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Guardion Health Sciences (GHSI) intends to raise $ 9 million from an IPO of its common shares, pursuant to an amended S-1 registration statement.

The company provides medical foods and vision test solutions specific to certain conditions.

Management is asking investors to pay an extremely high price / sale multiple during the IPO, while the company spends a lot of cash and shows no way to achieve profitability.

Society and technology

GHSI, based in San Diego, California, was founded in 2009 to develop, formulate and distribute specific medical foods under certain conditions.

Its first product, Lumega-Z, restores and restores macular protective pigment, while providing vital and essential nutrients to the eye.

The management is led by President and Chief Executive Officer Michael Favish, who has been with the company since its inception and previously founded Fotoball USA.

A depleted macular protective pigment is a modifiable risk factor for retinal-related diseases such as age-related macular degeneration, diabetic retinopathy, and computer vision syndrome.

GHSI developed the MapcatSF which is a quick and repeatable test for measuring the optical density of the macular pigment. [MPOD]. MPOD essentially provides a measure of the thickness of this macular pigmentary tissue by determining the amount of UV radiation absorbed.

The company is also developing GlaucoCetin, a vision-specific medical food that supports and protects the mitochondrial function of optic nerve cells in patients with glaucoma.

Below you will find a short video overview of the GHSI solutions:

Source: Guardion Health Sciences

To expand its offering in September 2017, the company acquired VectorVision through its wholly owned subsidiary, VectorVision Ocular Health.

VectorVision focuses on the standardization of contrast sensitivity, glare, low contrast acuity and early treatment of the visual acuity test of diabetic retinopathy ("ETDRS").

Customer / user acquisition

Management reports that more than 1,900 customers have been treated with the Lumega-Z product since its launch in 2011.

His client patients come from a variety of sources, including initial testing sites, sites of health care providers where the MapcatSF test device has been demonstrated, his online website, and referrals from other patients.

His patients are usually between 50 and 80 years old and are covered by private insurance or Medicare.

Management found that each MapcatSF test system deployed in a smaller clinic could generate up to 75 clients for its Lumega-Z product in the first 90 days.

In September 2017, the company acquired VectorVision for its standardization system for contrast sensitivity, glare sensitivity, low contrast acuity, and early treatment study of diabetic retinopathy for the test. 39, visual acuity.

With the acquisition of VectorVision, GHSI acquired the CSV-1000 and ESV-3000 test devices, to which certain patents relating to follow-on products were granted.

According to management, the CSV-1000 is "used worldwide by ophthalmologists in more than 60 countries" and believes that the ESV-3000 "will become the global standard for ETDRS visual acuity testing."

Both devices are currently sold worldwide and the company has a direct sales force for these devices as well as for its Lumega-Z medical food.

Management intends to expand its operations internationally, but has not provided any significant details on the schedule or locations.

Sales and marketing expenses expressed as a percentage of sales were very variable, with no discernable trend, according to the table below:

Sales and Marketing Costs Relative to Revenue



Until the 3rd quarter of 2018






Market and competition

According to a market research report published in 2017 by Grand View Research, the global market for medical foods is expected to reach $ 24.4 billion in 2025, a CAGR of 6.9% between 2014 and 2025.

The main factors behind the growth of the market are the growing awareness of medical foods, the improvement of patients' health care outcomes, the prevalence of several chronic diseases, malnutrition and diabetes. 39, continuous innovation.

Major competitors that supply or develop medical food products include:

  • Danone (OTCQX: OTCQX: DANOY)
  • Nestlé (OTCPK: OTCPK: NSRGY)
  • Abbott Laboratories (ABT)
  • Targeted Pharmaceuticals (OTCPK: OTCPK: TRGM)
  • Primus Pharmaceuticals
  • Mead Johnson & Company
  • Fresenius Kabi

Financial performance

The recent financial results of GHSI can be summarized as follows: Strong growth in top segment sales, acceleration until the third quarter of 2018

  • A significant increase in gross margin, but still less than $ 1 million a year
  • High and stable gross margin
  • Increase in cash used in operations

Below are some of the company's financial results for the two most recent years (PCAOB audited for full years):




Variance vs anterior

Until the 3rd quarter of 2018

$ 708,047



$ 437,349



$ 141,029



Gross profit

Variance vs anterior

Until the 3rd quarter of 2018

$ 415,586



$ 261,879



$ 65,327



Gross margin

Until the 3rd quarter of 2018








Treasury Operations

Variance vs anterior

Until the 3rd quarter of 2018

$ (3,287,940)



$ (4,776,891)



$ (1,653,574)

Sources: Company Registration Statement, IPO Edge

As at September 30, 2018, the Company had cash of $ 1.1 million and total liabilities of $ 398,572. (Unverified, interim)

Free cash flow in the twelve months ended September 30, 2018 was negative ($ 5.0 million).

IPO Details

GHSI intends to sell 2.5 million common shares at an average price of $ 3.50 per share for gross proceeds of about $ 8.75 million, not including the sale. usual subscriber options.

Assuming a successful IPO midway through the proposed price range, the value of the company at the IPO would be approximately $ 69.5 million.

Excluding the effects of the underwriters' options and the private equity or restricted stock options, if any, the ratio of float to outstanding shares will be approximately 12.32%.

According to its latest regulatory record, the Company expects to use the net proceeds as follows:

The Company expects to budget approximately $ 4.0 million of the proceeds of the Offering for the conduct of operations and for its working capital. Working capital expenditures will include, but are not limited to, employee benefits expenses, insurance expenses, license fees, facility costs and maintenance of inventory levels. , as well as research and studies. The remainder of the proceeds are intended for a variety of commercial initiatives, including the costs of marketing and producing new equipment and devices (approximately $ 1.0 million), the purchase of additional transcranial Doppler devices, and other costs related to Deployment of Transcranial Doppler Ultrasound Processing Services (approximately $ 1.0 million) and Recruitment of Experienced Brand Team Leaders with Appropriate Level Support Employees to Increase Marketing Efforts (Approx. 1.1 million bucks).

The management's presentation of the company's roadshow is not available.

The only publicly traded subscriber to the IPO is WallachBeth Capital.

Assessment measures

Below is a table of relevant capitalization and valuation measures:

Measured [TTM]


Market capitalization at the IPO

$ 70,576,664

Value of the company

$ 69,474,874

Price / Sales


VE / Income




Earnings per share

– $ 0.43

Total debt on equity


Floating Ratio / Outstanding Shares


Proposed IPO Midpoint Price per share

$ 3.50

Net free cash flow

– $ 5,017,279

Sources: Prospectus of the company, IPO Edge

For reference, the most clearly comparable public to GHSI would be Targeted Medical Pharma (OTCPK: TRGM); Below is a comparison of their main evaluation measures:


Targeted Medical (OTCPK: TRGM)

Guardion Health (GHSI)


Price / Sales



182 403%

VE / Income








Earnings per share


– $ 0.43


Sources: Prospectus of the company, IPO Edge

Scheduled date of IPO pricing: To be announced.

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