Executive Summary

Q2 revenue declined 14.8% year over year to $2.79M as delayed retail shipments from a third-party warehouse expansion late in June pushed orders into July; eCommerce was unaffected, and Amazon net sales surged 334% YoY and 124% sequentially, partially offsetting weakness .
Gross margin expanded to 44.8% from 42.7% YoY on mix/comp effects (inventory reserve in 2022), while operating expenses fell 27% YoY, narrowing operating loss 41% YoY to $(1.01)M despite lower sales .
Net loss of $(1.17)M contrasted with prior-year net income of $3.66M, driven by a non-cash loss from warrant derivative valuation this quarter versus a large non-cash gain a year ago; operating performance nonetheless improved YoY .
New CEO Jan Hall highlighted a brand-building plan (Bold Age campaign), accelerating eCommerce, and ongoing strategic review with Alantra that could include a sale of the company or the Viactiv brand—key potential stock catalysts as process updates emerge .

What Went Well and What Went Wrong

What Went Well
- Amazon channel traction: Amazon net sales +334.3% YoY and +124.3% QoQ in Q2; +647.8% YoY for 1H23, reflecting execution of eCommerce initiatives .
- Cost discipline: Total operating expenses fell 27% YoY in Q2 (amortization roll-off, lower payroll, lower executive stock comp), improving operating loss by 41% YoY despite softer sales .
- Gross margin resiliency: Q2 gross margin rose to 44.8% (vs. 42.7% LY) and remained solid despite elevated fulfillment costs earlier in 1H23; six-month GM decline versus LY was primarily from Amazon fulfillment costs in Q1 .
What Went Wrong
- Retail shipment disruption: June shipments to retail customers were delayed by a third-party warehouse expansion, suppressing Q2 revenue; resolved in July (timing issue, but highlights operational dependency) .
- Customer and vendor concentration: Three customers comprised 75% of Q2 revenue; the largest accounted for 53%, and a single vendor comprised 84% of accounts payable—heightened concentration risk .
- Non-cash derivative swing: A $(0.26)M non-cash loss from warrant derivative valuation in Q2 (vs. +$5.36M gain LY) flipped the bottom line; underlying operating improvement was overshadowed at the net income level .

Financial Results

Metric	Q2 2022	Q1 2023	Q2 2023
Revenue ($)	$3,275,213	$3,185,689	$2,789,817
Gross Profit ($)	$1,399,544	$1,335,302	$1,249,268
Gross Margin (%)	42.7%	41.9%	44.8%
Total Operating Expenses ($)	$3,111,122	$2,799,309	$2,261,914
Loss from Operations ($)	$(1,711,578)	$(1,464,007)	$(1,012,646)
Net (Loss) Income ($)	$3,655,637	$533,091	$(1,172,411)
Diluted EPS ($)	$2.97	$0.42	$(0.93)

Notes:

Q2 2023 revenue decline driven by delayed retail shipments from third-party warehouse expansion; eCommerce logistics unaffected .
Q2 2023 net loss impacted by non-cash warrant derivative fair value change (loss) vs. large gain in Q2 2022 .

Segment/Product Detail (where disclosed)

Product/Metric	Q2 2022	Q2 2023
Viactiv Revenue ($)	$3,183,200	$2,710,184
Viactiv % of Total Revenue	~97%	~97%
Clinical Nutrition Revenue ($)	$3,275,213	$2,789,817

Channel/Execution KPIs

KPI	Q2 2022	Q1 2023	Q2 2023	1H 2023
Amazon Net Sales Growth (%)	—	—	+334.3% YoY; +124.3% QoQ	+647.8% YoY
Cash & Equivalents ($)	—	$8,774,626	$8,365,987	—
Working Capital ($)	—	—	$11,993,202	—
Revenue by Geography (%)	NA 100%	—	NA 100%	—

Estimates vs. Actuals (S&P Global)

Metric	Q2 2023 Consensus	Q2 2023 Actual
Revenue	Unavailable via S&P Global (no mapping)	$2,789,817
EPS	Unavailable via S&P Global (no mapping)	$(0.93)

S&P Global consensus estimates were not available for GHSI at the time of analysis (no CIQ mapping).

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
All metrics	2023	None provided	None provided	N/A

Management did not issue formal financial guidance; updates focused on operational execution (Bold Age campaign, eCommerce), and a strategic review that could include a sale, merger, or other strategic transaction .

Earnings Call Themes & Trends

No Q2 2023 earnings call transcript was available; themes reflect Q2 10-Q/8-K, Q1 8-K, and FY 2022 8-K.

Topic	Previous Mentions (Q-2: FY22 PR)	Previous Mentions (Q-1: Q1’23 PR)	Current Period (Q2’23 filings/PR)	Trend
Supply chain/logistics	2022 impacted by supply chain; inventory rebuild; inflation pressures	Gross margin pressure from higher transportation/3PL costs	June retail shipments delayed by third-party warehouse expansion; resolved in July; eCommerce unaffected	Improving structurally; temporary hiccup in June
eCommerce/Amazon	Expansion of eCommerce capability	Continued focus on eCommerce	Amazon net sales +334% YoY / +124% QoQ; 1H +648% YoY	Improving
Product performance (Viactiv)	Viactiv = 96% of 2022 sales; brand expansion (Omega Boost)	Viactiv drove 33.6% total revenue growth in Q1	Viactiv ~97% of total; Q2 revenue timing impacted; Bold Age campaign launched	Mixed near-term (timing); strengthening brand work
Macro/Inflation	Inflation weighed on 2022 GM	—	Inflation expected to persist; higher fulfillment costs impacted 1H gross margin	Persistent headwind
Strategic alternatives	Advisor engaged Mar-2023	Ongoing strategic review with Alantra	Strategic review ongoing; potential sale of company or Viactiv brand	Ongoing; catalyst
Regulatory/Legal	—	—	No material legal proceedings	Stable
Concentration risks	—	—	3 customers = 75% of Q2 revenue; largest = 53%; one vendor = 84% of A/P	Elevated, ongoing

Management Commentary

“We recently implemented a Bold Age advertising campaign for the Viactiv calcium chews that has already seen positive results, as compared with industry metrics and prior Viactiv campaigns... Effective advertising, combined with targeted marketing initiatives, product innovations... plus expanded retail and online distribution, will be the engine of future growth…” — Jan Hall, CEO .
“We continue to believe that the Company remains undervalued... Our work with Alantra… is underway as we conduct our strategic review to solicit and evaluate alternatives to maximize stockholder value... which could range from a sale of the Company, sale of the Viactiv brand, merger... or other potential strategic transaction” — Jan Hall, CEO .
Prior quarter context: “Our immediate focus is on increasing sales and improving gross margin, while also reducing major cost categories and streamlining operations... we are continuing to work closely with Alantra... to implement the previously-announced strategic review” — Q1 commentary .

Q&A Highlights

No Q2 2023 earnings call transcript was found; the company did not provide a transcript in the period reviewed, so Q&A highlights are unavailable [ListDocuments returned no earnings-call-transcript for Q2; 2023-07-01 to 2023-09-30].

Estimates Context

S&P Global consensus estimates for Q2 2023 revenue and EPS were unavailable for GHSI (no CIQ mapping returned by the estimates tool at the time of analysis). As such, we cannot present a beat/miss analysis versus Wall Street consensus for this quarter.
Where estimates are unavailable, investors should focus on sequential/YoY trajectories, channel mix (Amazon), and the operating expense run-rate to infer near-term model updates .

Key Takeaways for Investors

Retail shipment timing, not demand, drove the Q2 revenue shortfall; July normalization suggests revenue should recover in Q3 absent further logistics disruptions .
Channel mix is improving with strong Amazon momentum; sustained eCommerce growth can underpin revenue trajectory and potentially enhance data-driven marketing ROI .
Structural cost reductions (amortization roll-off, payroll and stock comp cuts) lowered opex by 27% YoY; continued discipline is key to approaching breakeven on a modest top line .
Gross margin held up and expanded YoY despite earlier 1H fulfillment cost pressure; monitor Q3 margin to confirm normalization as retail shipments resume .
Strategic review (sale of company or Viactiv brand, merger) is a material catalyst; any transaction update could drive outsized stock moves given microcap status .
Risk flags: customer/vendor concentration, internal control material weaknesses, and macro inflation remain active overhangs that can impact execution and valuation multiples .
Liquidity appears adequate near term (cash ~$8.37M; working capital ~$11.99M), but management acknowledges potential need for capital over time if profitability is not reached or if strategic actions require flexibility .

Guardion Health Sciences, Inc. (GHSI)·Q2 2023 Earnings Summary