Sign in

You're signed outSign in or to get full access.

GH

Guardion Health Sciences, Inc. (GHSI)·Q1 2024 Earnings Summary

Executive Summary

  • Q1 2024 revenue declined 5.8% year over year to $3.00M, with gross margin compressing to 39.3% from 41.9%, driven by shipment phasing and packaging supply delays at the contract manufacturer .
  • Loss from operations widened to $(1.55)M and net loss was $(4.75)M, primarily due to a non-cash $(3.27)M loss from the change in fair value of the warrant derivative liability .
  • Strategic pivot: the Board is seeking stockholder approval to sell the Viactiv brand (Activ Nutritional LLC) for $17.2M and adopt a Plan of Liquidation and Dissolution; ISS recommended voting FOR both proposals, with completion targeted by June 30, 2024 .
  • New products launched: Viactiv Omega Boost Gel Bites (600mg) and magnesium citrate soft chews; Lumega‑Z reformulated to powder; distribution expansion planned across ~1,200 new points in Q2 2024 and new e‑commerce listings .

What Went Well and What Went Wrong

What Went Well

  • Product innovation and portfolio expansion: “In March 2024, the Company introduced a clinically tested 600mg dose form of the Omega Boost Gel Bites … In April 2024, the Company launched a magnesium citrate soft chew … Lumega‑Z … reformulated and relaunched … as a drink mix powder.”
  • Distribution momentum: Management expects Viactiv calcium soft chews distribution to increase via ~1,200 new points across three grocery chains, and a new e‑commerce customer listing to expand online availability .
  • Third-party governance support: ISS issued a report recommending institutional stockholders vote FOR the Viactiv sale and liquidation plan, supporting the proposed strategic path .

What Went Wrong

  • Revenue and margin pressure: Q1 revenue fell 5.8% YoY to $2.9996M and gross margin declined 260 bps to 39.3% due to shipment timing and packaging supply delays at the manufacturer .
  • Operating loss and derivative impact: Loss from operations increased to $(1.55)M; net loss of $(4.75)M was driven by a $(3.27)M non-cash loss on the warrant derivative liability fair value change .
  • Customer and vendor concentration: Two customers represented 72% of Q1 revenue; one vendor accounted for 72% of accounts payable, underscoring concentration risk .

Financial Results

Summary vs. Prior Quarters

MetricQ2 2023Q3 2023Q1 2024
Revenue ($USD)$2,789,817 $3,337,190 $2,999,645
Gross Margin %44.8% 43.8% 39.3%
Total Operating Expenses ($USD)$2,261,914 $2,233,166 $2,732,801
Loss from Operations ($USD)$(1,012,646) $(772,914) $(1,553,801)
Net Income (Loss) ($USD)$(1,172,411) $372,633 $(4,746,744)
Diluted EPS ($USD)$(0.93) $0.29 $(3.71)

Segment/Product Breakdown (Q1 2023 vs. Q1 2024)

MetricQ1 2023Q1 2024
Nutritional Supplements Revenue ($USD)$3,091,447 $2,918,526
Ocular Products Revenue ($USD)$94,242 $81,119
Total Revenue ($USD)$3,185,689 $2,999,645
Viactiv Share of Total Revenue (%)97.0% 97.3%

KPIs and Balance Sheet Highlights

MetricQ1 2023Q1 2024
Cash and Equivalents ($USD)$8,774,626 $5,605,035
Cash Used in Operations ($USD)$(1,879,210) $(754,611)
Working Capital ($USD)—$9,110,684
Shares Outstanding (period-end)—1,284,156
Warrant Derivative Liability ($USD)—$5,721,688

Notes: Q1 2023 working capital and period-end shares not disclosed in cited Q1 documents; Q1 2024 working capital and shares disclosed .

Guidance Changes

No traditional financial guidance was issued. Strategic transaction timeline was reiterated.

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Strategic Transaction Timeline (Sale of Activ/Plan of Liquidation)H1 2024Targeting special meeting May 23, 2024 “On track for completion by June 30, 2024, subject to closing conditions” Maintained/Specified timeline
Financial Guidance (Revenue, Margins, OpEx, Tax)FY/Q2 2024NoneNone—

Earnings Call Themes & Trends

No Q1 2024 earnings call transcript found.

TopicPrevious Mentions (Q2 2023, Q3 2023)Current Period (Q1 2024)Trend
Supply Chain/LogisticsWarehouse expansion delayed June shipments; resolved in July Packaging material delays impacted fulfillment in Q1; solution executed end of March Improving post-March
eCommerce/AmazonAmazon net sales +334% YoY in Q2; +124% vs Q1 ; regained consistent selling levels in Q3 Amazon listing expansion noted; broader e‑commerce listing expected Positive momentum
Product InnovationOmega Boost Gel Bites launched; marketing in 2022-2023 New 600mg Omega Boost; magnesium citrate soft chews; Lumega‑Z reformulated Accelerating
Macro/Vitamins categorySoftening unit volumes; inflation pressures Category softness; inflation and retail traffic declines noted Persistent headwind
Strategic AlternativesAlantra engaged; considering sale/merger Board seeking approval to sell Activ and liquidate Escalated to execution
Listing RiskNasdaq compliance risks described Continued emphasis on listing requirements amid transaction Elevated risk

Management Commentary

  • “We are pleased with the progress made during 2023, which was driven by strong topline growth combined with improved operating margins and a reduced cash burn.” — Jan Hall, President and CEO (FY 2023 press release) .
  • “We recently implemented a Bold Age advertising campaign … As we learn more … we will continue to refine and optimize … Effective advertising, combined with targeted marketing initiatives, product innovations … plus expanded retail and online distribution, will be the engine of future growth.” — Jan Hall (Q2 2023 press release) .
  • Board view on strategy: “If both of these proposals are approved, stockholders would receive one or more liquidating cash distributions, which combined are expected to represent a premium over our recent stock price … The transaction remains on track for completion by June 30, 2024.” — Board recommendation (Q1 2024 8‑K) .

Q&A Highlights

No Q1 2024 earnings call transcript was available; therefore, no Q&A highlights or call-based guidance clarifications could be obtained.

Estimates Context

Wall Street consensus (S&P Global) for GHSI Q1 2024 EPS and revenue was unavailable due to missing mapping in the S&P/CIQ database for this ticker. As a result, we cannot provide comparison vs. Street estimates for Q1 2024 at this time.

Key Takeaways for Investors

  • Q1 softness driven by shipment timing and packaging supply delays; manufacturer solution implemented at end of March, suggesting operational normalization into Q2 2024 .
  • Margin compression (39.3%) reflects volume and cost dynamics; watch for recovery as inventory normalizes and new distribution points come online in Q2 2024 .
  • Strategic catalyst: stockholder votes on the Viactiv sale and liquidation; ISS support and June 30 completion target frame near-term event risk and potential cash distributions .
  • Warrant derivative put right may reduce liquidation proceeds by an estimated ~$5.7M depending on elections and volatility; monitor exercise versus cash settlement at closing .
  • Concentration risks remain (customers and vendors); execution on distribution diversification and e‑commerce expansion could mitigate over time .
  • Category headwinds (inflation, retail traffic declines) persist; management is leaning into digital and Amazon channels to offset drug channel softness .
  • Listing/“shell company” risks around post-transaction structure could affect trading liquidity and investor access; monitor Nasdaq compliance and transaction outcomes .

Citations: