BHST — Q2 2026 Financial Report Analysis

VINIA growth stalls and full-year guidance is cut — the smaller net loss comes from lower finance costs, not the business

BioHarvest makes plant ingredients by growing plant cells in steel tanks (bioreactors) instead of farming the plant. It sells one of those ingredients itself, as the red-grape supplement VINIA, direct to US consumers. It also runs a contract development and manufacturing business (CDMO): it develops and makes plant compounds such as sweeteners, fragrances and saffron for other companies. In the second quarter of 2026 (April–June), revenue rose 3.8% to $8.84 million. That is down from 8.2% growth in the first quarter. The operating loss widened 38% to $2.51 million. Management also cut full-year revenue guidance to roughly $37–40 million, from the $42–48 million it had reaffirmed in May. The reason it gave: online advertising for health products (mainly on Meta) got sharply more expensive, so it chose to spend less on finding new VINIA customers and more on factory capacity.

At a glance

• Revenue +3.8% to $8.84M. VINIA, about 93% of sales, grew only about 3%. The consumer business has nearly stopped growing while the company holds back ad spending.
• Operating loss –$2.51M vs –$1.82M a year ago. Costs grew faster than sales in every major line except administration. The headline net loss shrank only because non-cash finance charges fell by about $1.0M.
• Cash and bank deposits fell $3.9M in the quarter to $16.2M (Q1: down $2.9M). Even so, the interim statements still include a "substantial doubt" going-concern warning.

The numbers

All figures are under IFRS (the international accounting rules the company reports in), in US dollars, for the three months ended June 30, 2026.

First half (six months to June 30): revenue $17.34M (+5.9%), operating loss –$4.34M (vs –$3.53M), net loss –$6.36M (vs –$6.42M), loss per share –$0.28 (vs –$0.37).

The two businesses

From January 2026 the company changed how it splits costs and internal sales between its two units. The VINIA unit now "buys" grape-cell powder from the CDMO unit at an arm's-length price, meaning the price an outside customer would pay. Last year's segment figures were restated to the same basis, so the year-over-year comparison below is like for like.

• VINIA (Products). Sales grew 3.2% year over year and about 1.6% from Q1. Gross margin fell 3.6 points. The powder it buys internally cost 9.2% more ($2.19M vs $2.01M), and its other direct costs rose to $1.29M from $1.07M, both faster than sales. Sales and marketing rose 10% to $4.34M. In other words, the unit spent more to stand still, even though management says it held back on buying customers at higher prices. In June it raised prices by up to 20% for new subscribers from their second order, its first price rise since entering the US in 2021. Management says it has seen no material hit to conversion or retention so far. The quarter only includes a few weeks of that.
• CDMO. Outside revenue is still small: $0.61M in Q2 and $1.02M in the first half. Most of this unit's revenue is the powder it sells to VINIA. R&D spending, almost all of it here, rose 25% to $1.39M for the unit ($1.66M company-wide), which is the main reason the unit's loss widened. In August it signed its first manufacturing (not just development) agreement: an exclusive deal with an existing UAE-based customer to support an expected 20 tons of a rare fragrance ingredient. Limited production could begin "as early as the first half of 2027". The company also warns that production depends on the compound meeting the customer's scent specifications, with no guarantee it will.

What the headline numbers hide

• The smaller net loss is not an operating improvement. Operating loss worsened by $0.69M. Net loss improved by $0.37M only because finance expenses fell to $1.25M from $2.23M, and the company earned $0.10M of interest on cash it didn't have a year ago. Management calls these finance costs mostly non-cash: interest building up on accounting provisions, plus exchange-rate effects.
• Most of the better loss per share is dilution. The average share count rose 31% (22.67M vs 17.33M) after 2025's share offering, warrant exercises and loan conversions. With last year's share count, Q2's loss would be about –$0.21 per share, not –$0.17. Roughly 70% of the 7-cent "improvement" comes from spreading the loss over more shares.
• Adjusted EBITDA flatters the picture by about $0.95M a quarter. It adds back depreciation ($0.49M) and share-based pay ($0.46M, up from $0.18M after the March option and RSU grants). Share-based pay is a real cost to shareholders, paid in new shares instead of cash.
• Cash conversion is weak and getting weaker. In the first half, operating activities used $4.17M of cash against a $6.36M net loss. That gap is mostly non-cash charges. Working capital moved the wrong way: trade receivables rose 46% since December, to $2.90M from $1.98M, and inventory rose 27% to $5.78M from $4.56M, against about 6% revenue growth. Combined cash and bank deposits fell $2.86M in Q1 and $3.95M in Q2. At the Q2 pace, the $16.2M lasts about four quarters, before any CDMO manufacturing revenue arrives.
• The going-concern warning stays. The notes still say conditions "raise substantial doubt" about the company's ability to continue as a going concern. Management believes it has enough cash for the next 12 months "assuming the deferral of certain non-essential capital expenditures". That cushion therefore depends on spending less on the factory build-out the strategy relies on. $2.66M of investor notes (10–12% interest) are now due within a year.
• Gross margin is slipping at the company level. Under the new internal transfer pricing, the CDMO unit's margin rose and VINIA's fell. Those shifts largely offset each other, so the consolidated figure is the cleanest view. It fell 2.2 points to 57.5%, because cost of revenue rose 9.5% against 3.8% revenue growth. Management attributes this to "revenue mix, growth in production, demand and sales".
• Guidance, then vs now. In May, with Q1 results, management reaffirmed total 2026 revenue of $42–48M. Three months later:

Takeaway: The VINIA business that pays for everything has close to stopped growing at today's ad prices. Management turned a planned VINIA profit for 2026 into a planned loss, three months after reaffirming guidance. Meanwhile the first CDMO manufacturing revenue is a 2027 event at the earliest. Until that arrives, the company relies on a $16M cash pile that shrank by about $4M last quarter.

What to watch next

• Can VINIA hit the new range? First-half VINIA sales were $16.3M, so the $33–35M full-year target needs $16.7–18.7M in the second half. That is 2% to 15% above the first half. It depends on the June price rise sticking, the new brand messaging lowering the cost of winning customers, and the new VINIA Daily Chews selling. Q3 is the first full quarter with the higher price.
• The CDMO guidance implies a big second-half swing. Adjusted EBITDA for the unit was –$1.80M in the first half (Q1 –$0.90M, Q2 –$0.89M). Full-year guidance of –$1.5M to –$2.5M therefore implies a second half between roughly +$0.3M and –$0.7M. That means near break-even or better, when each of the four quarters disclosed in the Q1 and Q2 releases (Q1–Q2 of both 2025 and 2026) came in between –$0.80M and –$0.95M. The release doesn't say whether the $4–5M CDMO revenue range counts only outside customers (who paid $1.02M in the first half) or also includes the roughly $2.1M a quarter billed to VINIA. Q3 will show which reading the numbers support.
• Cash. The consolidated adjusted EBITDA guidance of –$3M to –$5M, after –$2.75M in the first half, implies a second-half loss of $0.25M to $2.25M. Even at the bottom of that range, the average quarterly loss would be narrower than either first-half quarter. After the quarter ended, the company listed on the Tel Aviv Stock Exchange (trading from September 8, 2026). On September 29 it authorised a buyback of up to 1.13M shares (5%), an unusual use of cash for a company still flagging going-concern doubt. Watch whether repurchases actually happen and what Q3 cash looks like.

My read: the strategy of building CDMO manufacturing and royalties on top of VINIA is coherent. But the second half of 2026 asks a lot at once: the consumer business re-accelerates at higher prices, and the CDMO unit swings close to break-even, all while cash runs down. The Q3 report, expected around mid-November, will show whether the new guidance was set conservatively or still needs another cut.

Source: BioHarvest Sciences unaudited interim condensed consolidated financial statements and MD&A for the three and six months ended June 30, 2026 (Form 6-K, filed August 11, 2026), and the Q2 2026 results news release of the same date. Guidance history from the Q1 2026 results release (May 14, 2026).