Thorne Healthtech, Inc. [THRN] Filings

10-Q 1 thrn-20220930.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-40826

Thorne HealthTech, Inc.

(Exact name of registrant as specified in its charter)


Delaware		27-2877253
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
152 W. 57th Street, New York, NY		10019
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: (929) 251-6321

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	THRN	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant's common stock, par value $0.01 per share, as of November 8, 2022 was 52,841,462.

Thorne HealthTech, Inc.

FORM 10-Q TABLE OF CONTENTS


		Page No.
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations	6
	Condensed Consolidated Statements of Comprehensive Income	7
	Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)	8
	Condensed Consolidated Statements of Cash Flows	10
	Notes to Condensed Consolidated Financial Statements	12
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	39
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	55
Item 4.	Controls and Procedures	56
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	58
Item 1A.	Risk Factors	59
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	59
Item 3.	Defaults Upon Senior Securities	59
Item 4.	Mine Safety Disclosures	59
Item 5.	Other Information	59
Item 6.	Exhibits	60
	Signatures	61

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (Quarterly Report) contains forward-looking statements. All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our future results of operations and financial position, business strategy, commercial activities and costs, research and development costs, timing and likelihood of success, as well as plans and objectives of management for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that are in some cases beyond our control and may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “would,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “believe,” “estimate,” “predict,” “potential,” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this Quarterly Report include, but are not limited to, statements about:

•

our business, business strategy, products and services we may offer in the future;

•

our ability to increase brand awareness, attract and retain customers and sell additional products and services to new and existing customers;

•

our ability to convert customers into recurring subscribers;

•

our ability to develop new products and services or improve existing products and services;

•

our future financial performance, including trends in net sales, costs of sales, gross profit, operating expenses and free cash flow;

•

expectations about industry trends, such as a shift towards personalized healthcare and increasing demand for convenience;

•

our ability to efficiently spend on advertising and marketing;

•

our ability to maintain profitability;

•

our ability to compete successfully in competitive markets and expand internationally, including the success of our Thorne Asia joint venture;

•

our ability to maintain relationships with key distributors, ingredient suppliers, influencers and research institutions;

•

our ability to respond to rapid technological changes;

•

our expectations and management of future growth;

•

expectations about legal and regulatory changes;

•

our ability to attract and retain key personnel and highly qualified personnel;

•

our ability to protect our brand and maintain our Net Promoter Score (NPS);

•

our ability to maintain key certifications, such as our NSF International (NSF) Certified Facility;

•

our ability to maintain, protect and enhance our intellectual property, including our multi-omics database and trade secrets;

•

restrictions and penalties as a result of privacy and data protection laws;

•

our ability to successfully identify, acquire and integrate companies, technologies and assets, including those acquired in connection with the acquisition of Nutrativa LLC;

•

the increased expenses associated with being a public company;

•

the outcome and impact of litigation, including litigation associated with the filings of intellectual property rights (IPRs);

•

the timing and results of future regulatory filings, including those related to our OneDraw device; and

•

other risks and uncertainties, including those listed under the caption “Risk Factors.”

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 Quarterly Report and are subject to a number of risks, uncertainties and assumptions described in the section titled “Risk Factors” and elsewhere in this Quarterly Report. 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.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and you are cautioned not to unduly rely upon these statements.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

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

Commitments and Contingencies (Notes 11 and 16)

Series E convertible preferred stock; par value $0.01, 0 shares authorized as of September 30, 2022 and December 31, 2021; 0 shares issued and outstanding as of September 30, 2022 and December 31, 2021		—			—
Stockholders’ Equity
Common stock; par value $0.01, 200,000,000 shares authorized as of September 30, 2022 and December 31, 2021; 52,812,379 and 52,554,214 issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		528,124			525,542
Common stock, Class B; no par value, 0 shares authorized as of September 30, 2022 and December 31, 2021; 0 shares issued and outstanding as of September 30, 2022 and December 31, 2021		—			—
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

See accompanying notes to condensed consolidated financial statements.

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 development		—			—			—			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 unconsolidated affiliates		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 stockholders		—			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

See accompanying notes to condensed consolidated financial statements.

Thorne HealthTech, Inc.

Condensed Consolidated Statements of Comprehensive Income

(unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Net income	$	3,586,912		$	950,842		$	2,530,910		$	5,324,041
Other comprehensive loss:
Foreign currency translation adjustment, net of tax		(145,941	)		—			(332,141	)		—
Total other comprehensive loss		(145,941	)		—			(332,141	)		—

Comprehensive income		3,440,971			950,842			2,198,769			5,324,041
Comprehensive loss attributable to non-controlling interests		(151,704	)		(77,945	)		(596,060	)		(323,006	)
Comprehensive income attributable to Thorne HealthTech, Inc.	$	3,592,675		$	1,028,787		$	2,794,829		$	5,647,047

See accompanying notes to condensed consolidated financial statements.

Thorne HealthTech, Inc.

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(unaudited)


	Equity Attributable to Thorne Stockholders
	Common Stock
	Shares		Amount		Additional Paid-In Capital		Accumulated Deficit			Accumulated Other Comprehensive Loss			Non-controlling Interests			Total Stockholders’ Equity
Three Months Ended September 30, 2022:
Balance at July 1, 2022		52,733,269	$	527,333	$	255,557,384	$	(132,769,662	)	$	(186,200	)	$	1,958,417		$	125,087,272
Net income (loss)		—		—		—		3,738,616			—			(151,704	)		3,586,912
Other comprehensive loss:
Currency translation adjustment		—		—		—		—			(145,941	)		—			(145,941	)
Other comprehensive loss		—		—		—		—			(145,941	)		—			(145,941	)
Exercise of stock options		79,110		791		139,519		—			—			—

Thorne Healthtech, Inc. [THRN] Filings
10-Q	[2022-11-10]
10-Q	[2022-08-10]
10-Q	[2022-05-12]
10-K	[2022-03-16]
10-Q	[2021-11-10]
S-1	[2021-07-16]