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Thorne HealthTech Overstates Sales, Corrects Multiple Accounting Errors
Wellness firm also says it lacks supporting documentation for footnote disclosures.
April 13, 2023
Thorne HeathTech Inc. (THRN), a direct-to-consumer (DTC) health and wellness company, misstated sales and other items for the year-to-date period ended September 30, 2023. The errors were discovered, according to Thorne, in the fourth quarter of 2022, and corrected in the company’s latest annual report filed in March 2023.
The company characterized the misstatements as classification errors and include:
—Thorne overstated sales by $3.4 million, or 2.0%
—Thorne overstated marketing expense by $4.2 million, or 18.0%
—Thorne understated SG&A expense by $0.8 million, or 1.4%
There was no impact on net income.
To conform to the current presentation, Thorne also reclassified items in its 2021 financials including:
—Thorne overstated sales by $0.9 million, or 0.4%
—Thorne overstated marketing expense by $2.4 million, or 10.5%
—Thorne understated SG&A expense by $1.5 million, or 2.6%
The company says the errors aren’t material.
Thorne also revealed multiple control deficiencies, including not maintaining supporting documentation for journal entries and footnote disclosures, among other failures.
Separately, Thorne also revealed it had inaccurately calculated its net operating loss (NOL) carryforwards which resulted in a reduction of previously disclosed available federal and state NOLs of $23.2 million and $18.8 million, respectively. The company also revised its 2021 tax footnote presentation as it overstated the gross deferred tax asset and corresponding valuation allowance by $6.1 million.
Thorne’s shares are up more than 30% year-to-date.
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