Rob Fried: But also Brianna brings up a good point, retention is key and it’s still early in the game to see how the retention numbers compare.
Sean McGowan: I just — from a consumer standpoint, it’s just easier to take fewer bills. Easier to pack for a trip and get your day going. Anyway, I’ll pass it on. Thanks a lot, guys.
Operator: Our next question comes from the line of Bill Dezellem with Tieton Capital.
Bill Dezellem: I’m going to pick up on your last comment about retention with 1,000 milligram. And I know it’s early, but what are the early indications about retention?
Rob Fried: The early indications is retention is higher with 1,000 milligrams than other SKUs, in fact, all other SKUs. But again, it’s only a few months.
Bill Dezellem: And Rob, is it your sense that the consumer is staying on because they noticed more of a difference than consumers who are on a lower dosage, or do you believe it’s a different socioeconomic group that just has a different mindset?
Rob Fried: We’ve done some surveys and we have those surveys coming in, so it’s only very preliminary. So I can’t really give you a definitive answer. But I think it’s more the former than the latter.
Bill Dezellem: And then relative to Vitamin Shoppe and Sprouts, what is the size of that distribution or those distribution channels as you estimate them going forward? And did revenues begin in Q1 or when is the start point for those?
Rob Fried: They’re going to — we’re going to be in 700 vitamin shop stores. I don’t think we’re close to that yet, but I think they’ll be in 700 stores within the next couple of months. I think we recognized that revenue in the first quarter. Yes, in the first quarter.
Bill Dezellem: And so the ongoing — I guess my direct question would be, what is your expectation or speculation at what the ongoing revenue of Vitamin Shoppe and Sprouts combined could be on an annual basis?
Brianna Gerber: In our plans it’s not a meaningful contributor to our full year outlook. We’ve conservatively planned for the ramp-up. But of course, over time, we think it’s a good fit for our brand and we hope it will be much larger.
Bill Dezellem: And do you have a number that you’re willing to share there, Brianna?
Brianna Gerber: No, not at this time, Bill.
Bill Dezellem: And so then shifting to G&A. G&A was up nicely in this quarter. And I think you said — or pardon me, that you will — let me back up, I think you said that G&A is going to be increasing by $1.5 million to $2 million, somewhere in that neighborhood. And that increase is going to be used to grow the business. What additional details do you have around that in terms of what that practically means that you’re going to be spending money on?
Brianna Gerber: And I think, Bill, you were calling out that in the current quarter, year-over-year, our G&A was actually down about $1 million, and so our outlook implies some ramp-up in spend. We are investing in the infrastructure around these new verticals as we get into new areas. We just anticipate increased legal expense at the margin, regulatory, just basically IT infrastructure as well for many of the initiatives we have ongoing. And so we’re conservatively planning for that at this time of the year. Those are the key areas that I’d call out.
Operator: Our next question comes from the line of JP Mark with Farmhouse Equity Research.
JP Mark: Since you are taking my call, you already know the question I’m going to ask was just [indiscernible] ask is about the pro market and talking — and selling through channels is physicians and clinics. Can you talk a little bit about how that’s going and how many resources you’re allocating for that specifically?
Rob Fried: That market isn’t yet growing for us, it’s been pretty stable for us. We have a dedicated team that is focusing on that market. But we think that the new verticals that we have been investing in over the last really years and that we are close to announcing will be very relevant to that particular market.
JP Mark: In the sales and marketing budget, can you talk about whether it’s consistently been the same amount of spend for that or have you increased it, decreased it? Has it — I mean, sort of as a percent, you don’t have to get the number. But roughly speaking, is it stable or how do you look at it?
Brianna Gerber: That’s a comment specifically on selling and marketing for the healthcare practitioner, that professional channel?
JP Mark: Correct. Yes, that’s it. Yes, that’s the question.
Brianna Gerber: I’d say we have a small sales force that drives that business, some leadership around that business and business development there. I’d say it’s overall been fairly steady, maybe a little bit of variability, but not a meaningful ramp or investment there, perhaps ahead of as Rob talked about this new vertical, we’ll be looking to that.
Operator: And our next question comes from the line of Sean McGowan with ROTH Capital.
Sean McGowan: This relates to the comment you made early on, Brianna, about the liability that you — potential liability for those attorney fees. Will that dispute add meaningfully to the legal spending that you’ve already got — kind of there’s always a certain amount of legal spending, but is this going to ramp that up in any meaningful way?
Brianna Gerber: Not a meaningful way. We think it’s covered in our original G&A outlook and planning conservatively on some of the areas legal. This was not in our numbers, we did not expect this. But we think it’s covered in our current outlook. So nothing meaningful there in 2024.
Operator: There are no further questions at this time. So I’ll hand over the call back to Mr. Shamsian.
Ben Shamsian: Thank you, operator. There will be a replay of this call beginning at 7:30 p.m. Eastern Time today. The replay number is 1-800-770-2030 and the replay ID is 8584242. Thank you, everyone, for joining us today and for your continued support of ChromaDex.
Operator: This concludes today’s conference call. You may now disconnect.
