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June 2021 Acquisition of Viactiv® Brand and Business Changed Operational Focus of Company and Materially Impacted 2021 Revenues, Operations and Financial Results
Viactiv® Generated Net Revenues of approximately $2.4 Million or 92% of Net Revenues for the Quarter Ended December 31, 2021, and approximately $6.5 Million or 90% of Net Revenues for the Year Ended December 31, 2021
HOUSTON, April 01, 2022 (GLOBE NEWSWIRE) -- Guardion Health Sciences, Inc. (Nasdaq: GHSI) (“Guardion” or the “Company”), a clinical nutrition company that develops clinically supported nutrition, medical foods, and dietary supplements, announced its financial results for the year ended December 31, 2021. The Company also provided a corporate update to shareholders.
The financial highlights presented below were impacted by the Company’s acquisition, effective June 1, 2021, of the Viactiv® line of supplement chews for bone health, immune health and other applications, which are profitably marketed through many of the nation’s largest retailers, including, among others, Walmart (retail and online), Target and Amazon. The acquisition significantly changed the business and operations of the Company during 2021 as compared to 2020.
Financial highlights for the year ended December 31, 2021 include the following:
Total revenue increased to $7,233,118 in 2021, as compared to $1,889,844 in 2020, a 283% increase.
Gross profit was $3,110,434 in 2021; gross loss was $(56,791) in 2020, such 2020 results being negatively impacted by $971,719 of inventory write-downs.
Gross margin was 43.0% in 2021; gross loss was (3.0%) in 2020, such 2020 results being negatively impacted by inventory write-downs representing 51.4% of total revenue.
Operating loss increased to $(24,746,806) in 2021, as compared to $(8,551,731) in 2020, reflecting increased sales and marketing costs related to Viactiv®, increased general and administrative expenses, including costs of $2,103,680 related to the acquisition of Viactiv®, and a goodwill impairment (non-cash) charge of $11,893,134 at December 31, 2021.
Basic and diluted net loss per share in 2021 was $(1.04), as compared to 2020 diluted net loss per share of $(0.60), based on 23,688,623 weighted average common shares outstanding in 2021, as compared to 14,256,856 weighted average common shares outstanding in 2020.
Cash used in operations was $10,644,416 in 2021, as compared to $8,013,929 in 2020.
As of December 31, 2021, the Company had cash and short-term investments of $9,089,550.
Additional important events that occurred during the three months ended December 31, 2021 and subsequently include the following:
Successfully integrated the operations, infrastructure, and information systems of Viactiv into the Company during the last half of 2021, establishing a significant operational baseline from which to grow the Company in 2022 and beyond.
Relocated the corporate offices from San Diego, California to Houston, Texas.
Entered into an agreement to terminate the lease on the Company’s San Diego, California corporate office and main warehouse facility, which was utilized primarily for the Company’s ocular products business. The termination agreement was effective on October 31, 2021 and the Company moved its product inventory to an experienced third-party logistics provider. The Company expects that these changes will reduce overhead costs.
Launched a new and improved corporate and investor website to better engage with the Company’s investors, customers and other stakeholders. The website can be accessed at its current URL, www.guardionhealth.com.
Appointed product development and marketing authority Michaela Griggs to the Board of Directors.
Initiated a wind-down of the Company’s VectorVision business effective December 31, 2021, in order to focus on exploiting VectorVision’s valuable intellectual property and technology using a restructured and more cost-efficient approach.
Opened a Viactiv branded e-commerce site via Shopify.
Launched Omega-BOOST gel bites, the Company’s first expansion of the Viactiv® brand since the Company acquired it in June 2021. The 1,200 mg Omega-3 gel bites are designed to provide total body support, including cardiovascular, brain, joint and eye health.
Completed an offering of shares of common stock, Class A warrants and Class B warrants for gross proceeds of $11,100,000 in February 2022.
Bret Scholtes, Guardion’s President and Chief Executive Officer, commented, “The year 2021 was a transformational year for Guardion as it marked an evolution from focusing on a specific line of products in a specific therapeutic area to a wider focus on general consumer health and the acquisition of a product line with trusted brand recognition. The acquisition of the Viactiv® brand on June 1, 2021 significantly increased our revenues for the remainder of 2021, and we have maintained our focus on growing that business, despite a business environment that continues to have inventory management and supply chain challenges, which are expected to negatively impact our revenues and gross margins during the first half of 2022. The bright spot is that consumer demand is strong.
“We are focused on building a strong foundation by developing a business model and infrastructure that is designed for long-term commercial success. The acquisition of the Viactiv brand and business was an important step for us during 2021, and we are taking the important steps required to build a stronger company with an expanded array of products that fit our science-backed approach to product development.
“We have focused our efforts on growing the market share of our products, while at the same time expanding upon those attributes that we believe are fundamental to future growth, including expanding Viactiv’s brand awareness and consumer acceptance through increased marketing and development of direct-to-consumer opportunities; leveraging and expanding our experienced management team; significantly growing our distribution networks and relationships while creating opportunities to develop new approaches; and maximizing our product development and launch initiatives. The results of these efforts culminated in both an improved e-commerce presence for the Viactiv® brand, and a branded Shopify store, which we believe will provide accessible, inviting and successful environments for the online shopper. From here, we will continue to expand our presence both online and in brick-and-mortar venues, which we expect will ultimately provide growth in both revenue and profitability.
“We are currently working on a number of initiatives that we believe will help achieve these long-term goals. These include initiatives focused on increasing revenue and bringing compelling products to market under meaningful and differentiated brands that are supported by strong science. These initiatives fall into the following categories:
Brand Strategy – Strong brands are an important part of our strategy, and our team continues to evaluate the best ways to manage our brand and product portfolio. In particular, we are implementing a strategy that best leverages the strong consumer awareness and acceptance of the Viactiv® brand.
Sales Channels – Our team is pursuing opportunities to increase product commercialization through better access to sales channels. The Viactiv® products enjoy established distribution through traditional retailers and third-party E-Commerce retailers. Our other clinical nutrition products are sold directly to consumers via our website. By leveraging our collective experience selling in these channels, we will seek to increase the distribution of our products. For example, during January 2022, we launched our new e-commerce venue through a Shopify store for our Viactiv® line of products. The new e-commerce venue offers Viactiv® customers the option of shopping via retail outlets (e.g., grocery, pharmacy, etc.), or online through those same retail websites, or directly through our new branded website.
Scientific Work – Our team continuously evaluates scientific journals and clinical evidence to improve the science behind our existing products and drive our product development process. In addition, we are working with health care professionals to increase clinical awareness and evidence with respect to existing products.
Product Strategy – Our team is evaluating our current product portfolio and seeking opportunities to improve or discontinue certain of our existing products and technologies and develop new ones. We are focused on differentiated formulations, product taste, compelling product formats, and competitive cost structures.
Existing Business Lines – Our team continues to evaluate our non-Viactiv® business lines to determine their fit in the strategic direction of the Company. Product development and successful commercialization can be an expensive and time-consuming process. Management intends to focus on those products that possess the greatest chance for commercial success within a reasonable period of time and with a reasonable deployment of capital resources. Furthermore, we are evaluating our legacy ocular products to identify ways we can improve product format, cost structure, formulation and marketing, and financial performance.
“The launch at the beginning of 2022 of our Omega-BOOST product marks the first new product launch for the Viactiv® brand since its acquisition in June 2021. We intend to continue to drive organic growth through the expansion of the Viactiv brand, with regular new product introductions that address the varied and ever-changing needs of our target consumers, [both domestically and internationally]. Guardion is committed to bringing compelling products to market that serve a distinct need, under meaningful and differentiated brands that are supported by strong science. We continue to firmly believe that the Viactiv® acquisition was the key catalyst to create a platform from which Guardion is now well-positioned to grow the Company and create value for its shareholders.
“We recently completed an $11.1 million equity offering in February 2022. While the environment to execute such a transaction was challenging, we were confident in our business plan and the additional capital will allow us to continue to execute on, and accelerate, that plan during 2022 and 2023. We will focus primarily on increasing our commercialization and business development activities, including new product development and further strategic acquisitions, to capitalize on growth opportunities and product-line extensions. We will continue to work to evolve Guardion Health Sciences into a vital and profitable clinical nutrition company with recognized brands and consumer trust. We believe that this additional cash is a big step to getting us there, and we look forward to reporting our progress to you,” concluded Mr. Scholtes.
Additional information with respect to the Company’s business, operations and financial condition as of and for the year ended December 31, 2021 is contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, which has been filed with the U.S. Securities and Exchange Commission (the “SEC”) at www.sec.gov.
About Guardion Health Sciences, Inc.
Guardion Health Sciences, Inc. (Nasdaq: GHSI), is a clinical nutrition company. Guardion’s portfolio of science-based, clinically supported nutrition, medical foods, and dietary supplements support healthcare professionals, their patients, and consumers in achieving health goals. The Company’s combination of expertise and scientifically supported products is the foundation of Guardion’s growing position within 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 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. These forward-looking statements contain information about our expectations, beliefs, plans or intentions regarding our product development and commercialization efforts, research and development efforts, business, financial condition, results of operations, strategies or prospects, and other similar matters. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans,” “hopes” 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 are based on management’s current expectations and assumptions about future events, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict, and 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 integration of new management team members, the implementation of new financial, management, accounting and business software systems, the integration of the Viactiv acquisition and possibly additional acquisition targets, the impact of the COVID-19 pandemic on the Company’s business, operations and the economy in general, the Company’s ability to successfully develop and commercialize its proprietary products and technologies, and the Company’s ability to maintain compliance with Nasdaq’s listing requirements. 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.
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