ProPhase Labs, Inc. reported a significant decline in financial performance for the fiscal year ending December 31, 2024, with net revenue dropping to $6.8 million, an 80.6% decrease from $35.0 million in 2023. This decline was primarily attributed to a complete cessation of diagnostic services, which had previously generated $24.8 million in revenue, as demand for COVID-19 testing plummeted. The company also experienced a decrease in consumer product revenue, which fell by $3.4 million. The gross loss for the year was $0.2 million, compared to a gross profit of $15.6 million in the prior year, reflecting a gross margin of -2.2% versus 44.5% in 2023.
In terms of operational changes, ProPhase Labs has undergone a strategic shift, selling its contract manufacturing subsidiary, Pharmaloz Manufacturing, Inc. (PMI), to JL Projects, Inc. for $2 million in cash and the extinguishment of approximately $10 million in debt. This sale, completed on January 16, 2025, has been classified as a discontinued operation, impacting the company's financial results for 2024. The company is now focusing on its genomics and biopharmaceutical segments, including the development of the BE-Smart Esophageal Pre-Cancer diagnostic test and the Linebacker portfolio of cancer therapies.
The company’s workforce consisted of 96 full-time employees as of December 31, 2024, a reduction from previous years, reflecting the downsizing associated with the sale of PMI. ProPhase Labs is also facing challenges in its accounts receivable, with approximately $20.1 million outstanding, primarily from government agencies and healthcare insurers. The company has established a significant allowance for credit losses, which increased to $14.8 million in 2024, indicating ongoing difficulties in collecting payments.
Looking ahead, ProPhase Labs anticipates continued financial challenges, projecting further losses as it invests in research and development for its product candidates. The company has indicated that it will need to secure additional funding to support its operations and growth initiatives, particularly in the genomics and biopharmaceutical sectors. The management has expressed confidence in its ability to navigate these challenges, but acknowledges the inherent uncertainties in achieving profitability and sustaining operations without significant capital influx.
About ProPhase Labs, Inc.
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