Cosmos Health Reports Q2 2024 Results: Sustains Positive Momentum with 7% Revenue Growth vs. Q1 2023 and 12.5% vs. H1 2023

Rhea-AI Summary

Cosmos Health Inc. (NASDAQ:COSM) reported Q2 2024 financial results, showing revenue growth of 6.8% to $13.21 million compared to Q2 2023. For H1 2024, revenue increased by 12.5% to $27.79 million. However, gross profit decreased by 19% in Q2 2024, while H1 2024 gross profit grew by 10.3%. The company reduced operating expenses by 7.2% in Q2 and 9.7% in H1 2024. Net loss widened to $2.59 million in Q2 2024 from $0.98 million in Q2 2023. Adjusted EBITDA declined to a loss of $1.21 million in Q2 2024. Total assets decreased slightly to $60.86 million, while total liabilities increased by 3.3% to $28.71 million. CEO Greg Siokas emphasized continued top-line growth and efforts to enhance operations for sustained profitability.

Positive

• Revenue increased by 6.8% to $13.21 million in Q2 2024
• H1 2024 revenue grew by 12.5% to $27.79 million
• Operating expenses decreased by 7.2% in Q2 2024
• H1 2024 operating expenses decreased by 9.7%
• Total liabilities decreased by 4.2% for the 6-month period ended June 30, 2024

Negative

• Gross Profit decreased by 19.0% to $0.77 million in Q2 2024
• Net Loss widened to $2.59 million in Q2 2024, compared to $0.98 million in Q2 2023
• Adjusted EBITDA decreased to a loss of $1.21 million in Q2 2024
• Total Assets decreased by 2.4% to $60.86 million
• Total Stockholders' Equity decreased by 6.9% to $32.15 million

Insights

Financial Analyst

Cosmos Health's Q2 2024 results present a mixed financial picture. While revenue grew by 6.8% year-over-year to $13.21 million, the company's gross profit decreased by 19%. This decline in profitability, despite top-line growth, is concerning and suggests potential challenges in cost management or product mix.

The company's efforts to reduce operating expenses by 7.2% are commendable, but they weren't sufficient to offset the decline in gross profit. As a result, the net loss widened to $2.59 million from $0.98 million in Q2 2023. The absence of a $1.63 million bargain purchase gain from the previous year also contributed to this increased loss.

On a positive note, the company's deleveraging efforts are showing results, with total liabilities decreasing by 4.2% over the past six months. However, the decline in stockholders' equity by 6.9% quarter-over-quarter is a point of concern that investors should monitor closely.

Market Research Analyst

Cosmos Health's performance reflects both opportunities and challenges in the healthcare sector. The 12.5% revenue growth in H1 2024 indicates strong market demand for the company's diversified portfolio of healthcare products and services. However, the decrease in gross profit margin suggests intensifying competition or rising input costs in the industry.

The company's focus on operational efficiencies and cost management is important in the current economic environment. The 30.5% reduction in general and administrative expenses and 65.2% decline in sales and marketing expenses demonstrate a strategic shift towards leaner operations. This approach could potentially improve profitability in the long term, provided it doesn't hamper growth initiatives.

The acquisition of Cana Laboratories and investment in CosmoFarm's logistics center indicate a forward-looking strategy to enhance vertical integration and distribution capabilities. These moves could potentially strengthen Cosmos Health's market position and create synergies across its business segments.

Business Strategy Consultant

Cosmos Health's Q2 2024 results reveal a company in transition, balancing growth initiatives with operational efficiency. The focus on both organic growth and strategic M&A activities has driven top-line expansion, but the challenge lies in translating this growth into improved bottom-line performance.

The decrease in gross profit, despite revenue growth, suggests a need to optimize the product mix and potentially renegotiate supplier contracts. The company should consider strategies to shift towards higher-margin products or services to improve overall profitability.

The reduction in operating expenses is a positive step, but it's important to ensure that these cuts don't compromise the company's ability to innovate and compete effectively. Cosmos Health should focus on targeted investments in R&D and market expansion to drive sustainable growth.

The company's efforts to reduce liabilities are commendable, but the decline in stockholders' equity warrants attention. Management should prioritize initiatives to strengthen the balance sheet and explore options to raise capital if needed, without diluting existing shareholders excessively.

CHICAGO, IL / ACCESSWIRE / August 20, 2024 / Cosmos Health Inc. ("Cosmos Health" or the "Company'') (NASDAQ:COSM), a diversified, vertically integrated global healthcare group engaged in innovative R&D, owner of proprietary pharmaceutical and nutraceutical brands, manufacturer and distributor of healthcare products, and operator of a telehealth platform, today reported financial results for the second quarter ended June 30, 2024.

Second Quarter 2024 Financial Highlights

Income Statement:

• Revenue increased by 6.8%, or $0.84 million, to $13.21 million in Q2 2024, up from $12.36 million in Q2 2023, driven by a combination of organic growth and recent M&A activity.

  • H1 2024 revenue grew by 12.5%, or $3.08 million, to $27.79 million, compared to $24.71 million in H1 2023.

• Gross Profit decreased by 19.0% to $0.77 million in Q2 2024, down from $0.95 million in Q2 2023, primarily due to a larger contribution from the lower-margin logistics distribution segment.

  • H1 2024 gross profit increased by 10.3% to $2.10 million, compared to $1.90 million in H1 2023.

• Operating Expenses decreased by 7.2% to $3.27 million in Q2 2024, down from $3.52 million in Q2 2023, primarily driven by a 30.5% reduction in general and administrative expenses and a 65.2% decline in sales and marketing expenses.

  • H1 2024 operating expenses decreased by 9.7% to $6.44 million, compared to $7.13 million in H1 2023.

• Loss from Operations decreased by 2.9% to $2.5 million in Q2 2024, compared to $2.6 million in Q2 2023, driven by lower operating expenses.

  • H1 2024 loss from operations decreased by 17.0% to $4.34 million, compared to $5.23 million in H1 2023.

• Total other Income amounted to a loss of $0.09 million in Q2 2024, compared to a gain of $1.69 million in Q2 2023, primarily driven by a $1.63 million bargain purchase gain related to the acquisition of Cana Laboratories.

• Net Loss amounted to $2.59 million in Q2 2024, compared to a loss of $0.98 million in Q2 2023.

• Adjusted EBITDA decreased to a loss of $1.21 million in Q2 2024, compared to a gain of $0.50 million in Q2 2023.

• Adjusted Net Loss amounted to $1.55 million in Q2 2024, compared to a gain of $0.16 million in the prior-year period.

Balance Sheet:

• Total Assets decreased by 2.4% to $60.86 million from $62.35 million as of March 31, 2024.

  • Ended the quarter with tangible assets of $10.05 million, reflecting the acquisition of Cana Laboratories' facilities and CosmoFarm's logistics center.

• Total Liabilities increased by 3.3% to $28.71 million from $27.80 million as of March 31, 2024. For the 6-month period ended June 30, 2024, total liabilities decreased by 4.2% to $28.71 million, compared to $29.97 as of December 31, 2023. The decrease was due to a combination of factors, including:

  • $0.67 million or 14.5% decrease in notes payable

  • $0.40 million or 3.2% decrease in accounts payable and accrued expenses

  • $1.43 million or 48.9% decrease in other non-current and finance/lease liabilities

• Total Stockholders' Equity decreased by 6.9% to $32.15 million from $34.55 million as of March 31, 2024.

MANAGEMENT COMMENTARY

Greg Siokas, CEO of Cosmos Health, stated: "I am extremely pleased that we continue to deliver strong top-line growth, driven by solid momentum across various business segments. For the 6-month period ended June 30, 2024, revenue grew by 12.5%, and gross profit increased by 10%. Consistent with our deleveraging efforts, total liabilities decreased by 4.2%, or $1.26 million, while total stockholders' equity remained in excess of $32 million. As we move forward, we will intensify our efforts to enhance every aspect of our operations-from boosting operational efficiencies and maintaining disciplined cost management to expanding our sales networks and driving growth-all with the goal of achieving sustained profitability."

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
(in $)
GAAP - Figures
REVENUE			13,206,717				12,363,429				27,791,190				24,713,206
GROSS PROFIT			767,248				946,834				2,100,874				1,903,911
TOTAL OPERATING EXPENSES			(3,269,274	)			(3,523,299	)			(6,439,008	)			(7,131,548	)
GAIN (LOSS) FROM OPERATIONS			(2,502,026	)			(2,576,465	)			(4,338,134	)			(5,227,637	)
TOTAL OTHER INCOME (EXPENSE), NET			(88,685	)			1,688,106				(119,267	)			3,852,117
NET LOSS			(2,590,711	)			(981,530	)			(4,457,401	)			(1,441,393	)
NON-GAAP FIGURES
ADJUSTED EBITDA			(1,209,564	)			501,294				(1,753,090	)			(459,383	)
ADJUSTED NET INCOME (LOSS)			(1,552,010	)			163,988				(2,264,208	)			(903,764	)

(*) See "Definitions of Non-GAAP Measures" and "Reconciliation of Non-GAAP Measures" sections herein for an explanation and reconciliations of non-GAAP measures used throughout this release.

Definitions of Non-GAAP Measures

We collect and analyze operating and financial data to evaluate the health of our business and assess our performance. In addition to Revenue, Income (Loss) from Operations and Net Income (Loss) under GAAP, we use: EBITDA, Adjusted EBITDA, and Adjusted Net Income (Loss). Our calculation of these non-GAAP financial measures may differ from similarly titled non-GAAP measures, if any, reported by our peer companies. These non-GAAP financial measures should not be considered in isolation from, or as substitutes for, financial information prepared in accordance with GAAP.

Adjusted EBITDA

We define Adjusted EBITDA as Income (Loss) before Income Taxes, excluding (i) depreciation and amortization expense, (ii) interest expense, (iii) non-recurring and extraordinary items, (iv) stock-based compensation expense, (v) other income (expense), net, (vi) gain (loss) on equity investments, net, (vii) gain on extinguishment of debt, (viii) change in fair value of derivative liability, (ix) foreign currency transaction, net (x) prior years bad debt allowances, and (xi) other provisions.

We have included Adjusted EBITDA because it is a key measure used by our management team to evaluate our operating performance, generate future operating plans, and make strategic decisions. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management team and Board of Directors. In addition, it provides a useful measure for period-to-period comparisons of our business, as it removes the effect of certain non-cash expenses and non-recurring and extraordinary items.

Adjusted EBITDA has limitations as a financial measure, should be considered as supplemental in nature, and is not meant as a substitute for the related financial information prepared in accordance with GAAP.

Adjusted Net Income (Loss)

We define Adjusted Net Income (Loss) as Adjusted EBITDA (see above) adding provision for income taxes and deducting interest expense.

Adjusted Net Income has limitations as a financial measure, should be considered as supplemental in nature, and is not meant as a substitute for the related financial information prepared in accordance with GAAP.

Reconciliation of Non-GAAP Measures

Adjusted EBITDA & Adjusted Net Income (Loss)

The following table presents reconciliations of Adjusted EBITDA & Adjusted Net Income (Loss) to the most directly comparable GAAP financial measure for each of the periods indicated.

		Three Months Ended June 30,								Six Months Ended June 30,
(in $)		2024				2023				2024				2023
INCOME (LOSS) BEFORE INCOME TAXES			(2,590,711	)			(888,359	)			(4,457,401	)			(1,375,520	)
Adjustments (add back):
Depreciation and amortization expense			313,074				127,415				632,861				229,936
Interest expense			342,446				244,135				511,118				378,508
Non-cash interest expense			-				-				-				-
EBITDA			(1,935,191	)			(516,809	)			(3,313,422	)			(767,076	)
Non-recurring and extraordinary items			532,033				766,786				1,063,999				1,683,245
Stock based compensation			340,194				104,869				680,389				104,869
Other income (expense), net			29,305				34,477				(162,519	)			28,734
Gain (loss) on equity investments, net			(335	)			(2,676	)			(2,090	)			(3,969	)
Gain on extinguishment of debt			-				-				-				(1,910,770	)
Change in fair value of derivative liability			-				-				-				(3,384	)
Foreign currency transaction, net			(180,701	)			(66,674	)			(19,447	)			(262,709	)
Bad Debt Allowances			-				181,321				-				671,677
Other provisions			5,131				-				-				-
ADJUSTED EBITDA			(1,209,564	)			501,294				(1,753,090	)			(459,383	)
Interest income / (expense), net			(342,446	)			(244,135	)			(511,118	)			(378,508	)
Provision for income taxes			-				(93,171	)			-				(65,873	)
ADJUSTED NET INCOME			(1,552,010	)			163,988				(2,264,208	)			(903,764	)

CONDENSED CONSOLIDATED BALANCE SHEET DATA

		June 30, 2024				March 31, 2024				December 31, 2023
(in $)
ASSETS
Cash & cash equivalents			343,509				865,099				3,833,195
Inventory			4,323,784				4,871,349				4,789,054
Accounts receivable, prepaid expenses and other current assets			27,880,676				28,550,495				27,131,193
Property and equipment, net			10,053,986				10,170,328				10,455,499
Goodwill and intangible assets, net			7,716,242				7,962,908				7,684,183
Loans receivable			7,270,557				6,664,506				7,903,378
Other noncurrent assets			3,238,590				3,260,510				4,218,309
TOTAL ASSETS			60,827,344				62,345,195				66,014,811
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses			11,912,509				11,728,191				12,309,890
Other current liabilities			4,246,269				3,940,119				3,487,353
Lines of credit			7,105,599				6,426,197				6,630,273
Notes payable			3,948,470				4,162,038				4,617,510
Other non-current and finance/lease liabilities			1,494,923				1,541,968				2,926,757
Stockholders' and mezzanine equity			32,119,574				34,546,682				36,043,028
TOTAL LIABILITIES AND STOCKHOLDERS'/MEZZANINE EQUITY			60,827,344				62,345,195				66,014,811

About Cosmos Health Inc.

Cosmos Health Inc. (Nasdaq:COSM), incorporated in 2009 in Nevada, is a diversified, vertically integrated global healthcare group. The Company owns a portfolio of proprietary pharmaceutical and nutraceutical brands, including Sky Premium Life®, Mediterranation®, bio-bebe® and C-Sept®. Through its subsidiary Cana Laboratories S.A., licensed under European Good Manufacturing Practices (GMP) and certified by the European Medicines Agency (EMA), it manufactures pharmaceuticals, food supplements, cosmetics, biocides, and medical devices within the European Union. Cosmos Health also distributes a broad line of pharmaceuticals and parapharmaceuticals, including branded generics and OTC medications, to retail pharmacies and wholesale distributors through its subsidiaries in Greece and the UK. Furthermore, the Company has established R&D partnerships targeting major health disorders such as obesity, diabetes, and cancer, enhanced by artificial intelligence drug repurposing technologies, and focuses on the R&D of novel patented nutraceuticals, specialized root extracts, proprietary complex generics, and innovative OTC products. Cosmos Health has also entered the telehealth space through the acquisition of ZipDoctor, Inc., based in Texas, USA. With a global distribution platform, the Company is currently expanding throughout Europe, Asia, and North America, and has offices and distribution centers in Thessaloniki and Athens, Greece, and in Harlow, UK. More information is available at www.cosmoshealthinc.com, www.skypremiumlife.com, www.cana.gr, www.zipdoctor.co, as well as LinkedIn and X.

Forward-Looking Statements

With the exception of the historical information contained in this news release, the matters described herein, may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements preceded by, followed by, or that otherwise, include the words "believes," "expects," "anticipates," "intends," "projects," "estimates," "plans" and similar expressions or future or conditional verbs such as "will," "should," "would," "may" and "could", are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing. These statements, involve unknown risks and uncertainties that may individually or materially impact the matters discussed, herein for a variety of reasons that are outside the control of the Company, including, but not limited to, the Company's ability to raise sufficient financing to implement its business plan, the Company's ability to regain compliance with Nasdaq listing requirements, the impact of the COVID-19 pandemic and the war in Ukraine, on the Company's business, operations and the economy in general, and the Company's ability to successfully develop and commercialize its proprietary products and technologies. Readers are cautioned not to place undue reliance on these forward- looking statements, as actual results could differ materially from those described in the forward-looking statements contained herein. Readers are urged to read the risk factors set forth in the Company's filings with the SEC, which are available at the SEC's website (www.sec.gov). The Company disclaims any intention or obligation to update, or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Investor Relations Contact:

BDG Communications
cosm@bdgcommunications.com
+44 207 0971 653

SOURCE: Cosmos Health Inc.

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FAQ

What was Cosmos Health's (COSM) revenue growth in Q2 2024?

Cosmos Health (COSM) reported a revenue growth of 6.8% in Q2 2024, with revenue increasing to $13.21 million from $12.36 million in Q2 2023.

How did Cosmos Health's (COSM) gross profit perform in Q2 2024?

Cosmos Health's (COSM) gross profit decreased by 19.0% to $0.77 million in Q2 2024, down from $0.95 million in Q2 2023.

What was Cosmos Health's (COSM) net loss in Q2 2024?

Cosmos Health (COSM) reported a net loss of $2.59 million in Q2 2024, compared to a loss of $0.98 million in Q2 2023.

How did Cosmos Health's (COSM) operating expenses change in Q2 2024?

Cosmos Health's (COSM) operating expenses decreased by 7.2% to $3.27 million in Q2 2024, down from $3.52 million in Q2 2023.

What was Cosmos Health's (COSM) Adjusted EBITDA for Q2 2024?

Cosmos Health (COSM) reported an Adjusted EBITDA loss of $1.21 million in Q2 2024, compared to a gain of $0.50 million in Q2 2023.