Core Insights - ProPhase Labs has appointed Stu Hollenshead as Chief Operating Officer to enhance its consumer-centered health and wellness product strategy [1][3] - The company anticipates significant capital inflow related to improved accounts receivable collection initiatives between Q2 and Q3 2025 [3][10] - ProPhase is focusing on direct-to-consumer revenue streams and plans to launch new products, including Legendz XL, Legendz Triple Edge, and Equivir [3][8] Company Developments - The appointment of Hollenshead is seen as a pivotal step in ProPhase's expansion into consumer health products, leveraging his expertise in direct-to-consumer growth and digital marketing [1][3] - The company is exploring strategic alternatives for Nebula Genomics and DNA Complete, alongside implementing cost-cutting measures [2][10] - Following the sale of Pharmaloz Manufacturing, former COO Jed Latkin has transitioned to a consulting role to focus on the BE-Smart esophageal cancer test [3][12] Market Potential - The target market for the BE-Smart esophageal cancer diagnostic test is estimated to be between $7 billion and $14 billion in the U.S., with minimal competition currently [3][12] - ProPhase aims to establish itself as a leader in science-backed health solutions, with a focus on innovative consumer-first health products [9][12] Leadership Background - Stu Hollenshead has a strong track record in scaling consumer-first businesses, having previously led significant growth at Business Insider and Barstool Sports [4][5][6] - His experience includes overseeing subscription models, e-commerce, and direct-to-consumer monetization strategies [5][6] Strategic Partnerships - Hollenshead will also continue as CEO of 10PM Curfew, a platform with a highly engaged audience of over 70 million women, which ProPhase plans to leverage for brand growth [7][9] - The company is looking into joint venture opportunities to develop other brands that require marketing expertise and influencer networks [9]

Core Viewpoint - ProPhase Labs, Inc. has successfully closed the sale of its subsidiaries, Pharmaloz Manufacturing Inc. and Pharmaloz Real Estate Holdings, Inc., to a private equity group, significantly improving its financial position by eliminating over $20 million in debt and enhancing liquidity with $2 million in cash [1][2][6]. Financial Impact - The transaction has an aggregate deal value of approximately $23.6 million, which includes the retirement of more than $10 million in debt and the assumption of nearly $2 million in capital leases and close to $3 million in current and accrued payables [1][2][7]. - The private equity group will also assume a $3.3 million mortgage on the manufacturing facility, further alleviating financial burdens on ProPhase [3][7]. Operational Changes - The sale allows ProPhase to reduce overhead by transferring several employees to Pharmaloz, enabling the company to focus on its core businesses [3][7]. - The transaction avoids approximately $3 million in planned near-term capital expenditures, which will now be the responsibility of the buyer [5][7]. Strategic Focus - The CEO of ProPhase Labs emphasized that this sale is part of a broader strategy to reduce overhead and improve the balance sheet, positioning the company closer to sustainable profitability [6][8]. - The company aims to concentrate on its core growth opportunities, including the BE-Smart Esophageal Cancer Test and the upcoming launch of Equivir [6][8].

Financial Data and Key Metrics Changes - The company is anticipating a strong fourth quarter and has initiated a capital raise to support aggressive growth initiatives, particularly for DNA Complete and DNA Expand during the holiday season [8][10] - The company plans to reduce overhead and other expenses by at least $6 million, which may include settling over $5 million in payables, potentially resulting in an $11 million positive cash earnings swing [12][66] Business Line Data and Key Metrics Changes - Pharmaloz Manufacturing is expected to generate approximately $15 million in revenue for the fourth quarter, with plans for a second manufacturing line that could add $20 million to $25 million in annual revenues [30][31] - The BE-Smart Esophageal Cancer Test has significant market potential, targeting a $7 billion to $14 billion market with virtually no competition [43][45] - DNA Complete and DNA Expand have been launched, with expectations for initial sales figures to be reported in Q4 [70] Market Data and Key Metrics Changes - The company has a strong distribution network with access to 40,000 food, drug, and mass retail stores, which is crucial for the rollout of new products like Equivir [25][56] - The market for esophageal cancer diagnostics is growing, with a significant number of endoscopies performed annually, indicating a large potential customer base for the BE-Smart test [34][43] Company Strategy and Development Direction - The company is focusing on leveraging its existing assets and subsidiaries to drive growth, particularly in the lozenge manufacturing and cancer diagnostics sectors [21][46] - There is a strategic emphasis on cutting costs and improving financials while exploring potential liquidity events, including partnerships and sales of subsidiaries [12][19][66] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's underlying value and potential liquidity events, despite current frustrations with cash flow and receivables [14][15] - The CEO highlighted the importance of the upcoming holiday season for sales and the need for capital to support growth initiatives [8][10] Other Important Information - The company has not recognized $70 million in accounts receivable related to COVID testing, indicating a conservative approach to financial reporting [15][16] - The company is exploring strategic alternatives for Pharmaloz Manufacturing, with over 70 potential acquirers already identified [29] Q&A Session All Questions and Answers Question: How is DNA Complete different from Nebula? Is there a pathway for Nebula customers to switch to DNA Complete? - The key difference is that DNA Complete has enhanced ancestry features and more health reports compared to Nebula, and they are independent companies with flexibility in operations [68][69] Question: Can we expect initial sales figures for DNA Complete in Q4? - Initial sales figures for DNA Complete will likely be reported in Q4, but traction will take time as the launch is just beginning [70] Question: What was the cost for launch/marketing for DNA Complete? - The marketing expenses have been incurred throughout the year, with a focus on optimizing advertising based on testing and results [71][72] Question: Any prospect to screen for more than just esophageal cancer for the BE-Smart test? - Currently, the focus is on limiting capital expenditures and not developing new initiatives that would incur significant costs [75]

Financial Performance - For the three months ended September 30, 2024, net revenue was $3.1 million, a decrease from $8.4 million for the same period in 2023, primarily due to a $2.5 million decrease in diagnostic services and a $2.7 million decrease in consumer products[152]. - For the nine months ended September 30, 2024, net revenue was $9.3 million, down from $40.9 million for the same period in 2023, with a $24.8 million decrease in diagnostic services revenue[161]. - Net loss for the three months ended September 30, 2024, was $6.6 million, or $(0.35) per share, compared to a net loss of $5.1 million, or $(0.30) per share, for the same period in 2023[161]. - Net loss for the nine months ended September 30, 2024, was $19.0 million, or $(1.02) per share, compared to a net loss of $8.0 million, or $(0.47) per share, for the same period in 2023[170]. Diagnostic Services - Overall diagnostic testing volume decreased from 13,000 tests in the three months ended September 30, 2023, to zero tests in the same period in 2024[152]. - Overall diagnostic testing volume decreased from 259,000 tests in the nine months ended September 30, 2023, to zero tests in the same period in 2024[161]. - Diagnostic services costs for the nine months ended September 30, 2024, were zero, down from $1.9 million in the same period in 2023, due to decreased COVID-19 testing volumes[164]. - There were no diagnostic services revenue generated from the HRSA funding program for the three months ended September 30, 2024, and 2023[194]. - The expiration of the federal Public Health Emergency on May 11, 2023, led to a significant decrease in demand for COVID-19 testing services[195]. Expenses - General and administration expenses for the three months ended September 30, 2024, were $7.7 million, a decrease from $8.2 million in the same period in 2023[157]. - General and administration expenses decreased by $4.0 million to $22.5 million for the nine months ended September 30, 2024, compared to $26.5 million for the same period in 2023[165]. - Research and development costs for the three months ended September 30, 2024, were $122,000, down from $428,000 for the same period in 2023[158]. - Research and development costs decreased to $533,000 for the nine months ended September 30, 2024, down from $1.144 million in the same period in 2023, primarily due to reduced product research activities[167]. - Interest expense for the three months ended September 30, 2024, was $1.2 million, compared to $275,000 for the same period in 2023, reflecting a higher balance of outstanding debt[160]. - Interest expense increased to $2.3 million for the nine months ended September 30, 2024, compared to $781,000 for the same period in 2023, due to a higher balance of outstanding debt[169]. Cash Flow and Capital - Cash and cash equivalents decreased to $1.1 million as of September 30, 2024, down from $2.1 million at December 31, 2023, primarily due to $14.0 million used in operating activities[178]. - The company anticipates continued losses and will require additional capital to fund operations, which may be raised through public or private equity or debt financings[181]. - The company sold 1,033,500 shares of common stock, generating cash proceeds of $4.6 million during the nine months ended September 30, 2024[199]. Acquisitions and Agreements - The company continues to actively pursue acquisition opportunities for other companies, technologies, and products within and outside the consumer products industry[151]. - The company entered into a manufacturing agreement with Vespyr Brands, Inc. for the production of certain products, which is currently under negotiation for renewal[182]. - The company purchased assets related to the BE-Smart Esophageal Pre-Cancer diagnostic screening test for $3.5 million in cash and 100,000 shares of common stock[186]. - The company issued an unsecured promissory note for an aggregate principal amount of $7.6 million, accruing interest at a rate of 10% per year, due on January 27, 2026[190]. - The principal amount of the JXVII Note was increased to $10.0 million, with an interest rate raised to 15% per annum and a new maturity date of August 15, 2027[192]. Internal Controls and Compliance - A material weakness in internal control over financial reporting was identified, affecting the accuracy of account reconciliations and revenue recognition[218][220]. - The company is currently evaluating material weaknesses in internal controls and has hired a third-party accounting consultant to assist in remediation efforts[222]. - As of December 31, 2023, the company's internal controls over financial reporting were deemed ineffective due to several identified deficiencies[218]. - There were misstatements in accounts receivable, deferred revenue, and revenue for multiple subsidiaries due to inadequate controls and reliance on manual input processes[220]. - The evaluation of disclosure controls and procedures concluded that they were effective at the reasonable assurance level as of September 30, 2024[217]. - No material changes in internal control over financial reporting occurred during the most recent quarter that would likely affect internal controls[223]. Market Conditions - The company anticipates that increased costs for contract manufacturing and retail operations will be passed on to customers, while costs related to diagnostic services will be absorbed by the company[200]. - The company is subject to normal inflationary trends, which could materially affect its business in the future[200]. - Current economic conditions may adversely affect the company's business and financial performance, including the collection of accounts receivables and realization of inventory[214]. - There have been no material changes to market risk exposures since December 31, 2023[215]. - The company does not expect material losses related to its investment portfolio or excessive exposure to market risks associated with interest rates[213].

Financial Performance - For Q3 2024, ProPhase Labs reported net revenue of $3.1 million, a decrease from $8.4 million in Q3 2023, primarily due to a $2.5 million drop in diagnostic services and a $2.7 million decline in consumer products [10]. - The company experienced a gross margin loss of $0.2 million in Q3 2024, compared to a gross margin profit of $2.3 million in Q3 2023, resulting in an overall gross margin of (5.2)% versus 27.8% in the prior year [12]. - Total revenues for the three months ended September 30, 2024, were $3,146,000, a decrease from $8,365,000 for the same period in 2023, representing a decline of approximately 62.4% [23]. - Gross loss for the three months ended September 30, 2024, was $(165,000), compared to a gross profit of $2,327,000 for the same period in 2023 [23]. - Net loss for the nine months ended September 30, 2024, was $(19,005,000), compared to a net loss of $(8,031,000) for the same period in 2023, reflecting an increase in losses of approximately 136.5% [24]. - GAAP net income for September 30, 2024, was $(6,587,000), compared to $(5,141,000) for September 30, 2023 [30]. - EBITDA for September 30, 2024, was $(5,547,000), compared to $(3,368,000) for September 30, 2023 [30]. - Adjusted EBITDA for September 30, 2024, was $(4,440,000), compared to $(2,525,000) for September 30, 2023 [30]. - The company reported a basic loss per share of $(0.35) for the three months ended September 30, 2024, compared to $(0.30) for the same period in 2023 [23]. Cash Flow and Liquidity - As of November 12, 2024, the company reported $3.1 million in cash and cash equivalents, with an improved working capital position [7]. - Cash used in operating activities for the nine months ended September 30, 2024, was $(13,967,000), compared to $(11,135,000) for the same period in 2023, indicating a rise in cash outflow of approximately 25.4% [24]. - Cash and cash equivalents at the end of the period were $1,094,000, compared to $702,000 at the end of the same period in 2023, showing an increase of about 55.9% [24]. - Interest payment on promissory notes increased to $2,126,000 from $740,000 [25]. - Cash paid for income taxes decreased to $860,000 from $3,000,000 [25]. Expenses and Liabilities - Operating expenses for the three months ended September 30, 2024, totaled $7,772,000, down from $8,805,000 in the same period of 2023, indicating a decrease of about 11.7% [23]. - Total liabilities increased to $53,682,000 as of September 30, 2024, compared to $42,544,000 as of September 30, 2023, marking an increase of about 26.1% [22]. - Total stockholders' equity decreased to $38,126,000 as of September 30, 2024, from $49,383,000 as of September 30, 2023, representing a decline of approximately 22.7% [22]. - The company incurred depreciation and amortization expenses of $5,693,000 for the nine months ended September 30, 2024, compared to $4,435,000 for the same period in 2023, reflecting an increase of approximately 28.4% [24]. Strategic Initiatives - ProPhase anticipates Pharmaloz Manufacturing to generate over $15 million in revenues and $5 million in pre-tax earnings over the next 12 months, excluding contributions from a second manufacturing line [2]. - The company is in late-stage discussions with a major lozenge brand for a long-term contract that could add an additional $20-$25 million in revenues in its first year of production [3]. - ProPhase has initiated strategic partnership discussions for the BE-Smart Esophageal Cancer Test with two multi-billion-dollar cancer diagnostic companies [4]. - The launch of DNA Complete and DNA Expand is expected to enhance customer engagement and generate high-margin revenue through subscription services [5]. - ProPhase anticipates significant sequential improvement in revenues and EBITDA in Q4 2024, supported by strategic advancements across its subsidiaries [7]. - ProPhase plans to eliminate approximately $6 million in overhead and expenses in 2025 to focus on core assets and initiatives [2]. Non-Cash and Other Expenses - Share-based compensation expense for September 30, 2024, was $636,000, compared to $744,000 for September 30, 2023 [30]. - Non-cash rent expense for September 30, 2024, was $471,000, compared to $99,000 for September 30, 2023 [30]. - Net unrealized loss on investments in marketable debt securities decreased to $267,000 from $2,083,000 [25]. - Assets obtained in exchange for new finance lease obligations decreased to $3,699,000 from $6,201,000 [25]. - Common stock issued in an asset acquisition was $1,000,000 [25].

Core Insights - ProPhase Labs, Inc. reported a quarterly loss of $0.35 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.31, and compared to a loss of $0.30 per share a year ago, indicating a negative earnings surprise of -12.90% [1] - The company generated revenues of $3.15 million for the quarter ended September 2024, exceeding the Zacks Consensus Estimate by 11.56%, but down from $8.37 million in the same quarter last year [2] - ProPhase Labs shares have declined approximately 83.7% year-to-date, contrasting with a 25.5% gain in the S&P 500 [3] Earnings Outlook - The future performance of ProPhase Labs' stock will largely depend on management's commentary during the earnings call and the company's earnings outlook [4] - Current consensus EPS estimate for the upcoming quarter is -$0.24 on revenues of $5.88 million, and for the current fiscal year, it is -$1.23 on revenues of $14.8 million [7] Industry Context - The Medical - Drugs industry, to which ProPhase Labs belongs, is currently ranked in the top 25% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Another company in the same industry, Plus Therapeutics, is expected to report a quarterly loss of $0.46 per share, reflecting a year-over-year change of +54%, with revenues anticipated to be $1.4 million, up 12.9% from the previous year [9][10]

GARDEN CITY, NY, Nov. 11, 2024 (GLOBE NEWSWIRE) -- ProPhase Labs Inc. (NASDAQ: PRPH), (the “Company” or “ProPhase”), a next generation biotech, genomics and diagnostics company, today announced that they will be presenting third quarter 2024 financial results on a virtual conference call hosted by Renmark Financial on November 13, 2024 at 11:00 AM EST. A press release detailing these results will be issued prior to the virtual conference call. ProPhase Labs Inc. welcomes stakeholders, investors, and other i ...

GARDEN CITY, NY, Nov. 07, 2024 (GLOBE NEWSWIRE) -- ProPhase Labs, Inc. (NASDAQ: PRPH) (“ProPhase” or the “Company”), a next-generation biotech, genomics and diagnostics company, today announced the pricing of its underwritten public offering of 4,170,000 shares of common stock. Each share of common stock is being sold at a public offering price of $0.72 per share, for gross proceeds of approximately $3 million, before deducting underwriting discounts, and offering expenses. All of the shares are being offer ...

Projections for Pharmaloz Manufacturing: Approximately $16-17 Million in Revenue, $6-7 Million in PreTax Earnings for 2025 Strategic Partnership Discussions Begin for BE-Smart Esophageal Cancer Test GARDEN CITY, NY, Oct. 17, 2024 (GLOBE NEWSWIRE) -- ProPhase Labs, Inc. (NASDAQ: PRPH) (the "Company" or "ProPhase"), a next generation biotech, genomics, and diagnostics company, today announced significant progress across several key projects. Pharmaloz Manufacturing Inc. (PMI): In Q3, the Company engaged Think ...

GARDEN CITY, NY, Aug. 19, 2024 (GLOBE NEWSWIRE) -- ProPhase Labs, Inc. (NASDAQ: PRPH) ("ProPhase" or the "Company"), a next-generation biotech, genomics, and diagnostics company, today announced that it will be presenting at the Virtual Investor Summit Microcap Event. The company will be available for 1-on-1 meetings throughout the day in addition to their presentation. Event: Q3 Investor Summit Date: August 20th, 2024 Presentation Time: 1:00 P.M. ET Location: https://www.webcaster4.com/Webcast/Page/3062/51 ...