NEW YORK, July 15, 2024 (GLOBE NEWSWIRE) -- Diamond Equity Research, a leading equity research firm with a focus on small capitalization public companies has initiated coverage of BioHarvest Sciences Inc. (OTCQB: CNVCF, CSE: BHSC). The in-depth 35-page initiation report includes detailed information on the BioHarvest Sciences’ business model, services, industry, valuation, management, and risks.
The full research report is available here. Highlights from the report include:
- Pioneering the Wellness Market with First-to-Market Technology that Mirrors and Magnifies Phytonutrients: BioHarvest Sciences Inc. distinguishes itself with its proprietary Botanical Synthesis technology that not only mirrors but also significantly magnifies and multiplies natural phytonutrients. This positions BioHarvest as a first-to-market innovator, disrupting traditional pharmaceutical and nutraceutical production methods. The technology enhances the potency and efficacy of polyphenolic compounds derived from any plant, highlighting its versatile application across multiple botanical sources. VINIA®, BioHarvest’s first commercialized product, is a proprietary nutraceutical containing 100 times the Piceid Resveratrol found in a red grape. VINIA® boosts nitric oxide production and increases arterial dilation, which increases the rate of blood flow, improving mental alertness, energy, and circulation. The product has been a commercial success, demonstrating the effectiveness and market appeal of BioHarvest's innovative approach.
- Unlocking High-Margin Markets through Proprietary Molecule Development: BioHarvest has developed the capability to create proprietary molecules targeting high-margin sectors such as nutraceuticals, pharmaceuticals, food and beverages, and skincare, which demand natural, effective solutions. The global nutraceuticals market, valued at $317 billion in 2023, is projected to grow at a compound annual growth rate (CAGR) of 9.6% from 2024 to 2030, highlighting significant market potential. The company's commitment to premium products is demonstrated through sophisticated production processes, emphasizing its strategic focus on premium pricing and exceptional quality. These attributes not only ensure consumer satisfaction but also enhance the company's profitability through higher product margins. This strong market potential affirms the lucrative opportunities available for BioHarvest's innovative solutions.
- Targeting Q4 2024 EBITDA Profitability through Positive Financial Trajectory: BioHarvest is on track to achieve positive EBITDA, potentially by the fourth quarter of FY2024, supported by strong revenue growth and the company’s operational efficiency. In 2023, BioHarvest generated gross profit of $5.63 million, a significant increase from $1.22 million in 2022, representing growth of approximately 361.47%. This impressive growth was driven by rising revenues and a substantial gross margin expansion from 22% in 2022 to 45% in 2023. The company’s gross margins further expanded in Q1 2024 to 56% owing to increased manufacturing scale, improved manufacturing yields, and cost reduction in downstream packaging. Operating losses contracted from $10.61 million in 2022 to $9.96 million in 2023, reflecting the company's improving financial health and operational sustainability. Additionally, BioHarvest's expansion into the CDMO business is expected to further increase revenue, leveraging its advanced botanical synthesis technology to meet growing demand in the pharmaceutical and nutraceutical markets.
- Maximizing Market Penetration with Diverse and Strategic Distribution: BioHarvest employs a comprehensive distribution strategy that spans B2C, direct-to-consumer (D2C) channels, and incentive-based programs such as direct-to-doctor. This extensive market penetration is supported by a substantial base of recurring revenue from the VINIA® product line, demonstrating strong customer retention and a stable revenue stream. Approximately 90% of the revenue generated from VINIA.com comes from recurring subscriptions, underscoring the product's strong consumer retention and consistent demand. Notably, over 95% of these subscribers are committed to subscriptions of 3 months duration or more, indicating high customer satisfaction and the perceived value of continued use of the product.
- Expanding Botanical Synthesis Horizons with CDMO Services: The expansion into CDMO services allows BioHarvest to broaden its impact to include pharmaceuticals, food ingredients, nutraceuticals, and cosmetics. This strategic diversification is further strengthened by initial contracts with major industry players, potentially positioning the company for significant revenue growth and an enhanced market presence. Importantly, the initial phase of the CDMO business can be effectively managed using the existing resources and infrastructure, ensuring a cost-effective and efficient scale-up of operations. This allows BioHarvest to leverage its current capabilities, while exploring new revenue streams without the immediate need for extensive additional investment. The global nutraceuticals CDMO market, valued at USD 37.3 billion in 2022, is projected to grow at a 7.7% CAGR from 2023 to 2030, while the global pharmaceutical contract manufacturing and research services market, valued at USD 226.6 billion in 2022, is expected to grow at a 7.10% CAGR over the same period.
- Valuation: We have valued BioHarvest Sciences using a blended approach that incorporates both a discounted cash flow (DCF) analysis and a comparable company-based sum-of-the-parts (SOTP) method. The DCF analysis assumes a discount rate of 12.75% and a long-term growth rate of 1.5%, while the SOTP approach uses the average EV/S multiple of comparable firms in the nutraceutical and CDMO industries. We have assigned a weight of 75% to the DCF and 25% to the SOTP, resulting in a comprehensive valuation of $18.00 per share, contingent on the successful execution by the company.
About BioHarvest Sciences Inc.
BioHarvest Sciences Inc. specializes in botanical and cellular-based health solutions through its patented Botanical Synthesis technology, focusing on nutraceuticals, pharmaceuticals and CDMO services.
About Diamond Equity Research
Diamond Equity Research is a leading equity research and corporate access firm focused on small capitalization companies. Diamond Equity Research is an approved sell-side provider on major institutional investor platforms.
For more information, visit https://www.diamondequityresearch.com.
Disclosures:
Diamond Equity Research LLC is being compensated by BioHarvest Sciences Inc. (OTCQB: CNVCF, CSE: BHSC) for producing research materials regarding BioHarvest Sciences Inc. and its securities, which is meant to subsidize the high cost of creating the report and monitoring the security, however, the views in the report reflect that of Diamond Equity Research. As of 07/15/24, Diamond Equity Research LLC has been paid $35,000 for research services, payable in two installments for the initial year and not applicable to renewals. The first installment of $17,500 ($17,490 post bank charges) was paid within a month after signing the agreement. The second installment of $17,500 ($17,490 post bank charges) was paid after a management content draft version of the initiation of coverage report was provided electronically to BioHarvest Sciences Inc., but prior to the release of the actual initiation of coverage. Diamond Equity Research LLC may be compensated for non-research-related services, including presenting at Diamond Equity Research investment conferences, press releases and other additional services. The non-research related service cost is dependent on the company, but usually do not exceed $5,000. The issuer has not paid us for non-research related services as of 07/15/2024. Issuers are not required to engage us for these additional services. Additional fees may have accrued since then. Although Diamond Equity Research company sponsored reports are based on publicly available information and although no investment recommendations are made within our company sponsored research reports, given the small capitalization nature of the companies we cover we have adopted an internal trading procedure around the public companies by whom we are engaged, with investors able to find such policy on our website public disclosures page. This report and press release do not consider individual circumstances and does not take into consideration individual investor preferences. Statements within this report may constitute forward-looking statements, these statements involve many risk factors and general uncertainties around the business, industry, and macroeconomic environment. Investors need to be aware of the high degree of risk in small capitalization equities including the complete potential loss of their investment. Investors can find various risk factors in the initiation report and in the respective financial filings for BioHarvest Sciences Inc.
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