ProPhase Labs, Inc. (NASDAQ:PRPH),
(www.ProPhaseLabs.com) today reported its net sales from continuing
operations were $9.9 million for the year ended December 31, 2017,
as compared to net sales of $4.2 million for the year ended
December 31, 2016. The Company realized a net income for the
year ended December 31, 2017 of $41.8 million compared to a net
loss of $2.9 million for the year ended December 31, 2016.
The Company realized income from continuing
operations for the year ended December 31, 2017, of $14.3 million,
or $0.92 per share, as compared to a loss of $4.0 million, or
($0.24) per share, for the year ended December 31, 2016. The
Company realized income from discontinued operations for the year
ended December 31, 2017, of $27.5 million, or $1.77 per share, as
compared to income of $1.1 million, or $0.07 per share, for the
year ended December 31, 2016.
As previously announced, effective March 29,
2017 and with the approval of the Company’s stockholders, the
Company completed the sale of assets comprised principally of the
sale of intellectual property rights and other assets relating to
the Cold-EEZE® brand and product line (collectively, referred to
herein as the “Cold-EEZE® Business”) to a wholly-owned subsidiary
of Mylan N.V. (“Mylan”). As a consequence of the sale of the
Cold-EEZE® Business, for the year ended December 31, 2017 and 2016,
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.
As a consequence of the sale of the Cold-EEZE®
Business, the Company realized a gain, net of income tax, of $27.0
million for the year ended December 31, 2017. The gain on the
sale of the Cold-EEZE® Business is classified as a component of our
discontinued operations at December 31, 2017 and is net of
approximately $18.8 million for estimated income taxes arising from
the sale. For the year ended December 31, 2017, the Company also
realized an income tax benefit from continuing operations of $18.0
million as a consequence of the utilization of the federal and
state net operating losses.
Ted Karkus, the CEO of the Company, stated: “It
has always been our goal to optimize the long term value of our
company’s shares. To that end, for several years we
aggressively and efficiently invested in marketing our Cold-EEZE
brand. We were able to increase sales, market share and brand
awareness (to the dismay of our much larger competitors). Our
strategy succeeded, and culminated in the sale of the brand for $50
million to Mylan last year. To provide enhanced liquidity to
our shareholders, we also conducted two self-tenders and enabled
our shareholders to sell back just over 6 million shares of Company
common stock. In short, the ProPhase management team returned
great value to our shareholders.”
Mr. Karkus added, “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. As we look forward, we
are seeking to leverage our manufacturing expertise by creating
new, third party manufacturing and private label
opportunities.”
Mr. Karkus also noted, “We started shipping our
new dietary supplement, Legendz XL®, to a major retail drug chain
and other retailers in 2017. 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 stated, “In addition to retail
distribution, we are developing an e-commerce and a
direct-to-consumer strategy to drive consumers to our Legendz XL®
website or to various retail stores where our products are
carried. As part of this initiative, we formed a new,
wholly-owned subsidiary called ProPhase Digital Media (“PDM”). 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 expect to
initiate testing shortly. If our model proves successful, our goal
is for PDM to market other company’s products as well.”
Mr. Karkus concluded, “The Company continues to
explore a wide range of acquisition opportunities in the consumer
products space, as well as investments and acquisitions in other
sectors and industries.”
Today’s conference call will be webcast live
at:
https://engage.vevent.com/rt/prophaselabsinc_ao~6285328 at 11:00
a.m. (EST) on Wednesday, March 21, 2018.
Participants wishing to ask questions may access
the live call by dialing 833-623-9017 conference ID #
6285328. A replay of the conference call will be
available for 90 days on the company website
www.ProPhaseLabs.com.
About the Company
We are a vertically integrated and diversified
branding, marketing and technology company with deep experience
with over-the-counter (“OTC”) consumer healthcare products, dietary
supplements and other remedies. We are engaged in the research,
development, manufacture, distribution, marketing and sale of OTC
consumer healthcare products, dietary supplements and other
remedies in the United States. This includes the development
and marketing of dietary supplements under the TK Supplements®
brand, a wholly-owned subsidiary of the Company.
In August 2017, we formed a new, additional
wholly-owned subsidiary, ProPhase Digital Media, Inc., a Delaware
corporation (“PDM”). Our objective is for PDM to become an
independent full-service direct marketing agency. PDM’s first
initiative will be to market the TK Supplements® product
line. If successful, this may lead to the marketing of other
company’s consumer products.
In addition, the Company also continues to
actively pursue acquisition opportunities for other companies,
technologies and products inside and outside the consumer products
industry. For more information visit us at
www.ProPhaseLabs.com.
Forward Looking Statements
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®, our new product Legendz XL® and the formation
of ProPhase Digital Media 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.
Investor Contact
Ted Karkus, Chairman and CEO
ProPhase Labs, Inc.
(267) 880-1111
|
PROPHASE LABS, INC. &
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
OPERATIONS(in thousands, except per share
amounts) |
|
|
Year Ended December 31, |
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
Net sales |
$ |
9,867 |
|
|
$ |
4,206 |
|
Cost of sales |
|
7,919 |
|
|
|
3,209 |
|
Gross profit |
|
1,948 |
|
|
|
997 |
|
|
|
|
|
Operating
expenses: |
|
|
|
Sales and
marketing |
|
699 |
|
|
|
1,700 |
|
Administration |
|
4,808 |
|
|
|
2,733 |
|
Research and
development |
|
431 |
|
|
|
358 |
|
|
|
5,938 |
|
|
|
4,791 |
|
Interest income |
|
231 |
|
|
|
1 |
|
Interest expense |
|
(54 |
) |
|
|
(213 |
) |
Other income
(expense) |
|
150 |
|
|
|
Interest and other
income (expense), net |
|
327 |
|
|
|
(212 |
) |
|
|
|
|
Loss from continuing
operations before taxes |
|
(3,663 |
) |
|
|
(4,006 |
) |
|
|
|
|
Income tax benefit from
continuing operations |
|
17,990 |
|
|
|
- |
|
Income (loss) from
operations continuing operations |
|
14,327 |
|
|
|
(4,006 |
) |
|
|
|
|
Discontinued
operations: |
|
|
|
Income from
discontinued operations |
|
530 |
|
|
|
1,138 |
|
Gain on sale of
discontinued operations, net of taxes |
|
26,974 |
|
|
|
- |
|
Income (loss) from
discontinued operations |
|
27,504 |
|
|
|
1,138 |
|
|
|
|
|
Net income (loss) |
$ |
41,831 |
|
|
$ |
(2,868 |
) |
|
|
|
|
Other comprehensive
loss: |
|
|
|
Unrealized loss on
marketable securities |
|
(78 |
) |
|
|
- |
|
Total comprehensive
income (loss) |
$ |
41,753 |
|
|
$ |
(2,868 |
) |
|
|
|
|
Basic earnings (loss)
per share: |
|
|
|
Income (loss) from
continuing operations |
$ |
0.92 |
|
|
$ |
(0.24 |
) |
Income from
discontinued operations |
|
1.77 |
|
|
|
0.07 |
|
Net income
(loss) |
$ |
2.69 |
|
|
$ |
(0.17 |
) |
|
|
|
|
Diluted earnings (loss)
per share: |
|
|
|
Income (loss) from
continuing operations |
$ |
0.92 |
|
|
$ |
(0.24 |
) |
Income from
discontinued operations |
|
1.75 |
|
|
|
0.07 |
|
Net income
(loss) |
$ |
2.67 |
|
|
$ |
(0.17 |
) |
|
|
|
|
Weighted average
common |
|
|
|
shares
outstanding: |
|
|
|
Basic |
|
15,565 |
|
|
|
17,081 |
|
Diluted |
|
15,696 |
|
|
|
17,081 |
|
|
|
|
|
PROPHASE LABS, INC. &
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEET
DATA(in thousands) |
|
|
December 31, |
|
December 31, |
|
2017 |
|
2016 |
|
|
|
|
Cash and cash
equivalents |
$ |
3,173 |
|
$ |
441 |
Marketable securities,
available for sale |
$ |
18,765 |
|
$ |
- |
Accounts
receivable |
$ |
1,945 |
|
$ |
5,770 |
Inventory |
$ |
1,531 |
|
$ |
2,736 |
Total current
assets |
$ |
28,919 |
|
$ |
9,627 |
Total assets |
$ |
34,161 |
|
$ |
12,802 |
|
|
|
|
Total current
liabilities |
$ |
1,072 |
|
$ |
6,840 |
Total stockholders'
equity |
$ |
33,089 |
|
$ |
5,962 |
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