Overview

Cosmos Health Inc. is a diversified, vertically integrated global healthcare group that operates within the pharmaceutical industry. The company owns proprietary pharmaceutical and nutraceutical brands, manufactures and distributes healthcare products, and operates a telehealth platform. To compete successfully in the healthcare industry, Cosmos Health must demonstrate that its products offer medical benefits as well as cost advantages.

Revenue Sources

Cosmos Health generates revenue from the following sources:

1. Full Line Wholesaler: The company distributes a comprehensive range of pharmaceutical products, including prescription medications, over-the-counter (OTC) drugs, medical devices, food supplements, nutraceuticals, cosmetics, and other healthcare products to various businesses within the healthcare sector.

2. Branded Pharmaceuticals & Generics: The company is engaged in the production, promotion, distribution, and sale of licensed branded generics and OTC products throughout Europe.

3. Healthcare Distribution: The company conducts direct distribution and sales of pharmaceuticals, medical devices, branded generics, and OTC products. Its automated and GDP-licensed distribution facilities ensure efficient and secure delivery of medications.

4. Nutraceutical: Cosmos Health has created and developed its own proprietary branded nutraceutical products, “Sky Premium Life®” and “Mediterranation®”, which are manufactured exclusively by Doc Pharma.

General Risks

The company faces several risks, including supply chain disruptions, hikes in the price of medicine, and cuts in healthcare spending. Regulators are working to address these challenges by speeding up the approval of branded pharmaceuticals and biosimilars to boost competition and drive down prices.

Results of Operations

For the year ended December 31, 2024, the company had a net loss of $16,183,018 on revenue of $54,426,402, compared to a net loss of $18,542,654 on revenue of $53,376,874 for the prior year. The revenue increase was primarily driven by higher wholesale revenue and the inclusion of the company’s manufacturing subsidiary, CANA, for the full 12-month period in 2024.

The company’s cost of goods sold (COGS) increased by 2.22% to $50,115,079, while gross profit decreased by 0.88% to $4,311,323. The decrease in gross profit was due to the higher growth rate of COGS compared to revenue.

Operating expenses decreased by 24.16% to $19,856,153, primarily due to lower provisions for expected credit losses and a significant reduction in sales and marketing expenses for the company’s branded nutraceuticals. However, certain cost categories, such as salaries and wages, research and development, and depreciation and amortization, increased.

The company’s net operating loss for the year ended December 31, 2024, was $15,544,830, representing an improvement of 28.8% compared to the prior year.

Going Concern

The company’s consolidated financial statements are prepared under the assumption of going concern. However, the company’s revenues are not able to sustain its operations, and there are concerns about its ability to meet its obligations as they become due. Management has evaluated the company’s ability to continue as a going concern and has outlined plans to address the situation, including expanding its brand name products, accessing the capital markets, and postponing certain debt repayments and supplier payments. Nevertheless, management acknowledges that substantial doubt exists about the company’s ability to continue as a going concern.

Liquidity and Capital Resources

As of December 31, 2024, the company had negative working capital of $296,193, compared to positive working capital of $12,285,310 as of December 31, 2023. The decrease in working capital was primarily due to the significant cash used in operating activities and the increase in allowances for doubtful accounts.

The company used net cash of $7,717,034 in operating activities for the year ended December 31, 2024, compared to $15,635,999 in the prior year. The negative cash flow was primarily due to the company’s operating losses, which were driven by investments in key operational areas, including hiring skilled employees, increased R&D spending, and marketing costs for the company’s branded products.

The company’s financing activities in 2024 enabled it to access additional funds through debt and equity financing, which will support its ongoing investments and operational growth. Management is confident that the company’s current liquidity position, along with its financing and investment strategies, will enable it to meet its financial obligations and continue its growth trajectory.

Debt Obligations

Cosmos Health has various debt agreements, including loans, promissory notes, and trade facility agreements, with both third-party lenders and related parties. The company has been actively managing its debt obligations, including repaying certain loans, extending maturity dates, and entering into new debt facilities to support its operations and growth.

Critical Accounting Policies and Estimates

The company’s critical accounting policies and estimates include foreign currency translation, income taxes, accounts receivable and allowance for credit losses, and inventory valuation. These policies and estimates require significant judgment and assumptions, which can have a material impact on the company’s financial statements.

Recently Issued Accounting Pronouncements

Cosmos Health is monitoring several recently issued accounting pronouncements, including guidance related to disaggregated expense disclosures, income tax disclosures, and segment reporting. The company is evaluating the impact of these new standards on its consolidated financial statements and disclosures.