Record Net Sales With Growth of 33.1%; Raises
Full-Year Guidance Midpoints for Net Sales and Gross Margin
NEW
YORK, Aug. 8, 2023 /PRNewswire/ -- Thorne
HealthTech, Inc. ("Thorne HealthTech", "Thorne" or the "Company")
(NASDAQ: THRN), a leader in delivering personalized, innovative
solutions that empower individuals to live healthier, longer lives,
today announced its financial results for the second quarter ended
June 30, 2023.
Second Quarter Highlights:
- Net sales grew 33.1% year-over-year to $72.7 million, with direct-to-consumer ("DTC")
sales growth of 39.3%
- Gross profit grew 35.7% year-over-year to $40.6 million; gross profit as a % of net sales
increased year-over-year to 55.9%.
- Net income attributable to Thorne HealthTech, Inc. of
$4.4 million; adjusted
EBITDA1 of $12.5
million
- Diluted earnings per share ("EPS") of $0.08; adjusted diluted EPS1 of
$0.15
- Raises midpoints of full-year 2023 guidance ranges for each of
net sales and gross profit as a % of net sales, resulting in
updated guidance ranges for net sales of $285 million to $290
million and gross profit as a % of net sales of 50% to
52%
- Raises full-year 2023 guidance range for adjusted
EPS1 to $0.26 to
$0.32 based on updated estimated
applicable statutory tax rates in the second quarter
- At-home blood sampling device earned CE (Conformite Europeenne)
Mark certification in the European Union
1Adjusted EBITDA and adjusted diluted EPS are
non-GAAP measures. Important disclosures about, and reconciliations
of, non-GAAP measures to their most directly comparable GAAP
measures, including adjusted EBITDA, adjusted net income and
adjusted diluted earnings EPS are provided in the "Non-GAAP
Financial Measures" section of this press release.
"The Company delivered another strong financial performance in
the second quarter, achieving record net sales and adjusted
EBITDA," said Paul Jacobson, Thorne
HealthTech's chairman and CEO. "Robust demand for our premium
wellness offerings resulted in 33 percent sales growth, with
favorable gross margin contributions from direct-to-consumer
channel strength, pricing, product rationalization, and lower
overhead. Looking ahead to the second half of the year, with
our plant expansion on track, the core business is well positioned
for continued momentum as we drive innovation into the product
portfolio and increase brand awareness through our recently
launched marketing campaign. As a result, we are raising the
midpoints of our guidance ranges for sales and gross margin."
Net Sales
The following tables provide a summary of sales by channel for
the three and six months ended June 30, 2023, compared to the
three and six months ended June 30, 2022:
|
|
Three Months Ended
June 30,
|
|
|
|
Amounts
|
|
|
Year-Over-Year
|
|
|
As % of Net
Sales
|
|
|
|
2023
|
|
|
2022
|
|
|
$
Change
|
|
|
%
Change
|
|
|
2023
|
|
|
2022
|
|
(dollars in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DTC
|
|
$
|
36,800
|
|
|
$
|
26,425
|
|
|
$
|
10,375
|
|
|
|
39.3
|
%
|
|
|
50.6
|
%
|
|
|
48.4
|
%
|
Professional/B2B
(1)
|
|
|
35,915
|
|
|
|
28,216
|
|
|
|
7,699
|
|
|
|
27.3
|
%
|
|
|
49.4
|
%
|
|
|
51.6
|
%
|
Net Sales
(2)
|
|
$
|
72,715
|
|
|
$
|
54,641
|
|
|
$
|
18,074
|
|
|
|
33.1
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
|
|
Amounts
|
|
|
Year-Over-Year
|
|
|
As % of Net
Sales
|
|
|
|
2023
|
|
|
2022
|
|
|
$
Change
|
|
|
%
Change
|
|
|
2023
|
|
|
2022
|
|
(dollars in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DTC
|
|
$
|
70,617
|
|
|
$
|
50,416
|
|
|
$
|
20,201
|
|
|
|
40.1
|
%
|
|
|
51.2
|
%
|
|
|
46.4
|
%
|
Professional/B2B
(1)
|
|
|
67,336
|
|
|
|
58,255
|
|
|
|
9,081
|
|
|
|
15.6
|
%
|
|
|
48.8
|
%
|
|
|
53.6
|
%
|
Net Sales
(2)
|
|
$
|
137,953
|
|
|
$
|
108,671
|
|
|
$
|
29,282
|
|
|
|
26.9
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
(1)
|
"Professional"
generally means the Company's network of health professionals; and
"B2B" generally means business-to-business customers.
|
(2)
|
As disclosed in prior
quarters, we reclassified certain amounts in the condensed
consolidated statements of operations as a result of certain
immaterial classification errors related to prior interim periods.
For the three months ended June 30, 2022, such
reclassification reflected a decrease of $1.4 million to net sales,
a decrease of $1.4 million to marketing expenses, and a net
decrease of $0 to selling, general, and administrative expenses.
For the six months ended June 30, 2022, such
reclassification reflected a decrease of $2.1 million to net sales,
a decrease of $2.4 million to marketing expenses, and a net
increase of $0.3 million to selling, general, and
administrative expenses. There was no impact of the
reclassification adjustments to the balance sheets, statements of
cash flows or key operating measures such as operating income, net
income, adjusted EBITDA, adjusted net income, earnings per share or
adjusted earnings per share for any period as a result of the
reclassifications.
|
The following table provides a summary of the Company's annual
life-time value ("LTV") to customer acquisition cost ("CAC") ratio
for the three and six months ended June 30, 2023, compared to
the three and six months ended June 30, 2022:
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
LTV to CAC
(3)
|
|
4.0x
|
|
1.8x
|
|
3.7x
|
|
2.7x
|
|
|
|
(3)
|
Refer to the "Key
Financial and Operating Data" section below.
|
As of June 30, 2023, the number of
active subscriptions on Thorne.com grew 60.2% to 163,374, compared
to 101,976 as of June 30, 2022.
Information on our subscriptions on Amazon.com as of June 30, 2023 was not made available on the
Amazon.com platform due to certain technical challenges with its
data reporting. Refer to the "Key Financial and Operating Data"
section below for further detail regarding key financial and
operating metrics.
Cost of Sales and Gross Profit
The following tables provide a summary of cost of sales and
gross profit for the three and six months ended June 30, 2023,
compared to the three and six months ended June 30, 2022:
|
|
Three Months Ended
June 30,
|
|
|
|
Amounts
|
|
|
Year-Over-Year
|
|
|
As % of Net
Sales
|
|
|
|
2023
|
|
|
2022
|
|
|
$
Change
|
|
|
%
Change
|
|
|
2023
|
|
|
2022
|
|
(dollars in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
72,715
|
|
|
$
|
54,641
|
|
|
$
|
18,074
|
|
|
|
33.1
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
Cost of
sales
|
|
|
32,077
|
|
|
|
24,704
|
|
|
|
7,373
|
|
|
|
29.8
|
%
|
|
|
44.1
|
%
|
|
|
45.2
|
%
|
Gross profit
|
|
$
|
40,638
|
|
|
$
|
29,937
|
|
|
$
|
10,701
|
|
|
|
35.7
|
%
|
|
|
55.9
|
%
|
|
|
54.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
|
|
Amounts
|
|
|
Year-Over-Year
|
|
|
As % of Net
Sales
|
|
|
|
2023
|
|
|
2022
|
|
|
$
Change
|
|
|
%
Change
|
|
|
2023
|
|
|
2022
|
|
(dollars in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
137,952
|
|
|
$
|
108,671
|
|
|
$
|
29,281
|
|
|
|
26.9
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
Cost of
sales
|
|
|
63,041
|
|
|
|
49,255
|
|
|
|
13,786
|
|
|
|
28.0
|
%
|
|
|
45.7
|
%
|
|
|
45.3
|
%
|
Gross profit
|
|
$
|
74,911
|
|
|
$
|
59,416
|
|
|
$
|
15,495
|
|
|
|
26.1
|
%
|
|
|
54.3
|
%
|
|
|
54.7
|
%
|
For the three and six months ended June
30, 2023, the increase in gross profit as a percentage of
net sales was primarily from (i) increase in net sales and (ii)
lower overhead costs. These increases were partially offset by
certain higher cost of raw material as we sell through our higher
priced inventory.
Operating Expenses
The following tables provide a summary of selected operating
expenses for the three and six months ended June 30, 2023,
compared to the three and six months ended June 30, 2022:
|
|
Three Months Ended
June 30,
|
|
|
|
Amounts
|
|
|
Year-Over-Year
|
|
|
As % of Net
Sales
|
|
|
|
2023
|
|
|
2022
|
|
|
$
Change
|
|
|
%
Change
|
|
|
2023
|
|
|
2022
|
|
(dollars in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
$
|
1,506
|
|
|
$
|
1,744
|
|
|
$
|
(238)
|
|
|
|
-13.6
|
%
|
|
|
2.1
|
%
|
|
|
3.2
|
%
|
Marketing
|
|
|
10,038
|
|
|
|
15,841
|
|
|
|
(5,803)
|
|
|
|
-36.6
|
%
|
|
|
13.8
|
%
|
|
|
29.0
|
%
|
Selling, general and
administrative
|
|
|
22,471
|
|
|
|
18,505
|
|
|
|
3,966
|
|
|
|
21.4
|
%
|
|
|
30.9
|
%
|
|
|
33.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
|
|
Amounts
|
|
|
Year-Over-Year
|
|
|
As % of Net
Sales
|
|
|
|
2023
|
|
|
2022
|
|
|
$
Change
|
|
|
%
Change
|
|
|
2023
|
|
|
2022
|
|
(dollars in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
$
|
3,278
|
|
|
$
|
3,711
|
|
|
$
|
(433)
|
|
|
|
-11.7
|
%
|
|
|
2.4
|
%
|
|
|
3.4
|
%
|
Marketing
|
|
|
18,976
|
|
|
|
20,642
|
|
|
|
(1,666)
|
|
|
|
-8.1
|
%
|
|
|
13.8
|
%
|
|
|
19.0
|
%
|
Selling, general and
administrative
|
|
|
46,048
|
|
|
|
36,433
|
|
|
|
9,615
|
|
|
|
26.4
|
%
|
|
|
33.4
|
%
|
|
|
33.5
|
%
|
The decrease in marketing and marketing expense for three and
six months ended June 30, 2023 was in
line with planned spending targets, ahead of a significant
marketing campaign that started in late July, which is intended to
increase brand awareness and highlight the long-term value of the
benefits of Thorne's portfolio of offerings. The increase in
selling, general and administrative expenses for three and six
months ended June 30, 2023 was
primarily due to (i) increased selling costs associated with the
increase in net sales and (ii) increased employee compensation
costs.
Net Income and Diluted EPS
The following tables provide a summary of net income
attributable to Thorne HealthTech, Inc., adjusted EBITDA, adjusted
net income (loss), diluted EPS and adjusted diluted EPS for the
three and six months ended June 30, 2023, compared to the
three and six months ended June 30, 2022:
|
|
Three Months Ended
June 30,
|
|
|
|
Amounts
|
|
|
Year-Over-Year
|
|
|
|
2023
|
|
|
2022
|
|
|
$
Change
|
|
(dollars in
thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Thorne HealthTech, Inc.
|
|
$
|
4,446
|
|
|
$
|
(5,591)
|
|
|
$
|
10,037
|
|
Adjusted
EBITDA
|
|
|
12,535
|
|
|
|
(1,336)
|
|
|
|
13,870
|
|
Adjusted net income
(loss)
|
|
|
8,048
|
|
|
|
(2,602)
|
|
|
|
10,650
|
|
Diluted EPS
|
|
$
|
0.08
|
|
|
$
|
(0.11)
|
|
|
$
|
0.19
|
|
Adjusted diluted
EPS
|
|
$
|
0.15
|
|
|
$
|
(0.05)
|
|
|
$
|
0.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
|
|
Amounts
|
|
|
Year-Over-Year
|
|
|
|
2023
|
|
|
2022
|
|
|
$
Change
|
|
(dollars in
thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Thorne HealthTech, Inc.
|
|
$
|
4,044
|
|
|
$
|
(612)
|
|
|
$
|
4,655
|
|
Adjusted
EBITDA
|
|
|
18,655
|
|
|
|
7,425
|
|
|
|
11,230
|
|
Adjusted net
income
|
|
|
11,130
|
|
|
|
4,048
|
|
|
|
7,082
|
|
Diluted EPS
|
|
$
|
0.08
|
|
|
$
|
(0.01)
|
|
|
$
|
0.09
|
|
Adjusted diluted
EPS
|
|
$
|
0.21
|
|
|
$
|
0.08
|
|
|
$
|
0.13
|
|
Financial Position
As of June 30, 2023, the Company had $17.1 million in unrestricted cash and cash
equivalents, $15.2 million of
restricted cash associated with our plant expansion, and
$15.0 million of debt outstanding,
inclusive of $2.9 million
attributable to equipment financing and note payable of
$0.1 million. In addition, as of
June 30, 2023, the Company had $30.1
million of available borrowing capacity on its revolving
line of credit, with an option for an additional $15 million subject to agreement by the lender.
With the combination of restricted cash, existing equipment
financing arrangements and funds from a tenant improvement
allowance, the Company does not currently expect additional
borrowings under its revolving line of credit in connection with
the previously announced ongoing plant expansion, which started in
the third quarter of 2022 and is projected to be fully operational
by the end of the first quarter of 2024
Financial Guidance
The Company is raising the midpoints of its full-year 2023
guidance ranges for each of net sales and gross profit as a
percentage of net sales. The Company is also raising its full-year
2023 guidance range for adjusted EPS based on updating its estimate
of applicable statutory rates during the second quarter, as
described below. The Company is reaffirming its prior guidance
range for adjusted EBITDA. Accordingly, the following table
presents the Company's updated full-year 2023 guidance and the
corresponding growth rates over full-year 2022 results at the low
and high ends of the guidance ranges for each measure:
|
|
Updated Full-Year
Guidance
|
|
|
Prior
Guidance
|
|
|
Low -
High
|
|
Low - High
(Y/Y%)
|
|
|
Low -
High
|
Net sales
|
|
$285 million - $290
million
|
|
24.6% -
26.8%
|
|
|
$280 million - $290
million
|
Gross profit as a % of
net sales
|
|
50% - 52%
|
|
—
|
|
|
49% - 52%
|
Adjusted
EBITDA
|
|
$30 million - $32
million
|
|
22.4% -
30.6%
|
|
|
$30 million - $32
million
|
Adjusted diluted
EPS
|
|
$0.26 -
$0.32
|
|
(18.8%) - 0%
|
|
|
$0.25 -
$0.31
|
The Company's updated full-year guidance assumes the
following:
- Marketing expenses of between 14% and 15% of net sales, an
increase from the prior range of between 13% and 15%, with the
highest spend expected during the third quarter in connection with
the Company's recently launched marketing campaign
- Adjusted diluted EPS guidance also assumes: (i) depreciation
and amortization of approximately 2.5% of net sales, with cost
recognition expected to gradually increase during the year from the
facility expansion, (ii) interest expense of approximately 1% of
sales, (iii) an updated estimated full-year adjusted tax rate of
22.9%, a reduction from the prior estimate of 26% and (iv) diluted
weighted-average shares outstanding of 54 million as of
December 31, 2023
- Capital expenditures of between $35
million to $38 million
primarily related to our plant expansion
Webcast and Conference Call Details
The Company will host a conference call on Tuesday, August 8, 2023, at 5:00 p.m. (U.S. Eastern Time) to discuss its
second quarter 2023 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 +1 888 300 4150 (U.S. and Canada), or +1 646 970 1530 for international
callers, approximately 10 minutes prior to the start time. The
access code for the live call is 6156220. An audio replay will be
available for 7 days following the call. To access the replay, dial
+1 800 770 2030 (U.S. and Canada)
or +1 647 362 9199 (International). The access code for the replay
is 6156220.
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,
47,000+ health-care professionals, thousands of professional
athletes, more than 100 professional sports teams, and multiple
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
31, 2023 and Quarterly Report on Form 10-Q, which we plan to
file on or about August 9, 2023, 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
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.
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 annual
life-time value ("LTV"), customer acquisition costs ("CAC"), LTV to
CAC ratio and number of subscriptions.
We define annual LTV to CAC ratio as LTV from a specific
calendar year divided by the CAC of that same year. Annual LTV is
defined as the average gross contribution per customer purchasing
product on Thorne.com and on Amazon.com via our authorized reseller
("DTC Customer") within a particular calendar year 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 calendar year less the cost
of goods divided by the number of purchasing DTC Customers in the
same period. To arrive at the annual LTV for a particular calendar
year, we divide the average gross contribution by that year's Churn
Rate. Annual CAC is defined as the total advertising and marketing
expenses, inclusive of cooperative advertising costs treated as a
reduction of net sales, less headcount and associated benefit
expenses as well as costs attributed to value-in-kind, product
samples, and sponsorships for professional and B2B customers,
divided by the number of DTC Customers who placed their first order
during that same calendar year. We view the annual LTV to CAC ratio
as a key indicator for marketing efficiency.
The Company defines subscriptions as orders resulting from 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, non-cash
lease expense, 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-related costs. 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, non-cash lease expense, change
in fair value of warrant liability, income or loss from equity in
unconsolidated affiliates, and transaction-related costs 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,
transaction-related costs 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
(unaudited)
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2023
|
|
|
2022
|
|
Assets
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
17,093,556
|
|
|
$
|
36,024,847
|
|
Restricted
cash
|
|
|
15,201,129
|
|
|
|
4,900,000
|
|
Accounts receivable,
net
|
|
|
25,406,854
|
|
|
|
14,367,785
|
|
Related party
receivables
|
|
|
159,528
|
|
|
|
68,731
|
|
Inventories,
net
|
|
|
71,685,307
|
|
|
|
58,643,928
|
|
Prepaid expenses and
other current assets
|
|
|
5,919,447
|
|
|
|
2,615,593
|
|
Total current
assets
|
|
|
135,465,821
|
|
|
|
116,620,884
|
|
|
|
|
|
|
|
|
Long-term
Assets
|
|
|
|
|
|
|
Property and
equipment, net
|
|
|
65,324,802
|
|
|
|
49,176,844
|
|
Operating lease
right-of-use assets, net
|
|
|
33,588,576
|
|
|
|
17,546,240
|
|
Finance lease
right-of-use assets, net
|
|
|
2,734,096
|
|
|
|
3,143,592
|
|
Intangible assets,
net
|
|
|
14,887,063
|
|
|
|
11,830,249
|
|
Goodwill
|
|
|
20,041,040
|
|
|
|
20,041,040
|
|
Investments
|
|
|
1,400,000
|
|
|
|
1,400,000
|
|
Equity-method
investments
|
|
|
981,726
|
|
|
|
942,501
|
|
Other related party
receivables
|
|
|
—
|
|
|
|
153,556
|
|
Deferred tax
assets
|
|
|
6,942,187
|
|
|
|
7,782,187
|
|
Other
assets
|
|
|
1,162,138
|
|
|
|
1,166,928
|
|
Total assets
|
|
$
|
282,527,449
|
|
|
$
|
229,804,021
|
|
Thorne HealthTech,
Inc.
Condensed
Consolidated Balance Sheets
(unaudited)
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2023
|
|
|
2022
|
|
Liabilities,
Convertible Preferred Stock and Stockholders' Equity
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
40,556,301
|
|
|
$
|
26,997,203
|
|
Accrued
payroll
|
|
|
4,333,786
|
|
|
|
3,508,583
|
|
Other accrued
liabilities
|
|
|
5,795,887
|
|
|
|
3,563,843
|
|
Related party
payable
|
|
|
443,670
|
|
|
|
988,778
|
|
Current portion of
operating lease liabilities
|
|
|
2,491,641
|
|
|
|
1,504,433
|
|
Current portion of
finance lease liabilities
|
|
|
1,742,661
|
|
|
|
1,660,404
|
|
Notes
payable
|
|
|
116,368
|
|
|
|
814,576
|
|
Current portion of
long-term debt
|
|
|
764,766
|
|
|
|
523,510
|
|
Total current
liabilities
|
|
|
56,245,080
|
|
|
|
39,561,330
|
|
Long-term
Liabilities
|
|
|
|
|
|
|
Revolving line of
credit
|
|
|
10,000,000
|
|
|
|
—
|
|
Operating lease
liabilities, net of current portion
|
|
|
44,372,844
|
|
|
|
28,430,474
|
|
Finance lease
liabilities, net of current portion
|
|
|
1,125,607
|
|
|
|
1,455,011
|
|
Long-term debt, net of
current portion
|
|
|
14,111,906
|
|
|
|
12,646,049
|
|
Warrant
liability
|
|
|
1,416,909
|
|
|
|
1,059,343
|
|
Total
liabilities
|
|
|
127,272,346
|
|
|
|
83,152,207
|
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
|
|
Common stock; par
value $0.01, 200,000,000 shares authorized as of June 30, 2023 and
December 31, 2022; 53,920,020 and 53,289,685 issued and outstanding
as of June 30, 2023 and December 31, 2022, respectively
|
|
|
543,714
|
|
|
|
534,875
|
|
Treasury
stock
|
|
|
(21,950)
|
|
|
|
(9,678)
|
|
Additional paid-in
capital
|
|
|
265,697,111
|
|
|
|
260,978,339
|
|
Accumulated
deficit
|
|
|
(112,296,636)
|
|
|
|
(116,483,976)
|
|
Accumulated other
comprehensive loss
|
|
|
(85,385)
|
|
|
|
(29,136)
|
|
Total stockholders'
equity —Thorne HealthTech, Inc.
|
|
|
153,836,854
|
|
|
|
144,990,424
|
|
Non-controlling
interests
|
|
|
1,418,249
|
|
|
|
1,661,390
|
|
Total stockholders'
equity
|
|
|
155,255,103
|
|
|
|
146,651,814
|
|
Total liabilities and
stockholders' equity
|
|
$
|
282,527,449
|
|
|
$
|
229,804,021
|
|
Thorne HealthTech,
Inc.
Condensed
Consolidated Statements of Operations
(unaudited)
|
|
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
Net sales
|
|
$
|
72,714,600
|
|
|
$
|
54,640,936
|
|
|
$
|
137,952,379
|
|
|
$
|
108,670,636
|
|
Cost of
sales
|
|
|
32,077,213
|
|
|
|
24,704,294
|
|
|
|
63,041,402
|
|
|
|
49,254,885
|
|
Gross profit
|
|
|
40,637,387
|
|
|
|
29,936,642
|
|
|
|
74,910,977
|
|
|
|
59,415,751
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
|
1,506,149
|
|
|
|
1,743,812
|
|
|
|
3,278,238
|
|
|
|
3,711,478
|
|
Marketing
|
|
|
10,037,781
|
|
|
|
15,841,490
|
|
|
|
18,976,472
|
|
|
|
20,642,450
|
|
Selling, general and
administrative
|
|
|
22,470,851
|
|
|
|
18,504,691
|
|
|
|
46,048,391
|
|
|
|
36,433,167
|
|
Income (loss) from
operations
|
|
|
6,622,606
|
|
|
|
(6,153,351)
|
|
|
|
6,607,876
|
|
|
|
(1,371,344)
|
|
Other (expense) income,
net:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
|
(583,145)
|
|
|
|
(31,514)
|
|
|
|
(978,144)
|
|
|
|
(61,671)
|
|
Change in fair value
of warrant liability
|
|
|
(19,210)
|
|
|
|
594,899
|
|
|
|
(357,566)
|
|
|
|
528,980
|
|
Other income
(expense), net
|
|
|
236,787
|
|
|
|
(13,761)
|
|
|
|
571,318
|
|
|
|
44,094
|
|
Total other (expense)
income, net
|
|
|
(365,568)
|
|
|
|
549,624
|
|
|
|
(764,392)
|
|
|
|
511,403
|
|
Income (loss) before
income taxes and gain from equity interests in unconsolidated
affiliates
|
|
|
6,257,038
|
|
|
|
(5,603,727)
|
|
|
|
5,843,484
|
|
|
|
(859,941)
|
|
Income tax
expense
|
|
|
2,124,000
|
|
|
|
174,553
|
|
|
|
2,153,000
|
|
|
|
207,098
|
|
Net income (loss)
before gain from equity interests in unconsolidated
affiliates
|
|
|
4,133,038
|
|
|
|
(5,778,280)
|
|
|
|
3,690,484
|
|
|
|
(1,067,039)
|
|
Gain from equity
interests in unconsolidated affiliates
|
|
|
198,964
|
|
|
|
11,037
|
|
|
|
110,030
|
|
|
|
11,037
|
|
Net income
(loss)
|
|
|
4,332,002
|
|
|
|
(5,767,243)
|
|
|
|
3,800,514
|
|
|
|
(1,056,002)
|
|
Net loss —
non-controlling interests
|
|
|
(113,817)
|
|
|
|
(176,538)
|
|
|
|
(243,141)
|
|
|
|
(444,356)
|
|
Net income (loss)
attributable to Thorne HealthTech, Inc.
|
|
$
|
4,445,819
|
|
|
$
|
(5,590,705)
|
|
|
$
|
4,043,655
|
|
|
$
|
(611,646)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.08
|
|
|
$
|
(0.11)
|
|
|
$
|
0.08
|
|
|
$
|
(0.01)
|
|
Diluted
|
|
$
|
0.08
|
|
|
$
|
(0.11)
|
|
|
$
|
0.08
|
|
|
$
|
(0.01)
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
53,866,857
|
|
|
|
52,731,604
|
|
|
|
53,606,294
|
|
|
|
52,648,653
|
|
Diluted
|
|
|
53,866,857
|
|
|
|
52,731,604
|
|
|
|
53,606,294
|
|
|
|
52,648,653
|
|
Thorne HealthTech,
Inc.
Condensed
Consolidated Statements of Cash Flows
(unaudited)
|
|
|
|
Six Months Ended
June 30,
|
|
|
|
2023
|
|
|
2022
|
|
Cash Flows from
Operating Activities
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
3,800,514
|
|
|
$
|
(1,056,002)
|
|
Adjustments to
reconcile net income (loss) to net cash provided by (used in)
operating activities:
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
3,250,840
|
|
|
|
2,865,599
|
|
Change in fair value
of warrant liability
|
|
|
357,566
|
|
|
|
(528,980)
|
|
Non-cash lease
expense
|
|
|
1,719,871
|
|
|
|
1,852,780
|
|
Stock-based
compensation
|
|
|
6,621,221
|
|
|
|
5,151,248
|
|
Amortization of debt
issuance cost and debt discount
|
|
|
86,362
|
|
|
|
1,285
|
|
Change in allowance
for credit losses
|
|
|
5,415
|
|
|
|
(6,363)
|
|
Provision for losses
on inventories
|
|
|
266,677
|
|
|
|
(157,682)
|
|
Loss on sale of
equipment
|
|
|
27,233
|
|
|
|
—
|
|
Gain from equity
interests in unconsolidated affiliates
|
|
|
(110,029)
|
|
|
|
(11,037)
|
|
Write off of related
party receivable
|
|
|
154,696
|
|
|
|
—
|
|
Other
non-cash
|
|
|
—
|
|
|
|
(38,628)
|
|
Change in operating
assets and liabilities
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(10,900,799)
|
|
|
|
(5,007,492)
|
|
Related party
receivables
|
|
|
(91,937)
|
|
|
|
182,605
|
|
Related party
payables
|
|
|
(545,108)
|
|
|
|
(759,905)
|
|
Inventories
|
|
|
(13,237,252)
|
|
|
|
(19,321,200)
|
|
Prepaid expenses and
other assets
|
|
|
(3,385,426)
|
|
|
|
1,515,266
|
|
Accounts payable and
accrued liabilities
|
|
|
19,052,192
|
|
|
|
9,923,479
|
|
Accrued
payroll
|
|
|
825,203
|
|
|
|
—
|
|
Other accrued
liabilities
|
|
|
1,164,694
|
|
|
|
—
|
|
Operating lease
liabilities
|
|
|
224,052
|
|
|
|
(1,612,862)
|
|
Net cash provided by
(used in) operating activities
|
|
|
9,285,985
|
|
|
|
(7,007,889)
|
|
Cash Flows from
Investing Activities
|
|
|
|
|
|
|
Purchase of property
and equipment
|
|
|
(21,048,631)
|
|
|
|
(2,226,073)
|
|
Acquisition of PreCon
Health
|
|
|
(4,000,000)
|
|
|
|
—
|
|
Acquisition of
Nutrativa, net of cash acquired
|
|
|
—
|
|
|
|
(14,862,287)
|
|
Purchase of investment
in unconsolidated subsidiary
|
|
|
—
|
|
|
|
(1,000,000)
|
|
Purchase of license
agreements
|
|
|
(375,000)
|
|
|
|
(375,000)
|
|
Net cash used in
investing activities
|
|
|
(25,423,631)
|
|
|
|
(18,463,360)
|
|
Cash Flows from
Financing Activities
|
|
|
|
|
|
|
Proceeds from
Revolving Line of Credit
|
|
|
35,000,000
|
|
|
|
—
|
|
Proceeds from
long-term debt - equipment financing
|
|
|
564,828
|
|
|
|
—
|
|
Payments on Revolving
Line of Credit
|
|
|
(25,000,000)
|
|
|
|
—
|
|
Payment of long-term
debt - equipment financing
|
|
|
(342,673)
|
|
|
|
(243,475)
|
|
Payments of notes
payable
|
|
|
(698,208)
|
|
|
|
—
|
|
Payments on finance
lease
|
|
|
(894,332)
|
|
|
|
(209,514)
|
|
Buyback of management
stock
|
|
|
(1,227,230)
|
|
|
|
—
|
|
Debt issuance
costs
|
|
|
—
|
|
|
|
(25,700)
|
|
Proceeds from issuance
of ownership interest in consolidated subsidiary
|
|
|
—
|
|
|
|
2,601,806
|
|
Stock options
exercised
|
|
|
161,348
|
|
|
|
243,943
|
|
Net cash provided by
financing activities
|
|
|
7,563,733
|
|
|
|
2,367,060
|
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash and restricted cash
|
|
|
(56,249)
|
|
|
|
(186,200)
|
|
Net decrease in cash
and restricted cash
|
|
|
(8,630,162)
|
|
|
|
(23,290,389)
|
|
Cash, cash
equivalents and restricted cash, beginning of period
|
|
|
40,924,847
|
|
|
|
56,000,915
|
|
Cash, cash
equivalents and restricted cash, end of period
|
|
$
|
32,294,685
|
|
|
$
|
32,710,526
|
|
Thorne
HealthTech, Inc.
Reconciliations of
Non-GAAP Financial Measures
(unaudited)
|
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
Net income (loss)
attributable to Thorne HealthTech, Inc.
|
$
|
4,445,819
|
|
|
$
|
(5,590,705)
|
|
|
$
|
4,043,655
|
|
|
$
|
(611,646)
|
|
Gain from equity
interests in unconsolidated affiliates
|
|
(113,817)
|
|
|
|
(176,538)
|
|
|
|
(243,141)
|
|
|
|
(444,356)
|
|
Net income (loss)
before gain from equity interests in unconsolidated
affiliates
|
$
|
4,332,002
|
|
|
$
|
(5,767,243)
|
|
|
$
|
3,800,514
|
|
|
$
|
(1,056,002)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA and Adjusted
EBITDA Reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
4,332,002
|
|
|
$
|
(5,767,243)
|
|
|
$
|
3,800,514
|
|
|
$
|
(1,056,002)
|
|
Net income (loss)
margin
|
|
6.0
|
%
|
|
|
(10.6)
|
%
|
|
|
2.8
|
%
|
|
|
(1.0)
|
%
|
Depreciation and
amortization
|
|
1,689,821
|
|
|
|
1,523,749
|
|
|
|
3,250,840
|
|
|
|
2,865,599
|
|
Interest expense,
net
|
|
583,145
|
|
|
|
31,514
|
|
|
|
978,144
|
|
|
|
61,671
|
|
Income tax
expense
|
|
2,124,000
|
|
|
|
174,553
|
|
|
|
2,153,000
|
|
|
|
207,098
|
|
EBITDA
|
|
8,728,968
|
|
|
|
(4,037,427)
|
|
|
|
10,182,498
|
|
|
|
2,078,366
|
|
EBITDA
margin
|
|
12.0
|
%
|
|
|
(7.4)
|
%
|
|
|
7.4
|
%
|
|
|
1.9
|
%
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
2,873,086
|
|
|
|
3,141,836
|
|
|
|
6,621,221
|
|
|
|
5,151,248
|
|
Non-cash lease
expense
|
|
546,459
|
|
|
|
107,113
|
|
|
|
1,037,627
|
|
|
|
216,017
|
|
Change in fair value
of warrant liability
|
|
19,210
|
|
|
|
(594,899)
|
|
|
|
357,566
|
|
|
|
(528,980)
|
|
Gain from equity
interests in unconsolidated affiliates
|
|
(198,964)
|
|
|
|
(11,037)
|
|
|
|
(110,030)
|
|
|
|
(11,037)
|
|
Transaction-related
costs
|
|
566,038
|
|
|
|
58,825
|
|
|
|
566,038
|
|
|
|
519,236
|
|
Adjusted
EBITDA
|
$
|
12,534,797
|
|
|
$
|
(1,335,589)
|
|
|
$
|
18,654,920
|
|
|
$
|
7,424,850
|
|
Adjusted EBITDA
Margin
|
|
17.2
|
%
|
|
|
(2.4)
|
%
|
|
|
13.5
|
%
|
|
|
6.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income
(Loss) Reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
4,332,002
|
|
|
|
(5,767,243)
|
|
|
|
3,800,514
|
|
|
|
(1,056,002)
|
|
Income tax
expense
|
|
2,124,000
|
|
|
|
174,553
|
|
|
|
2,153,000
|
|
|
|
207,098
|
|
Stock-based
compensation
|
|
2,873,086
|
|
|
|
3,141,836
|
|
|
|
6,621,221
|
|
|
|
5,151,248
|
|
Non-cash lease
expense
|
|
546,459
|
|
|
|
107,113
|
|
|
|
1,037,627
|
|
|
|
216,017
|
|
Change in fair value
of warrant liability
|
|
19,210
|
|
|
|
(594,899)
|
|
|
|
357,566
|
|
|
|
(528,980)
|
|
Gain from equity
interests in unconsolidated affiliates
|
|
(198,964)
|
|
|
|
(11,037)
|
|
|
|
(110,030)
|
|
|
|
(11,037)
|
|
Transaction-related
costs
|
|
566,038
|
|
|
|
58,825
|
|
|
|
566,038
|
|
|
|
519,236
|
|
Adjusted net income
(loss) before adjusted tax expense
|
|
10,261,831
|
|
|
|
(2,890,852)
|
|
|
|
14,425,936
|
|
|
|
4,497,580
|
|
Adjusted income tax
expense (benefit)
|
|
2,213,659
|
|
|
|
(289,085)
|
|
|
|
3,296,326
|
|
|
|
449,758
|
|
Adjusted net income
(loss)
|
$
|
8,048,172
|
|
|
$
|
(2,601,767)
|
|
|
$
|
11,129,610
|
|
|
$
|
4,047,822
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
weighted-average shares outstanding
|
|
53,866,857
|
|
|
|
52,731,604
|
|
|
|
53,606,294
|
|
|
|
52,648,653
|
|
Adjusted diluted
earnings (loss) per share
|
$
|
0.15
|
|
|
$
|
(0.05)
|
|
|
$
|
0.21
|
|
|
$
|
0.08
|
|
View original content to download
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SOURCE Thorne HealthTech, Inc.