ATLANTA – Nov. 30, 2011 – Capsalus Corp. (OTCBB:WELL) has received a Buy rating from Opus Group Financial, an upgrade from its Speculative Buy recommendation issued last February. The independent financial advisory firm based its new rating on the ongoing roll-out of Capsalus’ expansion plans, highlighted by the acquisition of GeneWize Life Sciences, Inc. and the development and launch of Guava Healthcare, Inc.’s franchising business model. GeneWize Life Sciences is the first beauty and wellness network marketing DNA customized nutritional supplements, skin care and gene modulating weight management products; now as a franchisor, Guava Healthcare offers customized in-home, non-medical and medical staffing and services to clients across the age spectrum.
As the report indicates, Capsalus’ acquisition of GeneWize represents the company’s third deal in less than a year, each with early stage enterprises in the health and wellness arena that have demonstrated the potential to generate accelerating cash-flow and rapid margin growth. GeneWize, which over the past three years has generated more than $25 million in revenue at a run-rate of $400,000-500,000 per month, will enable Capsalus to report revenues in Q4 2011 for the first time in over a year since the company set out to reposition itself.
“The GeneWize acquisition offers Capsalus an established business model that will make an immediate contribution to its revenue line in Q4 2011,” said Opus Analyst Robert Sassoon. “It also will positively impact Capsalus’ operating income in Q1 2012, generating gross margins of approximately 30 percent in the absence of the overhead costs that supported GeneWize’s former parent.”
In addition, after Guava Healthcare’s transition from an owner-operated business to a franchising model over the course of 2011, it has begun selling franchises in select markets in the current quarter. Opus expects this move will also start to enhance substantially Capsalus’ revenue line in Q1 2012 if not sooner.
Concurrent with its corporate development campaign, Capsalus has executed a major asset overhaul since early 2010, involving the replacement of underperforming assets and reductions in operating expenses and debt. While Opus acknowledges the probability of future stock dilution, the prospect of relatively quick returns from new investments should considerably improve financials and reignite interest in the stock in the near term as well as point to significant upside over the longer term.
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