Full Press Release Details
DOYLESTOWN, PA--(Marketwire - May 13, 2011) - ProPhase Labs (NASDAQ: PRPH)
www.ProPhaseLabs.com today reported net sales of $3.2 million for the three
months ended March 31, 2011, compared to net sales of $2.0 million for the
three months ended March 31, 2010.
The Company incurred a net loss for the three months ended March 31, 2011,
of $1.0 million, or ($0.07) per share, compared to a net loss of $1.1
million, or ($0.08) per share, for the three months ended March 31, 2010.
Results for the first quarter of 2011 compared to the first quarter of 2010
primarily reflect (i) an increase in net sales of $1.2 million, (ii) an
increase in sales and marketing expenditures of $821,000 and (iii) an
increase in research and development costs of $131,000.
Net sales increased for the first quarter 2011 as compared to the first
quarter 2010 due principally to an increase in shipments to retailers from
period to period. Data from SDI Health suggests that the highest
incidence of upper respiratory disorders for the 2010-2011 Cold Season
occurred principally from December 2010 to February 2011 as compared to the
2009-2010 Cold Season when such incidences occurred principally from
October 2009 to December 2009. As a consequence, the timing, stocking and
ultimate level of demand in retailer purchases of ProPhase Labs' products
was affected by the change in the timing and the comparative severity of
the respective cold season, as well as the effects of the Company's
expanded marketing efforts to increase consumer awareness and to influence
purchase decisions. The increase in the Company's sales and marketing
expenditures for first quarter 2011 compared to the first quarter 2010
principally was due to an increase in traditional media purchases in print,
digital, out-of-home and television as the Company strategically expanded
its marketing and promotional program investment principally for its
flagship Cold-EEZE® brand.
Ted Karkus, ProPhase Labs' Chairman and CEO, said, "As I noted in our
year-end report to shareholders, we accomplished several major initiatives
in Fiscal 2010, including; a significant restructuring of our staff, new
and improved flavors, packaging and marketing of our flagship Cold-EEZE®
brand, the restructuring and repositioning of our Kids-EEZE® brand at a
significant but unavoidable cost, and we improved our relationships with
"Now, after a 5 year downtrend in sales and profitability, we are
optimistic that these initiatives better position ProPhase to realize a
reversal in trend and increase revenues in Fiscal 2011. Our goal is to
build the Cold-EEZE® brand and improve and expand our distribution
platform for the long term. Consistent with these goals, our plan is to
leverage the Cold-EEZE® brand with new products as opposed to new flavors.
To this end, we recently introduced to our retailers a new Cold-EEZE® Oral
Spray, an oral delivery application of our proprietary cold remedy formula
of zinc gluconate glycine. The initial retailer response has been strong,
thereby validating our efforts to improve our relationships with them. We
hope this will lead to solid nation-wide product placement on store shelves
when we introduce our Oral Spray to consumers, as we implement our product
launch in the fall of 2011. Our goal for our Oral Spray and improved
Kids-EEZE® products is to provide revenue growth in the second half of
this year," Mr. Karkus said.
"Our plan for Fiscal 2011 is to create opportunities for revenue growth and
increase both consumer and retailer awareness and acceptance of our core
brands. This will require significant investment in sales and marketing at
the expense of short-term profitability. Long-term, we believe that this
strategy will provide the greatest opportunity for future shareholder
value," Mr. Karkus added.
ProPhase Labs is a diversified natural health medical science company. It
is a leading marketer and manufacturer of the Cold-EEZE® cold remedy
family of lozenges clinically proven to significantly reduce the severity
and duration of the common cold. Cold-EEZE® customers include leading
national retailers, chain food, drug and mass merchandise stores,
wholesalers and distributors, as well as independent pharmacies. ProPhase
Labs has several wholly owned subsidiaries including a manufacturing unit,
which consists of an FDA registered facility to manufacture Cold-EEZE®
lozenges and fulfill other contract manufacturing opportunities. ProPhase
also owns 50% of Phusion Laboratories, LLC ("Phusion"). Phusion licenses a
revolutionary proprietary technology that has the potential to improve the
delivery and/or efficacy of many active ingredients or compounds. Phusion
will formulate and test products to exploit market opportunities within
ProPhase's robust over-the-counter distribution channels. For more
information visit us at www.ProPhaseLabs.com.
Forward-Looking Statements
Certain statements in this press release are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995
and involve known and unknown risk, uncertainties and other factors that
may cause the Company's actual performance or achievements to be materially
different from the results, performance or achievements expressed or
implied by the forward-looking statement. Factors that impact such
forward-looking statements include, among others, changes in worldwide
general economic conditions; government regulations; the ability of our new
management to successfully implement our business plan and strategy; our
ability to fund our operations including the cost and availability of
capital and credit; our ability to compete effectively including our
ability to maintain and increase our market share in the markets in which
we do business; and our dependence on sales from our main product,
Cold-EEZE®, and our ability to successfully develop and commercialize new
ProPhase Labs, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
--------------------
Net sales $ 3,166 $ 1,976
Cost of sales 1,172 806
Gross profit 1,994 1,170
Sales and marketing 1,555 734
Administration 1,245 1,412
Research and development 219 88
Loss from operations (1,025) (1,064)
Interest and other income 12 2
Loss from operations before income taxes (1,013) (1,062)
Income tax (benefit) - -
Net loss $ (1,013) $ (1,062)