ProPhase Labs(PRPH) - 2024 Q3 - Quarterly Results

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].