Guardion Health Sciences Earnings. Should You Buy?

 

 

Guardion Health Sciences, Inc. (Nasdaq: GHSI), a clinical nutrition and diagnostics company that develops science-based, clinically supported nutritional supplements, medical foods, and diagnostic products, announced financial results for the three months and year ended December 31, 2020.

Effective March 1, 2021, the Company amended its Certificate of Incorporation to effectuate a 1-for-6 reverse split of its outstanding common stock. Accordingly, all share and per share amounts included herein have been retroactively adjusted to reflect the reverse stock split for all periods presented.

Financial highlights for the year ended December 31, 2020 include the following:

   -- Total revenue of $1,889,844 for the year ended December 31, 2020, as 
      compared to $902,937 for the year ended December 31, 2019, an increase of 
      approximately 109%. 
   -- Net loss for the year ended December 31, 2020 of $(8,571,657) or $(0.60) 
      per share, as compared to a net loss of $(10,878,308) or $(1.79) per 
      share for the year ended December 31, 2019. 
   -- Cash balance at December 31, 2020 of $8,518,732. 
   -- Pro forma cash balance at December 31, 2020 of $45,727,241, after giving 
      effect to the sale of common stock and the exercise of warrants during 
      January and February 2021.


Corporate highlights for the fourth quarter ended December 31, 2020 include the following:

   -- The Company appointed seasoned nutritional products industry veteran Bret 
      Scholtes as President and Chief Executive Officer, and as a member of the 
      Board of Directors. 
   -- The Company retained an investment banking firm to act as its exclusive 
      financial advisor to assist management and the Board of Directors in the 
      identification and evaluation of strategic transactions to enhance 
      shareholder value. 
   -- Ho Wah Genting Berhad, the Company's exclusive Malaysian distributor, 
      advised Guardion that Astramern Astra H (formerly Astramern Nutra H), an 
      immune support dietary supplement designed and produced by the Company, 
      was granted product registration approval by the Malaysian National 
      Pharmaceutical Regulatory Agency. Previously, in August 2020, the Company 
      had announced the product registration approval of the vitamin 
      formulation Astramern NutraV. 
   -- New data was published in the journal Nutrients (published October 26, 
      2020) that the efficacy of the Company's Lumega-Z(R) compared to the 
      current standard of care, the AREDS-2 soft gel supplement (marketed under 
      the PreserVision(R) brand by Bausch + Lomb) in patients with vision 
      problems associated with eye disease. Lumega-Z(R) demonstrated 
      statistically significant vision improvements in both eyes at six months 
      (p < 0.001), and a positive linear trend with treatment time (p < 0.001), 
      with benefits evident after just three months. This compares to no 
      significant change (p > 0.05) provided by the AREDS-2 supplement gel cap 
      formulation. 
   -- A trademark was issued for "NutriGuard" on October 27, 2020 by the U.S. 
      Patent and Trademark Office under Class 5 -- nutritional dietary 
      supplements.


Bret Scholtes, Guardion’s President and Chief Executive Officer, commented, “As it was for many companies, 2020 was a year of transition and challenge on multiple fronts. I joined the Company in January 2021 to lead the effort to build Guardion into a leading clinical nutrition company with the objective that it become a top performing growth company. As a start, our team has taken the first three months of 2021 to begin to assess the business, the core fundamentals, and the market opportunity for the Company’s products and services. I am excited by the prospects of the business, evidenced, in part, by the increased revenue on a year-over-year basis and the critical third-party validation of our science that we received in 2020. We plan to continue such efforts in future periods.”

Mr. Scholtes continued, “We have much to do in the coming months before we will be in a position to implement and accelerate our growth initiatives. We are focused on building a strong foundation by developing a business model and infrastructure that are designed for long-term commercial success. We have started this process by concentrating on certain key areas, including our business strategy, go-to-market capabilities, scientific affairs and human capital. We are also beginning the process of establishing our nascent brands and identifying core customer bases where we can accelerate our marketing efforts once our clinical support and scientific evidence is in place.”

Mr. Scholtes concluded, “This process will take time, but we have already taken two important steps to build a stronger company. We have raised sufficient capital to not only fund the process — but also to accelerate the process — of building the Company through organic growth and carefully considered strategic acquisitions. Our recent at-the-market equity financings in 2021 generated gross proceeds of $35,000,000 and the exercise of warrants in 2021 generated net proceeds of $3,608,509. In addition, our recent reverse stock split enabled us to come into full compliance with Nasdaq’s continued listing rules regarding minimum bid stock price. Over the long-term, the key to our success will be to create value in well-differentiated and robust brands through strong clinically proven claims that address consumer needs in growing markets, both domestically and internationally. We are committed to bringing compelling products to market under meaningful and differentiated brands supported by strong science. We appreciate the patience and support of our shareholders as we focus on the Company’s evolution during 2021.”

Financial Results

Years Ended December 31, 2020 and 2019

Total revenue for the year ended December 31, 2020 increased by approximately 109% to $1,889,844, as compared total revenue for the year ended December 31, 2019 of $902,937, primarily due to an initial order from the Company’s Malaysian distributor of $890,000 for a novel nutraceutical formulation designed to support the body’s immune function.

Operating expenses for the year ended December 31, 2020 were $8,494,940, as compared to operating expenses for the year ended December 31, 2019 of $11,058,559. Operating expenses in 2020 included a $615,936 reduction to expense associated with the settlement with the former Chief Executive Officer, while operating expenses in 2019 included a goodwill impairment charge of $1,563,520.

Net loss for the year ended December 31, 2020 was $(8,571,657), which included inventory write-downs of $971,719, offset by a net gain from the settlement with the former Chief Executive Officer of $615,936. Net loss for the year ended December 31, 2019 was $(10,878,308), which included a goodwill impairment charge of $1,563,520. Taking all of these factors into account, net loss decreased by approximately 21% in 2020 as compared to 2019.

About Guardion Health Sciences

Guardion Health Sciences, Inc. (NASDAQ: GHSI), is a clinical nutrition and diagnostics company. Guardion’s portfolio of science-based, clinically supported nutrition, medical foods, and diagnostic products support healthcare professionals, their patients, and consumers in achieving health goals. Guardion’s commercial and developmental initiatives are supported by equally impressive scientific and medical advisory boards, led by seasoned business executives and physicians with many years of experience. This combination of expertise and scientific knowledge forms the foundation of Guardion’s growing position within the eye care industry and the clinical nutrition marketplace. Information and risk factors with respect to Guardion and its business, including its ability to successfully develop and commercialize its proprietary products and technologies, may be obtained in the Company’s filings with the U. S. Securities and Exchange Commission (the “SEC”) at www.sec.gov.

Forward-Looking Statement Disclaimer

With the exception of the historical information contained in this news release, the matters described herein may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward- looking in nature and not historical facts, although not all forward-looking statements include the foregoing. These statements involve unknown risks and uncertainties that may individually or materially impact the matters discussed herein for a variety of reasons that are outside the control of the Company, including, but not limited to, the Company’s ability to raise sufficient financing to implement its business plan, the impact of the COVID-19 pandemic on the Company’s business, operations and the economy in general, and the Company’s ability to successfully develop and commercialize its proprietary products and technologies. Readers are cautioned not to place undue reliance on these forward- looking statements, as actual results could differ materially from those described in the forward-looking statements contained herein. Readers are urged to read the risk factors set forth in the Company’s filings with the SEC, which are available at the SEC’s website (www.sec.gov). The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Investor Relations Contact:

2021-03-26 12:00:00 GMT Guardion Health Sciences Announces Financial -2-

CORE IR

Scott Arnold

516-222-2560

scotta@coreir.com

Media Relations Contact:

Jules Abraham

Director of Public Relations

CORE IR

917-885-7378

julesa@coreir.com

Guardion Health Sciences, Inc.

Consolidated Balance Sheets

 
                                             December 31, 
                                      --------------------------- 
                                          2020           2019 
                                      ------------   ------------ 
 
Assets 
 
Current assets 
   Cash                               $  8,518,732   $ 11,115,502 
   Accounts receivable                      11,248         78,337 
   Inventories                             384,972        310,941 
   Prepaid expenses                        179,931        362,938 
                                       -----------    ----------- 
 
Total current assets                     9,094,883     11,867,718 
 
Deposits                                    11,751         11,751 
Property and equipment, net                285,676        374,638 
Operating lease right-of-use asset, 
 net                                       418,590        572,714 
Intangible assets, net                      50,000         50,000 
                                       -----------    ----------- 
 
Total assets                          $  9,860,900   $ 12,876,821 
                                       ===========    =========== 
 
Liabilities and Stockholders' 
Equity 
 
Current liabilities 
   Accounts payable and accrued 
    liabilities                       $    608,313   $    129,132 
   Accrued expenses                        127,637        116,211 
   Payable to former officer               148,958              - 
   Derivative warrant liability             25,978         13,323 
   Operating lease liability - 
    current                                162,845        151,568 
                                       -----------    ----------- 
 
Total current liabilities                1,073,731        410,234 
 
Operating lease liability -- 
 long-term                                 271,903        434,747 
                                       -----------    ----------- 
 
Total liabilities                        1,345,634        844,981 
 
Commitments and contingencies 
 
Stockholders' Equity 
 
Preferred stock, $0.001 par value; 
10,000,000 shares authorized; no 
shares issued and outstanding at 
December 31, 2020 and December 31, 
2019                                             -              - 
Common stock, $0.001 par value; 
 250,000,000 shares authorized; 
 15,170,628 and 12,497,094 shares 
 issued and outstanding at December 
 31, 2020 and December 31, 2019             15,171         12,497 
Additional paid-in capital              62,583,423     57,531,014 
Accumulated deficit                    (54,083,328)   (45,511,671) 
                                       -----------    ----------- 
 
Total stockholders' equity               8,515,266     12,031,840 
                                       -----------    ----------- 
 
Total liabilities and stockholders' 
 equity                               $  9,860,900   $ 12,876,821 
                                       ===========    =========== 


Guardion Health Sciences, Inc.

Consolidated Statements of Operations

 
                                        Years Ended December 31, 
                                       -------------------------- 
                                          2020           2019 
                                       -----------   ------------ 
 
Revenue 
   Medical foods                       $ 1,609,482   $    444,657 
   Medical devices                         275,862        434,010 
   Other                                     4,500         24,270 
                                        ----------    ----------- 
Total revenue                            1,889,844        902,937 
                                        ----------    ----------- 
 
Cost of goods sold 
   Medical foods (includes inventory 
    write-down of $760,488 during the 
    year ended December 31, 2020)        1,599,510        155.212 
   Medical devices (includes 
    inventory write-down of $211,231 
    during the year ended December 
    31, 2020)                              344,647        178,815 
   Other                                     2,478          7,288 
                                        ----------    ----------- 
Total cost of goods sold                 1,946,635        341,315 
                                        ----------    ----------- 
 
Gross profit (loss)                        (56,791)       561,622 
                                        ----------    ----------- 
 
Operating expenses 
   Research and development                160,978        194,311 
   Sales and marketing                   1,450,205      1,874,901 
   General and administrative            7,450,245      7,425,827 
   Costs related to resignation of 
    former officer (including the 
    reversal of previously recognized 
    stock compensation expense of 
    $965,295 during the year ended 
    December 31, 2020)                    (615,936)             - 
   Loss on sales of equipment               18,500              - 
   Equipment impairment                     30,948              - 
   Goodwill impairment                           -      1,563,520 
                                        ----------    ----------- 
 
Total operating expenses                 8,494,940     11,058,559 
                                        ----------    ----------- 
 
Loss from operations                    (8,551,731)   (10,496,937) 
                                        ----------    ----------- 
 
Other income (expenses): 
   Interest expense                         (7,271)      (258,365) 
   Finance cost upon issuance of 
    warrants                                     -       (415,955) 
   Change in fair value of derivative 
    liability                              (12,655)       292,949 
                                        ----------    ----------- 
 
Total other income (expenses)              (19,926)      (381,371) 
                                        ----------    ----------- 
 
Net loss                                (8,571,657)   (10,878,308) 
                                        ==========    =========== 
 
Net loss per common share -- basic 
 and diluted                           $     (0.60)  $      (1.79) 
                                        ==========    =========== 
Weighted average common shares 
 outstanding -- basic and diluted       14,256,856      6,078,014 
                                        ==========    =========== 


Guardion Health Sciences, Inc.

Operations by Segment

 
                         For the Year Ended December 31, 2020 
                ------------------------------------------------------ 
                              Medical Foods 
                                   and          Medical 
                 Corporate    Nutraceuticals    Devices       Total 
                -----------   --------------   ---------   ----------- 
 
Revenue         $     4,500   $    1,609,482   $ 275,862   $ 1,889,844 
 
Cost of goods 
 sold                 2,478        1,599,510     344,647     1,946,635 
                 ----------    -------------    --------    ---------- 
 
Gross profit 
 (loss)               2,022            9,972     (68,785)      (56,791) 
 
Stock 
 compensation 
 expense            544,127                -           -       544,127 
 
Operating 
 expenses         3,757,945        3,892,899     299,969     7,950,813 
                 ----------    -------------    --------    ---------- 
 
Loss from 
 operations     $(4,300,050)  $   (3,882,927)  $(368,754)  $(8,551,731) 
                 ==========    =============    ========    ========== 
 
 
                               As of December 31, 2020 
                   ------------------------------------------------ 
                               Medical Foods 
                                    and        Medical 
                   Corporate   Nutraceuticals   Devices    Total 
                   ----------  --------------  --------  ---------- 
Current assets 
   Cash            $8,518,732  $            -  $      -  $8,518,732 
   Inventories, 
    net                     -         254,879   130,093     384,972 
   Other                    -          89,333   101,846     191,179 
                    ---------   -------------   -------   --------- 
Total current 
 assets             8,518,732         344,212   231,939   9,094,883 
 
Right of use 
 asset                      -         374,447    44,143     418,590 
Property and 
 equipment, net             -         135,641   150,035     285,676 
Intangible 
 assets, net                -          50,000         -      50,000 
Other                       -          11,751         -      11,751 
                    ---------   -------------   -------   --------- 
 
Total assets       $8,518,732  $      916,051  $426,217  $9,860,900 
                    =========   =============   =======   ========= 
 

 


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