ProPhase Labs, Inc. (NASDAQ: PRPH) (“ProPhase” or the “Company”), a
next-generation biotech, genomics, and diagnostics company, today
reported its financial and operational results for the three months
ended September 30, 2024. The Company also highlighted substantial
progress in its ongoing strategic initiatives, which are expected
to drive significant revenue growth and potentially significant
liquidity events in the upcoming quarters.
Key Highlights:
Pharmaloz Manufacturing projects $15+ million
revenues and $5+ million pre-tax earnings over next 12 months not
including potential contribution from second manufacturing
line.
Developing a potential strategy before year-end
to eliminate approximately $6 million per year in overhead and
expenses in 2025 to focus on core assets and initiatives.
Company Initiates BE-Smart Esophageal Cancer
Test Strategic Partnership Discussions
DNA Complete and DNA Expand successfully launch;
Anticipates Strong Holiday Gift Giving Season
Equivir major clinical study results due shortly
with anticipated launch around year-end.
Pharmaloz Manufacturing:
- Hired ThinkEquity investment bank
to explore strategic alternatives including a potential sale of
Pharmaloz Manufacturing.
- The Company estimates $15 million+
in revenues over the next 12 months starting in Q4 2024. This does
not include any contribution from the planned second lozenge
manufacturing line.
- In late-stage discussions with a
major lozenge brand to enter a long-term contract to take over the
entire capacity of the planned second lozenge manufacturing line.
The Company estimates that this long term contract would add an
additional $20-$25 million of revenues in its first full year of
production and have the potential to grow further over time.
- Signed two top-tier lozenge brands,
which we expect to add approximately $5million in annualized
revenues with strong profit margins.
- Also, in discussions to add several
additional lozenge brands.
- Starting in January 2025, a large
new customer is expected to start production of a non-seasonal
lozenge, improving off-season business.
- Lozenge manufacturing line #2 is
built and is ready to be delivered.
- Lozenge line #3 planned for H2
2025, which would increase capacity significantly.
- The new lines are highly automated,
include key dry feed systems, require less labor and are therefore
expected to deliver both increased revenues and improved
margins.
BE-Smart Esophageal Cancer
Test:
- The Company has initiated strategic
partnership discussions with two multi-billion-dollar cancer
diagnostic testing companies in collaboration with Forward
Healthcare Consultants (FHC).
- Also working with FHC to secure
market access, insurance reimbursement and engage physician
networks.
- Received additional samples from
Mayo Clinic for expanded data analysis.
- Pursuing validation through additional studies and
peer-reviewed publications.
DNA Complete and DNA
Expand:
- Launched with a comprehensive
marketing campaign led by industry experts.
- Offers advanced genetic analysis,
competitive pricing, and faster turnaround times.
- Introduced subscription services,
enhancing customer engagement and creating opportunities to
generate high-margin revenue.
- Prioritizes data security with
world-class cybersecurity measures.
Equivir Clinical Trial:
- Trial completed; final statistical
analysis expected by end of November.
- Preliminary review of final data is
encouraging, supporting key claims for future sales.
- Preparing a peer-reviewed paper
detailing trial results, expected by end of Q4.
- Positioned as a pioneering,
sugar-free supplement with clinical evidence supporting efficacy as
both a therapeutic (shortening both duration and severity of
symptoms) and as a prophylactic enhancing immunity against upper
respiratory infections.
- Anticipating strong retail
interest, leveraging the extensive marketing platforms of DNA
Complete.
Financial Outlook:
ProPhase anticipates significant sequential
improvement in revenues and EBITDA in Q4 2024, and beyond, driven
by strategic advancements across its subsidiaries. The company
remains financially strong, with $3.1 million in cash and cash
equivalents as of November 12, 2024, and an improved working
capital position from the quarter end.
CEO Commentary:
Ted Karkus, ProPhase Labs' Chief Executive
Officer, commented:
"Q3 2024 showcased the significant potential of
our subsidiaries. Pharmaloz has a tremendous short-term and
long-term outlook for growth and potential sale. BE-Smart has the
potential to one day achieve a $1+ billion valuation. The
probability of achieving this potential is further heightened by
the collaboration with Forward Healthcare Consultants. This could
include a significant partnership with a major cancer diagnostic
testing company in the coming months. The successful launch of DNA
Complete and DNA Expand is the result of dedicated efforts by our
leadership and consultants, notably Jason Karkus and Stu
Hollenshead, and we look forward to a strong holiday season. And
the beauty of DNA Expand is that it will include a subscription and
does not require additional lab sequencing. The margins on this
initiative should be quite significant. And finally, Equivir is to
follow just a couple of months after the launch of our DNA family
of products. Given our historical success in building and selling
the Cold-EEZE brand for $50 million, we believe that Equivir has
even greater potential.
Our strategic moves position us well for
substantial growth in Q4 2024 and beyond. Given the new growth and
profitability at Pharmaloz, the recent launch of DNA Complete and
DNA Expand, and the soon to launch Equivir, when combined with
potential and significant reductions in overhead and expenses
before year-end, our outlook for 2025 is exciting to say the least.
As always, we remain focused on maximizing shareholder value
through disciplined execution and strategic expansion."
Third Quarter 2024 Financial
Results
Three Months Ended September 30,
2024 as Compared to the Three Months Ended September 30,
2023
For the three months ended September 30,
2024, net revenue was $3.1 million as compared to $8.4 million for
the three months ended September 30, 2023. The decrease in net
revenue was the result of a $2.5 million decrease in net
revenue from diagnostic services, and a $2.7 million decrease in
consumer products. The decrease in net revenue for diagnostic
services was due to decreased COVID-19 testing volumes compared to
the 2023 period. Overall diagnostic testing volume decreased from
13,000 tests in the three months ended September 30, 2023 to
zero tests in the three months ended September 30, 2024. None
of the tests during the three months ended June 30, 2023 were
reimbursed by the HRSA uninsured program.
Cost of revenues for the three months ended
September 30, 2024 were $3.3 million, comprised of $0.5
million for diagnostic services and $2.8 million for consumer
products. Cost of revenues for the three months ended
September 30, 2023 were $6.0 million, comprised of $1.8
million for diagnostic services and $4.2 million for consumer
products.
We realized a gross margin loss of $0.2 million
for the three months ended September 30, 2024 as compared to a
gross margin profit of $2.3 million for the three months ended
September 30, 2023. The decrease of $2.5 million was comprised
of a decrease of $1.2 million in diagnostic services, and a
decrease of $1.3 million in consumer products. For the three months
ended September 30, 2024 and 2023, we realized an overall
gross margin of (5.2)% and 27.8%, respectively. Gross margin for
diagnostic services was zero or not applicable due to no revenue
and 27.8% in the 2024 and 2023 comparable periods, respectively.
Gross margin for consumer products was 10.7% and 27.8% in the 2024
and 2023 comparable periods, respectively. Gross margin for
consumer products have historically been influenced by fluctuations
in quarter-to-quarter production volume, fixed production costs and
related overhead absorption, raw ingredient costs, inventory mark
to market write-downs and timing of shipments to customers.
Diagnostic services costs for the three months
ended September 30, 2024 were zero compared to $0.1 million
for the three months ended September 30, 2023. The decrease in
diagnostic service costs of $0.1 million for the three months ended
September 30, 2024 as compared to the three months ended
September 30, 2023 was due to decreased COVID-19 testing
volumes in 2024 compared to the 2023 period.
General and administration expenses for the
three months ended September 30, 2024 were $7.7 million as
compared to $8.2 million for the three months ended
September 30, 2023. The decrease in general and administration
expenses of $0.6 million for the three months ended
September 30, 2024 as compared to the three months ended
September 30, 2023 was principally related to a decrease in
personnel expenses and professional fees associated with our
diagnostic services business.
Research and development costs for the three
months ended September 30, 2024 were $122,000 as compared to
$428,000 for the three months ended September 30, 2023. The
decrease in research and development costs of $306,000 for the
three months ended September 30, 2024 as compared to the three
months ended September 30, 2023 was principally due to
decreased activities related to product research and field testing
as a result of refined focus and efforts.
As a result of the effects described above, net
loss for the three months ended September 30, 2024 was $6.6
million, or $(0.35) per share, as compared to net loss of $5.1
million, or $(0.30) per share, for the three months ended
September 30, 2023. Diluted loss per share for the three
months ended September 30, 2024 and 2023 were $(0.35) per
share and $(0.30) per share, respectively.
Our aggregate cash and cash equivalents as of
September 30, 2024 were $1.1 million as compared to $2.1
million at December 31, 2023. Our working capital was
$13.5 million and $26.7 million as of September 30,
2024 and December 31, 2023, respectively. The decrease of
$1.1 million in our cash and cash equivalents for the nine
months ended September 30, 2024 was principally due to $14.0
million cash used in operating activities, capital expenditures of
$1.1 million, and repayment of notes payable for $2,508,000, offset
by proceeds from the sale of marketable debt securities of
$3.4 million, proceeds from issuance of common stock, notes
payable and mortgage loan of $13.0 million.
Conference Call Details:
To participate in the virtual conference call on
November 13, 2024, at 11:00 AM ET, please register at:
https://www.renmarkfinancial.com/events/third-quarter-2024-results-virtual-conference-call-nasdaq-prph-B7BiIzlRxh
About ProPhase Labs
ProPhase Labs, Inc. (Nasdaq: PRPH) is a
next-generation biotech, genomics and diagnostics company. Our goal
is to create a healthier world with bold action and the power of
insight. We believe we are revolutionizing healthcare with
industry-leading Whole Genome Sequencing solutions, while
developing potential game changer diagnostics and therapeutics in
the fight against cancer. This includes a potentially life-saving
cancer test focused on early detection of esophageal cancer and
potential breakthrough cancer therapeutics with novel mechanisms of
action. Our world-class CLIA labs and cutting-edge diagnostic
technology provide wellness solutions for healthcare providers and
consumers. We develop, manufacture, and commercialize health and
wellness solutions to enable people to live their best lives. We
are committed to executional excellence, smart diversification, and
a synergistic, omni-channel approach. ProPhase Labs' subsidiaries
and their strategic synergies highlight our potential for long-term
value.
For more information, visit
www.ProPhaseLabs.com
Forward Looking Statements
This press release contains “forward-looking
statements” as defined by the Private Securities Litigation Reform
Act of 1995 that involve risks and uncertainties. In some cases,
you can identify forward-looking statements by terms such as “may,”
“might,” “will,” “objective,” “intend,” “should,” “could,” “can,”
“would,” “expect,” “believe,” “design,” “estimate,” “predict,”
“potential,” “plan” or the negative of these terms and similar
expressions intended to identify forward-looking statements. These
statements include statements related to our strategy, plans,
objectives and initiatives, including our expectations regarding
the future revenue growth potential of each of our subsidiaries,
the projected value of a sale of PMI, our expectations relating to
PMI’s existing and new contracts, production, revenue, and
earnings, the anticipated timing for the installation of additional
lozenge lines and their ability to increase capacity and revenue,
our expectation of potential and significant reductions in overhead
and expenses before year-end, our expectations regarding outcomes
of strategic discussions with healthcare consultants, advisors, and
partners for BE-Smart, the success of the commercialization plan
for BE-Smart, our expectations of revenue and earnings from a
partnership for BE-Smart, our ability to enter into new domestic
and international long-term contracts for our DNA Complete business
and the financial impact of any such contracts, our anticipated
expenses, ability to obtain funding for our operations and the
sufficiency of our cash resources, and the expected timeline for
completion of final statistical analysis of our Equivir clinical
trial. The Company cautions readers that forward-looking statements
are based on management’s expectations and assumptions as of the
date of this release and are subject to certain risks and
uncertainties that could cause actual results to differ materially,
including, but not limited to, risks related to prevailing market
conditions, the impact of general economic, industry or political
conditions in the United States, and the Company’s ability to
satisfy customary closing conditions associated with the offering.
Management believes that these forward-looking statements are
reasonable as and when made. The Company undertakes no obligation
to update forward-looking statements except as required by
applicable securities laws.
Media Relations and Institutional
Investor Contact:
ProPhase Labs, Inc. 267-880-1111
investorrelations@prophaselabs.com
Retail Investor Relations
Contact:
Renmark Financial Communications John Boidman
212-812-7680 Jboidman@renmarkfinancial.com
ProPhase Labs, Inc. and
SubsidiariesCondensed Consolidated Balance
Sheets(in thousands, except share and per share
amounts)
|
|
September 30, 2024 |
|
|
December 31, 2023 |
|
|
|
|
(Unaudited) |
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
501 |
|
|
$ |
1,609 |
|
Restricted cash |
|
|
593 |
|
|
|
540 |
|
Marketable securities, available for sale |
|
|
2 |
|
|
|
3,127 |
|
Accounts receivable, net |
|
|
31,638 |
|
|
|
36,313 |
|
Inventory, net |
|
|
3,966 |
|
|
|
3,841 |
|
Prepaid expenses and other current assets |
|
|
5,535 |
|
|
|
2,155 |
|
Total current assets |
|
|
42,235 |
|
|
|
47,585 |
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment,
net |
|
|
13,851 |
|
|
|
12,898 |
|
Prepaid expenses, net of
current portion |
|
|
431 |
|
|
|
832 |
|
Operating lease right-of-use
asset, net |
|
|
4,234 |
|
|
|
4,572 |
|
Intangible assets, net |
|
|
10,396 |
|
|
|
12,333 |
|
Goodwill |
|
|
5,231 |
|
|
|
5,231 |
|
Deferred tax asset |
|
|
14,576 |
|
|
|
7,313 |
|
Other assets |
|
|
854 |
|
|
|
1,163 |
|
TOTAL
ASSETS |
|
$ |
91,808 |
|
|
$ |
91,927 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
15,459 |
|
|
$ |
9,383 |
|
Accrued diagnostic services |
|
|
38 |
|
|
|
314 |
|
Accrued advertising and other allowances |
|
|
122 |
|
|
|
24 |
|
Finance lease liabilities |
|
|
3,897 |
|
|
|
1,840 |
|
Operating lease liabilities |
|
|
971 |
|
|
|
953 |
|
Short-term loan payable, net of discount of $758 |
|
|
2,670 |
|
|
|
— |
|
Deferred revenue |
|
|
1,647 |
|
|
|
2,382 |
|
Income tax payable |
|
|
2,274 |
|
|
|
3,278 |
|
Other current liabilities |
|
|
1,620 |
|
|
|
2,683 |
|
Total current liabilities |
|
|
28,698 |
|
|
|
20,857 |
|
|
|
|
|
|
|
|
|
|
Non-current liabilities: |
|
|
|
|
|
|
|
|
Secured long-term debt, net of discount of $324 and $341 |
|
|
2,925 |
|
|
|
2,924 |
|
Unsecured promissory notes, net of discount of $142 and $266 |
|
|
9,858 |
|
|
|
7,334 |
|
Due to sellers (see Note 3) |
|
|
2,000 |
|
|
|
2,000 |
|
Deferred revenue, net of current portion |
|
|
928 |
|
|
|
1,100 |
|
Operating lease liabilities, net of current portion |
|
|
3,663 |
|
|
|
4,237 |
|
Finance lease liabilities, net of current portion |
|
|
3,885 |
|
|
|
4,092 |
|
Total non-current
liabilities |
|
|
24,984 |
|
|
|
21,687 |
|
Total liabilities |
|
|
53,682 |
|
|
|
42,544 |
|
|
|
|
|
|
|
|
|
|
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, 19,078,529
and 18,045,029 shares outstanding, respectively |
|
|
18 |
|
|
|
18 |
|
Additional paid-in capital |
|
|
126,339 |
|
|
|
118,694 |
|
Accumulated deficit |
|
|
(24,034 |
) |
|
|
(5,029 |
) |
Treasury stock, at cost, 18,940,967 and 18,940,967 shares,
respectively |
|
|
(64,000 |
) |
|
|
(64,000 |
) |
Accumulated other comprehensive loss |
|
|
(197 |
) |
|
|
(300 |
) |
Total stockholders’ equity |
|
|
38,126 |
|
|
|
49,383 |
|
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
$ |
91,808 |
|
|
$ |
91,927 |
|
ProPhase Labs, Inc. and
SubsidiariesCondensed Consolidated Statements of
Operations and Other Comprehensive Loss(in
thousands, except per share
amounts)(unaudited)
|
|
For the three months ended |
|
|
For the nine months ended |
|
|
|
September 30, 2024 |
|
|
September 30, 2023 |
|
|
September 30, 2024 |
|
|
September 30, 2023 |
|
Revenues, net |
|
$ |
3,146 |
|
|
$ |
8,365 |
|
|
$ |
9,254 |
|
|
$ |
40,885 |
|
Cost of revenues |
|
|
3,311 |
|
|
|
6,038 |
|
|
|
10,328 |
|
|
|
21,590 |
|
Gross (loss) profit |
|
|
(165 |
) |
|
|
2,327 |
|
|
|
(1,074 |
) |
|
|
19,295 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diagnostic expenses |
|
|
— |
|
|
|
132 |
|
|
|
— |
|
|
|
1,932 |
|
General and
administration |
|
|
7,650 |
|
|
|
8,245 |
|
|
|
22,455 |
|
|
|
26,480 |
|
Research and development |
|
|
122 |
|
|
|
428 |
|
|
|
533 |
|
|
|
1,144 |
|
Total operating expenses |
|
|
7,772 |
|
|
|
8,805 |
|
|
|
22,988 |
|
|
|
29,556 |
|
Loss from operations |
|
|
(7,937 |
) |
|
|
(6,478 |
) |
|
|
(24,062 |
) |
|
|
(10,261 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income, net |
|
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
39 |
|
Interest expense |
|
|
(1,158 |
) |
|
|
(275 |
) |
|
|
(2,316 |
) |
|
|
(781 |
) |
Other (expense)
income |
|
|
— |
|
|
|
(33 |
) |
|
|
12 |
|
|
|
(132 |
) |
Loss from operations before
income taxes |
|
|
(9,095 |
) |
|
|
(6,785 |
) |
|
|
(26,366 |
) |
|
|
(11,135 |
) |
Income tax benefit |
|
|
2,508 |
|
|
|
1,644 |
|
|
|
7,361 |
|
|
|
3,104 |
|
Loss from operations
after income taxes |
|
|
(6,587 |
) |
|
|
(5,141 |
) |
|
|
(19,005 |
) |
|
|
(8,031 |
) |
Net
loss |
|
$ |
(6,587 |
) |
|
$ |
(5,141 |
) |
|
$ |
(19,005 |
) |
|
$ |
(8,031 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss)
on marketable securities |
|
|
1 |
|
|
|
(2,032 |
) |
|
|
103 |
|
|
|
(2,201 |
) |
Total comprehensive
loss |
|
$ |
(6,586 |
) |
|
$ |
(7,173 |
) |
|
$ |
(18,902 |
) |
|
$ |
(10,232 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.35 |
) |
|
$ |
(0.30 |
) |
|
$ |
(1.02 |
) |
|
$ |
(0.47 |
) |
Diluted |
|
$ |
(0.35 |
) |
|
$ |
(0.30 |
) |
|
$ |
(1.02 |
) |
|
$ |
(0.47 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
19,079 |
|
|
|
17,175 |
|
|
|
18,672 |
|
|
|
16,924 |
|
Diluted |
|
|
19,079 |
|
|
|
17,175 |
|
|
|
18,672 |
|
|
|
16,924 |
|
ProPhase Labs, Inc. and
SubsidiariesCondensed Consolidated Statements of
Cash Flows (in thousands)
(unaudited)
|
|
For the nine months ended |
|
|
|
September 30, 2024 |
|
|
September 30, 2023 |
|
Cash flows from
operating activities |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(19,005 |
) |
|
$ |
(8,031 |
) |
Adjustments to reconcile net
loss to net cash (used in) provided by operating activities: |
|
|
|
|
|
|
|
|
Realized loss on marketable debt securities |
|
|
18 |
|
|
|
(3 |
) |
Depreciation and amortization |
|
|
5,693 |
|
|
|
4,435 |
|
Amortization of debt discount |
|
|
1,000 |
|
|
|
97 |
|
Amortization on operating lease right-of-use assets |
|
|
338 |
|
|
|
325 |
|
Stock-based compensation expense |
|
|
3,021 |
|
|
|
2,860 |
|
Accounts receivable allowances |
|
|
— |
|
|
|
718 |
|
Credit loss expense, direct write-off |
|
|
— |
|
|
|
74 |
|
Inventory reserve |
|
|
21 |
|
|
|
— |
|
Gain from disposal of fixed assets |
|
|
(91 |
) |
|
|
— |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
4,675 |
|
|
|
(2,380 |
) |
Inventory |
|
|
(146 |
) |
|
|
(1,078 |
) |
Prepaid expenses and other current assets |
|
|
(4,218 |
) |
|
|
(938 |
) |
Deferred tax asset |
|
|
(7,427 |
) |
|
|
(4,350 |
) |
Other assets |
|
|
853 |
|
|
|
— |
|
Accounts payable and accrued expenses |
|
|
6,069 |
|
|
|
(438 |
) |
Accrued diagnostic services |
|
|
(276 |
) |
|
|
(768 |
) |
Accrued advertising and other allowances |
|
|
98 |
|
|
|
14 |
|
Deferred revenue |
|
|
(907 |
) |
|
|
(315 |
) |
Deferred tax liability |
|
|
— |
|
|
|
(307 |
) |
Operating lease liabilities |
|
|
(1,710 |
) |
|
|
(139 |
) |
Income tax payable |
|
|
(1,004 |
) |
|
|
(881 |
) |
Other liabilities |
|
|
(969 |
) |
|
|
(30 |
) |
Net cash used in operating activities |
|
|
(13,967 |
) |
|
|
(11,135 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities |
|
|
|
|
|
|
|
|
Business acquisitions, escrow received |
|
|
— |
|
|
|
478 |
|
Asset acquisitions, net of cash acquired |
|
|
— |
|
|
|
(2,904 |
) |
Purchase of marketable securities |
|
|
— |
|
|
|
(3,819 |
) |
Proceeds from maturities of marketable securities |
|
|
— |
|
|
|
4,168 |
|
Proceeds from sales of marketable securities |
|
|
3,374 |
|
|
|
3,817 |
|
Proceeds from sales of fixed assets |
|
|
229 |
|
|
|
— |
|
Capital expenditures |
|
|
(1,141 |
) |
|
|
(1,845 |
) |
Net cash provided by (used in) investing activities |
|
|
2,462 |
|
|
|
(105 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities |
|
|
|
|
|
|
|
|
Proceeds from issuance of note payable, net |
|
|
8,334 |
|
|
|
7,600 |
|
Proceeds from issuance of common shares, net |
|
|
4,624 |
|
|
|
— |
|
Repurchases of common shares |
|
|
— |
|
|
|
(588 |
) |
Repurchase of common stock for payment of statutory taxes due on
cashless exercise of stock option |
|
|
— |
|
|
|
(5,379 |
) |
Repayment of note payable |
|
|
(2,508 |
) |
|
|
— |
|
Net cash provided by financing
activities |
|
|
10,450 |
|
|
|
2,833 |
|
|
|
|
|
|
|
|
|
|
Decrease in cash, cash
equivalents and restricted cash |
|
|
(1,055 |
) |
|
|
(8,407 |
) |
Cash, cash equivalents and restricted cash at the beginning of the
period |
|
|
2,149 |
|
|
|
9,109 |
|
Cash, cash equivalents and restricted cash at the end of
the period |
|
$ |
1,094 |
|
|
$ |
702 |
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosures: |
|
|
|
|
|
|
|
|
Cash paid for income
taxes |
|
$ |
860 |
|
|
$ |
3,000 |
|
Interest payment on the
promissory notes |
|
$ |
2,126 |
|
|
$ |
740 |
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of non-cash investing and financing
activities: |
|
|
|
|
|
|
|
|
Stock-based compensation
included in the prepaid expense |
|
$ |
— |
|
|
$ |
1,138 |
|
Net unrealized loss,
investments in marketable debt securities |
|
$ |
267 |
|
|
$ |
2,083 |
|
Assets obtained in exchange
for new finance lease obligations |
|
$ |
3,699 |
|
|
$ |
6,201 |
|
Reclassification between
prepaid expenses and other assets |
|
$ |
544 |
|
|
$ |
— |
|
Accrued offering cost |
|
$ |
22 |
|
|
$ |
— |
|
Issuance of warrants with
unsecured promissory note |
|
$ |
— |
|
|
$ |
398 |
|
Common stock issued in asset
acquisition |
|
$ |
— |
|
|
$ |
1,000 |
|
Non-GAAP Financial Measures and
Reconciliation
In an effort to provide investors with
additional information regarding our results of operations as
determined by accounting principles generally accepted in the
United States of America (“GAAP”), we disclose certain non-GAAP
financial measures. The primary non-GAAP financial measures we
disclose are EBITDA and Adjusted EBITDA.
We define "EBITDA" as net income (loss) before
net interest expense, income taxes, depreciation and amortization.
Adjusted EBITDA further adjusts EBITDA by excluding acquisition
costs, other non-cash items, and other unusual or non-recurring
charges (as described in the table below).
Non-GAAP financial measures should not be
considered as a substitute for, or superior to, measures of
financial performance prepared in accordance with GAAP. These
non-GAAP financial measures do not reflect a comprehensive system
of accounting, differ from GAAP measures with the same names and
may differ from non-GAAP financial measures with the same or
similar names that are used by other companies. We compute non-GAAP
financial measures using the same consistent method from quarter to
quarter and year to year. We may consider whether other significant
items that arise in the future should be excluded from the non-GAAP
financial measures.
We use EBITDA and Adjusted EBITDA internally to
evaluate and manage the Company’s operations because we believe
they provide useful supplemental information regarding the
Company’s ongoing economic performance. We believe that these
non-GAAP financial measures provide meaningful supplemental
information regarding our operating results primarily because they
exclude amounts that are not considered part of ongoing operating
results when planning and forecasting and when assessing the
performance of the organization. In addition, we believe that
non-GAAP financial information is used by analysts and others in
the investment community to analyze our historical results and in
providing estimates of future performance and that failure to
report these non-GAAP measures could result in confusion among
analysts and others and create a misplaced perception that our
results have underperformed or exceeded expectations.
The following table sets forth the
reconciliations of EBITDA and Adjusted EBITDA excluding other costs
to the most comparable GAAP financial measures (in thousands):
|
|
For the three months ended |
|
|
For the nine months ended |
|
|
September 30, 2024 |
|
|
September 30, 2023 |
|
|
September 30, 2024 |
|
|
September 30, 2023 |
GAAP net income
(1) |
|
$ |
(6,587 |
) |
|
$ |
(5,141 |
) |
|
$ |
(19,005 |
) |
|
$ |
(5,141) |
Interest, net |
|
|
1,158 |
|
|
|
274 |
|
|
|
2,316 |
|
|
|
274 |
Income tax benefit |
|
|
(2,508 |
) |
|
|
(1,644 |
) |
|
|
(7,361 |
) |
|
|
(1,644) |
Depreciation and
amortization |
|
|
2,390 |
|
|
|
3,143 |
|
|
|
5,693 |
|
|
|
3,143 |
EBITDA |
|
|
(5,547 |
) |
|
|
(3,368 |
) |
|
|
(18,357 |
) |
|
|
(3,368) |
Share-based compensation
expense |
|
|
636 |
|
|
|
744 |
|
|
|
3,021 |
|
|
|
744 |
Non-cash rent expense (2) |
|
|
471 |
|
|
|
99 |
|
|
|
236 |
|
|
|
99 |
Credit loss expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
Adjusted
EBITDA |
|
$ |
(4,440 |
) |
|
$ |
(2,525 |
) |
|
$ |
(15,100 |
) |
|
$ |
(2,525) |
(1) We believe that net income (loss) 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.
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