SOHM Inc (OTCMKTS:SHMN) has turned to share buybacks as it looks to revitalize its business operations and prospects in the nutraceutical and pharmaceutical space. The new strategy comes on the heels of one of the worst routs that have seen the stock languish at all-time lows in the market.
Catalysts and Share Price Analysis
The stock has taken a significant hit over the past few months, a move that has led to subdued activity in the market. With the stock languishing at all-time lows and in dire need of new catalysts to spark a bounce back, the management believes now is the time to act.
In addition, to buying backs, the company is also working on a pipeline of nutraceutical and prescription drugs that it hopes to sell through distribution partners. The company has also made a string of alliance agreements as part of the ongoing restructuring, as it seeks to reinvigorate its prospects.
A spike in share price volume could as well indicate that investors are slowly taking note of recent developments. A high turnover in traded shares signals renewed investor interest setting the stage for a potential turnaround from all-time lows.
The stock faces an uphill task to turn bullish given that it is languishing below the $0.01 level. Below the psychological level, the stock remains susceptible to further drops in continuation of the long-term downtrend.
SOHM casts itself as a pharmaceutical company engaged in the development, manufacturing, and distribution of pharmaceutical and nutraceutical products across the U.S. The company develops analgesics, antibiotics, and anti-inflammatory drugs.
A spike in market activity, as well as share price, follows the announcement that SOHM is poised to carry out a share repurchase program. The board of directors has already approved the proposed buyback as part of an effort to revitalize its business operations.
The proposed buyback is targeting 10% of all outstanding shares. Up to 50% of the shares are to be retired.
“We acknowledge that SOHM’s current cap structure is not optimal. Instead of a reverse split, we would rather begin taking concrete steps to reduce the company’s current outstanding shares while ensuring that our investors do not see their holdings reduced,” said CEO Baron Night.
Confirmation of share buyback follows the announcement that the company continues to work with partners to optimize SOHM’s nutraceutical and prescription products. The company has since inked strategic alliances with distribution partners in the retail and convenience store segments. SOHM has also inked alliance agreements with suppliers and customers.
Early in the year, the pharmaceutical company signed a master supply agreement with a U.S based customer for the supply of Prescription (Rx) products. The company expects more than 7 to 9 SKUs orders from the customer.
The supply agreement is poised to add to the company’s product portfolio. It will also contribute a great deal to future overall growth. The supply agreement is part of the company’s recent strategy of increasing USA manufacturing capabilities.
SOHM has also opened negotiations with a pharmaceutical company for the development of new products. The company is also planning to develop new products as it looks to strengthen its current pipeline of products. Product development is part of the company’s push to create sustainable revenue streams for rapid growth in 2019.
Mr. Night has sought to reaffirm the company’s long-term prospects by reiterating operational efficiency backed by good response from existing contract and white label manufacturing customers. The company expects new orders for its products from the current line of customers.
Management expects revenue to more than double in 2019. In addition, the company is projecting profit margins of about 38%.
“Our operational and revenue generation efforts are ongoing, and we are confident of achieving our revenue target for the year 2019 and beyond”, stated Mr. Night, President and CEO.
The management team is working round the clock to reinvigorate SOHM prospects after a long period of underperformance. Expanding the current product pipeline is part of a drive that seeks to reinvigorate revenue streams. In addition, the company has signed a strategic partnership as it aims to accelerate the development and distribution of critical products.
Operational efficiency appears to have inched higher all but affirming the company’s growth prospects. Overall, it looks like better days are ahead for SHMN.
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Disclosure: We have no position in SHMN and have not been compensated for this article.