Cosmos Health (NASDAQ: COSM), formerly Cosmos Holdings, is positioned to close 2022 strong after reaching significant milestones earlier this year. From a triple-digit percentage increase in EBITDA to strong subsidiary performance, the company is set to continue breaking its records. Investors appear to be positioning ahead of those expectations, sending shares of COSM higher by more than 27% since Monday*. (*intraday share price of $0.46 on 9/14/22, press time)
Interest is deserved. COSM has established itself as a key player in the health sector, with over ten years of experience helping penetrate valuable revenue-generating markets. Moreover, being proactive, COSM constantly evaluates trends within multiple markets while researching its own developments, pursuing the highest quality and most profitable. That objective is met and served well by substantial assets, including its Sky Premium Life subsidiary and those born from its active Research and Development programs. That's not all.
Cosmos is also expanding into the global pharmaceutical sector, working with subsidiaries in Greece and the UK to target business from generic and over-the-counter (OTC) medication production that enhances current and puts new revenue opportunities into COSM crosshairs. Still, that's only part of the value equation.
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Cosmos Health Proves its Place in Pharmaceutical Markets
Cosmos Health is also expanding its presence into other substantial markets, including Branded and Generic Pharmaceuticals, Health Products, and Food Supplements. Its stake across those sectors has contributed to COSM scoring impressive revenue and EBITDA growth. That trend is expected to continue.
That's a likely result of Cosmos Health's success generated from understanding both sides of the market and having insider knowledge on product availability, trends, pricing, and patent expirations. Knowing that can provide and strengthen COSM's competitive edge. More importantly, since patent expiration means more demand for generic equivalents, COSM can do more than keep an eye on pricing fluctuations and fill in gaps in the market; they can generate significant revenues in the process.
The company's behind-the-scenes insight also boosts business in the Generic Pharmaceuticals, Health Products, and Food Supplements markets. Cosmos Health's expansive portfolio gives it competitive leverage by keeping business accretive while it touches on opportunities in multiple sectors. In addition, branching into the generic pharmaceuticals market with insight into expiring patents puts the company ahead of others. That interest alone can fuel COSM's revenue growth expectations into the end of 2022. It's not blind ambition.
Research efforts determine what products are in demand from the company's current customer base and which would do the best in given markets. Since COSM can capitalize on new opportunities by developing its own brand of products, profit margins can be significantly higher. Of course, making the right decisions matters, and COSM has the infrastructure to ensure that happens.
Research and Development Program Evaluate Opportunities
Cosmos Health's Research and Development program plays a crucial role in the company's planning and manufacturing. The current focus is to seize on the demand surrounding nutraceutical products and food supplements related to pharmaceutical products. Research allows COSM to determine the most profitable products while satisfying customers' needs. On top of this, research also helps identify the highest quality formulations so consumers can be confident they are receiving the best product at the best price.
Acquisitions are in play too. COSM has clearly intended to close on opportunities that would fit into its supply chain and provide more revenue. Combining its current assets with new acquisitions should accelerate revenue stream increases, which, in turn, strengthens its capital structure, allowing them to venture into and score additional successes in new markets.
Arguably one of the company's most significant acquisitions has facilitated its means to sell generic, branded, and OTC pharmaceuticals and medications. Expanding its presence in a multi-billion dollar pharmaceutical market does bring substantial near and long-term opportunities.
Global Expansion Boosts Revenues Further
Those are already targeted through its Thessaloniki, Greece, based company Sky Pharm SA, which imports and exports excess medicines to the EU. That's a timely proposition. Demand and prices are significantly higher in European markets. And because COSM is already in compliance with GDP (Good Distribution Practices), is ISO certified by TUV NORD, and is approved to sell products by the ΕΟΦ (the Greek equivalent to the FDA), growth is expected to come sooner than later. Notable, too, COSM has officially announced its first Amazon launch: its line of 85 Sky Premium Life products. This is all part of the company's expansion into international markets, with opportunities being seized worldwide.
Another contributing subsidiary is UK-based pharmaceutical wholesaler Decahedron Ltd. This company imports and exports prescription and generic medications, OTCs, and medical devices globally, with a network of 25 clients and vendors in nine countries.
COSM's third subsidiary, Cosmofarm, has decades of experience in the wholesale pharmaceutical sector. Based in Athens, Cosmofarm is authorized by the National Organization for Medicines under Good Distribution Practices to source and distribute various products to over 1,000 pharmacies. Its network of around 250 manufacturers and wholesalers supplies pharmaceuticals, food supplements, and medical devices for export. The three subsidiaries have diversified their interests and, better still, positioned COSM for potentially exponential growth in multiple billion-dollar markets.
The sum of those parts has set COSM up for a strong finish in 2022 and accelerated growth in 2023.
New Products Mean New Revenues
It adds to an already bullish proposition. Cosmos Health recently reported that its gross profit margins rose to 14.2% from 11.5% last year. It also generated a positive operating income for the first half of 2022 and momentum into the second half of this year. COSM also reported a 202.42% increase in Adjusted EBITDA for the first six months of 2022, boosted by substantial gains in interest across the global business stage.
Also, Cosmos Health's Sky Premium Life nutraceutical brand is adding revenue-generating firepower. Sky Premium Life recorded a 23% increase in gross profit through June 2022 and a positive EBITDA of $0.8 million. With the launch of Sky Premium Life's new premium supplement line, these patterns will likely continue and even multiply. Mediterranation, a high-quality new supplement, features antioxidants and anti-inflammatory ingredients, including hibiscus, dittany of Crete, kritamos, and more. The unique formulation is expected to satisfy the demand for this type of specialized supplement, with high-quality ingredients sourced directly from the Mediterranean driving that interest. Cosmos Health expects positive reception to its release, contributing to bullish expectations in its Q4 and 2023 performance.
Bringing A Diverse Portfolio into Q4 and 2023
Indeed, the whole of Cosmos Health is the real attraction. And growth potential shouldn't be underestimated or under-appreciated. Keep in mind that COSM has already shown promising growth over the past year, which doesn't include its new product launch. Now, with new revenue streams in play, share prices look appreciably disconnected from a fair value and don't reflect a forward-looking potential for the company.
The best supporting evidence of that being the case is that COSM can get larger faster, maximizing opportunities through its products, the breadth of markets, and management. Moreover, they continue to position themselves as a key player in multiple sectors, leveraging specialized research, strong fundamentals, and a growing portfolio to give the company a competitive advantage in several markets. Those things make the COSM investment proposition more than attractive; it makes it timely.
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