On August 9, 2023 ChromaDex Corp. (NASDAQ:CDXC) reported financial results for the second quarter of 2023 (Press release, ChromaDex, AUG 9, 2023, View Source [SID1234634056]).
Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:
Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing
Schedule Your 30 min Free Demo!
Second Quarter 2023 and Recent Highlights
Total net sales were $20.3 million, with $16.9 million from Tru Niagen, up 21% and 16% from the prior year quarter, respectively.
Strong gross margin of 60.8% and a $1.8 million reduction in operating expenses.
Sales and marketing expense as a percentage of net sales was 29.6%, an improvement of 1,830 basis points, compared to 47.9% from the prior year quarter.
Net loss was $2.2 million or $(0.03) per share, an improvement of $4.2 million, or $0.06 per share, from the prior year quarter.
Adjusted EBITDA, a non-GAAP measure, was a positive $0.2 million, a $4.9 million improvement from the prior year quarter.
Two published abstracts, originally presented in April 2023, highlighted the significance of NAD+ in glaucoma patients and that supplementation with nicotinamide riboside, NR, shows promising effects.(1)
ChromaDex External Research Program (CERP) celebrated its 10th anniversary, signing more than 275 global research agreements with over 235 independent, expert investigators to uncover the full potential of NAD+ with Niagen. This research has shown that the health benefits of Niagen translate from preclinical models to human clinical studies for brain, heart and muscle health with remarkable consistency. Looking to the next 10 years, there is great anticipation for emerging benefits in sensory, infant, maternal and reproductive health to be translated from preclinical to human studies.
"This was another excellent quarter, delivering 21% year-over-year revenue growth, positive Adjusted EBITDA of $0.2 million and positive operating cash flows for the second consecutive quarter," said ChromaDex Chief Executive Officer, Rob Fried. "We are again raising our 2023 revenue outlook by 2.5% to at least 15% growth, underscoring our commitment to consistent profitable growth."
(1) Refers to two independent clinical study abstracts originally presented in April 2023 at the Association for Research in Vision and Ophthalmology (ARVO) annual meeting and recently published in the peer-reviewed ARVO journal, Investigative Ophthalmology & Visual Science.
Results of operations for the three months ended June 30, 2023 compared to the prior year quarter
ChromaDex reported a net sales increase of 21%, or $3.6 million, to $20.3 million. The increase in net sales was fueled by growth in sales of Tru Niagen and growth in Niagen ingredient sales.
Gross marginpercentageimproved 80 basis points to 60.8%. The improvement in gross margin percentage is primarily driven by economies of scale and supply chain management optimization efforts, partly offset by changes in business mix.
Operating expensedecreased 11%, or $1.8 million, to $14.7 million driven by a $2.0 million reduction in sales and marketing expense slightly offset by higher research and development expense and general and administrative expense.
Net loss was $2.2 million, or $0.03 loss per share, compared to a net loss of $6.4 million or $0.09 loss per share for the second quarter of 2022. Adjusted EBITDA, a non-GAAP measure, was a positive $0.2 million, a $4.9 million improvement from Q2 2022. See "Reconciliation of Non-GAAP Financial Measures" for a reconciliation of non-GAAP Adjusted EBITDA to net loss, the most directly comparable GAAP measure.
Net cash inflow from operating activities was $6.1 million for the six months ended June 30, 2023, showing a significant improvement compared to a net cash outflow of $11.0 million in the prior year. This improvement can be attributed to a $10.0 million reduction in net loss, a positive impact of $4.9 million from inventory management, as well as other favorable changes in working capital.
2023 Full Year Outlook
Looking forward, for the full year, the Company expects at least 15.0% revenue growth year-over-year. The projected growth considers only recurring, steady revenue growth from the e-commerce business and established partnerships, as well as upside from newer partnerships realized in the first half of the year. However, potential upside which is not reflected in this growth, lies within new partnerships, channels, and products. The Company projects that gross margin will remain stable year over year as cost savings initiatives and benefits from economies of scale are expected to largely offset continued inflationary pressures. Moreover, further optimization, coupled with new and focused customer acquisition strategies are expected to result in reduced selling and marketing expense as a percentage of net sales. The Company plans to increase investments in research and development, mainly during the latter half of the year, to drive innovation and expects general and administrative expense to be flat to down $1 million year over year.
Investor Conference Call
A live webcast will be held Wednesday, August 9, 2023 at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss ChromaDex’s second-quarter financial results and provide a general business update.
To listen to the webcast, or to view the earnings press release and its accompanying financial exhibits, please visit the Investors Relations section of ChromaDex’s website at View Source The toll-free dial-in information for this call is 1-888-330-2446 with Conference ID: 4126168.
The webcast will be recorded, and will be available for replay via the website from 7:30 p.m. Eastern time on August 9, 2023 through 11:59 p.m. Eastern time on August 16, 2023. The replay of the call can also be accessed by dialing 800-770-2030, using the Replay ID: 4126168.