
ProPhase Labs Announces Rapid Manufacturing Growth at CDMO Subsidiary Given Demand for Cold Lozenges
ProPhase Labs, Inc. (NASDAQ: PRPH) has announced an expansion strategy for its wholly-owned subsidiary, Pharmaloz Manufacturing, Inc. (PMI), due to growing global demand for high-quality lozenges. Pharmaloz Manufacturing, is a subsidiary of ProPhase Labs, Inc., and serves as a comprehensive contract manufacturer and private label developer specializing in a diverse array of cough drops, lozenges, OTC drugs, and dietary supplement products. PMI is renowned for its commitment to non-GMO, organic, and naturally-derived ingredients.
As rationale for the expansion, ProPhase Labs has stated a goal of reaching an annualized revenue run-rate of $60 to $80 million by the end of 2024. This projection could potentially translate to annualized pre-tax net profits ranging from $12 to $20 million. The company is also exploring opportunities to extend its work week further, which would increase both capacity and margins. The company has actively engaged with several world-renowned lozenge brands to finalize formulations and the company believes demand expected from these collaborations has the potential to exceed the company’s targets. Production for prospective customers may commence as early as early 2024. This follows growth in production of a 100% year-over-year increase in its non-Cold-EEZE contract manufacturing division. Additionally, Pharmaloz is set to receive new automation equipment, with delivery and installation scheduled for the coming months. This advanced equipment is expected to boost the capacity of the first lozenge line by almost 50% before the end of 2023, resulting in a 50% increase in revenues even before additional lozenge lines are introduced. The company noted that with the current three-and-a-half workday schedule, Pharmaloz anticipates achieving a run-rate of $15 million in annualized revenues and a run-rate of $3+ million in gross profit in Q1 2024. The existing demand already surpasses these projections. Equipment for a second lozenge manufacturing line is already in the pipeline, with delivery and installation set for Q2 2024. This expansion is anticipated to further enhance capacity, paving the way for an annualized run-rate of revenues ranging from $30 to $35 million at the beginning of Q3 2024. If achieved, this translates to a potential annualized pre-tax net profit ranging from $6 to $9 million. In anticipation of continued growth, Pharmaloz has engaged a top engineering firm to develop a three-year master plan. This plan envisions a fourfold increase in capacity by December 2024, with potential for further scaling beyond that.
ProPhase Labs’ CEO, Ted Karkus, emphasized Pharmaloz’s unwavering commitment to quality and reliability, setting the subsidiary apart in a competitive lozenge manufacturing landscape. The company has built a strategic moat founded on attention to detail and service excellence that makes it exceedingly challenging for competitors to replicate their capabilities.