ProPhase Labs, Inc. (NASDAQ: PRPH,
www.ProPhaseLabs.com) today reported its financial results for the
three and six months ended June 30, 2018. Net sales from continuing
operations were $3.2 million for the three months ended June 30,
2018 as compared to net sales from continuing operations of $1.9
million for the three months ended June 30, 2017. The Company
incurred a net loss for the three months ended June 30, 2018, of
$260,000, or ($0.02) per share, compared to a net loss of $2.3
million, or ($0.14) per share, for the three months ended June 30,
2017.
Results for the second quarter of 2018 compared
to the second quarter of 2017 principally reflect the net effect of
(i) an increase in net sales of $1.3 million, (ii) a decrease in
administration costs of $106,000 due principally to a decrease in
professional and legal costs and (iii) a decrease in research and
development expenses of $137,000.
The Company generated net sales from continuing
operations for the six months ended June 30, 2018 of $6.6 million,
as compared to $2.7 million for the six months ended June 30, 2017.
The Company incurred a net loss from continuing operations for the
six months ended June 30, 2018 of $216,000, or ($0.02) per share,
compared to a net loss from continuing operations of $1.6 million,
or ($0.10) per share, for the six months ended June 30, 2017.
The financial results for the six months ended
June 30, 2018 as compared to the six months ended June 30, 2017
reflect the net effect of (i) an increase in net sales of $3.9
million, (ii) an increase in sales and marketing expenses of
$71,000 and (iv) a decrease in research and development
expenditures of $84,000.
The Company realized net income from
discontinued operations for the six months ended June 30, 2017, of
$43.2 million, or $2.54 per share. As a result of the sale of the
Cold-EEZE® Business, for the six months ended June 30, 2017, the
Company has classified as discontinued operations the (i) gain from
the sale of the Cold-EEZE® Business, (ii) all gains and losses
attributable to the Cold-EEZE® Business and (iii) the income tax
expense attributed to the sale of the Cold-EEZE® Business.
We continue to own and operate our manufacturing
facility and manufacturing business in Lebanon, Pennsylvania, and
our headquarters in Doylestown, Pennsylvania. As part of the sale
of the Cold-EEZE® Business, we entered into a manufacturing
agreement to supply various Cold-EEZE® lozenge products to Mylan.
In addition, we produce over-the-counter drug and dietary
supplement lozenges and other products for other third party
customers. We are also pursuing a series of new product development
and pre-commercialization initiatives in the dietary supplement
category.
Ted Karkus, the CEO of the Company, stated:
“ProPhase Digital Media (“PDM”) is the digital marketing division
of our Company that will market our dietary supplements direct to
consumers through social media, digital and e-mail communications.
PDM’s initial efforts will be to market our lead dietary
supplement, Legendz XL®. We initiated testing during Q2 2018. This
testing will continue during Q3 to optimize results. If our model
proves successful, our goal is for PDM to market our other
internally developed products and ultimately market other company’s
products as well.”
Mr. Karkus continued, “In addition to digital
distribution, in 2017 we shipped our new dietary supplement,
Legendz XL®, to a major retail drug chain and other retailers.
Implementation of our dietary supplement strategy will require
significant investment in marketing as well as significant
additional distribution within the various retail channels and
e-commerce venues in order to achieve a successful launch and build
a successful new product line. We are optimistic but cannot assure
that other major retail chains will carry Legendz XL® in the second
half of 2018.”
Mr. Karkus also noted, “We continue to own and
operate our Pharmaloz manufacturing facility which manufactures and
supplies Cold-EEZE® lozenges to Mylan as well as lozenges to other
companies on a contract manufacturing basis. Manufacturing revenue
fluctuates from quarter to quarter. Also, marketing and
distribution expenses may increase as we build our consumer
products businesses. Therefore, no assurance can be given that full
year results will follow first half results.”
Mr. Karkus concluded, “Looking forward, in
addition to developing our consumer products businesses and growing
our manufacturing business, the Company continues to seek
development stage acquisitions in other sectors and industries,
including cyber security, internet of things and blockchain
technologies.”
About the Company
ProPhase is a vertically integrated
manufacturer, marketer and distributor of a diversified range of
over-the-counter (“OTC”) dietary supplements. We are engaged in the
research and development of additional OTC dietary supplements,
including Legendz XL®, which are marketed under our TK Supplements
brand. The Company is also developing ProPhase Digital Media as a
service that leverages and applies technology to the
direct-to-consumer marketing of consumer products. With our
enhanced liquidity following the sale of our Cold-EEZE brand, we
are also actively exploring additional opportunities outside of the
consumer products industry. For more information visit us at
www.ProPhaseLabs.com.
Forward Looking Statements
All statements contained in this press release,
other than statements of historical fact, are forward-looking
statements. These statements speak only as of the date of this
press release and are based on our current plans and expectations
and involve risks and uncertainties that could cause actual future
events or results to be different from those described in or
implied by such forward-looking statements, including risks and
uncertainties relating to our research and development efforts and
exploration of potential business opportunities. Further
information about these matters can be found in our Securities and
Exchange Commission filings. Except as required by applicable law
or regulation, we do not undertake any obligation to update our
forward-looking statements to reflect future events or
circumstances.
Except for the historical information contained
herein, this document contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, including statements relating to the launch of our new line
of TK Supplements®, and our new product Legendz XL®. Management
believes that these forward-looking statements are reasonable as
and when made. However, such forward-looking statements involve
known and unknown risks, uncertainties, and other factors that may
cause actual results to differ materially from those projected in
the forward-looking statements. These risks and uncertainties
include, but are not limited to: the difficulty of predicting the
acceptance and demand for our products, the impact of competitive
products and pricing, costs involved in the manufacture and
marketing of products, the timely development and launch of new
products, and the risk factors listed from time to time in our
Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and any
subsequent SEC filings.
PROPHASE LABS, INC. &
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(in thousands, except per share
amounts)(unaudited)
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, 2018 |
|
|
June 30, 2017 |
|
|
June 30, 2018 |
|
|
June 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales (Note 2) |
|
$ |
3,186 |
|
|
$ |
1,905 |
|
|
$ |
6,594 |
|
|
$ |
2,676 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales (Note
2) |
|
|
1,928 |
|
|
|
1,765 |
|
|
|
3,910 |
|
|
|
2,451 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
1,258 |
|
|
|
140 |
|
|
|
2,684 |
|
|
|
225 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
(Note 2): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and
marketing |
|
|
235 |
|
|
|
221 |
|
|
|
407 |
|
|
|
336 |
|
Administration |
|
|
1,200 |
|
|
|
1,306 |
|
|
|
2,419 |
|
|
|
2,387 |
|
Research
and development |
|
|
87 |
|
|
|
224 |
|
|
|
174 |
|
|
|
258 |
|
|
|
|
1,522 |
|
|
|
1,751 |
|
|
|
3,000 |
|
|
|
2,981 |
|
Interest income,
net |
|
|
4 |
|
|
|
151 |
|
|
|
100 |
|
|
|
97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing
operations before income taxes (Note 6) |
|
|
(260 |
) |
|
|
(1,460 |
) |
|
|
(216 |
) |
|
|
(2,659 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit from
continuing operations |
|
|
- |
|
|
|
574 |
|
|
|
- |
|
|
|
1,027 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing
operations |
|
|
(260 |
) |
|
|
(886 |
) |
|
|
(216 |
) |
|
|
(1,632 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations
(Note 3): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) from discontinued operations |
|
|
- |
|
|
|
(835 |
) |
|
|
- |
|
|
|
530 |
|
Gain
(loss) on sale of discontinued operations, net of taxes |
|
|
- |
|
|
|
(584 |
) |
|
|
- |
|
|
|
42,684 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
discontinued operations |
|
|
- |
|
|
|
(1,419 |
) |
|
|
- |
|
|
|
43,214 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(260 |
) |
|
$ |
(2,305 |
) |
|
$ |
(216 |
) |
|
$ |
41,582 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on
marketable securities |
|
|
68 |
|
|
|
- |
|
|
|
25 |
|
|
|
- |
|
Total comprehensive
income (loss) |
|
$ |
(192 |
) |
|
$ |
(2,305 |
) |
|
$ |
(191 |
) |
|
$ |
41,582 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing
operations |
|
$ |
(0.02 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.02 |
) |
|
$ |
(0.10 |
) |
Income (loss) from
discontinued continued operations |
|
|
- |
|
|
|
(0.08 |
) |
|
|
- |
|
|
|
2.54 |
|
Net
income (loss) |
|
$ |
(0.02 |
) |
|
$ |
(0.14 |
) |
|
$ |
(0.02 |
) |
|
$ |
2.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing
operations |
|
$ |
(0.02 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.02 |
) |
|
$ |
(0.10 |
) |
Income (loss) from
discontinued continued operations |
|
|
- |
|
|
|
(0.08 |
) |
|
|
- |
|
|
|
2.44 |
|
Net
(loss) income |
|
$ |
(0.02 |
) |
|
$ |
(0.14 |
) |
|
$ |
(0.02 |
) |
|
$ |
2.34 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
11,339 |
|
|
|
16,943 |
|
|
|
11,237 |
|
|
|
17,030 |
|
Diluted |
|
|
11,339 |
|
|
|
16,943 |
|
|
|
11,237 |
|
|
|
17,680 |
|
PROPHASE LABS, INC. &
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEET
DATA(in
thousands)(unaudited)
|
|
June 30, |
|
|
December 31, |
|
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
|
$ |
3,665 |
|
|
$ |
3,173 |
|
Marketable securities,
available for sale |
|
$ |
6,776 |
|
|
$ |
18,765 |
|
Accounts
receivable |
|
$ |
1,363 |
|
|
$ |
1,945 |
|
Inventory |
|
$ |
2,386 |
|
|
$ |
1,531 |
|
Total current
assets |
|
$ |
19,547 |
|
|
$ |
28,417 |
|
Total assets |
|
$ |
22,123 |
|
|
$ |
33,659 |
|
|
|
|
|
|
|
|
|
|
Total current
liabilities |
|
$ |
1,595 |
|
|
$ |
1,812 |
|
Total stockholders'
equity |
|
$ |
20,528 |
|
|
$ |
31,847 |
|
|
|
|
|
|
|
|
|
|
Investor Contact
Ted Karkus, Chairman and CEO
ProPhase Labs, Inc.
(267) 880-1111
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