On March 10, 2021 ChromaDex Corp. (NASDAQ:CDXC) reported fourth quarter and full year 2020 financial results (Press release, ChromaDex, MAR 10, 2021, View Source [SID1234576389]).

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Fourth Quarter 2020 and Recent Highlights

Total net sales of $15.4 million, up 18% from $13.1 million in the year ago quarter.
Tru Niagen net sales of $12.3 million, a 21% increase from the year ago quarter.
Gross margin of 61.0%, a 400 basis point increase from the year ago quarter.
Net loss was ($6.1) million or ($0.10) per share, an improvement of $0.05 per share year-over-year.
Adjusted EBITDA excluding total legal expense, a non-GAAP measure, was a loss of ($1.1) million, a $1.0 million improvement year-over-year.
Growing body of clinical research suggests that nicotinamide riboside ("NR") may support important areas of human health.
Phase 2 clinical study showed a reduction in liver fat and inflammatory markers in patients with non-alcoholic fatty liver disease (NAFLD) when receiving a nutritional protocol that included NR.
Phase 3 clinical study on 300 patients in Turkey with mild-to-moderate COVID-19 showed a 3.5 day reduction in recovery time when adding a daily nutritional protocol that included NR to the local standard of care.
Tru Niagen received the ‘Most Favourite Brand’ award by Watsons Hong Kong loyalty members for the second consecutive year.
Full Year 2020 Highlights

Delivered on financial outlook to investors across all metrics. Slightly better than target on selling and marketing and G&A expense.
Total net sales of $59.3 million, up 28% from $46.3 million in the prior year.
Tru Niagen net sales of $47.1 million, a 31% increase from $36.1 million in the prior year.
Gross margins of 59.5%, a 390 basis point increase from the prior year.
Lower selling and marketing expense as a percentage of net sales (35.4% in 2020 versus 39.4% in 2019).
Net loss was ($19.9) million or ($0.33) per share, an improvement of $0.24 per share year-over-year.
Adjusted EBITDA excluding total legal expense, a non-GAAP measure, was a loss of ($1.0) million for FY 2020, a $7.8 million improvement year-over-year.
Signed 225th material transfer agreement through ChromaDex External Research Program (CERP), which has resulted in 60 published studies to date, including 11 published clinical studies, on Niagen.
Expanded in Europe and Australia, following regulatory approval for Tru Niagen.
Nestlé Health Science’s new Celltrient Cellular Energy products featuring Tru Niagen launched in the United States, following the launch of Tru Niagen capsules on Persona, a Nestlé Health Science company and leading personalized vitamin subscription program, earlier this year.
ChromaDex Chief Scientific Advisor, Dr. Charles Brenner, Receives 2020 National Scientific Achievement Award from the American Society for Nutrition.
"ChromaDex’s philosophy of focusing on business fundamentals with a science-based strategic approach continued in 2020," said ChromaDex CEO Rob Fried. "In 2021, we will further our position as the world’s leading NAD+ company by growing the Tru Niagen brand, extending partnerships and furthering scientific advancements with world-leading scientists."

Results of operations for the three months ended December 31, 2020

For the three months ended December 31, 2020 ("Q4 2020"), ChromaDex reported net sales of $15.4 million, up 18% compared to $13.1 million in the fourth quarter of 2019 ("Q4 2019"). The increase in Q4 2020 revenues was driven by growth in sales of Tru Niagen and Niagen ingredient revenues.

Gross margin percentage improved by 400 basis points to 61.0% in Q4 2020 compared to 57.0% in Q4 2019. The improvement in gross margin percentage was driven by the positive impact of increased Tru Niagen consumer product sales and product cost savings initiatives.

Operating expenses decreased by $0.8 million to $15.5 million in Q4 2020, compared to $16.3 million in Q4 2019. The decrease in operating expenses was driven by a decrease of $1.9 million in general and administrative expense, and a decrease of $0.1 million of R&D expense, partially offset by $1.2 million of higher selling and marketing expenses. The decrease in general and administrative expense was driven by the absence of $2.2 million of bad debt expense related to the write-off of an Elysium receivable in Q4 2019.

The net loss for Q4 2020 was ($6.1) million or ($0.10) per share as reported compared to a net loss of ($8.9) million or ($0.15) per share for Q4 2019 as reported. Non-GAAP net loss per share in Q4 2019 was ($0.11) excluding a $2.2 million, or $0.04 per share, non-cash charge related to the write-off of the Elysium receivable as bad debt.

Adjusted EBITDA excluding total legal expense, a non-GAAP measure, was a loss of ($1.1) million for Q4 2020, compared to a loss of ($2.1) million for Q4 2019, a $1.0 million improvement.

ChromaDex defines Adjusted EBITDA excluding total legal expense as net income or (loss) which is adjusted for interest, income tax, depreciation, amortization, non-cash stock compensation costs, severance and restructuring expense, bad debt expense related to Elysium Health and total legal expense.

For Q4 2020, the net cash flow from operating activities was at break-even, versus ($0.6) million used in Q4 2019.

Results of operations for the year ended December 31, 2020

For the full year ended December 31, 2020 ("FY 2020"), ChromaDex reported net sales of $59.3 million, up 28% compared to $46.3 million in the full year ended December 31, 2019 ("FY 2019"). The increase in FY 2019 revenues was driven by growth in sales of Tru Niagen.

Gross margin percentage improved by 390 basis points to 59.5% in FY 2020 compared to 55.7% in FY 2019. The improvement in gross margin percentage was driven by the positive impact of increased Tru Niagen consumer product sales and product cost savings initiatives.

Operating expenses decreased by $1.9 million to $55.1 million in FY 2020, compared to $57.1 million in FY 2019. The decrease in operating expenses was driven by a decrease of $3.9 million in general and administrative expense, and a decrease of $0.7 million of R&D expense, partially offset by $2.7 million of higher selling and marketing expense. The decrease in general and administrative expense was driven by lower legal costs of $2.7 million and the absence of $2.2 million of bad debt expense related to the write-off of an Elysium receivable in 2019.

The net loss for FY 2020 was ($19.9) million or ($0.33) per share as reported compared to a net loss of ($32.1) million or ($0.56) per share for FY 2019 as reported. For FY 2020, the reported loss was negatively impacted by a non-cash charge of $6.9 million related to stock-based compensation.

Adjusted EBITDA excluding total legal expense, a non-GAAP measure, was a loss of ($1.0) million for FY 2020, compared to a loss of ($8.8) million for FY 2019, a $7.8 million improvement. The $7.8 million improvement was primarily driven by higher sales and gross margins, partially offset by higher marketing and selling expense.

For full year 2020, the net cash used in operating activities was ($10.6) million versus ($20.4) million for the same period in the prior year. The Company ended the year of 2020 with cash of $16.7 million.

2021 Outlook

Looking forward, the Company expects continued, steady revenue growth driven by its global ecommerce business, as well as growth with existing and new strategic partners. The Company expects continued gross margin improvement to slightly better than 60%, and roughly flat selling and marketing and R&D expense as a percentage of net sales year-over-year. The Company expects slightly higher general and administrative expense, excluding severance, restructuring and legal expense. The Company plans to increase investments and resources to drive brand awareness and accelerate its R&D pipeline to capitalize on growth in the NAD+ market globally.

Investor Conference Call

ChromaDex management will host an investor conference call to discuss the fourth quarter results and provide a general business update on Wednesday, March 10, at 4:30pm ET.