Cosmos Health says reorganization is underway to streamline costs

Cosmos Health (COSM) announced CEO Greg Siokas has issued the a letter to the Company’s shareholders, which read in part, “It has been just over a year since my previous shareholder letter, and I would like to express my sincere gratitude for your continued support. We have achieved many positive milestones since then; however, our share price has not responded accordingly, despite strong execution across several key areas. These include completing strategic acquisitions, advancing our R&D initiatives, reducing our debt, and expanding our brands internationally. Cosmos is in a dynamic growth phase, advancing through horizontal and vertical expansion. We are confident in the strength of our diversified strategy, which maximizes synergies and emphasizes expanding our distribution network, driving innovation through R&D, and developing high-margin brands with a global perspective, while maintaining a strong balance sheet and disciplined cost management. We believe that, over time, our efforts will be recognized, reflected in both our financial performance. Encouragingly, we are already seeing positive momentum, as demonstrated by this year’s earnings results. Revenue increased year-over-year by 18.1% in Q1 2024 and by 6.8% in Q2 2024 compared to the same periods last year, driven by organic growth and the positive effects of our 2023 M&A activity…Moving forward, our strategy will center on these key pillars to drive value creation: Target Markets: We are prioritizing high-margin segments, with a strategic push to expand our proprietary brands, such as Sky Premium Life and C-sept/C-scrub, across global markets. Additionally, we are enhancing our contract manufacturing division, targeting high-demand medicines with competitive pricing. Innovation: Our R&D efforts are concentrated on IP-driven products, aiming for World Medical Organization patent approval and the completion of clinical trials for the CCX obesity pill by 2025, with commercialization projected for 2026. We are also progressing in treatments for CNS cancers, brain tumor-related issues, and gastrointestinal disorders. Vertical Integration & Efficiency: Our in-house manufacturing strengthens efficiency, quality, and cost control. We also aim to achieve operational efficiencies and economies of scale through organic growth and targeted bolt-on acquisitions at CosmoFarm, mirroring recent acquisitions of pharmacy distribution networks, including Pelofarm, Pharmatrade, and Bikas. Global Networks: We will leverage our extensive global network to access new markets and business segments, amplifying our reach and impact. We aim to expand the distribution of our brands through strategic agreements in new regions and territories, such as recent deals in the UAE and Eastern Europe, while strengthening market share in core markets like Greece and Cyprus. Diversification: We are pursuing new opportunities and synergies to reduce risk, focusing on expanding our generic pharmaceutical portfolio across the EU and international markets, with an emphasis on advanced generics and innovative OTC products, and a focus on government-backed clients such as the NHS in the United Kingdom. Corporate Reorganization: A reorganization is underway to streamline costs and enhance asset and resource utilization through the integration of business units. A key component of this plan is a cost optimization initiative aimed at significantly reducing recurring operating expenses while maintaining the Company’s growth outlook. Following a comprehensive review, the Company has identified several strategic opportunities to reduce operating expenses, including payroll optimization, investments in technology, and fostering a bonus-driven compensation culture. Despite our achievements and detailed guidance, our share price has become markedly disconnected from our fundamental strengths and future growth prospects, reaching what I believe is an unjustifiably low level. Since inception, I have invested over $15 million in Cosmos, including approximately $1 million last year, underscoring my belief in its potential. I trust that my actions speak for themselves, and I remain committed to supporting the company.”