BioHarvest Sciences Q2 2025 Earnings Report

BioHarvest Sciences EPS Results

• Actual EPS: -$0.15
• Consensus EPS: -$0.11
• Beat/Miss: Missed by -$0.04
• One Year Ago EPS: N/A

BioHarvest Sciences Revenue Results

• Actual Revenue: $8.52 million
• Expected Revenue: $8.53 million
• Beat/Miss: Missed by -$18.00 thousand
• YoY Revenue Growth: N/A

BioHarvest Sciences Announcement Details

• Quarter: Q2 2025
• Date: 8/11/2025
• Time: Before Market Opens
• Conference Call Date: Monday, August 11, 2025
• Conference Call Time: 8:00AM ET

BioHarvest Sciences (NASDAQ:BHST) is a biotech firm. It focused on leveraging its botanical synthesis technology to develop science-based and clinically proven therapeutic solutions, within business verticals nutraceutical health and wellness products such as dietary supplements and development of plant cell-based Active Pharmaceutical Ingredients which focus on specific medical indications. BioHarvest Sciences Inc. is based in Vancouver, Canada.

BioHarvest Sciences Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Revenue Growth rose 41% year-over-year to $8.5 million in Q2, in line with guidance, driven by balanced performance across subscription products and CDMO services, and the company remains on track to reach adjusted EBITDA breakeven in Q4.
• Positive Sentiment: Gross Margin Expansion improved by 800 basis points to 60% through larger bioreactors, enhanced manufacturing yields, digitized workflows, and supply-chain optimizations like consolidated shipments.
• Positive Sentiment: Direct-to-Consumer Momentum saw approximately 65,000 active Vineyard subscribers (majority daily users) and Amazon now accounts for ~20% of sales, with Vinnia ranking #1 among virtual-only products.
• Positive Sentiment: CDMO Traction achieved the first pharmaceutical partner’s advancement from stage one to stage two, secured a fragrance contract, and launched an AI-driven discovery phase to accelerate high-value CDMO engagements.
• Negative Sentiment: Widening Losses in Q2 included operating expenses rising to $6.9 million, a net loss of $4.0 million ($0.24/share), and an adjusted EBITDA loss of $1.3 million, despite margin improvements.

Presentation

[Operator]

Greetings, and welcome to the BioHarvest Sciences Second Quarter twenty twenty five Corporate Update Conference Call. At this time, all participants are in listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. Before we begin the formal presentation, I'd like to remind everyone that statements made on today's call and webcast, including those regarding future financial results and industry prospects, are forward looking and may be subject to a number of risks and uncertainties that could cause actual results to differ materially from those described on the call.

[Operator]

Please refer to the company's regulatory filings for a list of associated risks, and we would also refer you to the company's website for more supporting industry information. In addition, throughout today's call, the company may refer to adjusted EBITDA, a non IFRS financial measure, which it believes provides helpful information to investors about the performance on the business on an ongoing basis. A reconciliation of adjusted EBITDA to its most directly comparable IFRS financial measure is included in today's earnings release, which is available on BioHarvest website under the Investor tab. On our call today is Chief Executive Officer, Ilan Sobel and Chief Financial Officer, Par Dicker. I would now like to hand the call over to CEO, Ilan Sobel. Ilan, the floor is yours.

[Ilan Sobel, CEO at BioHarvest Sciences]

Thank you, operator, and good morning, everyone. I'm pleased to welcome you to today's second quarter twenty twenty five corporate update conference call. Q2 marked a pivotal quarter for BioHarvest, not just in terms of execution, but in setting the stage for a major inflection in the 2025. With continued gross margin expansion, growing Vignon subscription revenue and accelerating CDMO traction, we remain on track to achieve adjusted EBITDA breakeven targeted for Q4 of this year. Now before going further into the second quarter, I'd like to quickly introduce our company and background.

[Ilan Sobel, CEO at BioHarvest Sciences]

BioHarvest is the inventor of botanical synthesis, a patented non GMO platform that produces highly potent plant based compounds without needing to grow the plant. Our cell banks replicate key phytonutrients at magnified potency and industrial scale to enable the creation of consistent, soluble and bioavailable products. This allows us to serve high value markets across pharma, nutraceuticals, cosmetics, and nutrition, both through our branded products and as CDMO partner. Now moving to the second quarter. We continued in the second quarter scaling both our products and CDMO divisions.

[Ilan Sobel, CEO at BioHarvest Sciences]

Revenue rose 41% year over year to $8,500,000 in line with our $8,500,000 guidance. Growth was fueled by balanced performance across vineyard.com and Amazon plus revenue contribution from our CDMO services division helping to drive our progress towards adjusted EBITDA breakeven in the 2025. Looking at our direct to consumer health and wellness products division, total active Vineyard customers in The US has reached approximately 65,000 as of July 2025 with subscription customers representing the majority of these daily users. Our Amazon business, which now accounts for approximately 20% of total sales, continues to deliver strong results across conversion rates, repeat purchases, and return on ad spend. And Vignia is currently the number one with virtual only products sold on amazon.com in The US.

[Ilan Sobel, CEO at BioHarvest Sciences]

We continue to build real consumer equity and momentum across each of these core platforms. In Q2, gross margins expanded by 800 basis points to 60%, up from 52% in the same year ago quarter. This improvement reflects both scale and technology leverage driven by the deployment of 22% larger bioreactors, enhanced manufacturing yields, and continued digitization of our biological production workflows. We continue to improve efficiencies within our supply chain. For example, in q two, we began shipping all six and twelve month purchases in a single larger one time shipment rather than a ninety day supply each quarter, which has reduced transportation costs and packaging materials and added 50 basis points to our gross profit margin efforts.

[Ilan Sobel, CEO at BioHarvest Sciences]

Vinnia has maintained its premium pricing in the resveratrol market. Our high customer retention and a 4.7 star average rating on vineyard.com continues to validate the product's efficacy and brand trust, and we are about to reach a major milestone of 10,000 customer reviews on vinnia.com with over 9,900 verified reviews as we speak today. This is a very significant achievement for our hardworking Vignette team. Our direct to consumer health and wellness ecommerce machine is proving highly scalable, allowing us to successfully launch new Vina Insight products via our e commerce channels without having to add significant marketing dollars and enabling us to create strong operating leverage. In Q2, new products defined as all non capsule products contributed to 20% of the company's incremental revenue growth versus prior year and now constitute a healthy 10% of the total revenue mix.

[Ilan Sobel, CEO at BioHarvest Sciences]

This healthy contribution is balanced by the fact that our core capsule business is still the primary growth driver of the direct to consumer health and wellness business contributing 80% of the year over year revenue growth in the second quarter. In q two, we continued to expand our Vinaya Insight delivery systems and in June, we successfully launched Vinaya Daily 2x Formula chews, a double dose eight hundred milligram first of its kind shoe designed to increase nitric oxide production and arterial dilation and to enhance blood flow and oxygen delivery for athletes and individuals with high active lifestyles. These shoes are informed sports certified, meeting global anti doping standards, and expanding access for us into the critical professional sports and institutional wellness programs. Our Vignette 2x daily formula chews are targeting a younger demographic than our core capsule business and enable us to capture revenue from a much younger consumer audience who are looking for the extra edge on the sports field and workplace. The consumer feedback so far has been very encouraging, and we are quickly building strong Amazon reviews with a very encouraging start with many five star reviews.

[Ilan Sobel, CEO at BioHarvest Sciences]

In addition, we added this quarter two new superfood tea SKUs, our English breakfast and and matcha green tea in k cup compatible parts to follow the successful q one debut of our superfood teas in sachets. Looking forward, we are also expanding our Vina Superfood coffee line with Vina Espresso expected to launch soon in the espresso compatible format, targeting the more than 5,000,000 US households that use an espresso original system. In the second quarter, we also saw major milestones achieved by the CDMO division. Firstly, we announced that a CDMO research contract had successfully completed stage one, becoming the first CDMO project to advance to stage two. We are excited to continue working with this valued pharmaceutical partner on a high impact approved therapeutic drug product.

[Ilan Sobel, CEO at BioHarvest Sciences]

And stage two will involve successfully transitioning growth of the target compound to our liquid bioreactors. It is important to note that to date we have a 100% technical success rate when compounds successfully complete stage one and that each stage in our CDMO development process represents positive revenue and high gross profit margin improving our bottom line as we complete the critical research and development stages with CDMO partners bringing valuable life changing plant compounds to market. The CDMO business development team is actively building the new contract funnel and in Q2 we also signed our first contract targeting a fragrance molecule. Our AI capabilities were integral in securing this new agreement and are providing invaluable insights as we engage with prospective industrial partners. Our target compound on this project is a provocative use case for our botanical synthesis technology as the compound is a highly valuable compound derived from an endangered plant species that sells for thousands of dollars per kilo.

[Ilan Sobel, CEO at BioHarvest Sciences]

We now have ongoing CDMO projects for pharmaceutical nutrition and fragrance industry partners and I'm pleased to report that our deal funnel is very healthy. We are being very selective in the deals we finalize but our expectation is that we will announce multiple new CDMO contracts here in the 2025. So as our products and our CDMO services business units expand, we are constantly innovating so that we can actively layer on incremental high margin revenue drivers. I would like to spend a few moments here to discuss three examples of major new programs that are designed to rapidly accelerate our revenues in the 2025, each of which is incremental to existing core growth catalysts such as incremental CDMO contracts and our upcoming olive cell product. I call these our big bets for the downhill of 2025.

[Ilan Sobel, CEO at BioHarvest Sciences]

The first big bet I want to talk to you about is in our products business, in our direct to consumer health and wellness products business, where I am very pleased to announce the launch of our Vinia Health Pros professional affiliate program, which is our new proprietary program to activate major health practitioners, athletes, coaches, trainers, and health influencers who have significant followings and who share our passion for healthy and sustainable living. We have always fostered relationships with like minded influencers and practitioners, but this formalized HealthPRO's professional program will dramatically increase vineyard exposure within our targeted partner physical and social networks and is expected to drive significant subscriber growth at lower acquisition costs. The HealthPros professional network will all be approved and supported by the Vinia team and our own proprietary back end technology systems, and our goal is to have 300 top thought leaders enrolled by the 2025. We are launching with a dynamic and eclectic mix of partners. One great example is doctor Anatoka, a top colorectal surgeon with a growing social media audience of a 160,000 Instagram followers who is focused on gut health and who advocates the critical importance of blood flow given the need for healthy blood flow in the intestinal tract to digest food, absorb nutrients, and ensure optimal delivery of these nutrients to the body's tissue cells and organs.

[Ilan Sobel, CEO at BioHarvest Sciences]

Another great new partner is Marcellus Wiley, an NFL Hall of Famer and sports media personality who's partnering with us to bring the power of Vina to his community and sporting ecosystem. Just these two health pros alone represent over 1,000,000 engaged social media followers. Today, we kick off our test phase with 10 health pros using the platform, and in September, we will scale to a 100 by the end of the month with a target of 300 health pros on our platform by the end of the year. Our second big bet also relates to our direct to consumer health and wellness business and sits squarely in my own personal wheelhouse based on my eighteen years of experience with the Coca Cola system where I manage major hydration brands in The USA such as Vitaminwater, Smartwater, and Powerade sports drinks. I'm excited to announce that we are in the final phases of commercializing our differentiated entry to disrupt the $13,000,000,000 electrolyte drinks market in The USA.

[Ilan Sobel, CEO at BioHarvest Sciences]

In October, we will launch our Vinia blood flow hydration solution into the market as a daily powdered electrolyte mix which comes in six great tasting flavors. We will be the first electrolyte hydration beverage powered by blood flow and driven by our unique vineyard matrix of pisces with Verosol and other polyphenols, demonstrating that this blood flow driven hydration solution is a breakthrough that only Vinia and BioHarvest can deliver. Currently, the marketplace is swamped by players with marketing claims largely related to electrolytes. We plan to be a disruptor in the market focusing on the importance of having better blood flow to deliver the necessary oxygen, fluids, electrolytes, and nutrients to organs, muscles, tissues, and cells right where hydration matters most. In addition to the blood flow benefits we all know about, our solution will feature premium electrolytes sourced from nature.

[Ilan Sobel, CEO at BioHarvest Sciences]

Our formulation features salt from the Irish Sea as our source of sodium, potassium from coconut water, and magnesium from the ocean bed. And at 25 calories, it tastes amazing. We have been very fortunate to partner with one of the best formulators in the industry, Lewis Hines, the owner of Bevnology and previously head of r and d for the Coca Cola Company for Europe, Africa, The Middle East. Lewis has partnered with myself and the team on the development of this product for the last twelve months and has invested more than a thousand hours of r and d time to get this product tasting just perfect. Our Vinia blood flow hydration solution will be sold via our ecommerce channels and is a great strategic fit for our HealthPro professional affiliate program.

[Ilan Sobel, CEO at BioHarvest Sciences]

Our third big bet is the addition of a new revenue driver in our CDMO services division. We call this our AI enabled discovery phase. This new service offering has been developed for cosmetic pharmaceutical, nutraceutical, and nutrition companies who need help identifying the most promising botanical compounds for their products. It leverages our proprietary AI trained on rare plant biology and biosynthesis and couples it with our team's proven ability to achieve full scale production from indication to market. With these assets, we are uniquely positioned to provide companies and researchers an assessment for the most effective plant candidates based on scientific evidence, unique value propositions, and prior success in tissue culture.

[Ilan Sobel, CEO at BioHarvest Sciences]

We will provide models of feasibility and future product analysis, including evaluation of active ingredients and formulation, patentability, sourcing, and safety. These customers will receive a final shortlist of suitable plant candidates with multi pathway efficacy and full scalability within the BioHarvest system. This service includes the utilization of our computational biologists and access to our catalog library of plants information, whereby our PhD plant cell biologists analyze the AI driven data to provide a human experience based point of view behind the recommendation for plants to take into a stage one contract. The discovery phase will be completed in seven to ten days at a cost to the CDMO customer of approximately 35 to 50,000 US dollars. The goal of the discovery phase is to finalize one or two recommended plans to move into stage one, and we anticipate that this new service addition will accelerate the rates of new high value CDMO customer projects entering into stage one contracts.

[Ilan Sobel, CEO at BioHarvest Sciences]

Each of these big bets along with our subscription driven operating leverage, expanding gross margins and maturing CDMO contracts are designed to put us in a strong position to reach the adjusted EBITDA breakeven target in q four of this year. With that, I'll now turn it over to Bahr, our CFO, to walk through the financials. Thank you, Bahr.

[Bar Dichter, CFO at BioHarvest Sciences]

Thank you, Ilan. Good morning, everyone. I will provide you with a succinct review of our financial results. A full breakdown is available in our SEC filings and in the press release that crossed the wire before market opened today. Please note that all figures are in U.

[Bar Dichter, CFO at BioHarvest Sciences]

S. Dollars unless stated otherwise. Revenue for the 2025 increased 41% to $8,500,000 in line with our revenue guidance as compared to $6,000,000 in the 2024. The increase was as a result of continued success of the company's Vinia family of products. Gross profit increased 65% to $5,100,000 or 60% of total revenue in the 2025, as compared to $3,100,000 or 52% of total revenue in the same year ago quarter.

[Bar Dichter, CFO at BioHarvest Sciences]

The increase in gross margin was primarily attributed to the benefits of increased manufacturing scale and improved manufacturing yield. Total operating expenses for the second quarter totaled 6,900,000.0 as compared to $4,800,000 in the same year ago quarter. The increase in operating expenses was primarily due to increased marketing spend and the development of our Health or Affiliate program to support future revenue growth and higher expenses from the CDMO service division. General and administration expenses increased 61% in the second quarter as compared to the same year ago quarter due to one time costs associated with our NASDAQ corporate compliance upgrade. Net losses for the 2025 totaled $4,000,000 or $0.24 per basic and diluted share as compared to a net loss of $700,000 or $04 per basic and diluted share in the same year ago quarter.

[Bar Dichter, CFO at BioHarvest Sciences]

Adjusted EBITDA loss, a non IFRS measure, totaled $1,300,000 in the 2025 as compared to an adjusted EBITDA loss of 1,200,000 in the same year ago quarter. On a percentage of revenue basis, adjusted EBITDA loss totaled 14.7% in the 2025 as compared to 20.7% in the same year ago quarter. Cash and cash equivalents as of 06/30/2025, totaled $3,700,000 as compared to $2,400,000 as of 12/31/2024. Importantly, with the current margin route and expense discipline, we continue to project that we will reach adjusted EBITDA breakeven in the fourth quarter. We believe this is achievable within the 2025 based on Vynia run rate growth, expanding Amazon contribution, and maturing of our first CDMO programs.

[Bar Dichter, CFO at BioHarvest Sciences]

This inflection is a key financial milestone for validating the scalability of our business model. I would now like to pass the call back to Ilan to offer some closing remarks, after which we will begin our Q and A session.

[Ilan Sobel, CEO at BioHarvest Sciences]

Thank you, Bar, and thank you all for joining us today and for your continued support of BioHarvest Sciences. As we wrap up today's call, I want to take a moment to recognise the strength of the platform we've built, the discipline of our team and the momentum we're carrying into the second half of the year, which I view as a monumental financial turning point in the history of our organization. I consider it a privilege to lead this company, and I remain confident in our ability to deliver both operationally and financially against the incredible opportunity in front of us. We're seeing our strategy come to life. The direct to consumer business is scaling efficiently with growing margin leverage, and our CDMO pipeline is starting to unlock long term value through marquee partnerships.

[Ilan Sobel, CEO at BioHarvest Sciences]

This synergy between product and platform is translating into real commercial traction and most importantly a path to adjusted EBITDA breakeven target in Q4 of this year. That inflection will mark a turning point for BioHarvest, a shift from foundation building to scalable execution and from early validation to accelerating value creation. Botanical synthesis is no longer just a breakthrough technology. It's a commercial platform with expanding utility across multiple high value verticals. As we scale from here our focus remains unchanged, execute with discipline, deliver measurable health benefits from life changing plant compounds for millions of consumers and drive long term sustainable value for our shareholders.

[Ilan Sobel, CEO at BioHarvest Sciences]

With that, I'll hand the call back to the operator to begin our Q and A session. Thank you operator.

[Operator]

Thank you. We will now begin the question and answer session. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our First question is from Matt Hewitt, Craig Hallum Capital Group.

[Matthew Hewitt, Senior Research Analyst at Craig-Hallum]

Good morning and congratulations on all your progress. Maybe to start off, if we could dig a little bit into the consumer side, I'm curious if the 2x2 launches kind of progress as you would have anticipated, How you think that ramp could look over the back half of the year? And then regarding the Hydration launch, is there anything different given that this will be a liquid versus your prior consumer products? And how do you anticipate that launch proceeding into the back half of the year?

[Ilan Sobel, CEO at BioHarvest Sciences]

So, good morning, Matt. Thank you for your questions. The 2X formula feedback has been phenomenal. I would encourage everybody to go to Amazon and have a look at our consumer reviews. I think the last time I looked, we had 25 reviews.

[Ilan Sobel, CEO at BioHarvest Sciences]

Read the reviews. It'll help you understand the level of engagement that consumers have, the overall taste feedback, the overall functionality. And this is really encouraging because it's a premium product. It's $79 Obviously, it's still a strong value proposition because you're getting basically eight hundred milligrams of vineyard in each specific chew. So when you benchmark it versus singles, it's still a better value proposition, but from an absolute price point, we premiumize it because we understand that the user is different.

[Ilan Sobel, CEO at BioHarvest Sciences]

The user is looking for very unique functionality, increased vascularity and all the benefits that you get from increasing nitric oxide from an overall blood flow and oxygenation perspective. So we're very enthused. It does take time to get the product out there and to get the reviews going and just from an efficiency perspective and you understand that we're all about marketing efficiency and how we operate, you can't really start spending significant resources on a platform like Amazon as an example until you have a critical mass of reviews. So now we're tracking at that 25 reviews, which is a significant number of reviews. The last time I looked, we had a five star rating from 25 reviews, which again just emphasizes the consumers vote on quality, on functionality and on taste.

[Ilan Sobel, CEO at BioHarvest Sciences]

So we're very encouraged and we see that the 2X2s will continue to build momentum and be an important contributor for the business in the third quarter, and then again in the fourth quarter as we start to ramp up additional marketing spend behind that, and specifically because the new HealthPro channel is going to be a key channel that the True product is going to be totally appropriate for the consumer that the HealthPro, the discerning consumer that the HealthPro channel is focusing on. And that's probably a good segue to the hydration product that we bring into the marketplace. This is unique. And as I said in the notes in my comments earlier, it's personal. Having spent eighteen years in the beverage business on both the ready to drink mat and on the powdered side of the business, did have the privilege of launching in Vietnam powdered beverages back in the previous life.

[Ilan Sobel, CEO at BioHarvest Sciences]

I have a lot of experience with this space, But obviously, we're focused on the stick packs, which is the powdered beverage space, which today just in The US, it's roughly about a $4,000,000,000 market. You have players like LiquidIV who lead this market that's right now more than a billion dollars of revenue on an annual basis. And obviously there's significant interaction between the powdered stick business and the ready to drink business. Right now our focus is on the powdered stick business. As I said, we've developed a formula which we believe is a game changer from an overall taste perspective.

[Ilan Sobel, CEO at BioHarvest Sciences]

It's clean. The formula is super clean which is so important for these consumers. Very, very discerning. As you can see, you've got the power of veneer from a blood flow perspective, which is powering hydration. It's pretty much common sense when you actually talk to the consumer, you understand the consumer behavior and the consumer cognitive thinking approach, consumers understand that in order to have the best hydration you've got to have really good blood flow to transfer all the fluids and the electrolytes to your muscles, your tissues, and your cells.

[Ilan Sobel, CEO at BioHarvest Sciences]

The consumer, resonates very strongly. You can see, and this is just work in progress packaging. We've evolved the packaging even more breakthrough in the last seventy two hours, but it's very clearly, it's blood flow hydration. It's hydration powered by blood flow and we have naturally derived electrolytes, which again is very unique differentiating the category with sodium from Irish sea salt, potassium from coconut water powder and the magnesium from the bed of the ocean and a really unique clean sugar sweetener system where we're using organic cane sugar and Reb M with a very unique ratio that Lewis from Bevnology has developed and you have a product that has very little aftertaste. So the power of the 2X2s and the hydration product all being doubled down and executing through our regular channels plus through the HealthPro channel.

[Ilan Sobel, CEO at BioHarvest Sciences]

This timing has been absolutely critical to start to build the additional scaling and additional incremental growth points within our business with in a way, was through the HealthPros with the Salesforce that so literally, the HealthPros act as a Salesforce for our business, an educated technical sales force for our business to be able to communicate to the more discerning health based audience the power of our two x formula chews and the hydration products. Thank you. And I hope I've covered your question.

[Matthew Hewitt, Senior Research Analyst at Craig-Hallum]

No, yes, that was fantastic. Maybe shifting gears a little bit on the CDMO side, obviously congratulations on your color there. You noted the success with the initial pharmaceutical company and the fragrance. I'm just curious how that pipeline is progressing, maybe an update on the Tate and Lyle opportunity?

[Ilan Sobel, CEO at BioHarvest Sciences]

Yes, sure. So we've been very busy to put it simply. The pipeline is significant. We have high single digit number of leads that we are working on. And these are all, I would say, significant catalysts that we're looking to bring into the CDMO business.

[Ilan Sobel, CEO at BioHarvest Sciences]

Not all of them will get through the gates, but there is consistently new use cases that we are being shared significant, life changing compound billion dollar opportunities. A good example is the announcement that we made in May regarding the fragrance. I mean, was a use case that we wouldn't have coming into this twelve months ago thought that that would be a use case and we continue to see new incremental use cases, which just basically opens up the opportunities for us. The team is very, very focused on pulling that pipeline through. It's a really good mix of pharma, of nutraceutical, and of food companies that are part of the pipeline.

[Ilan Sobel, CEO at BioHarvest Sciences]

And we are confident that in the downhill of the year, so between now and the end of the year, we will announce at least one and maybe two new deals into the CDMO, which I think would give us significant momentum going into 2026. Importantly as well, as it relates to the new product that we've launched, the discovery product, this for us has been a game changer because many of our customers are coming to us, they have very clear indications that they're focusing on, but unlike Tate and Lyle who are very, very focused and had done enormous research that it was plant A and plant B, many of our customers are more focused in starting with the indication and they'll come to us and say, look, we have a specific indication we're targeting. Let's say, I'll just use a broad example out there, asthma. Obviously these are companies that have played in the chemical synthesis space for the last twenty, thirty years. And all of a sudden, they're starting to understand that there's massive blind spots out there that they have to make sure they get their arms around That may be a critical answer in driving a game changing compound for their businesses.

[Ilan Sobel, CEO at BioHarvest Sciences]

And that's when they knock on the bioharvest sciences door, because obviously we're the critical bridge between the plant kingdom and scaling these life changing compounds with unique consistency, economic viability, and obviously patents. And so we've developed now this unique discovery process, which is indication focused and then utilizing the different tools, the computational biology tools that we've developed from, you know, and obviously utilizing a significant amount of AI because we've actually been able now to catalog so many libraries of plants, of compounds, of the mechanism action, of understanding what's worked in tissue culture, what hasn't worked in tissue culture. And we're able to very quickly, and it's normally like a fourteen day process that we're able to work through, be able to then sit down with the customer and say, okay, based on that indication, here are the one or two or three plants that we believe have the compounds that can be the next generation of life changing compounds for you. We believe that based on the mechanism of action, based on the work that's been done in the last thirty years from a tissue culture perspective, that we can deliver on this compound. And that then gives them the confidence to go into that critical stage one.

[Ilan Sobel, CEO at BioHarvest Sciences]

So with this new tool, we're able to also increase further the amount of leads that are coming into the pipeline, and I think that's going to really stand us in very strong position as we go into 2026. Lastly, in the case of our Tate and Lyle partnership, the partnership continues to strengthen. The relationship between the two working teams is excellent. There's a great collaboration. We have sourced one of the critical plants.

[Ilan Sobel, CEO at BioHarvest Sciences]

We are working actively on the tissue culture work and I promise that when we have news to share, we will be sharing that news, but the partnership continues to grow from strength to strength and that gives us opportunities. Tate and Lyle are a significant company that cover many categories and I think Tate and Lyle have experienced the professionalism, the capabilities of our organization over the last six months and I believe that can also open up some potential new opportunities for us outside of the existing swim lane that we've been working on. And at the right time, I can share a little bit more in this area if appropriate. Thank you.

[Matthew Hewitt, Senior Research Analyst at Craig-Hallum]

That's helpful. Maybe one last one for me and I'll hop back in the queue. But will you guys be seeing any impact from the implementation of tariffs? And if so, how do you expect to respond? Thank you.

[Ilan Sobel, CEO at BioHarvest Sciences]

Yeah. So obviously, everybody's familiar that the final tariff impact from an Israel perspective is now sitting at 15% as far as transfer material from Israel to The US. We obviously are transferring material from, you know, one company owned by BioHarvest to another company. So we have factored that in into our value chain. And obviously, I would prefer it to be zero, but the impact of that, we've been able to manage that through driving efficiencies in other areas.

[Ilan Sobel, CEO at BioHarvest Sciences]

We had budgeted actually for a higher number thinking it was gonna go up to 17, and it's basically what we had factored into our downhill. Now that it's sitting at 15 for the moment and I do think that that's not stationary, that may change. So we do get a little bit of upside and obviously we're focused on everything here, but we have been able to factor that into our P and L and into our projections as we look to guide the business to that adjusted EBITDA profitability that we're focusing on getting to in the fourth quarter. Not a major impact. Okay?

[Ilan Sobel, CEO at BioHarvest Sciences]

The quantum is not major. It's manageable. And we've managed it through just, you know, religious focus on cost reduction in other areas to to balance that impact.

[Matthew Hewitt, Senior Research Analyst at Craig-Hallum]

That's helpful. Thank you.

[Operator]

Next question is from Amit Dayal, H. C. Wainwright.

[Amit Dayal, Managing Director & Senior Technology Analyst at H.C. Wainwright & Co.]

Thank you. Good morning, everyone.

[Amit Dayal, Managing Director & Senior Technology Analyst at H.C. Wainwright & Co.]

Congrats on another strong quarter. With respect to the sales channels, Ilan, can you give us sort of a high level overview of what are the different sales channels you will have by the end of the year, and how are you managing these?

[Ilan Sobel, CEO at BioHarvest Sciences]

Well, Amit, nice to hear from you. Okay. From a sales channel perspective, obviously, our core vineyard.com direct to consumer business is basically the lion's share of our business. This today is roughly around about 80% of the business. Obviously, Amazon, we've been able to manage this at a healthy 20% of the business.

[Ilan Sobel, CEO at BioHarvest Sciences]

So today, these are the core channels. In addition, we have a growing direct to doctor professional business where we have a small team that focuses on key integrative medicine centers around The US and key doctors that actually do sell supplements directly to their patients. We've also opened up our international purchases in the last two months and we're seeing a really nice steady stream of international purchases come through every single day. And that obviously helps us from a marketing efficiency perspective because they're seeing this through leakage of a lot of our TV. We do a lot of work with TBN, Trinity Broadcast Corporation, which is the fourth largest TV channel in The US.

[Ilan Sobel, CEO at BioHarvest Sciences]

A lot of that content is projected into the Southern Hemisphere, Australia, New Zealand, also into Singapore, Malaysia and even into Europe. So we're starting to see now that those consumers and that's one of the reasons why we turned on international purchasing and every single day we're getting more and more requests and I believe that will continue to grow. The HealthPros channel Amit is a major major bet for us and something that I believe will be a critical source of our competitive advantage because to be able to manage and build that professional channel requires IT capabilities, critical technology that we as a company, it's part of our DNA, the way we run our business with technology and systems running the whole back end of the business. We spent literally the last four months building the back end of how do you onboard 300 health pros, how do you make sure that you have all their required information that's critical, banking information, tax information, being able to pay them at the appropriate time and all the backend systems. We've now developed that.

[Ilan Sobel, CEO at BioHarvest Sciences]

We've also developed all the content to be able to educate these people, the catalogs, the specific programming to make sure that these health experts understand the technical nature of our product, almost like it's our own sales force going out and communicating to the world the uniqueness of our, in this case, of our veneer products, and obviously the health pros will continue as we launch new products into the marketplace. So our expectation with these health pros that are coming on board, they are people that are highly respected in their ecosystems, in their communities. Many of them have significant social media presence as we articulated with the two examples that we shared a little bit earlier, and we see this as being a critical strategic channel for the company, a channel that we can control, a channel that we're able to scale initially. We'll go from 10 to 100 to 300 by the end of the year, and ultimately we will continue to build this out and scale it. My expectation is that this will contribute shortly 20% of the business and will then start to kind of give us a nice balanced channel mix.

[Ilan Sobel, CEO at BioHarvest Sciences]

And importantly, the marketing efficiency in this channel is much greater than all the other channels because it allows us to be able to generate a much lower cost of acquisition. So this should help us really drive increased marketing efficiency and leverage as we start to continue to scale the business. The only other channels that I think we would start to consider as we're scaling our business is other e commerce channels which play in parts of the world or play in certain areas that we don't specifically play in. And I'll be able to share more about that in the probably in the next call.

[Amit Dayal, Managing Director & Senior Technology Analyst at H.C. Wainwright & Co.]

Understood. These health pros, are these, you know, like fitness and health sort of influences, or, like, are these some other type of, you know, folks with other credentials?

[Ilan Sobel, CEO at BioHarvest Sciences]

No. This is this is, like, another level. You know, a lot of the people we're gonna be bringing on board on HealthPros, they are doctors. They are nutritionists, they are physiotherapists, they are chiropractors, these are people that they are top coaches, they are trainers, these are people that basically live and breathe health every single day. That when you explain to them about dilation of arteries and nitric oxide and ET1, they get, they understand exactly the uniqueness of our product.

[Ilan Sobel, CEO at BioHarvest Sciences]

When you talk to them about solubility and bioavailability, they get it. When we talk to them about hydration powered by blood flow, get it. These are educated people that live and breathe in the health and nutrition world, and we're very, very selectively bringing on board these people. We have very, very tight agreements with them as well, and so it's a layer of very highly skilled trained health professionals that understand the science and understand the consumer and can be a very important and highly effective bridge between our company and consumers out there and a consumer that basically we can then target in a much more efficient way.

[Amit Dayal, Managing Director & Senior Technology Analyst at H.C. Wainwright & Co.]

Understood. Thank you for that, Helene. With respect to margins, see another sort of improvement this quarter. Is there more room here? You spoke about some maybe slight headwinds from tariffs, etcetera.

[Amit Dayal, Managing Director & Senior Technology Analyst at H.C. Wainwright & Co.]

With that in mind, are we sort of capped at around 60% at least for the near term?

[Ilan Sobel, CEO at BioHarvest Sciences]

So I think you know my answer to that, and you know that we literally are a company that, as a result of some great work that Barr has done with her team and the systems that we put in, we're like ABC costing on steroids in our company. We know every single step and what the cost is of that step, and we're maniacal in looking at every single opportunity to turn the knobs. So I would tell you that we still have target opportunities to turn the knobs, and you saw us share that example a little bit earlier, just purely by changing how we ship and shipping in a double pack for many of the households that purchase two subscriptions for each household. This added literally another 50 basis points for us. And there are a number of other opportunities like that that we will be able to execute between now and the end of the year, and then obviously we do get the benefits of scale as we continue to scale up the revenue of the business.

[Ilan Sobel, CEO at BioHarvest Sciences]

So I would say to you, there's more in it, and we're very, very focused on literally turning every single screw. It may be the pace will not be as fast as the pace of what we've done. I mean, you think about it, we went from 6% now to 60% in three years. And I think importantly, I mean, this is really, really important. I want everybody out there to understand this.

[Ilan Sobel, CEO at BioHarvest Sciences]

The price of Vinia core package, which is our ninety days, three months subscription package, when we launched in May 2021 was $99 If you all go online today and you want to buy that same package, it's $99 We've maintained price. And show me another company out there that has, in this hyperinflationary four years, has been able to maintain price on their core SKU. This is super unique. It's driven by number one, the company's vision and value system, which is all about democratizing life changing compounds, and we felt that this price point is a magical price point and critical. And then just real servant leadership across the end to end value chain to find other ways outside of pricing to be able to drive margin in the business.

[Ilan Sobel, CEO at BioHarvest Sciences]

So there are plenty of opportunities left for us. Obviously, for us is not a lever that we want to be pulling, because as we democratize and scale the business, we do utilize mix management. Obviously, our coffee products and tea products are higher margin than our capsule business. And I think with the success we're gonna see in our hydration business, we have very high expectations. This will help us improve margin as well from a mix perspective.

[Ilan Sobel, CEO at BioHarvest Sciences]

But again on the cost side and the efficiency side there's still more work for us and it won't be at the same pace, but there's still work to be done there.

[Amit Dayal, Managing Director & Senior Technology Analyst at H.C. Wainwright & Co.]

Understood. Thank you for that comprehensive answer, Eilan. I'll take my other questions offline. Thank you.

[Ilan Sobel, CEO at BioHarvest Sciences]

Thank you. Thank you.

[Operator]

Next question is from Anthony Vendetti, Maxim Group.

[Anthony Vendetti, Executive MD - Research at Maxim Group]

Thank you. Ilan, I was wondering if you could just dig a little deeper into your botanical process there. Any other this quarter, particularly innovations in the process in terms of improving the throughput? And any other new molecule isolation that you've been able to ascertain this quarter? And then just an update on your facility expansion. Thanks so much.

[Ilan Sobel, CEO at BioHarvest Sciences]

So from a botanical synthesis process perspective, Anthony, we've done, we continue every quarter, there's a lot of work that we're doing on the process. Let's call it the process optimization. I think I first wanna break this up into the first area, which is around digitization of our of our facility as it relates to all the biological metrics that are critical for us to make sure that the cells are growing effectively on the growth curve in a way that optimizes the high seed, resveratrol, and polyphenols that they produce, as well as optimizing potency, as well as optimizing yield. And my COO, Elana, and her team are, you know, growing in their knowledge because this whole piece has been digitized and with more data, we're able to optimize. So we're getting better and better at doing what we need to do to drive optimization of yield and potency, and that's really, really critical.

[Ilan Sobel, CEO at BioHarvest Sciences]

And that's all just driven by the digitization. We built a blueprint, a brain for our facility, which allows us also to be much more efficient in handling every single month, you know, anywhere from 100 to 140 bioreactors. There's no other company in the world that handles the quantum scale of bioreactors that we handle. This is number one. Number two is and I actually sat down with the team before I before I went overseas.

[Ilan Sobel, CEO at BioHarvest Sciences]

So last week, Wednesday, had a great three hour meeting with our process engineering team, and there are certain parts of our process where we have an opportunity to automate these processes more effectively and so there is a significant amount of work specifically in the area which we call harvesting which is when we basically take the cells when they finish their growth cycle and we separate it from the liquid. We call this harvesting. We are now working on a number of different technologies to much more efficiently work through the harvesting side. And then similarly on the drying side, there's a number of technologies that we're working on right now because as we scale our manufacturing capacity, we will be putting in place our own drying capacity. That's, again, just to the earlier point around the margins.

[Ilan Sobel, CEO at BioHarvest Sciences]

Once we start to bring at least a large proportion of our drying in house, This will allow us to improve gross profit margins. So everything that we're doing from process optimization as it relates to harvesting, as it relates to downstream drying, and upstream the digitization, All of this is ultimately allowing us to get better at what we do and will translate over time in much better gross profits for the direct to consumer business. But importantly, all of this translates into the CDMO into the CDMO business itself. In addition, we're also working on the next generation of bioreactors. You know, now we're at 1,200 liter bioreactors, and we don't stay stationary.

[Ilan Sobel, CEO at BioHarvest Sciences]

We keep on moving. We went from three fifty to 600 to 800 to 1,000 to 1,200 liters, and as we plan now to move to our next facility, which we will commence the more specific manufacturing towards the back end of this year, the expectation is to be in 2,000 liters and above. So there's a lot of work that we're doing in that space. And this is just part of, you know, how a company like ourselves that's building a movement of change to bring life changing compounds to the world. It's like the natural cycle of just continuous improvement around the process engineering of our end to end business so we can get better and better as it relates to botanical synthesis.

[Ilan Sobel, CEO at BioHarvest Sciences]

On the CDMO side, and I speak here on behalf of Zaki, it's amazing the way Zaki and obviously, given his background as a as a mathematician and an engineer, Zaki has built a, I would say, a best in class computational biology team with some real experts from the industry, and this is really starting to be seen as a force of our competitive advantage across the business. You know, our business, we don't talk about it a lot externally. You don't see us of thumping our chest around how we use AI, but we're using AI across our entire business and specifically within the CDMO business, whether it relates to the work that we do from a discovery perspective, or it relates to the work we're doing on the actual tissue culture work in leveraging the power of AI computational biology to get more and more efficient, all the way through to, you know, we live in an ecosystem in Israel, probably the best ecosystem as it relates to tapping into best in class cutting edge technology to make us more efficient like computer vision. We started a major project in the area of computer vision so that there's less handling of the materials and we can actually use computer vision to be able to and AI, a combination of computer vision and AI to be able to assess whether the tissue culture is growing the right way or not.

[Ilan Sobel, CEO at BioHarvest Sciences]

So continuous, continuous, and this is really part of the culture and the innovative mindset that we have at BioHarvest.

[Anthony Vendetti, Executive MD - Research at Maxim Group]

Okay, great. And then just maybe one last follow-up. In terms of the quarter we're in now, I know fourth quarter twenty five is the target for EBITDA breakeven. But for this quarter, are there any other major milestones by September 30 that we should be looking for between now and then?

[Ilan Sobel, CEO at BioHarvest Sciences]

Look, I think you'll start to see the impact of the HealthPros in the month of September. For us now, as I said, we're bringing in our first 10 this week. Everything's ready. The whole back end's ready. The front end's ready.

[Ilan Sobel, CEO at BioHarvest Sciences]

It's a huge effort of the whole marketing organization as well as the IT side of the organization. And then we plan to very quickly bring on board 5,100, and so we should start to see some of those benefits come through in September, but we're working through very methodically and carefully around how we do that. But the true impact of that will be in the fourth quarter. Similarly, the hydration product, we will launch, we're trying to get production completed in September and because the product is Inform Sports certified, and again, it's one of the few products in the market that actually is third party verified, anti doping. We've been very, very technical on how we bring in this product to the market.

[Ilan Sobel, CEO at BioHarvest Sciences]

Everything is best in class. So with the Informed Sports Certification, it takes about another ten days from the time you've done manufacturing to send samples to London, because every single batch is certified to make sure it passes anti doping more. And this is so critical to get into NCAA teams, NFL, MLS. And I really believe we have the game changer. The game changer of hydration as it relates to the science, as it relates to the taste and then ultimately efficacy when it comes to these athletes.

[Ilan Sobel, CEO at BioHarvest Sciences]

That's why it was so important for us to invest in Informed Sports Certification. So the true impacts again will be in October. We are doing a lot of work on the CDMO and there's a lot of action going on but I don't to be overly predictive on this and we will obviously share more updates when appropriate over the next six weeks. But you can see the business is gearing up for putting in place the infrastructure to really have a significant acceleration in the fourth quarter. And I think it was important for us to give our shareholders a visibility of what that looks like, building on top already very, very good core momentum in the business.

[Anthony Vendetti, Executive MD - Research at Maxim Group]

Okay, great. Thanks so much for all that color. Appreciate it.

[Operator]

Next question is from Hunter Dahmert, Dahmert Equity Research.

[Hunter Diamond, Owner at Diamond Equity Research LLC]

Hi, everyone. Good morning and congratulations on the strong results. My question relates to the CDMO again. When do you see that sort of ramping up high level and contributing more meaningful to revenue? And maybe you could touch on the Phase one, Phase two assets, the breakdown of contracts or how you see where you see the low hanging fruit?

[Hunter Diamond, Owner at Diamond Equity Research LLC]

Is it more coming in earlier stage or some later stage compounds that you're able to work with?

[Ilan Sobel, CEO at BioHarvest Sciences]

Hi, good morning, Anza. Thank you for the question. So look, just to kind of remind everybody, we've made huge progress. We moved NASDAQ listed pharmaceutical company that has an approved drug. I repeat an approved drug.

[Ilan Sobel, CEO at BioHarvest Sciences]

We moved them already from phase one to phase two in the second quarter in May. And so that was really a major, major validation of the power of our technology. And given the fact that this is quite a unique biological material that we plan to produce for this very, very strategic partner. And as you know, we are now working very closely with Tate and Lyle. And then obviously the fragrance opportunity, which we haven't really spoken about in a public forum like this.

[Ilan Sobel, CEO at BioHarvest Sciences]

But this is a monster of an opportunity of a category or I'd call it more like a segment, which is 16,000,000,000 and it's just waiting for innovation just given the sustainability challenge that exists. Literally, the particular plant that we're dealing with here is a plant that in twenty years' time may not exist. It's a rare plant, and it's massive opportunity from a financial leverage perspective for us. So what's already in the queue is significant and each of those opportunities are literally specifically on the take and love side and on the fragrance side. These are multi billion dollar opportunities.

[Ilan Sobel, CEO at BioHarvest Sciences]

On the pharmaceutical side, it's a good multi million dollar opportunity. So what's sitting in the pen looks really, really good right now. And as I mentioned a little bit earlier, the team has built an amazing pipeline. What's really very encouraging for me is that that pipeline has not been built by crazy amount of marketing. The demand creation is coming from the customers.

[Ilan Sobel, CEO at BioHarvest Sciences]

It's customers that are finding us and are totally intrigued, overwhelmed by technology and then start to understand what could actually do for their respective businesses. And that's why throughout significant interaction with customers, we decided to bring into play the discovery module because we felt that this for $35,000 to $50,000 a few weeks of work by our computational biologists together with our R and D team, we could very quickly get customers on the path into a stage one project. So going back to your that just gives a bit of color and texture on what's going on, which is super exciting. What's important going back to your question is when are we going to start to see meaningful contributions? The meaningful contributions I believe will start coming to play in early next year because we'll start to see more of the existing projects coming into phase one moving to phase two, phase two moving into phase three.

[Ilan Sobel, CEO at BioHarvest Sciences]

And then as a result of a lot of the work we've done in building the pipeline, you'll start to see a lot more projects coming into phase one. So the contribution of the CDMO will continue to increase. And by the way, the CDMO contribution right now, it's meaningful. It's not insignificant. It's meaningful as we're realizing revenue on a quarter by quarter basis, it's becoming more and more meaningful each quarter.

[Ilan Sobel, CEO at BioHarvest Sciences]

And obviously that will continue and we'll start to probably break it out more clearly for our shareholders and the analysts as we go into next year.

[Hunter Diamond, Owner at Diamond Equity Research LLC]

Great. Thank you for taking my question.

[Operator]

This concludes our question and answer session. I'd now like to hand the call back over to Mr. Ilan Sobel for his closing remarks.

[Ilan Sobel, CEO at BioHarvest Sciences]

So thank you everybody for making time. I know for some of you on the West Coast, it was pretty early this morning. I appreciate that. I hope after the last one hour, you really see the progress that the company has made, our ability to maniacally execute day in, day out and deliver on what we said we would deliver. I also hope you walk away from this conference call encouraged by the additional capabilities that we're building as it relates to new channels, as it relates to new breakthrough disruptive products going into multi billion dollar categories, all the way through to what we're doing on the CDMO side with our new discovery service, which ultimately has the ability to really act as a significant catchment of customers that we can bring in and progress through our CDMO.

[Ilan Sobel, CEO at BioHarvest Sciences]

It's those capabilities that we're building that combined with the momentum of the business that together are ultimately gonna ensure that we deliver on the financial metrics that are so important that we're all, my management team, Barr, and kudos to Barr who's just so focused on ensuring that we execute on our financial metrics. As I said earlier, we have such great visibility, data visibility on where we need to be focusing our resources on to ultimately deliver those critical financial milestones that I believe all of our shareholder partners are obviously eager for us to cross the line and then really start to scale this business and our capabilities and build a life changing company that's delivering compounds that's positively affecting the health and wellness of initially millions and 10 millions and ultimately hundreds of millions of consumers around the world. So thank you for your time and I'm super excited as we move into an exciting downhill of the company as we continue to build on the existing momentum. Thank you.

[Operator]

Ladies and gentlemen, this concludes today's teleconference. Thank you for your participation. You may now disconnect your lines at this time, and have a wonderful day.

Participants

Executives

• Ilan Sobel, CEO
• Bar Dichter, CFO

Analysts

• Matthew Hewitt, Senior Research Analyst at Craig-Hallum
• Amit Dayal, Managing Director & Senior Technology Analyst at H.C. Wainwright & Co.
• Anthony Vendetti, Executive MD - Research at Maxim Group
• Hunter Diamond, Owner at Diamond Equity Research LLC