Cosmos Health Inc. (COSM) - 10-Q Summary
Business Context and Reporting Period
Company: Cosmos Health Inc.
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: June 30, 2026
Business Overview: An international healthcare group engaged in the nutraceuticals, pharmaceuticals, and healthcare distribution sectors. Operations include proprietary brands ("Sky Premium Life," "Mediterranation"), generic pharmaceuticals, contract manufacturing, and a telehealth platform (ZipDoctor). The company operates subsidiaries in Greece, the UK, Cyprus, and the US.
Key Financial Metrics (Six Months Ended June 30, 2026)
| Metric | Amount (USD) |
|---|---|
| Revenue | $36,914,268 |
| Cost of Goods Sold | $34,021,435 |
| Gross Profit | $2,892,833 |
| Gross Margin | 7.8% |
| Net Loss | $(8,891,945) |
| Net Loss Per Share (Basic & Diluted) | $(0.17) |
| Cash and Cash Equivalents | $1,800,949 |
| Restricted Cash | $644,219 |
| Total Current Assets | $36,668,695 |
| Total Current Liabilities | $34,842,708 |
| Working Capital | $1,825,987 |
| Total Debt (Notes & Convertible Notes) | ~$7.4M (Current) + ~$3.0M (Long-term) |
| Stockholders' Equity | $20,674,483 |
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 29.7% to $36.9M (vs. $28.5M in 2025), driven by higher sales from wholesale (Cosmofarm), UK operations (Decahedron), and manufacturing (Cana).
- Widening Net Loss: Net loss increased 143.9% to $8.9M (vs. $3.6M in 2025). This was primarily due to non-cash charges including a $2.14M loss on the change in fair value of convertible notes, a $0.85M loss on digital assets, and increased interest expenses.
- Gross Margin Compression: Gross margin decreased to 7.8% (from 11.3% in 2025). This decline is largely attributed to a $0.8M revenue reversal related to the distributor Medihelm due to collectability concerns, while the associated COGS had already been recognized.
- Digital Assets: The company purchased $1.1M in Bitcoin during the period. Total digital asset holdings (Ethereum and Bitcoin) are valued at $1.66M, reflecting a cumulative unrealized loss of $1.44M.
- Debt Conversions: Significant portions of convertible notes were converted into common stock, resulting in the issuance of over 22 million shares in Q2 2026 alone.
Guidance, Outlook, Risks, and Unusual Items
- Going Concern Warning: Management has concluded that substantial doubt exists regarding the company's ability to continue as a going concern for the next 12 months due to significant net losses and negative operating cash flows. Continued operations depend on securing additional financing.
- Liquidity Strategy: The company is raising capital through its At-the-Market (ATM) program (raised ~$2.9M in the six months) and has a Securities Purchase Agreement for up to $300M in senior secured convertible notes (initial $8M tranche closed in August 2025).
- Unusual Items:
- Medihelm Revenue Reversal: $0.8M revenue reversal recorded due to ASC 606 variable consideration constraints regarding collectability.
- Convertible Note Fair Value: Significant volatility in the fair value of convertible notes and derivative liabilities impacted the bottom line.
- Digital Asset Volatility: Unrealized losses on crypto holdings impacted net income.
- Internal Controls: The company disclosed material weaknesses in internal controls over financial reporting, specifically regarding segregation of duties and IT general controls.
Investor Verification Checklist
- Going Concern Status: Verify the status of the $300M convertible note facility and the success of the ATM program in funding operations.
- Medihelm Collectability: Assess the likelihood of recovering receivables from Medihelm and the potential for further revenue reversals.
- Digital Asset Exposure: Review the company's strategy for holding digital assets given the significant unrealized losses and volatility.
- Dilution Impact: Analyze the impact of recent and potential future share issuances from convertible note conversions on existing shareholders.
- Internal Control Remediation: Monitor progress on remediation of material weaknesses in internal controls and ITGCs.