Cosmos Health Reports First Quarter 2023 Financial Results; Delivers Positive Adjusted EBITDA and Significant Increase in Adjusted Net Income
CHICAGO, IL / ACCESSWIRE / May 17, 2023 / Cosmos Health Inc. ("Cosmos Health" or "the Company") (NASDAQ:COSM), a global healthcare group with proprietary lines of nutraceuticals and distributor of pharmaceuticals, branded generics, OTC medications and medical devices, today provided a business update and reported financial results for the first quarter ended March 31, 2023.
First Quarter 2023 Financial Highlights
- Revenues amounted to $12.35 million, compared to $13.07 million in Q1 2022. When considered on a constant currency basis, using quarterly average Q1 2022 exchange rates, revenues were virtually flat at $13.03 million, highlighting the stability of our platform.
- Adjusted EBITDA was $0.4 million, continuing the positive momentum from FY 2022.
- Adjusted Net Income increased 1270% from $0.03 million in Q1 2022 to $0.5 million.
- Total debt decreased from $16.6 million in Q1 2022 to $3.5 million, representing a 79% reduction.
- Due to the significant reduction in debt, interest expenses decreased from $0.58 million in Q1 2022 to $0.13 million, a 78% decline.
- Total assets remained virtually flat at $68 million compared to Q4 2022, with significant working capital of $32.1 million ensuring strong financial flexibility.
- Stockholders' Equity increased to $44 million, compared to $39.3 million in Q4 2022 and $5.2 million in Q1 2022, representing an increase of 12% and 746%, respectively.
- On March 20, 2023, the Company canceled a distribution agreement eliminating the obligation of $1.5 million as debt payment, and, as a result, recorded a gain.
Management Commentary
Greg Siokas, Chief Executive Officer of Cosmos Health, stated: "We are pleased with the progress we have made during this first quarter. We successfully executed strategic initiatives to advance the acquisition of Pharmaceutical Laboratories CANA S.A. ("Cana"), repay debts, recruit key personnel, boost our marketing efforts, and enhance product awareness through participation in three major exhibitions, as well as TV and Amazon advertisements. Additionally, we have made investments in our infrastructure to facilitate the expansion of our own branded nutraceuticals and accommodate the new phases of growth.
Looking back, in 2022, we established a solid foundation by fortifying our balance sheet. This has carried over into 2023 as we continue to lay the groundwork for a promising and sustainable future. As a result, we are in a favorable position to withstand challenging market conditions, including high interest rates, while simultaneously pursuing growth opportunities. This involves organic means, such as expanding the international reach of our distribution network for our branded nutraceuticals, as well as engaging in M&A. In line with this objective, we recently announced the acquisition of the property that houses the operations of our wholly-owned subsidiary, CosmoFarm. Furthermore, we successfully finalized the acquisition of ZipDoctor and are now in the final stages of acquiring Cana.
Another bright spot so far in 2023 is the strong demand for our own branded nutraceuticals. Demand indications for our Sky Premium Life products have surpassed our expectations, including in key markets such as the United Kingdom where the brand has gained significant recognition. Consequently, we are expanding our production capacity and improving our infrastructure to meet increased volumes. Sky Premium Life products are available in pharmacies and prominent retail chains, such as Holland & Barrett, as well as popular online stores like Amazon and eBay. We are expediting our efforts to further increase our distribution network and anticipate entering new major markets, including the United States. Importantly, it should be emphasized that our nutraceutical products boast high profit margins and are expected to be a major driving force in the future, significantly enhancing our performance metrics. We anticipate these outcomes to be reflected in our results in the second half of this year and beyond.
Whether it is vertical integration and expanding our product portfolio with enhanced formulations, innovative R&D based on cutting-edge technologies like microbiome-based obesity management, showcasing the value of the Cana GMP license enabling pharmaceutical production and engaging in contract manufacturing with multinational corporations as clients, we firmly believe that these endeavors will be transformative for our company, generating significant value. Our journey is just beginning, and we eagerly anticipate keeping our investors updated on our upcoming projects and acquisitions in the pipeline."
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
| Period Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
(in $) | ||||||||
GAAP - Figures | ||||||||
REVENUE | $ | 12,349,777 | $ | 13,071,800 | ||||
GROSS PROFIT | 957,077 | 1,891,932 | ||||||
INCOME (LOSS) FROM OPERATIONS | $ | (2,651,172 | ) | $ | 242,251 | |||
NET INCOME (LOSS) | (459,863 | ) | 203,347 | |||||
Non-GAAP Figures (*) | ||||||||
ADJUSTED EBITDA | $ | 404,857 | $ | 620,151 | ||||
ADJUSTED NET INCOME (LOSS) | $ | 481,198 | $ | 35,135 | ||||
(*) 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). We have included these non-GAAP financial measures because they are key measures used by our management to evaluate our operating performance. Accordingly, we believe that these non-GAAP financial measures provide 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. 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-cash interest expense, (iv) stock-based compensation expense, (v) non-recurring and extraordinary items (vi) other income (expense), net, (vii) gain (loss) on equity investments, net, (viii) gain on extinguishment of debt, (ix) change in fair value of derivative liability (x) foreign currency transaction, net, and (xi) prior years bad debt allowances.
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 extraordinaryItems.
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.
| Period Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
INCOME (LOSS) BEFORE INCOME TAXES | $ | (487,161 | ) | $ | 269,014 | |||
Adjustments (add back): | ||||||||
Depreciation and amortization expense | 102,521 | 112,622 | ||||||
Interest expense | 134,373 | 584,176 | ||||||
Interest income | (183,416 | ) | (64,827 | ) | ||||
Non-cash interest expense | - | 260,527 | ||||||
Stock-based compensation | 96,888 | - | ||||||
Non-recurring and extraordinary items | 766,786 | 265,278 | ||||||
Other income (expense), net | (5,743 | ) | 54,812 | |||||
Gain (loss) on equity investments, net | (1,293 | ) | (1,678 | ) | ||||
Gain on extinguishment of debt | - | (1,004,124 | ) | |||||
Change in fair value of derivative liability | (3,384 | ) | (15,001 | ) | ||||
Foreign currency transaction, net | (196,035 | ) | 159,352 | |||||
Bad debt allowances | 181,321 | - | ||||||
ADJUSTED EBITDA | $ | 404,857 | $ | 620,151 | ||||
Provision for income taxes | 27,298 | (65,667 | ) | |||||
ADJUSTED NET INCOME | $ | 481,198 | $ | 35,135 | ||||
About Cosmos Health, Inc
Cosmos Health Inc. (NASDAQ:COSM) is a global healthcare group that was incorporated in 2009 and is headquartered in Chicago, Illinois. Cosmos Health is engaged in the nutraceuticals sector through its own proprietary lines of products "Sky Premium Life" and "Mediterranation." Additionally, the Company is operating in the pharmaceutical sector through the provision of a broad line of branded generics and OTC medications and is involved in the healthcare distribution sector through its subsidiaries in Greece and UK serving retail pharmacies and wholesale distributors. Cosmos Health is strategically focused on the R&D of novel patented nutraceuticals (IP) and specialized root extracts as well as on the R&D of proprietary complex generics and innovative OTC products. Cosmos has developed a global distribution platform and is currently expanding throughout Europe, Asia and North America. Cosmos Health has offices and distribution centers in Thessaloniki and Athens, Greece and Harlow, UK. More information is available at www.cosmoshealthinc.com and www.skypremiumlife.com.
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 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
[email protected]
+44 207 0971 653
SOURCE: Cosmos Health Inc.
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