Pharmaloz Announced Final Contract Negotiations With Major Lozenge Brand; New Partnership Could Add $35M Annually To Revenue By Late 2025, Bringing Total Revenue To $50M With Projected Net Earnings Of $8M-$10M In 2026; Targets $6M Annual Savings Through Non-Core Operations Cost-Cutting Without Affecting Core Units

The Company will review on Thursday, December 12th, at 12:00 p.m. EST.

GARDEN CITY, NY, Dec. 11, 2024 (GLOBE NEWSWIRE) -- ProPhase Labs, Inc. (NASDAQ:PRPH) ("ProPhase" or the "Company"), a next-generation biotech, genomics, and diagnostics company, today provided updates on several key initiatives.

Securing Low-Interest Rate Financing from a Global Private Equity Fund

ProPhase has secured an agreement with a billion-dollar global private equity fund, providing flexible, low-interest rate debt financing as needed. Based on the current operating plans and financial forecasts, the Company believes that the aforementioned debt financing arrangement will eliminate the necessity for future equity financing in the near term and provides the Company with the strategic freedom to focus on and grow its core businesses until a meaningful liquidity event occurs and/or until the Company achieves profitability. Additionally, ProPhase will explore opportunities with the fund to distribute its ProPhase TK supplements—Legendz XL, Legendz Triple Edge, and the forthcoming Equivir—throughout Asia. Equivir is a clinically tested dietary supplement that serves as an immune booster, both prophylactically and therapeutically.

Pharmaloz Capacity Expansion and Major New Contract

The Company is entering the final phase of contract negotiations with a major lozenge brand. This partnership would fully utilize Pharmaloz's forthcoming high-tech production line #2, set to be one of North America's most advanced lines, offering enhanced automation, efficiency, and energy savings. For Line #1, the Company currently estimates a 12-month forward-looking run rate of $15+ million in revenues and a projected $5+ million in net earnings at Pharmaloz. The new contract, if consummated, would add up to $35 million in additional revenues annually. By late 2025, assuming full utilization of production lines #1 and #2, annualized revenue run-rates may approach $50 million, with projected net earnings of between $8 and $10 million entering 2026.

Strategic Executive Hiring

To support these Pharmaloz growth initiatives, ProPhase has hired Jay Schwartz, a 30-year veteran in the consumer health sector. Mr. Schwartz will play a key role in finalizing the large lozenge contract, overseeing the installation of line #2, and preparing it for full-scale utilization. Furthermore, he will assist the Company as we actively pursue strategic alternatives including a potential sale of Pharmaloz.

Implementing Significant Cost Reductions

ProPhase is finalizing a comprehensive set of cost-saving measures targeting its non-core operations. These efforts are expected to reduce operating expenses by at least $6 million per year without impacting core business units. These cost efficiencies will enable the Company to sharpen its focus on its key subsidiaries. Combined with anticipated revenue and earnings growth at Pharmaloz, and the ramp up of DNA Complete, DNA Expand and ProPhase Supplements, the Company is poised for substantial operational improvements in 2025.

Executive Perspective

"The partnership with this global private equity fund should secure, low-interest rate financing at our disposal, with the goal of eliminating discounted equity offerings in the near-term," said Ted Karkus, CEO of ProPhase Labs. "This capital access provides the foundation we need as we finalize a transformative lozenge contract growing revenues just at Pharmaloz from an estimated $15+ million run rate for 2025 to potentially $50 million for 2026. Hiring Jay Schwartz is just the first step in strengthening our management team to handle the increased scale and profitability. Finally, as we implement our significant cost-saving measures in the coming weeks, we are ensuring the Company's operational alignment for robust performance for not only Pharmaloz but for the entire Company in 2025 and in the years ahead."

The Company will present in the live Virtual Non-Deal Roadshow Series hosted by Renmark Financial Communications Inc. Ted Karkus, Chairman & Chief Executive Officer, will present on Thursday, December 12th, at 12:00 p.m. EST.