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ProPhase Labs, Inc. (PRPH)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue fell 39% YoY to $1.43M as consumer products declined, but gross margin improved to 36.8% from (2.5)% on mix and cost actions; loss from continuing ops narrowed to $(4.68)M with diluted EPS (cont.) of $(0.13) vs $(0.32) YoY .
  • Against S&P Global consensus, PRPH missed revenue ($1.43M vs $2.45M*) and moderately beat EPS from continuing ops (−$0.12 actual vs −$0.18* est.); only one estimate was available for each metric (low coverage)*. Values retrieved from S&P Global.
  • Portfolio actions reduced fixed costs: sold Pharmaloz for ~$23.6M (debt and payables largely extinguished), shut the genomics lab, cut headcount from 96 to 25; stockholders’ equity rose to $15.1M by 3/31/25 from $7.4M at 12/31/24 .
  • Liquidity catalysts management emphasized: potential Nebula Genomics sale LOIs “within weeks” and Crown Medical Collections pursuing ~$50M net in H2’25; BE‑Smart test submitted for peer review with commercialization targeted as an LDT later in 2025 .

What Went Well and What Went Wrong

  • What Went Well

    • Gross margin turned positive (36.8%) vs (2.5)% YoY; consumer products GM rose to 53.0% from 28.0% on lower overhead and mix .
    • Balance sheet/overhead reset: Pharmaloz sale (~$23.6M) eliminated >$20M in obligations; headcount reduced to 25, and G&A fell to $4.1M from $7.3M YoY .
    • Strategic pipeline momentum: BE‑Smart study submitted for peer review; FDA’s LDT rule vacatur expected to accelerate commercialization; CEO: “next few months could be a turning point” .

  • What Went Wrong

    • Revenue underperformed YoY and missed consensus ($1.43M vs $2.45M*), with no diagnostic revenue contribution; revenue decline driven by consumer products . Values retrieved from S&P Global.
    • Cash was tight at quarter‑end ($0.09M); operating cash use from continuing ops was $(3.98)M in Q1; interest expense remained elevated at $0.54M .
    • Execution risks remain around monetization timelines (Nebula sale window “3–4 months” and Crown collections “within months”) and around BE‑Smart uptake pending peer‑review publication and early commercial traction .

Financial Results

Quarterly trend (oldest → newest)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($M)3.15 N/A (not separately disclosed)1.43
Gross Profit (Loss) ($M)(0.17) N/A0.53
Gross Margin %(5.2)% N/A36.8%
Loss from Operations ($M)(7.94) N/A(3.66)
EPS – Continuing Ops (Diluted)N/AN/A$(0.13)
Net EPS (Diluted)$(0.35) N/A$0.11 (includes discontinued operations gain)
Adjusted EBITDA ($M)N/AN/A(1.61)

YoY comparison (Q1 2025 vs Q1 2024)

MetricQ1 2024Q1 2025
Revenue ($M)2.36 1.43
Gross Profit ($M)(0.06) 0.53
Gross Margin %(2.5)% 36.8%
G&A Expense ($M)7.30 4.09
R&D Expense ($M)0.27 0.10
Loss from Operations ($M)(7.63) (3.66)
EPS – Continuing Ops (Diluted)$(0.32) $(0.13)
Net EPS (Diluted)$(0.36) $0.11
Adjusted EBITDA ($M)(4.29) (1.61)

Actual vs S&P Global consensus (Q1 2025)

MetricActualConsensusSurprise
Revenue ($M)1.4312.450*(1.019)
Primary EPS (Continuing Ops)(0.121)(0.180)*+0.059
  • Coverage count: Revenue estimates: 1; EPS estimates: 1*. Values retrieved from S&P Global.

Segment breakdown

SegmentQ1 2024 Revenue ($M)Q1 2024 GM %Q1 2025 Revenue ($M)Q1 2025 GM %
Diagnostic Services0.00 N/A 0.00 N/A
Consumer Products2.36 28.0% 1.43 53.0%
Total2.36 (2.5)% 1.43 36.8%

KPIs and balance sheet snapshots

KPI12/31/20243/31/2025
Headcount (FT)96 25
Cash & Equivalents ($M)0.68 0.09
Working Capital ($M)(1.50) 0.72
Stockholders’ Equity ($M)7.35 15.12
Short‑term Loan, net ($M)3.21 2.45

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
BE‑Smart commercialization pathway2025Cash‑pay LDT launch contemplated while CPT pursued Study submitted for peer review; launch “later this year” as LDT; FDA LDT vacatur seen accelerating access Qualitative update (timing affirmed)
Crown Medical net collectionsH2 2025~$50M net estimate ~$50M net estimate; potential early cash flows “within months” Maintained estimate; timing refined
Nebula Genomics process2025Exploring strategic alternatives LOIs could be forthcoming “within weeks”; sale in 3–4 months possible Process advancing
Nasdaq complianceThrough late Jun 2025Not previously specifiedIn compliance other than price; expects 6‑month extension at period end Qualitative update

Note: Company did not issue quantitative revenue/EPS/EBITDA guidance.

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3’24 and Q4’24)Current Period (Q1’25)Trend
Cost reset/overheadDiscussed plan to cut ~$6M annual costs and streamline ops Pharmaloz sale, lab shutdown, IT cuts, headcount 96→25 executed Improving cost discipline
BE‑Smart (esophageal test)Advancing validation, partnership talks initiated Paper submitted; LDT path bolstered by FDA LDT vacatur; commercialization “later this year” Toward commercialization
Crown Medical collectionsLitigation‑driven recovery strategy outlined ~$50M net targeted; early settlements possible; debtor‑in‑possession financing option considered Execution phase
Nebula/DNA CompleteD2C refocus; lab shut; subscription model; database value emphasized ThinkEquity engaged; LOIs “within weeks” possible; 3–4 month sale window cited Sale process advancing
Capital structure/NasdaqSought non‑dilutive financing; expects Nasdaq extension; avoid reverse split if catalysts land Reiterated extension expectation; prefers debt bridge vs equity Managing listing risk
Equivir (supplement)Trial nearing final analysis; next season launch aim Awaiting final CRO stats; targeting next cough/cold season Timing extended

Management Commentary

  • “We’ve taken bold steps to streamline operations, reduce overhead and align our resources with opportunities that we believe have real value… the next few months could be a turning point as we move closer to several major milestones.” — Ted Karkus, CEO .
  • On BE‑Smart: “The very first patient being tested… on a commercial basis, I absolutely anticipate that being later this year… We will not build a big sales force; we’ll leverage existing networks so it’s a profit center.” .
  • On Nebula: “We already did our first due diligence call… possible within weeks we could have our first LOIs… we really could sell this in 3 to 4 months.” .
  • On Crown Medical: “There may be settlements coming in the next 1 to 2 months… once it starts to flow, it’s going to flow significantly.” .

Q&A Highlights

  • BE‑Smart timing and go‑to‑market: Commercial first tests targeted later in 2025; partner‑driven distribution to avoid heavy fixed costs .
  • Collections cadence: Early settlements could precede formal court process; collections may begin within months; DIP financing being explored to bridge to recoveries .
  • Nebula optionality: Parallel track to sell (LOIs possible within weeks) while operating near breakeven with subscription renewals .
  • Nasdaq extension: Company reiterated expectation of the 6‑month extension; remains compliant except price .
  • Financing approach: Preference for debt bridge vs equity given anticipated liquidity events; management compensation deferrals align with shareholders .

Estimates Context

  • Consensus breadth was limited (single‑analyst coverage). Q1 2025 revenue missed ($1.43M vs $2.45M*), while EPS from continuing operations was better than feared (−$0.12 actual vs −$0.18*). Values retrieved from S&P Global.
  • With cost reductions and discontinued operations gain, net EPS printed +$0.11, but core continuing losses and interest costs persist, suggesting estimates may need to move down on revenue but could improve on margins/opex following the structural resets .

Key Takeaways for Investors

  • Core opex reset is real: YoY G&A down ~$3.2M; consumer margin expansion to 53% demonstrates operating leverage when volume returns .
  • Near‑term catalysts are binary and timing‑sensitive: Crown collections and Nebula LOIs could transform liquidity; delays would keep financing risk elevated .
  • BE‑Smart is the medium‑term value driver: peer‑review publication plus LDT launch later this year offer a clear validation path and early revenue option with limited fixed cost .
  • Balance sheet improved, but cash remains tight: Equity rose to $15.1M, yet cash was $0.09M at 3/31; watch for bridge financing mechanics and any debtor‑in‑possession facility tied to collections .
  • Estimate framework: Lower top‑line near term (no diagnostics) vs consensus, but improving operating losses and adjusted EBITDA from cost cuts could support better-than-feared EPS trajectories absent revenue inflection .
  • Stock reaction catalysts: (1) First Crown settlements; (2) Nebula LOI/signing; (3) BE‑Smart publication and first commercial tests; (4) confirmation of Nasdaq extension .

Footnote on estimates: *Values retrieved from S&P Global.