Business Overview ChromaDex Corporation was founded in 1999 and is headquartered in Los Angeles, California. The company initially started as a provider of analytical reference standards, natural product fine chemicals, and related research and development services in the dietary supplement and natural products industry. Over the years, ChromaDex has evolved its business to focus on the development and commercialization of proprietary-based ingredient technologies, including its flagship ingredient Niagen.
In 2013, ChromaDex achieved a significant milestone by commercializing food-grade Niagen, a proprietary form of nicotinamide riboside chloride (NRC), as both a dietary supplement and food ingredient. Niagen has successfully completed the FDA's new dietary ingredient (NDI) notification process twice and has been approved by various global regulatory bodies, including Health Canada, the European Commission, the Turkish Ministry of Agriculture, and the Therapeutic Goods Administration of Australia.
The company operates in three key business segments: Consumer Products, Ingredients, and Analytical Reference Standards and Services. Through its Consumer Products segment, ChromaDex markets and sells its flagship Tru Niagen supplement, which contains the company's proprietary nicotinamide riboside (NR) ingredient, directly to consumers. The Ingredients segment focuses on the development and commercialization of NR and other NAD+ precursor technologies, supplying these ingredients to manufacturers of consumer products and pharmaceutical outsourcing facilities. The Analytical Reference Standards and Services segment supplies phytochemical reference standards and other research and development services.
Throughout its history, ChromaDex has faced some challenges, including a complex and protracted legal battle with competitor Elysium Health that began in 2016. The litigation involved multiple complaints and counterclaims filed in California and New York. After years of dispute, ChromaDex was able to resolve these issues through a settlement agreement reached in 2022.
Pioneering NAD+ Research and Innovation ChromaDex's success is built upon its extensive research and development efforts in the field of NAD+, an essential coenzyme found in every cell of the human body. The company's scientific team, which includes world-renowned experts, has conducted extensive research demonstrating the critical role of NAD+ in cellular metabolism and healthy aging. Through its ChromaDex External Research Program (CERP), the company has established over 275 research partnerships with leading universities and research institutions, contributing to the growing body of scientific literature on NAD+ and its applications.
One of ChromaDex's key innovations is its patented nicotinamide riboside (NR) ingredient, marketed as Niagen. NR has been shown to be a highly efficient NAD+ precursor, capable of significantly increasing NAD+ levels in the body. The company's Niagen ingredient has been successfully reviewed under the U.S. Food and Drug Administration's (FDA) new dietary ingredient (NDI) notification program and has been approved as generally recognized as safe (GRAS) by the FDA, Health Canada, the European Commission, and other regulatory bodies around the world.
Financial Performance and Outlook In its most recent fiscal year ended December 31, 2023, ChromaDex reported total revenue of $83.57 million, a 15.9% increase from the prior year. The company's net loss for the year was $4.94 million, as it continued to invest in research and development, sales and marketing, and the expansion of its business. Despite the net loss, ChromaDex generated positive operating cash flow of $7.12 million and free cash flow of $6.97 million, ending the year with a strong cash position of $27.32 million and no debt.
For the first nine months of 2024, ChromaDex reported net sales of $70.47 million, a 13.0% increase compared to the same period in 2023. The company achieved net income of $1.37 million and generated $3.53 million in operating cash flow during this period. In the most recent quarter, ChromaDex reported revenue of $25.58 million, representing a 31% year-over-year growth. This growth was primarily driven by a 368% increase in Niagen ingredient sales, including initial sales of pharmaceutical-grade Niagen to select clinics. However, this growth was partially offset by a decline in sales to Watsons, a former related party.
ChromaDex expects to continue its strong financial performance, updating its guidance for full-year 2024 net sales growth to approximately 15% year-over-year, up from the previous range of 10-15%. The company also anticipates continued strong and steady gross margins, with a slight improvement over the prior year's 60.8%. ChromaDex plans to make investments in sales and marketing during the fourth quarter to support the Niagen IV launch while maintaining similar efficiencies, and to increase research and development investments to support its core strategic initiatives.
Segment Performance ChromaDex's Consumer Products segment has been the primary driver of the company's growth. For the three and nine months ended September 30, 2024, this segment reported net sales of $18.12 million and $54.12 million, respectively. The segment maintained a consistent gross margin of 64% for both periods, resulting in gross profits of $11.61 million and $34.67 million for the three and nine month periods, respectively.
The Ingredients segment has also shown strong performance, with net sales of $6.67 million and $14.06 million for the three and nine months ended September 30, 2024, respectively. This segment demonstrated improved efficiency, with gross margins of 67% and 60% for the three and nine month periods, resulting in gross profits of $4.50 million and $8.50 million, respectively.
The Analytical Reference Standards and Services segment, while smaller in scale, contributed net sales of $0.78 million and $2.29 million for the three and nine months ended September 30, 2024. This segment operates with lower margins, reporting gross profits of $0.13 million and $0.22 million for the respective periods.
Liquidity ChromaDex ended the most recent quarter with a strong cash position of $32.40 million, including $152,000 of restricted cash. The company has a $10 million revolving credit line with Western Alliance Bank, which was undrawn as of the latest quarter. ChromaDex's debt-to-equity ratio stands at 0.03, indicating a conservative capital structure. The company's current ratio of 2.95 and quick ratio of 2.35 demonstrate a strong ability to meet short-term obligations and maintain financial flexibility.
Expansion into Pharmaceutical-Grade Niagen In 2024, ChromaDex launched its Niagen Plus product line, which includes pharmaceutical-grade Niagen in the form of intravenous (IV) infusions and injections. This new vertical has been a significant driver of the company's recent growth, as demand for advanced NAD+ supplementation continues to rise among health-conscious consumers and wellness-focused clinics.
The Niagen IV product, in particular, has gained traction due to its ability to deliver higher NAD+ levels in the body compared to traditional NAD+ IV therapies. ChromaDex has rapidly expanded the availability of Niagen Plus, with the product now being offered at over 200 Restore Hyper Wellness clinics nationwide. The company expects to expand the reach of Niagen Plus to over 300 clinics in the coming weeks. ChromaDex sees this new pharmaceutical-grade Niagen business as a strategic marketing initiative that can also boost awareness and demand for its flagship Tru Niagen consumer product.
Regulatory Milestones and Pipeline Advancements ChromaDex has also achieved several important regulatory milestones. In 2024, the company initiated communication with the FDA and is working to organize meetings as part of its effort to pursue an investigational new drug (IND) application for the use of NR in the treatment of ataxia telangiectasia (AT), a rare genetic disorder. Additionally, the company continues to expect the completion of the NO-PARK study, a clinical trial investigating the potential of NR to slow the progression of Parkinson's disease, within the first half of 2025.
Market Trends and Industry Outlook ChromaDex operates in the rapidly growing global dietary supplements market, which is expected to expand at a compound annual growth rate (CAGR) of approximately 8% from 2022 to 2027. This growth is primarily driven by increased consumer awareness of health and wellness, a trend that aligns well with ChromaDex's focus on healthy aging and NAD+ supplementation.
The company's primary market is the United States, although specific geographic breakdowns of sales have not been provided. As ChromaDex continues to expand its global presence and regulatory approvals, it is well-positioned to capitalize on the growing international demand for science-backed nutritional supplements.
Risks and Challenges While ChromaDex has demonstrated impressive growth and innovation, the company faces several risks and challenges. The dietary supplement and pharmaceutical industries are highly regulated, and any changes in government regulations could impact the company's ability to commercialize its products. Additionally, ChromaDex relies on a single supplier, W.R. Grace, for its NR ingredient, which could pose supply chain risks.
The company also operates in a competitive environment, with larger pharmaceutical and consumer health companies potentially developing competing products. Effective management of the company's sales, marketing, and distribution channels will be crucial for maintaining its leadership position in the NAD+ market.
Conclusion ChromaDex's 25-year history of innovation and its position as the global authority on NAD+ research make it a compelling investment opportunity in the growing healthy aging and wellness market. The company's flagship Tru Niagen product, combined with its newly launched pharmaceutical-grade Niagen offerings, position it for continued growth and expansion. With a strong pipeline of regulatory and clinical advancements, ChromaDex appears well-positioned to capitalize on the increasing consumer demand for science-backed solutions that support overall health and longevity. The company's solid financial performance, improved guidance, and strategic initiatives in both consumer and pharmaceutical-grade products provide a strong foundation for future growth in the expanding global dietary supplements market.