Cosmos Health (NASDAQ: COSM) stock is on the move. Rightly so. After its name change from Cosmos Holdings in July, the company has been on an operational roll, posting a triple-digit percentage increase in EBITDA, strong revenue growth, a significant milestone reached by its Sky Pharm SA subsidiary, and most importantly, positioned itself and its subsidiaries to perform exceptionally well into the end of 2022 and all of 2023.
Of course, keep in mind that while its name is new, COSM isn’t. They are an established player in the billion-dollar health sector, advancing an international healthcare group agenda with over a decades worth of experience. They are leveraging that experience and expertise to capitalize and monetize opportunities in the nutraceuticals sector through its proprietary lines of products, “Sky Premium Life” and “Mediterranation.” But they do more.
Cosmos Health is also taking advantage of opportunities within the massive and fast-changing pharmaceutical sector by providing a broad line of branded generics and OTC medications. Subsidiaries in Greece and the UK contribute to growth in that mission, currently serving retail pharmacies and wholesale distributors. And with a lot on its business plate, COSM shares present a value opportunity supported by several streams of revenue-generating support.
Accelerating Growth Fueled By Subsidiary Strength
That’s a result of having a well-defined business plan that includes taking advantage of substantial revenue-generating opportunities in the Branded Pharmaceuticals, Generic Pharmaceuticals, and Health Products and Food Supplements markets. Each of those segments presents multiple shots on income goals. But that’s not the best part.
Because COSM is intimate with both sides of the market, it can maximize operating performance by getting a unique behind-the-scenes view of product availability, pricing, demand trends, and patent expirations. Remember, as the patents for branded products near expiration, generic equivalents become ripe to enter the marketplace and, more often than not, become the preferred choice for those needing the medications. That’s a result of cost primarily. And that shift in demand plays in COSM’s favor, especially with the company monitoring these cycles and taking advantage of pricing fluctuations caused by the patent expiration once the generic equivalents enter the market.
The principles and strategies described above are inherent to how COSM targets business from the Generic Pharmaceuticals, Health Products, and Food Supplements markets. But they can also maximize opportunities by understanding the historical and market-specific characteristics of generic product demand, providing valuable insight to guide its vendors that source their generic drug exports. In other words, it’s an efficient channel. So is its Health Products focus.
But the better news is that its focus on wholesale distribution of Health Products & Food Supplements offers more significant margins than pharmaceutical product distribution. And the opportunities to grow that business is in play, with product portfolio expansion remaining a priority objective to take advantage of high-margin sales. Moreover, expanding its product portfolio also provides a competitive advantage by offering customers a more extensive portfolio of products sourced from a single vendor. But here’s the better news.
In addition to being wholesalers for supplements and related products, COSM is also creating its own brand of products to sell to its current customer base. And it’s expected to do well, with COSM already having insight into what products are in demand and which products should be developed. Private branded products would carry significantly higher margins than serving as a wholesaler for other brands. But all the above is about the products side of the business. Plenty more is going on to create additional shareholder value on the corporate side.
A Focused R&D Strategy Fuels Growth
Leading that charge is a robust Research & Development program. And it’s not singularly focused; COSM is on the record saying they are committed to strategic R&D across each business unit, focusing intensely on nutraceutical products with inherently lower risk profiles and clearly defined regulatory pathways. And they have been busy, constantly evaluating the demand for food supplements in the markets where they currently distribute pharmaceutical products. Just as significant, their research and analysis determine which food and nutritional supplements are chosen to develop and how they are formulated, a move that maximizes the probability of successfully competing with other brands in the marketplace.
Investors liking growth won’t be disappointed, either. COSM regularly evaluates acquisition targets that expand distribution reach and/or can be vertically integrated into the supply chain of the products they currently distribute. In addition to capitalizing on organic growth drivers, COSM is also actively pursuing accretive acquisitions that offer long-term revenue growth, margin expansion through synergies, and the ability to maintain a flexible capital structure. Another business focus is attracting investor attention, and it should.
Cosmos Health’s expansion into the full-line wholesale distribution business through acquisition has provided them the opportunity to sell, as a full-line pharmaceutical wholesaler, the local markets with branded pharmaceuticals, generic pharmaceuticals, over-the-counter (OTC) medicines, vitamins, and food supplements. By expanding its pharmaceutical distribution business, COSM is better positioned than ever to source and procure branded and generic products directly from manufacturers and sell their vitamins, food supplements, and cosmetic products directly to pharmacies at competitive prices. Expectations are for this expansion to increase COSM’s sales and profit margins by expediting its vertical integration into the supply chain.
There’s also the matter of COSM subsidiaries; each is a value driver.
Engine For Growth Firing On All Cylinders
COSM is, in fact, powered by a subsidiary-fueled engine. Sky Pharm SA, a Thessaloniki, Greece, based company, is one. It trades the excess amounts of about 500 medicines that can be exported within the EU countries. COSM buys from Greek wholesale pharmaceutical companies and multinational pharmaceutical manufacturers and then exports them to European markets, where demand and prices are often substantially higher. The company is in compliance with GDP (Good Distribution Practices) certified by ΕΟΦ (the Greek equivalent to the FDA) and is ISO certified by TUV NORD. Incidentally, COSM shares spiked after COSM announced officially launching its first Sky Premium Life products on Amazon in the United States, with plans to get all 85 SKUs listed on Amazon by year-end. Placement into US Amazon followed successfully getting its products on Amazon in the UK and Singapore, part of a focused initiative to grow internationally and leverage its robust global logistics and distribution capabilities to a worldwide customer base.
Another contributor to the value proposition is Decahedron Ltd., a UK-based pharmaceutical wholesaler with over a decade in business. They import and export branded, generic and unlicensed POM, OTCs, and medical devices worldwide, participate in governmental tenders, and register dossiers in new territories. Its network comprises 25 clients and vendors, expanding to nine countries, including Germany, the UK, Denmark, United Arab Emirates, Germany, Italy, France, Singapore, and Ireland. It is audited by the MHRA under European GDP (Good Distribution Practices), listed as a full member of the EAEPC, and audited by TÜV on their behalf.
Its third subsidiary, Cosmofarm, has more nearly 30 years in business and is a fully licensed pharmaceutical wholesale company operating in the greater Athens area. The company is approved and authorized by the National Organization for Medicines under Good Distribution Practices to distribute a comprehensive range of pharmaceutical products. Cosmofarm’s core activity is sourcing, procuring, and distributing branded and generic medicines, over-the-counter (OTC) pharmaceuticals, food supplements, and medical devices to its growing network of more than 1130 pharmacies. The company maintains a vast supplier network of approximately 250 pharmaceutical manufacturers and wholesalers.
Of course, infrastructure, an impressive product portfolio, and meeting growth objectives are important. But so is making money. And COSM is.
A Strong 1H/2022 With A Tailwind
Cosmos Health recently reported a 202.42 % increase in Adjusted EBITDA and positive operating income for the first half of 2022. Keep in mind that it came during some pretty strong global business headwinds. Despite those challenges, COSM increased its profitability by strengthening gross profit margins to 14.2% from 11.5% compared to last year.
Better yet, the growth is organic, driven by the development of its proprietary nutraceutical brand, Sky Premium Life®, which contributed to reaching positive income from operations of $0.2 million for the first half of 2022 compared to a loss of $3.1 million in the same period last year. Its positive EBITDA of $0.8 million for the first half of 2022 compares to a $2.8 million loss for the same period in 2021. It gets better. Gross profit increased by 23.0% to $3.7 million for the six months ended June 30, 2022, resulting from managing expenses and reducing operating expenses by nearly 43.7% and 41.9% for the three and six months ended June 30, 2022, respectively. The trend is likely to continue.
COSM announced launching a new premium line of nutritional supplements, Mediterranation, made using organic herbs and plant extracts such as crataegus, hibiscus, dittany of Crete, oregano, mastic, and kritamos, ingredients found in specific regions in Greece and the Mediterranean. Cosmos management expects the product to do well, noting that these unique, high-quality formulations will meet demand among consumers for supplements that utilize high-quality Mediterranean ingredients, including polyphenols, which possess antioxidant and anti-inflammatory properties.
A Q4 And 2023 Opportunity In-Play
Indeed, COSM’s sum of its parts equals a compelling value proposition. Share prices at these levels, in fact, barely show enough value to reflect just its current intrinsics. They certainly don’t account for COSM’s inherent potential or its strengthening fundamentals, top, and bottom line growth, and its accelerating pace to create significant shareholder value into the tail end of this year. But that’s not all supporting the bullish case.
Cosmos also has the right products, are in the right markets, and has the right management team to deliver success sooner than later. Thus, while share prices took a dip in sympathy with broader market weakness, remember that almost every micro and smallcap stock also did. Therefore, don’t be misled; COSM performs much better than its share price indicates.
Remember, too, that COSM shares have traded significantly higher over the past 52 weeks. And they are far better positioned today compared to then. Hence, with operational performance strong and getting stronger, current share price weakness will likely relent to more sane valuations. After all, COSM has what investors want most from a company: Strong fundamentals, increasing revenues, and strengthening bottom-line results. Couple that with a management team that understands the markets they serve and can capitalize quickly on opportunities; it’s a trifecta of reasons that make the investment proposition in COSM more than attractive; it makes it compelling.
Disclaimers: Shore Thing Media, LLC. (STM, Llc.) is responsible for the production and distribution of this content. STM, Llc. is not operated by a licensed broker, a dealer, or a registered investment adviser. It should be expressly understood that under no circumstances does any information published herein represent a recommendation to buy or sell a security. Our reports/releases are a commercial advertisement and are for general information purposes ONLY. We are engaged in the business of marketing and advertising companies for monetary compensation. Never invest in any stock featured on our site or emails unless you can afford to lose your entire investment. The information made available by STM, Llc. is not intended to be, nor does it constitute, investment advice or recommendations. The contributors may buy and sell securities before and after any particular article, report and publication. In no event shall STM, Llc. be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or made available by STM, Llc., including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance. The information in this video, article, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. STM, Llc. strongly urges you conduct a complete and independent investigation of the respective companies and consideration of all pertinent risks. Readers are advised to review SEC periodic reports: Forms 10-Q, 10K, Form 8-K, insider reports, Forms 3, 4, 5 Schedule 13D. For some content, STM, Llc., its authors, contributors, or its agents, may be compensated for preparing research, video graphics, and editorial content. STM, LLC has been compensated up to ten-thousand-dollars cash via wire transfer to produce and syndicate content for Cosmos Health, Inc. for a period of one month. Please read the full disclaimer at https://primetimeprofiles.com/
As part of that content, readers, subscribers, and website viewers, are expected to read the full disclaimers and financial disclosures statement that can be found on our website.
The Private Securities Litigation Reform Act of 1995 provides investors a safe harbor in regard to forward-looking statements. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements of historical fact may be forward looking statements. Forward looking statements are based on expectations, estimates, and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Forward looking statements in this action may be identified through use of words such as projects, foresee, expects, will, anticipates, estimates, believes, understands, or that by statements indicating certain actions & quote; may, could, or might occur. Understand there is no guarantee past performance will be indicative of future results. Investing in micro-cap and growth securities is highly speculative and carries an extremely high degree of risk. It is possible that an investors investment may be lost or impaired due to the speculative nature of the companies profiled.
