Emergent’s Undervalued Business Model To Drive Volumes

Submitted by David Gould as part of our contributors program.

With several major phamaceutical firms, like Pfizer (PFE), facing a new stream of competition from generics, investors are encouraged to broadly diversify with the goal of backing the next break through. Weight loss drugs have garnered plenty of attention, but only time will tell what the next hot niche will be. Emergent Health Corp (EMGE.PK), a healthcare firm focused on regenerative medicine, continues to be undervalued on the market despite reported double-digit distribution growth from JDI International and the release of several bottom-line catalysts. On June 5, 2012, the company released preliminary unaudited revenues of nearly $500K for the first quarter versus $70.8K for 1Q11. Total assets were preliminarily estimated at $1.2M by March 31, 2012 – nearly triple last year’s figures. The cash position was similarly estimated at $1.1M – also roughly triple last year’s figures.

One product that I believe will catalyze progress even more is Vita-Stim Stem Cell Nutrition. Management has already expressed popularity for MultVitamin-MultiMineral with Stem Cell Nutrition bother international and domestically, so there is little reason to doubt the success of a similar product. While the company may need to increase staff to continue to meet volume demand, increased scale will spread out fixed costs and create long-term value.

Vita-Stim Stem Cell Nutrition helps increase the release of adult stem cells, or progenitor cells, and consists of a patented formulation of aphanizomenon flos-aquae (AFA) and its derivatives. The efficacy of the product has been scientifically backed by research that shows AFA can increase adult stem cell count, which, in turn, helps with organ repair. Since health is highly influence by the availability of extra stem cells, Vita-Stim Stem Cell Nutrition may counter the natural aging process. At a $3.45M valuation, Emergent is thus well positioned to appreciate.

Several factors will help drive volumes for Vita-Stim Cell Nutrition. First, the baby boomer population is hitting retirement and will push demand yet higher for regenerative medicine. Second, larger biopharmaceutical companies steer away from high-risk sectors due to the heavy amount of capital requirements in R&D. This gives Emergent the benefit of barriers to entry in attracting consumers. A majority of adults consumer a daily vitamin & mineral formula, so the market is substantial. Third, Emergent has an incentive-based distribution system through JDI International.

Emergent fortunately has products of cross-over value. This means that consumers of one line will find benefit in another. Combined with the supply chain system, Emergent has a business model that yields a positive feedback for demand. For example, the company’s Infinity Plus Anti-Aging support is scientifically-formulated to help increase telomere length – an action that may reverse aging. Distributors who have driven demand for Vita-Stim Cell Nutrition are likely to do it again for Infinity Plus Anti-Aging Support.

Disclaimer: The distributor of this research report, Gould Partners, is not a licensed investment adviser or broker dealer. We are a consultant to Emergent Health and have been contracted ten thousand dollars. Investors are cautioned to perform their own due diligence as information contained within this report has been derived from public sources and cannot be guaranteed by us to be fully accurate. Always discuss investments with a licensed professional before making any financial decision. Statements made herein are often “forward-looking statements” as defined under Section 27A of the Securities Act of 1933, Section 21E of the Securities Act of 1934, and the Private Securities Litigation Reform Act of 1995. Since these statements are uncertain, actual results may be materially different from those expected.