DOYLESTOWN, PA--(Marketwired - August 09, 2016) - ProPhase Labs, Inc. (NASDAQ: PRPH) (www.ProPhaseLabs.com) today reported its net sales were $2.8 million for the three months ended June 30, 2016 as compared to net sales of $2.2 million for the three months ended June 30, 2015. The Company incurred a net loss for the three months ended June 30, 2016, of $1.1 million, or ($0.06) per share, compared to a net loss of $1.6 million, or ($0.10) per share, for the three months ended June 30, 2015.
The Company's sales are derived principally from its over-the-counter ("OTC") health care and cold remedy products. As a consequence, a significant portion of our business is highly seasonal, which may cause significant variations in operating results from quarter to quarter. The category of cough and cold product sales, including our Cold-EEZE
Results for the second quarter of 2016 compared to the second quarter of 2015 principally reflect the net effect of (i) an increase in net sales of $656,000 principally due to an increase in contract manufacturing net sales of $630,000, which carry lower gross margins, (ii) a decrease of $329,000 in administration costs due principally to a decrease in legal and professional costs relating to litigation matters, (iii) a decrease in research and development expenditures of $103,000, offset by (iv) an increase in sales and marketing expenses of $59,000 and (v) an increase in interest expense of $53,000.
The Company generated net sales for the six months ended June 30, 2016 of $8.2 million, as compared to $8.1 million for the six months ended June 30, 2015. The Company incurred a net loss for the six months ended June 30, 2016 of $2.5 million, or ($0.14) per share, compared to a net loss of $2.9 million, or ($0.18) per share, for the six months ended June 30, 2015.
Results for the six months ended June 30, 2016 as compared to the six months ended June 30, 2015 principally reflect the net effect of (i) an increase in net sales of $166,000 principally due to an increase of $1.1 million in our contract manufacturing operations from non-related third party entities to produce lozenge-based products, which carry lower gross margins, and (ii) an increase in interest expense of $104,000, offset by (ii) a decrease in sales and marketing expense of $155,000, (iii) a decrease in administration costs of $811,000 relating to decrease in legal and professional costs relating to litigation matters and (iv) a decrease in research and development expenditures of $225,000.
The decrease in net sales of OTC health care and cold remedy products for the six months ended June 30, 2016 as compared to the six months ended June 30, 2015 was due to the timing of customer purchases, product mix shipped from period to period and lower consumer demand as a consequence of several factors including the decreased incidence and severity of upper respiratory illnesses, principally from January through March 2016 as compared to the prior year January through March 2015. According to IMS Health (a healthcare industry information provider), key industry statistics reveal that the incidence of upper respiratory illness across the country declined approximately 11% for the period January through March 2016 as compared to the prior year January through March 2015. The category of cough and cold product sales, including our Cold-EEZE
As previously announced, the Company will host a shareholder conference call on Wednesday, August 10, 2016 at 10:00 am to review our second quarter financial results.
Ted Karkus, the CEO of the Company, stated, "Our product development efforts have been largely focused on successfully leveraging the Cold-EEZE
Mr. Karkus continued, "In order to offset the seasonality of our current revenues and our dependence on the severity of the cold season, we have developed a new product line of over the counter dietary supplements, branded as "TK Supplements
Mr. Karkus also announced, "In addition to the financial results reported herein, management is initiating a process to explore and evaluate a wide range of strategic initiatives and alternatives to further enhance shareholder value. These include the possible sale of core assets of the Company as well as explore a range of potential acquisitions. The Company is working with Bourne Partners, a boutique investment bank focused on the consumer health and pharmaceutical industries, to assist in the strategic review. This process has been approved by the Board of Directors. There can be no assurance that this review process will result in any transactions or other strategic alternatives of any kind. The Company does not intend to disclose developments or provide updates on the progress or status of this process unless it deems further disclosure is appropriate or required."
(1) Generally, a cold season is defined as the period of September to March when the incidence of the common cold rises as a consequence of the change in weather and other factors.
About ProPhase Labs
ProPhase Labs is a diversified natural health medical science company. It is a leading marketer of the Cold-EEZE
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
ProPhase Labs, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Six Months Ended
---------------------------- ----------------------------
June 30, 2016 June 30, 2015 June 30, 2016 June 30, 2015
------------- ------------- ------------- -------------
Net sales $ 2,847 $ 2,191 $ 8,217 $ 8,051
Cost of sales 1,721 1,184 4,152 3,382
------------- ------------- ------------- -------------
Gross profit 1,126 1,007 4,065 4,669
------------- ------------- ------------- -------------
Operating
expenses:
Sales and
marketing 769 710 3,367 3,522
Administration 1,262 1,591 2,801 3,612
Research and
development 169 272 255 480
------------- ------------- ------------- -------------
2,200 2,573 6,423 7,614
------------- ------------- ------------- -------------
Loss from
operations (1,074) (1,566) (2,358) (2,945)
Interest income,
net (53) - (105) (1)
------------- ------------- ------------- -------------
Loss before
income tax (1,127) (1,566) (2,463) (2,946)
Income tax - - - -
------------- ------------- ------------- -------------
Net loss $ (1,127) $ (1,566) $ (2,463) $ (2,946)
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Basic and diluted
loss per share:
------------- ------------- ------------- -------------
Net loss $ (0.06) $ (0.10) $ (0.14) $ (0.18)
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Weighted average
common
shares
outstanding:
Basic and
diluted 17,081 16,020 17,081 15,956
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ProPhase Labs, Inc. and Subsidiaries
Condensed Consolidated Balance Sheet Data
(in thousands)
(unaudited)
June 30, December 31,
2016 2015
----------------------------
Cash and cash equivalents $ 1,149 $ 1,664
Accounts receivable $ 1,801 $ 4,000
Inventory $ 4,349 $ 4,331
Total current assets $ 8,480 $ 11,879
Total assets $ 11,544 $ 1,489
Total current liabilities $ 5,177 $ 4,534
Other long term obligations $ - $ 1,466
Total stockholders' equity $ 6,367 $ 8,829
Investor Contact
Ted Karkus
Chairman and CEO
ProPhase Labs, Inc.
(215) 345-0919 x 0
