common stockholders |
$ |
3,738,616 |
$ |
475,709 |
$ |
3,126,970 |
$ |
475,709 |
||||||||
|
Undistributed earnings attributable to Series E convertible preferred |
— |
553,078 |
— |
5,171,338 |
||||||||||||
|
Net income attributable to Thorne HealthTech, Inc. |
3,738,616 |
1,028,787 |
3,126,970 |
5,647,047 |
||||||||||||
|
Net loss — non-controlling interests |
(151,704) |
(77,945) |
(596,060) |
(323,006) |
||||||||||||
|
Net income |
$ |
3,586,912 |
$ |
950,842 |
$ |
2,530,910 |
$ |
5,324,041 |
||||||||
|
EBITDA and Adjusted EBITDA Reconciliation |
||||||||||||||||
|
Net income |
$ |
3,586,912 |
$ |
950,842 |
$ |
2,530,910 |
$ |
5,324,041 |
||||||||
|
Net income margin |
6.1 |
% |
2.0 |
% |
1.5 |
% |
3.9 |
% |
||||||||
|
Depreciation and amortization |
1,573,008 |
1,067,176 |
4,438,607 |
3,329,145 |
||||||||||||
|
Interest (income) expense, net |
(33,673) |
29,089 |
27,998 |
392,990 |
||||||||||||
|
Income tax expense |
— |
78,914 |
207,098 |
122,452 |
||||||||||||
|
EBITDA |
5,126,247 |
2,126,021 |
7,204,613 |
9,168,628 |
||||||||||||
|
EBITDA margin |
8.8 |
% |
4.4 |
% |
4.3 |
% |
6.8 |
% |
||||||||
|
Adjustments: |
||||||||||||||||
|
Stock-based compensation |
3,254,625 |
890,527 |
8,405,873 |
1,425,192 |
||||||||||||
|
Change in fair value of warrant liability |
(37,926) |
(2,212,554) |
(566,906) |
(902,528) |
||||||||||||
|
Write-off of acquired Drawbridge in-process research and |
— |
— |
— |
1,563,015 |
||||||||||||
|
Loss on Drawbridge Transaction |
— |
— |
— |
165,998 |
||||||||||||
|
Guarantee fees |
— |
141,949 |
— |
421,220 |
||||||||||||
|
(Gain) loss from equity interests in unconsolidated affiliates |
14 |
131,390 |
(11,023) |
3,304,496 |
||||||||||||
|
Acquisition costs |
— |
— |
519,236 |
— |
||||||||||||
|
Adjusted EBITDA |
$ |
8,342,960 |
$ |
1,077,333 |
$ |
15,551,793 |
$ |
15,146,021 |
||||||||
|
Adjusted EBITDA margin |
14.3 |
% |
2.2 |
% |
9.2 |
% |
11.2 |
% |
||||||||
|
Adjusted Net Income (Loss) Reconciliation |
||||||||||||||||
|
Net income |
$ |
3,586,912 |
$ |
950,842 |
$ |
2,530,910 |
$ |
5,324,041 |
||||||||
|
Income tax expense |
— |
78,914 |
207,098 |
122,452 |
||||||||||||
|
Stock-based compensation |
3,254,625 |
890,527 |
8,405,873 |
1,425,192 |
||||||||||||
|
Change in fair value of warrant liability |
(37,926) |
(2,212,554) |
(566,906) |
(902,528) |
||||||||||||
|
Write-off of acquired Drawbridge in-process research and |
— |
— |
— |
1,563,015 |
||||||||||||
|
Loss on Drawbridge Transaction |
— |
— |
— |
165,998 |
||||||||||||
|
Guarantee fees |
— |
141,949 |
— |
421,220 |
||||||||||||
|
(Gain) loss from equity interests in unconsolidated affiliates |
14 |
131,390 |
(11,023) |
3,304,496 |
||||||||||||
|
Acquisition costs |
— |
— |
519,236 |
— |
||||||||||||
|
Adjusted net income (loss) before adjusted tax expense |
6,803,625 |
(18,932) |
11,085,188 |
11,423,886 |
||||||||||||
|
Adjusted income tax expense (benefit) |
680,363 |
(1,893) |
1,108,519 |
1,142,389 |
||||||||||||
|
Adjusted net income (loss) |
$ |
6,123,262 |
$ |
(17,039) |
$ |
9,976,669 |
$ |
10,281,497 |
||||||||
|
Diluted weighted-average shares outstanding |
52,742,926 |
51,222,522 |
52,921,051 |
50,327,893 |
||||||||||||
|
Adjusted diluted earnings per share |
$ |
0.12 |
$ |
– |
$ |
0.19 |
$ |
0.20 |
||||||||
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SOURCE Thorne HealthTech, Inc.
