Cover	Mar. 15, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Mar. 15, 2024
Entity File Number	000-21617
Entity Registrant Name	PROPHASE LABS, INC.
Entity Central Index Key	0000868278
Entity Tax Identification Number	23-2577138
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	711 Stewart Avenue
Entity Address, Address Line Two	Suite 200
Entity Address, City or Town	Garden City
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	11530
City Area Code	(215)
Local Phone Number	345-0919
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, par value $0.0005
Trading Symbol	PRPH
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false

Cover

Mar. 15, 2024

Cover [Abstract]

Document Type

8-K

Amendment Flag

false

Document Period End Date

Mar. 15, 2024

Entity File Number

000-21617

Entity Registrant Name

PROPHASE LABS, INC.

Entity Central Index Key

0000868278

Entity Tax Identification Number

23-2577138

Entity Incorporation, State or Country Code

Entity Address, Address Line One

711 Stewart Avenue

Entity Address, Address Line Two

Suite 200

Entity Address, City or Town

Garden City

Entity Address, State or Province

Entity Address, Postal Zip Code

11530

City Area Code

(215)

Local Phone Number

345-0919

Written Communications

false

Soliciting Material

false

Pre-commencement Tender Offer

false

Pre-commencement Issuer Tender Offer

false

Title of 12(b) Security

Common Stock, par value $0.0005

Trading Symbol

PRPH

Security Exchange Name

NASDAQ

Entity Emerging Growth Company

false

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

No.		Description

99.1		Press Release dated March 15, 2024

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

	ProPhase Labs, Inc.

	By:	/s/ Ted Karkus
		Ted Karkus
		Chairman of the Board and Chief Executive Officer

1.	Nebula Genomics has marked a milestone with the execution of an international revenue generating business-to-business (B2B) agreement with MenaDNA, Inc. This agreement presents the possibility for significant expansion of its global footprint and paves the way for prospective future revenue streams. Several additional and meaningful distribution arrangements, both domestically as well as internationally, are anticipated during the next few months, if not sooner, but cannot be assured.

2.	Our Pharmaloz Manufacturing subsidiary has significantly increased its production capabilities with the addition of new automation equipment and additional equipment to be installed in the coming months. With the recent acquisition of significant new customers, recent price increases and potential additional major deals on the near-term horizon, the Company is already experiencing a dramatic increase in both revenues and profits, which the Company expects to continue as the year progresses subject to market conditions and other factors.

3.	The BE-Smart Esophageal Cancer Test and the dietary supplement Equivir are both anticipated to be in commercialization in the coming months and may provide significant contributions to both the top and bottom line in the second half of 2024.

1)	Nebula Genomics

	●	Analyzes greater than 99% of human DNA compared to typical ancestry tests that analyze less than 1%.
	●	Has a world-class, proprietary bioinformatics platform to provide deep genetic health information, rare genetic mutations plus ancestry at highly competitive prices.
	●	Data protected by world-class cyber security.
	●	Signed a major international business to business agreement with MenaDNA, a large, well-placed distribution company that will enable us to grow our presence globally.
	●	On the verge of signing another major long-term international agreement that, if signed, could represent an initial $10-$20 million in annual revenues. Additional significant agreements are also currently in the final negotiation stages.
	●	Acquired a second high-capacity whole genome sequencing machine and are currently creating an optimized automated workflow to ensure high throughput low fail genomic sequencing runs.
	●	The second high-capacity machine brings our total low pass (1X WGS) throughput potential to over 2 million specimens per year equating to $150-$200+ million in potential revenue capacity.
	●	Hired several key industry veterans and streamlined existing clinical laboratory personnel.
	●	Began offering genetic counseling to our direct consumer customers.

Title of Each Class		Trading Symbol		Name of Each Exchange on Which Registered
Common Stock, par value $0.0005		PRPH		Nasdaq Capital Market

2)	Pharmaloz Manufacturing

	●	Generated revenues of just over $9 million in 2023. Due to better-than-expected efficiencies resulting from recently installed automation equipment, capacity estimates are increased from $30 million to now $45 million in revenues once the second lozenge line is installed entering Q3 2024. Capacity estimates are expected to increase from a range of $60-$80 million to $90-$100 million with estimated 20-25% pre-tax net profit margins once the third and fourth lozenge lines are installed in the first half of 2025.
	●	There is a significant shortage of lozenge manufacturing capacity in both the U.S. and globally. The Company is now in late-stage negotiations with four major lozenge brands. All are short manufacturing capacity and need a reliable FDA approved manufacturer.
	●	The Company estimates that to build a new manufacturing facility from scratch with the capacity that Pharmaloz will have next year might cost $100+ million and take 5+ years to complete with FDA approvals. And of course, this would not include customers.
	●	Recently announced the signing of two significant deals representing over $5 million in additional revenues per year. Manufacturing has already begun for the first of these deals. Both deals could expand significantly in the future.
	●	Engineering completed the design of phase 1 and phase 2 plans to take the plant from 1 lozenge line to a potential of up to 7 operational lines within the next four years and a potential of over $250 million in annual capacity.
	●	New liquid fill equipment ahead of schedule for delivery in Q2 allowing for new higher margin business lines.
	●	Existing customers accepted an average increase of 15.2% for production beginning in 2024.
	●	Passed the 3-year FDA audit with no citations.

3)	BE-Smart Esophageal Cancer Test

	●	Completed additional samples which are currently being analyzed by Stat King, a division of Genesis Drug Discovery and Development, in order to further validate the 90%+ sensitivity and specificity of the BE-Smart Esophageal Cancer test.
	●	Commercialization discussions continue with multiple potential global partners.
	●	Company on track to commercialize BE-Smart in the second half of 2024.
	●	Development on track with goal to receive Current Procedural Terminology (“CPT”) codes in mid- 2024 for insurance reimbursement.
	●	Working in collaboration with CDx Diagnostics to analyze multiple samples from individual patients in order to continue to perfect the multistage prediction algorithm.
	●	Working in conjunction with multiple groups to fully develop the ‘advanced traffic light’ approach of green, yellow, orange, and red to assess distinct levels of cancer risk, leading to optimized treatment approaches. This approach may lead to insurance companies mandating the use of the BE-Smart test for endoscopies performed on Barrett’s Esophagus patients.
	●	On track to assess RNA Seq data confirming the presence of the 8 major proteins discovered by the BE-Smart cancer test that are patent protected. Also, in the process of confirming the lack of meaningful expression of other proteins currently used as the gold standard. Ultimately, this will further support BE-Smart’s potential advantage vs. all existing competing technologies.

4)	Equivir

	●	Completed enrollment of over 329 patients with last patient starting at the beginning of the 2024.
	●	Released impressive interim results from 152 patients at the 90-day mark.
	●	Out of the total number of upper respiratory incidents, 68% were in the placebo group vs only 32% in the Equivir group.
	●	Initial data was better than initially expected with the full data set anticipated to be available by the end of June 2024.
	●	Pharmaloz is planning to ramp up production of the Equivir capsules with a second half 2024 launch timeframe.
	●	Currently working with our distribution partner to leverage distribution in over 40,000 food, drug and mass retail stores.

5)	Other financial highlights

	●	Q4 2023 secured a low interest rate mortgage on the Pharmaloz plant.
	Subsequent to year-end 2023:
	●	Realized over $3.6 million on the partial sale of an investment.
	●	Raised over $2.5 million by securitizing a small portion of outstanding receivables.
	●	Increased monthly accounts receivable collections with current collection partner.

	December 31, 2023		December 31, 2022
ASSETS
Current assets
Cash and cash equivalents	$	1,609	$	9,109
Restricted cash		540		—
Marketable securities, available for sale		3,127		8,328
Accounts receivable, net		36,313		37,054
Inventory, net		3,841		3,976
Prepaid expenses and other current assets		2,155		2,366
Total current assets		47,585		60,833

Property, plant and equipment, net		12,898		7,288
Prepaid expenses, net of current portion		832		121
Operating lease right-of-use asset, net		4,572		4,059
Intangible assets, net		12,333		8,475
Goodwill		5,231		5,709
Deferred tax asset		7,313		—
Other assets		1,163		1,163
TOTAL ASSETS	$	91,927	$	87,648

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	9,383	$	5,905
Accrued diagnostic services		314		1,009
Accrued advertising and other allowances		24		99
Finance lease liabilities		1,840		—
Operating lease liabilities		953		301
Deferred revenue		2,382		2,499
Income tax payable		3,278		4,190
Other current liabilities		2,683		2,072
Total current liabilities		20,857		16,075

	December 31, 2023			December 31, 2022

Non-current liabilities:
Long-term debt, net of discount of $341	$	2,924		$	—
Unsecured convertible promissory notes, net		—			2,400
Unsecured promissory notes, net of discount of $266 and $0		7,334			—
Due to sellers (see Note 3)		2,000			—
Deferred revenue, net of current portion		1,100			1,059
Deferred tax liability, net		—			224
Finance lease liabilities, net of current portion		4,092			—
Operating lease liabilities, net of current portion		4,237			4,259
Total non-current liabilities		21,687			7,942
Total liabilities		42,544			24,017

COMMITMENTS AND CONTINGENCIES

Stockholders’ equity
Preferred stock authorized 1,000,000, $0.0005 par value, no shares issued and outstanding		—			—
Common stock authorized 50,000,000, $0.0005 par value, 18,045,029 and 16,210,776 shares outstanding, respectively		18			16
Additional paid-in capital		118,694			109,138
Retained earnings (accumulated deficit)		(5,029	)		11,753
Treasury stock, at cost, 18,940,967 and 18,126,790 shares, respectively		(64,000	)		(58,033	)
Accumulated other comprehensive loss		(300	)		757
Total stockholders’ equity		49,383			63,631
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	91,927		$	87,648

	For the years ended
	December 31, 2023			December 31, 2022
Revenues, net	$	45,236		$	122,647
Cost of revenues		28,997			51,993
Gross profit		16,239			70,654

Operating expenses:
Diagnostic expenses		1,932			12,022
General and administration		34,502			34,385
Research and development		1,418			652
Total operating expenses		37,852			47,059
(Loss) income from operations		(21,613	)		23,595

Interest income, net		78			153
Interest expense		(1,275	)		(764	)
Change in fair value of investment securities		—			(76	)
Other income		10			—
(Loss) income from operations before income taxes		(22,800	)		22,908
Income tax benefit (expense)		6,018			(4,445	)
Loss (income) from operations after income taxes	$	(16,782	)	$	18,463

Other comprehensive (loss) income:
Unrealized (loss) income on marketable securities		(1,057	)		932
Total comprehensive (loss) income	$	(17,839	)	$	19,395

Earnings (loss) per share:
Basic	$	(0.98	)	$	1.17
Diluted	$	(0.98	)	$	1.02

Weighted average common shares outstanding:
Basic		17,207			15,845
Diluted		17,207			18,651

	For the years ended
(unaudited)	December 31, 2023			December 31, 2022
GAAP net income ⁽¹⁾	$	(16,782	)	$	18,463
Interest, net		1,197			611
Income Tax Expense (Benefit)		(6,018	)		4,445
Depreciation and amortization		6,277			4,718
EBITDA		(15,326	)		28,237
Share-based compensation expense		4,560			3,986
Non-cash rent expense ⁽²⁾		117			236
Bad debt expense		91			6,163
Adjusted EBITDA	$	(10,558	)	$	38,622

⁽¹⁾	We believe that net income is the financial measure calculated and presented in accordance with GAAP that is most directly comparable to EBITDA and Adjusted EBITDA. EBITDA and Adjusted EBITDA measure the Company’s operating performance without regard to certain expenses. EBITDA and Adjusted EBITDA are not presentations made in accordance with GAAP and the Company’s computation of EBITDA and Adjusted EBITDA may vary from others in the industry. EBITDA and Adjusted EBITDA have important limitations as analytical tools and should not be considered in isolation or as substitutes for analysis of the Company’s results as reported under GAAP.

⁽²⁾	The non-cash portion of rent, which reflects the extent to which our GAAP rent expense recognized exceeds (or is less than) our cash rent payments. For newer leases, our rent expense recognized typically exceeds our cash rent payments, while for more mature leases, rent expense recognized is typically less than our cash rent payments.