Thorne HealthTech Reports Financial and Operating Results for the Third Quarter 2021
Thorne HealthTech (NASDAQ: THRN) reported strong third quarter and nine-month results for 2021, highlighting a record net sales of $48.0 million for Q3 and $135.4 million year-to-date. Gross margins improved to 53.2% in Q3, up from 49.9% in 2020. The company's net income reached $1.0 million for Q3, significantly down from $4.2 million in 2020. Despite a 79.7% increase in selling expenses, Thorne remains focused on enhancing brand awareness and expanding its subscription model. Cash and equivalents stood at $76.7 million.
- Record net sales of $48.0 million for Q3 2021, a 23.8% increase from 2020.
- Gross margins improved to 53.2% in Q3 2021, up from 49.9% in the same period last year.
- Increased DTC subscription sales by 41.4%, reaching $6.2 million in Q3.
- Strong total cash and equivalents of $76.7 million as of September 30, 2021.
- Net income decreased to $1.0 million in Q3 2021, down from $4.2 million in Q3 2020.
- Adjusted EBITDA dropped to $1.1 million in Q3 2021 from $7.7 million in the same period last year.
- Selling, general, and administrative expenses increased by 79.7% to $24.2 million in Q3 2021.
NEW YORK, Nov. 10, 2021 /PRNewswire/ -- Thorne HealthTech, Inc. ("Thorne HealthTech" or the "Company") (NASDAQ: THRN), a leader in developing innovative solutions for a personalized approach to health and wellbeing, today announced financial and operational results for the third quarter and nine months ended September 30, 2021.
"Our digitally native brand continues to thrive, and our third quarter results are representative of our team's ability to execute against our plan. With record net sales of
Third Quarter 2021 Financial Highlights
- Net sales of
$48.0 million - Gross profit of
$25.5 million - Gross margins of
53.2% - Net income of
$1.0 million - Adjusted EBITDA of
$1.1 million
Nine Months Ended September 30, 2021 Financial Highlights
- Net sales of
$135.4 million - Gross profit of
$71.7 million - Gross margins of
52.9% - Net income of
$5.3 million - Adjusted EBITDA of
$15.1 million
Third Quarter Operational and Business Highlights
- Thorne HealthTech's shares began trading on the Nasdaq Global Select Market on September 23, 2021, under the ticker symbol "THRN," after closing its initial public offering of 7,000,000 shares of common stock at a price of
$10.00 per share, for total gross proceeds for the offering, before deducting the underwriting discounts and other offering expenses, of$70.0 million . - 218,935 active subscriptions as of September 30, 2021, up
65.5% over the third quarter 2020. This represents34.1% of DTC revenue for the quarter, up from30.0% for the same period in 2020. - Annual marketing campaign that occurred in the third quarter;
$10.8 million spent on marketing, or22.5% of revenues.
Sales
Net sales for the three months ended September 30, 2021, were
Net sales for the nine months ended September 30, 2021, were
Cost of Sales and Gross Profit
Cost of sales for the third quarter 2021 was
Gross profit for the third quarter was
Cost of sales for the nine-month period ended September 30, 2021, was
Gross profit for the nine-month period ended September 30, 2021, was
Selling, General and Administrative Expenses
Total selling, general and administrative expenses for the third quarter of 2021 were
Total selling, general and administrative expenses for the nine-month period ended September 30, 2021, were
Net Income
For the third quarter 2021, net income was
For the nine-month period ended September 30, 2021, net income was
Adjusted EBITDA (non-GAAP)
For the third quarter 2021, adjusted EBITDA was
For the nine-month period ended September 30, 2021, adjusted EBITDA was
Balance Sheet and Liquidity
As of September 30, 2021, the Company had
On October 4, 2021, the Company repaid the
Earnings Conference Call
Thorne HealthTech will host an investor conference call and webcast to discuss its recent financial results and provide an update on current business trends on Wednesday, November 10, 2021, at 8:30AM ET.
Conference Call Audio Only Dial-in Information: To participate in the conference call, dial (646) 904-5544 (domestic) or +1 (929) 526-1599 (international). Please dial into the call at least 10 minutes prior to the start to allow time to connect. The conference code is 498514.
A simultaneous webcast of the call will be accessible via the company's website at https://investors.thornehealthtech.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. Such statements are based on current assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties, many of which are beyond the parties' control, include risks described in the section entitled "Risk Factors" and elsewhere in Thorne HealthTech's filings made with the Securities and Exchange Commission in its Final Prospectus filed pursuant to Rule 424(b) on September 23, 2021. These forward-looking statements speak only as of the date hereof and should not be unduly relied upon. Thorne HealthTech disclaims any obligation to update these forward-looking statements.
Definitions
See the "Definitions" section for the definition of certain terms used within the press release, including within the schedules.
Use of Non-GAAP Financial Measures and Other Operating Metrics
The Company refers to certain financial measures that are not recognized under U.S. generally accepted accounting principles ("GAAP") in this press release, including: EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin. See the schedules to this press release, including the "Definitions" section, for additional information and reconciliations of such non-GAAP financial measures.
About Thorne HealthTech:
Thorne HealthTech (Nasdaq: THRN) is a leader in developing innovative solutions for a personalized approach to health and wellbeing. Thorne HealthTech is a science-driven wellness company that is utilizing testing and data to create improved product efficacy and deliver personalized solutions to consumers, health professionals, and corporations. Thorne HealthTech's unique, vertically integrated brands, Thorne and Onegevity, 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.
CONTACTS
Investor Relations
Danielle O'Brien
thorneIR@edelman.com
Media
Isabella Wiltse
thornemedia@edelman.com
THORNE HEALTHTECH, INC Condensed Consolidated Statements of Operations (unaudited) | ||||
Three Months Ended | Nine Months Ended | |||
2021 | 2020 | 2021 | 2020 | |
Net sales | $ 48,009,678 | $ 38,774,342 | $ 135,383,383 | $ 102,278,334 |
Cost of sales | 22,469,952 | 19,444,844 | 63,710,703 | 54,900,528 |
Gross profit | 25,539,726 | 19,329,498 | 71,672,680 | 47,377,806 |
Operating expenses: | ||||
Research and development | 2,236,913 | 552,060 | 4,279,854 | 3,123,593 |
Write-off of acquired Drawbridge in-process research and development | — | — | 1,563,015 | — |
Selling, general and administrative | 24,222,656 | 13,478,279 | 57,078,758 | 43,003,047 |
Income (loss) from operations | (919,843) | 5,299,159 | 8,751,053 | 1,251,166 |
Other (income) expense: | ||||
Interest expense, net | 29,089 | (137,777) | 392,990 | 724,418 |
Guarantee fees | 141,949 | 186,600 | 421,220 | 358,560 |
Change in fair value of warrant liability | (2,212,554) | 420,084 | (902,528) | 1,138,268 |
Loss on Drawbridge transaction | — | — | 165,998 | — |
Other expense (income), net | (39,473) | 1,129 | (77,616) | 1,129 |
Total other (income) expense, net | (2,080,989) | 470,036 | 64 | 2,222,375 |
Income (loss) before income taxes and loss from equity interests in unconsolidated affiliates | 1,161,146 | 4,829,123 | 8,750,989 | (971,209) |
Income tax expense | 78,914 | 47,934 | 122,452 | 128,708 |
Net Income (loss) before loss from equity interests in unconsolidated affiliates | 1,082,232 | 4,781,189 | 8,628,537 | (1,099,917) |
Loss from equity interests in unconsolidated affiliates | (131,390) | (620,054 ) | (3,304,496) | (1,064,080) |
Net income (loss) | 950,842 | 4,161,135 | 5,324,041 | (2,163,997) |
Net (income) loss—non-controlling interests | (77,945) | 583,661 | (323,006) | (103,566) |
Net Income (loss) attributable to Thorne HealthTech, Inc | 1,028,787 | 3,577,474 | 5,647,047 | (2,060,431) |
Undistributed earnings attributable to Series E convertible preferred stockholders | (553,078) | (3,577,474) | (5,171,338) | — |
Net Income (loss) attributable to common stockholders | $ 475,709 | $ — | $ 475,709 | $ (2,060,431) |
Earnings (loss) per share: | ||||
Basic | $ 0.02 | $ — | $ 0.02 | $ (0.20) |
Diluted | $ 0.01 | $ — | $ 0.01 | $ (0.20) |
Weighted average common shares outstanding: | ||||
Basic | 21,212,668 | 11,932,085 | 19,032,403 | 10,439,466 |
Diluted | 51,222,522 | 40,413,805 | 50,327,893 | 39,866,905 |
THORNE HEALTHTECH, INC Reconciliations of Non-GAAP Financial Measures Adjusted EBITDA (unaudited) | ||||
Three Months Ended | Nine Months Ended | |||
2021 | 2020 | 2021 | 2020 | |
EBITDA Calculation and reconciliation | ||||
Net income (loss) | $ 950,842 | $ 4,161,135 | $ 5,324,041 | $ (2,163,997 ) |
Depreciation and amortization | 1,067,176 | 957,682 | 3,329,145 | 2,851,203 |
Interest expense (income), net | 29,089 | (137,777 ) | 392,990 | 724,418 |
Income tax expense | 78,914 | 47,934 | 122,452 | 128,708 |
EBITDA | 2,126,021 | 5,028,974 | 9,168,628 | 1,540,332 |
EBITDA margin | ||||
Adjustments: | ||||
Stock-based compensation | 890,527 | 1,396,006 | 1,425,192 | 9,796,595 |
Change in fair value of warrant liability | (2,212,554 ) | 420,084 | (902,528 ) | 1,138,268 |
Write-off of acquired Drawbridge in-process research and development | — | — | 1,563,015 | — |
Loss on Drawbridge transaction | — | — | 165,998 | — |
Guarantee fees | 141,949 | 186,600 | 421,220 | 358,560 |
Loss from equity interests in unconsolidated affiliates | 131,390 | 620,054 | 3,304,496 | 1,064,080 |
Adjusted EBITDA | $ 1,077,333 | $ 7,651,718 | $ 15,146,021 | $ 13,897,835 |
Adjusted EBITDA margin | ||||
THORNE HEALTHTECH, INC.
Definitions
EBITDA and Adjusted EBITDA
We calculate Adjusted EBITDA as net income (loss) adjusted to exclude: interest income (expense), net; guarantee fees; other income (expense), net; provision for income taxes; depreciation and amortization expense; stock-based compensation expense; change in fair value of warrant liability; write-off of acquired Drawbridge in-process research and development; loss on the Drawbridge Transaction; loss from equity interest in unconsolidated affiliates; and the costs of relocating our production facility from Idaho to South Carolina and the associated start-up costs of the new facility. Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by total revenue.
We use Adjusted EBITDA and Adjusted EBITDA Margin as measures of operating performance and the operating leverage in our business. We believe that these non-GAAP financial measures are useful to investors for period-to-period comparisons of our business and in understanding and evaluating our operating results for the following reasons: (i) Adjusted EBITDA and Adjusted EBITDA Margin are widely used by investors and securities analysts to measure a company's operating performance without regard to items such as stock-based compensation expense, depreciation and amortization expense, interest expense, net, other (income) expense, net, loss from non-controlling interest and provision for income taxes, each of which can vary substantially from company to company depending upon their financing, capital structures and the method by which assets are acquired; (ii) our management uses Adjusted EBITDA and Adjusted EBITDA Margin in conjunction with financial measures prepared in accordance with GAAP for planning purposes, including the preparation of our annual operating budget, as a measure of our core operating results and the effectiveness of our business strategy, and in evaluating our financial performance; and (iii) Adjusted EBITDA and Adjusted EBITDA Margin provide consistency and comparability with our past financial performance, facilitate period-to-period comparisons of our core operating results, and also facilitate comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results.
Our use of Adjusted EBITDA and Adjusted EBITDA Margin have limitations as analytical tools, and you should not consider these measures in isolation or as substitutes for analysis of our financial results as reported under GAAP. Some of these limitations are, or may in the future be, as follows: (i) although depreciation and amortization expense are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA and Adjusted EBITDA Margin do not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; (ii) Adjusted EBITDA and Adjusted EBITDA Margin exclude stock-based compensation expense, which is a recurring expense for our business and an important part of our compensation strategy; (iii) Adjusted EBITDA and Adjusted EBITDA Margin do not reflect: (1) changes in, or cash requirements for, our working capital needs; (2) interest expense, or the cash requirements necessary to service interest or principal payments on our debt, which reduces cash available to us; (3) tax payments that may represent a reduction in cash available to us; or (4) the use of net operating loss (NOL) carryforwards and the full valuation reserve against deferred tax assets and liabilities are non-cash items that can have an impact on GAAP performance, but may not reflect the continuing operating results of our business; and (iv) the expenses and other items that we exclude in our calculation of Adjusted EBITDA and Adjusted EBITDA Margin may differ from the expenses and other items, if any, that other companies may exclude from Adjusted EBITDA when they report their operating results and we may, in the future, exclude other significant, unusual or non-recurring expenses or other items from these financial measures.
Because of these limitations, Adjusted EBITDA and Adjusted EBITDA Margin should be considered along with other operating and financial performance measures presented in accordance with GAAP.
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SOURCE Thorne HealthTech, Inc.
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