Emergent’s Innovation Should Drive Outperformance

EMGE: Emergent Health logo
EMGE
Emergent Health

Submitted by David Gould as part of our contributors program.

As firms like Pfizer (PFE) and Abbott (ABT) languish under patent cliffs, smaller healthcare peers that showcase innovation are increasingly likely to outperform. One attractive company that has driven solid momentum is Emergent Health Corp (EMGE.PK). Emergent specializes in Regenerative Medicine, which the US Department of Health anticipates supplying the greatest future healthcare need for the baby boomer demographic. These secular trends are complemented both by an active pipeline and solid IP protection.

Getting back to Pfizer, many biopharmaceutical companies are attempting to catalyze free cash flow by acquiring biosimilars and biobetters. What makes these biological versions of existing and approved drugs so attractive is that they collectively have minimal paths to commercialization. This takeover environment clears the path for Emergent to focus on its niche lines.

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Emergent’s JDI International member network has, accordingly, generated double-digit returns based on management’s statements. Revenue acceleration will be driven by the distribution of a variety of products from Vita-Stim Stem Cell Nutrition Concentrate to Hungarest Diet & Energy Aid. Vita-Stim is a phytoceutical distributed through physicians that aids in healing while the Hungarest is a diet product distributed through Health Food Stores that aids in weight loss. The implementation of a direct selling method is likely to dramatically increase sales by incentivizing efficient distribution. Fortunately, the high distributor retention rate relative to the industry also makes this growth sustainable.

While these two products make Emergent attractive in their own rights, the company is even more attractive as an investment in innovation. The R&D department is exploring treatments for hair growth, sexual dysfunction, skin quality, and various other wellness matters. Emergent’s newest AntiAging product, Infinuity Plus, is likely to be released later this quarter or early next quarter. It will help further penetrate the baby boomer generation and thus generate meaningful cross-selling opportunities. Given how the level of innovation is backed by positive secular trends, Emergent remains well positioned over time.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in EMGE.PK, PFE, and ABT over the next 72 hours.

DISCLAIMER: The distributor of this research report, Gould Partners, is not a licensed investment adviser or broker dealer. Investors are cautioned to perform their own due diligence as information contained within this report has been derived from public sources and management and cannot be guaranteed by us to be fully accurate. Always discuss investments with a licensed professional before making any financial decision. We are a consultant to Emergent and have been compensated ten thousand dollars for independent research.