Prophase Labs Inc (PRPH) 2023 Q3 法說會逐字稿

Good day and welcome to ProPhase Labs, Inc. Third Quarter 2023 Financial Results and Corporate Updates. (Operator Instructions)

Please note that this event is being recorded. Now like to turn the conference over to Mr. Ted Karkus, CEO. Please go ahead.

Thank you, Nick, and thank you, everybody, for joining. I'm actually really excited to have this call today because we are at an inflection point in the company -- that we're going through an inflection point in our company over the last couple of quarters, and over the next couple of quarters. But I am tickled pink with how well things are going in our development stage subsidiaries.

With that said, I want to start with the forward looking statement. Before we get started, I would like to remind you of the company's Safe Harbor language. During this presentation, we will make forward-looking statements, including statements regarding our strategies, plans, objectives, and initiatives, and underlying assumptions.

While we believe that these forward-looking statements are reasonable as on when made, forward-looking statements are based on expectations that involve risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties include, but are not limited to, our ability to obtain and maintain necessary regulatory approval, general economic conditions, consumer demand for our products and services, challenges relating to entering into and growing new business lines, the competitive environment, and the risk factors listed from time to time in our filings with the SEC filing.

This call will present non-GAAP financial measures such as adjusted EBITDA. Reconciliation of these non-GAAP measures to the most comparable GAAP measures are included in the earnings release furnished to the SEC prior to this call and available on our website.

Alright. A couple of -- I always like to start with a couple of shout outs. Number one, I think Equity has done a phenomenal job working with our investment bankers over the last three years. Not only did they do a large raise for us, but they were instrumental in finding some great assets that we acquired over the last three years, and some of those assets are the assets that are going to bear very significant fruit, I believe, on behalf of our company going forward.

We also have excellent coverage by H.C. Wainwright -- by Joshua Levine at Third Stream Research, and of course, love Diamond Equity Research. Hunter Diamond -- shout out to Hunter. So thank you all so much.

And finally, Renmark. I do virtual non-deal roadshows, presentations, right now about once a month. We actually have one coming up next Thursday the 16th. I'd like to keep our shareholders up-to-date on what's going on. So I'd like to do a VR -- it's a virtual presentation. We go through the company presentation, which is up on our website. I update that presentation regularly. I believe we just updated very, very recently, so feel free to go to our website if you want to get into more details about our company.

Okay. So with that said, I don't like to prepare a lot of remarks for these calls, and everybody knows I love to talk, but I love to get into the Q&A. So I'm going to give everybody sort of stream of consciousness, just off the top of my head, because I live and breathe our company every day, and I live and breathe everything that we're doing.

And I'd just like to explain to everyone what we're doing, because I think that you will feel very good at the end of this call, if I speak that way as opposed to reading two pages that I felt. In any event, where do I start? Why don't I start with our accounts receivable actually, because people ask questions about that every quarter, I'm sure I'm going to get some questions this quarter about it.

People are going to ask about our finances. We're in a bear market for microcap development stage companies. We came out of it for a little while late last year, and at some point this year with interest rates just really took off, it really just killed the ability to raise capital, and that kills microcap development stage companies that are burning cash that need more cash.

And I believe in the biotech industry, the valuations -- relative to liquidating value, relative to cash on hand -- the valuations have never been lower. So it's an incredibly difficult time for microcap development stage companies.

So and then people ask well what about our accounts receivable? Because then they worry that we have the capital that we need to develop the assets. And I make it very clear in our press releases, I'm the largest shareholder in our company. I care about our shareholders more than anything. I even tell the employees that I'm very loyal to our employees. We have a great set of employees that have really evolved over the last year.

But number one, shareholders come first. I don't dilute shareholders if I don't absolutely have to, I never have. I'm not aware of ever diluting shareholders with any of the raises that we've ever done. And I have no current intention, nor are there any prospects of having to dilute shareholders now or anytime soon, which also means for those that are still short out there, I have no idea how you're going to cover, because we're going to do a raise at some point because there's absolutely nothing planned to do a raise for our parent company, ProPhase Labs.

As specifically as far as the accounts receivable is concerned, our accounts receivable, as I've explained in the past, is based on a combination of collecting on those receivables, but also operating a business that generates new accounts receivable. So at year end, for example, we had about $37 million at year-end 2022. We had about $37 million in accounts receivable.

We, in the first half of the year, I believe we collected on a little less than half of that amount. But we had new accounts receivable because we were still doing COVID testing business in the first half of the year. That's what we're collecting on now. Given that it's no longer a public health emergency and a significant percentage of accounts receivables was from COVID testing, the insurance companies are now paying more slowly than they used to, but they are paying. But they are dragging it out, and there's nothing that we can do about it.

So we do have dollars coming in from accounts receivable, in fact, from -- and I'd also point out that from the second quarter to the third quarter, our accounts receivable dropped from $39 million to $33.4 million (sic - see press release, "$38.6 million"), so they dropped more than $5 million while we were still doing business.

And I understand we're also doing business now with Nebula Genomics for which we have accounts receivable. In fact we have some significant accounts receivable at Nebula Genomics, and also with Pharmaloz. So the accounts receivable, we are collecting, and then it just becomes a question of time in the accounts receivable with the dollars flowing in, to the dollar flowing out, and developing our company. To build our Nebula Genomics lab required acquiring a lot of state-of-the-art equipment, hiring a lot of people, building a lot of infrastructure, and we believe that's going to pay off in a huge way in the current year.

And I'm going to get going into next year, and I'm going to get into that in a moment. But I just wanted to give you sort of the big picture and honestly, this is the one frustration I have is that the accounts receivable comes in slowly. I'll be -- honestly, it puts pressure on me as the CEO, but we have plenty of avenues. So we're watching the accounts receivable flow in on a weekly basis.

And if we need more capital -- I don't know that we do -- we have access to a mortgage at Pharmaloz. We own a substantial building. We own for on 12 acres across from a Walmart, it's valuable land and property. We have the significant accounts receivable that we could set up a credit line against. So to the extent that we need to raise additional capital, we can do so without doing an equity raise and without doing anything that would harm our shareholders.

Alright, so I just want to put that to rest because that seems to be a major concern at virtually every development stage company at the current time. Alright, having said that, let's talk about some really positive things. And what I'm also going to say is the punchline to all this is I'm going to talk about Pharmaloz -- and I'm going to talk about our that's our lozenge manufacturing facility -- I'm going to talk about Nebula Genomics.

Both of these subsidiaries are growing dramatically in value as we speak, and I believe that sometime early next year, it is possible that we could create liquidity events for some of these subsidiaries. And there is a number of different possibilities for what we could do, but it would represent values that collectively, I believe, would be significantly greater than the entire market cap of the company.

So I only mentioned this now because my point is, why would we raise capital for ProPhase Labs, the public company, and dilute shareholders, when we have underlying assets that are so valuable that we potentially could raise capital for, without diluting our shareholders? And because I am shareholder-friendly -- this is the way I think -- my background is on Wall Street. So rest assured, I believe, if you're worried about the stock price, I believe that the future is very bright from a capital markets point of view.

Let's get into the businesses a little bit and then I'll go to the Q&A. I'm happy to start. Pharmaloz -- we did a press release not that long ago -- I reviewed everything. I don't want to go too much into it today. Read our last press release on Pharmaloz, and of course, our press release today.

The bottom line is, we're in a sweet spot. In an industry where we've owned a state-of-the-art manufacturing facility for 30 years, and it just so happens we're at a point in time where capacity around the country and around -- I believe globally -- has diminished significantly, and demand has virtually never been greater. And so we have some of the largest lozenges brands in the world, want to give us as much business as we can handle.

I believe, theoretically, that if we had the capacity right now, we could be doing $100 million of revenues right now, and earning pretax $20 million to $25 million on that business. Now, we're not doing $100 million revenues right now. We're at an operating at like $8 million to $10 million. We have equipment coming in [short term] this month, that's going to increase our capacity to $15 million in the month of December.

So going into the first quarter, our revenues are going to be up dramatically because we already have demand for that $15 million of business. And we also instituted price increases. So on our base business, our margins are going to improve significantly. And on our new business, our margins are even better. So all of a sudden, Pharmaloz is going to start generating nice profits that will contribute to the bottom line.

And then taking it one step further, in the second quarter, we have a new lozenge line and all the ancillary automated equipment that should take us to $30 million or even $35 million of capacity run rate by the end of the second quarter. Which means starting in the third quarter, our goal is to be generating at least $30 million of revenues, and generating pretax profits of at least $6 million to $7 million, or even $8 million of pretax profits. Those are serious numbers.

So think about the swing in our earnings and in our cash flow and in our EBITDA just in the next quarter or two just from Pharmaloz. And understand when I talk about $30 million to $35 million of capacity, we already have the demand for that as well right now, and that's without the two big lozenge brands that want to give us all their business. So it gives you an idea of the dynamics of Pharmaloz what's going on there.

And I have been told -- don't quote me on this -- but the private equity will pay 10 to 15 times pretax. So you can start to see what the numbers could look like and feel like very quickly in the coming quarters. And again, if you read the press releases and we're doing this, we already have the plans for it.

We have two more lozenge lines already ordered that are coming in late next year that are going to take us up to -- and depending on which press release, and which presentation, and the numbers, it's not an exact science -- we're talking $60 million to $80 million revenues, but understand that's based on a 3.5 day workweek.

Now you have to have downtime for maintenance and things like that, but you don't need 3.5 days of downtime, and it's a matter of making sure we have enough employees, and that's one of the reasons why we're bringing a lot more automated equipment. But in addition to that, we have to find the supply of employees to build it out. So we don't know sitting here today what the numbers are going to be, but there's the potential that our capacity could be $80 million to $100 million by the end of next year.

And could you imagine if we were generating $20 million, $25 million of pretax? And multiplied 10 to 15 times, that, I mean, we're talking about a facility that could be worth $300 million. Now I don't want to get carried away. I'm not suggesting it's going to be worth that. I'm not even saying that's even our objective.

But the point is, with that kind of potential and a market cap of our company that trades around $70 million to $80 million, we have a manufacturing facility that could be worth significantly more than the whole market cap of our company next year by itself. And again, my background is in investment banking on Wall Street. And so I'd be silly not to pursue all avenues in that regard.

So I can talk more in the Q&A, but it just gives you a little bit of background, and I'm not suggesting we're actually doing a raise on one of our subsidiaries, or that we're doing anything at present. I'm just explaining that we do have options available to us so that our shareholders are rest assured that I'm not going to do what so many other microcap development stage companies do, and that's blindside you with an equity raise. It's simply not happening at ProPhase Labs, the parent company, alright?

You know, I can't guarantee at some point in the future, something will change. But I can tell you for the foreseeable future, don't have the slightest interest in such an activity.

Okay -- Nebula Genomics. Now, Pharmaloz to me, I don't want to sell to anybody. To me, it's sort of a boring, ho-hum business. One of our senior employees here, who's who's working on this has noted and said, this is very exciting. And yes, it is very exciting from a numbers point of view. It's not exciting from the point of view -- it's not like biotech, all right? It's not like development stage cancer tests, and cancer therapeutics, and things of that nature.

But Pharmaloz obviously, it's exciting from a numbers point of view. The demand is there. It's just how quickly we can execute on building the capacity. And the one thing I can tell you, look at my history. For 40 years, I've done nothing but execute. And executing for Pharmaloz to me is a no-brainer.

Probably one of the easiest things I've ever had to do, all right, and I'm not the hands-on personally, but it's easiest thing as a company that I've ever seen. It's not a guarantee it's going to happen, but I can't see why we're not going to execute truly in a significant way.

Now Nebula Genomics, what's interesting about that? Completely different set of dynamics, and yet, the future potential is even greater than Pharmaloz. So what's interesting about Nebula Genomics, is that whole genome sequencing, this was truly the vision of George Church 20 years ago, and it's just coming together now.

And what's interesting is whole genome sequence testing didn't explode in a big way previously for no reason other than price. And now the prices coming down, medical doctors, physicians, academic researchers, medical research is all starting to look much more seriously at whole genome sequencing.

That's not to say that the academicians and the researchers weren't already doing whole-genome sequence research, but I'm talking about levels of research where this business is now literally exploding before our eyes because of price.

And you got to understand there was one company that had a monopoly on whole genome sequencing for a very long period of time, and they kept their pricing very high. And because they kept their pricing so high, it demotivated consumers, and demotivated medical researchers from doing more research.

Now a new company -- not a new company, but new to this country -- just settled litigation at the beginning of the year where they can bring in equipment into this country. We are the first laboratory in the country to have their high throughput, extremely efficient equipment for whole genome sequencing, where we can provide pricing at a lower price than any laboratory in the country. It is such an incredible statement.

I can't believe our microcap company is making this statement, and yet, it's an accurate statement. And so it was interesting when we were just selling direct to consumer online, I didn't really feel the business taking off the way it should. It was growing very nicely, don't get me wrong, but from a small base, and so if we say it's growing from 50% or 100% from a small base like big deal, it's not meaningful to the numbers. And we had to advertise to generate that business.

But now, we have a business that doesn't require any advertising. No costs to advertising -- it's just getting the word out that we're the low-cost provider of whole genome sequencing in the country, and the business is coming to us. We were just at a genomics conference, and the responses were tremendous. And I have a team here that is doing a phenomenal job now of building that business.

So yes, he is my son. He doesn't just have the same last name. Jason Karkus built a COVID testing business, which was doing $100 million a year revenues. He's now building our genomics business, along with Jed Latkin, who is becoming a senior employee of our company. And I believe that they're going to kill it the same way they did with the COVID testing.

And so what's interesting about this, Jason and I had the approach three years ago with the COVID testing business, where we took the approach of Kevin Costner in Field of Dreams. If you build it, they will come. And we built an enormous COVID testing lab. And then we did an enormous amount of business.

The issue with that business was that COVID testing lasted two years. Originally, everybody thought it was going to be one year and it ended up being two years.

Now at this point, the only people getting COVID tested are going into a hospital and they get tested in the hospital. So we're actually not even in the COVID testing business, but now it's interesting, Jason and I had the same reaction, which is if you build it, they will come, with the whole genome sequencing testing in our lab, and sure enough, we built a state-of-the-art lab in Garden City, New York, and they're starting to come.

And the difference between the COVID testing business and the genomics business is that the COVID testing business wasn't going to last long term and it didn't, and the genomics business is, and we're in its infancy, but what's going to happen to this business, it's going to explode going forward, and we are right now perfectly situated as the leaders in whole genome sequencing, and word is spreading quickly.

We have major opportunities who did an enormous amount of research. These are companies that scoured the country looking for labs to do whole genome sequencing, and they said to us, there wasn't anybody that even came close to our pricing. And our pricing still has healthy profit margins for us.

And what's nice about the B2B business, it's repeatable business month after month, year after year. You can rely on it. We have very healthy profit margins. We don't have to spend on advertising. You can plan it out.

And so we are going from a direct-to-consumer business where we had to spend money on advertising, still making nice nice money, nice profits, to a B2B business that can blow away the direct-to-consumer business. It's repeatable. It has higher profit margins, and will be viewed as an incredibly valuable business to outsiders.

What's also interesting is some of the largest labs in the country, they're dabbling. They're getting their feet wet in the business of whole genome sequencing, but they aren't doing it in a big way. And it's kind of humorous to see, but one of the largest labs in the country offers, for pricing for whole genome sequencing, and it's two and three times the price that we offer. And they have no ability to compete with us.

In fact, they're not even really in the business. In fact, they're in the business on very expensive on equipment, with expensive consumables. Even if they wanted to compete with us, they couldn't.

And so if somebody wants to build out a lab like ours, they first have to develop a relationship with a company that we have a relationship with. Then they'd have to develop -- would have to build out the lab, acquire the equipment, bring in the genomics professionals -- they would have to negotiate for pricing. They would have to do all these things that's going to take time.

And so I don't know what our lead times but our lead time might be a year. It might be a year and a half. And if somebody else gets into the business, there's going to be so much business to go around that it's not like they will be taking business from us. They'll just -- they'll finally be in a year, or a year and a half.

There might be another lab that can do what we do. But short term, there isn't a lab in the country that can we do what we do.

So that gives you a little bit about Nebula Genomics. I can clarify further in our Q&A. I would just like to mention I don't often spend a lot of time on the pure biotech plays -- that's our esophageal cancer test, Linebacker -- a cancer therapeutic. Linebacker, I'm not going to mention on this call.

The stock market doesn't care. I just want you to know that we have ongoing studies where we're getting really, really great results. I don't think the market's going to care anytime soon, so I don't even bother to mention it. We're not spending a lot of money on it, but it's a hidden asset that could be very valuable one day.

And our esophageal cancer test -- we have so many avenues of excitement with our esophageal cancer test. And I'm again, I'm not going to explain too much on this call. I've explained on our esophageal cancer test on prior calls, but we have multiple avenues for this test, including testing not only for whether or not you have esophageal cancer today, but whether you're at high risk or low risk, and that's what the insurance companies tell us they are really interested in. That is a really big deal.

We also have the ability with our technology to potentially provide this test without an endoscopy. If we do that, forget about it, it's game over. We're developing that now. And finally, we may, with our technology and our know-how, be able to develop a esophageal cancer therapeutic. So we're going in a lot of directions with it.

We are absolutely -- our timeframes -- are totally in line with what I've guided our shareholders all year. We're looking to commercialize it early next year, get CPT codes early next year. And quite frankly, we're continuing to get really great results, and I'm really looking forward to developing our esophageal cancer test.

And finally, I mentioned it in the press release, Equivir is getting close at hand. We have this great clinical study going on. It was oversubscribed with patients, and the results so far have been really, really good. And so I can't wait to get some of the preliminary results that we can use to finalize the claims that we'll put on the packaging so we can actually commercialize product.

And so with that, I just want to check a couple of quick notes if there's anything I want to mention. I will just mention one more thing -- on our Nebula Genomics, with our GAAP versus non-GAAP, we have subscriptions where we have to recognize some revenue over three years, even though we get the revenue upfront, and there's minimal cost to provide the services of the subscription.

It's a little frustrating. We are correcting that now. But the beauty of the B2B is that's a different business model. There may not even be subscriptions involved. So we won't have these GAAP versus non-GAAP delays. You will see, I believe very strong numbers, from Nebula next year.

And understand, when that happens, we go from a company losing money quarterly to a company making money quarterly. I can't tell you which quarter we're going to have that change, but when we do, the numbers are going to start growing. I believe they're going to start growing dramatically every quarter sequentially thereafter.

Both businesses are going to explode in revenues and profitability, and therefore, earnings next year. I can't tell you which quarter exactly right now, and I don't want you to hold me to it, but the point is the amount of money we're losing, when you look at our adjusted EBITDA, is minimal compared to the opportunity and what we're building and managing the cash flow. So it's not an issue. So we have exciting times ahead, and just a matter of patience for when we get out of the bear market.

But last point, and I'll hand it over to Q&A. It doesn't matter if we're in a bull market or a bear market. We're building the underlying value of the company. Bull markets and bear markets have no effect on our ability to build the capacity and generate revenues and earnings for Pharmaloz, and the same is true for Nebula Genomics. So if you look at it from that perspective, the underlying value of our company, I believe, is growing every single day.

At some point, the stock market will recognize it next year, if not later this year. But whether it does or it doesn't, I will bring out the value in other ways, regardless of whether we're in a bull market or bear market. So I just want to give you all that perspective.

And with that, Nick, I'd love to hand it over. I hit the 30 minute mark, and I'd love to hand it over for Q&A.

Thank you, sir. We'll now begin the question and answer session.

(Operator Instructions)

Adam Waldo, Lismore Partners, LLC.

Good day, Ted, I hope you can hear me okay. Thanks for taking my questions.

Yes, sir.

So when we met last quarter in second week in August, you outlined for the market, a couple of different ways that you could access near term bridge liquidity from your existing balance sheet capacity to bridge the modest free cash flow negative performance that you expect over the next couple of quarters until Pharmaloz and the other businesses really start to generate significant free cash flow, which based on your commentary this quarter, looks like it's going to be in the second half of '24.

So right now, we're kind of a run rate of $3 million to $4 million a quarter in negative free cash flow, forget adjusted EBITDA. You have $38 million in accounts receivable on your balance sheet that you indicated last quarter, very high quality and could be securitized. You have the ability to take a more mortgage on the Pharmaloz business, and you have various public market and private equity opportunities to raise capital on any of the different subsidiaries.

We're in a bear market. We're in a bear market where typically the only way you get your stock to kind of move in the right direction relative to the underlying fundamental value that you're creating, as you know, as a private and public markets guy, is by deploying liquidity to change the trajectory of your stock price.

So what steps should we expect you to take over the next quarter or so, on the accounts receivable securitization front, to free up liquidity there both for funding operations, operational and cash flow needs as well as deploying for share repurchase?

And what kind of capital do you think you can raise from a mortgage on the Pharmaloz fixed asset base separate from any capital markets activities? Thanks.

Wow, that was a mouthful.

That was -- (multiple speakers)

Sorry. Sorry about that.

Not at all, I love it. And the truth of the matter -- I may have said this in the last call, I don't remember, but if you ever want to come work for ProPhase Labs, I think you'll fit in really well here.

I do have a good job, but thank you.

Okay, the answer to your question, is you really, to some extent, you answered your own question. I would just say that in terms of profitability of the company, I think that the profitability -- I don't want to speak out a line -- the profitability of the company is going to start improving. It's just a question of how much it improves, in which quarter, for which subsidiary. But any subsidiary that improves in profitability will improve the bottom line as well.

So for example, Pharmaloz, we actually have the automation equipment coming in this month, and we have price increases that will start to kick in in December and January. The automation equipment should be up and running by the end of the month. So in the month of December, all of a sudden the profitability, the revenues and profitability of Pharmaloz are going to improve actually significantly.

And so you look at the first quarter, we're going to have -- we're going to be at a run rate that's probably 50% higher than what we're doing right now, and improve gross profit margins, not only on the existing business from increasing pricing to everyone, but the new business, which has even higher gross profit margin.

So our Pharmaloz business is going to improve in profitability short term. And then once we get that second line in, it improves dramatically, right? Because then, we're gonna double. So our business is gonna be up 50% towards the end of January -- (multiple speakers)

So let me just answer your question. Well, you asked a long question, I'm gonna give you the full answer. I heard every word of what you said.

Fair enough.

Okay. so you're going to see those numbers improve every quarter, which means that the drag from the negative cash flow is going to be less and less each quarter. The same is true of Nebula, I just don't know the timing, but we have some monster business opportunities that Jason and the Nebula team are developing right now. I can't tell you which month -- actually, maybe I can tell you which month, but I can't tell you which week they're going to kick in -- but it's short term.

Once these businesses start to kick in, our revenues are going to improve for Nebula and our profitability, it doesn't mean we will be profitable, but our losses will be less. What I don't know is that turning point where we actually have bottom line profits in both subsidiaries -- actually in Pharmaloz it should be in December. We should be profitable, and then those profits start to extend.

Nebula, it's a little more complicated because we have a lot of overhead to build the business. But once the business starts to take off, the overhead becomes much less significant, and all of a sudden, you see a lot of profits flow to the bottom line. And that's going to happen -- could happen -- very, very quickly, to be honest with you.

And that's why we're trying -- we have -- we're the only laboratory in the country with high capacity, whole genome sequencing equipment at the low price points that we have. And we're the first lab in the country to get the next piece of this equipment. We're next in line for the next piece of equipment. So our capacity is going to go up significantly, and we have businesses that want bring us enormous amounts of high margin business to us.

So those numbers are going to start to improve, so whatever the negative cash flow is now, I believe it's going to be less and less each quarter. At the same time -- and don't quote me on that on a short-term basis -- the negative cash flow whether we acquire some more equipment and then we depreciate a little bit more. You know, things of that nature.

But in general, all those numbers are going to be improving. And at the same time, as I mentioned, yes, we do have access to a mortgage at Pharmaloz. The interest rates are higher.

But the way I look at it, even though the interest rates are higher than they would have been six months ago, whatever the interest expense is on any money that we raise in the debt markets right now, even if it's at a higher interest rate, the cost of that for one year pales in comparison. It's a rounding error compared to the opportunity and the revenue scenarios that I think that we're going to be generating.

So we do have access to capital, both mortgage at Pharmaloz, as well as on our accounts receivable. Our accounts receivable is improving. Actually, even as I mentioned, just from the second quarter to the third quarter, our accounts receivable went down from $39 million to $33.4 million and will continue to improve.

We continue to receive. Dollars are flowing in from that. I just don't know if that's going to accelerate. That's the frustrating part, but they are flowing in from that. So I think that between a credit facility, and our accounts receivable, not to mention we have a very strong asset base as well as the mortgage, that will more than bridge us.

Okay, don't quote me. it's not a guaranteed forward-looking statement, but as of today, that will more than bridge us through when the company is profitable, and will more than bridge us to options that we may have if we want to explore other ways to bring out value in our subsidiaries.

When you have subsidiaries like ours that are exploding in revenues and earnings and dynamics next year, it will create opportunities for liquidity events if we choose to go down that path. And I would certainly go down a path like that before I would ever do anything to raise capital for ProPhase Labs, the parent company.

So I hope I answered your question. We took up a lot of time just with you. I would like to move to our next question, but thank you, Adam, for your question and your support. Much appreciated.

Nick, if you could go to the next question, please.

Yi Chen, H.C. Wainwright & Co.

Hi, thank you for taking my questions. Could you give us some color within the total revenue for the third quarter, how much of that was based on testing, and whether you expect those testing revenue to pretty much disappear in the fourth quarter?

Yes, COVID testing has disappeared. It has disappeared in the third quarter, and I noticed there was a very little bit of testing at the beginning of this quarter. I apologize. I don't -- if we didn't break it out and I can get those numbers for you afterwards or our CFO can -- I don't know what the revenues were. It obviously had to be minimal. It was the very small number of tests. We did put that into the press release.

So the rest of the revenues are obviously Nebula Genomics and Pharmaloz manufacturing. And as I mentioned, as you now go into the fourth quarter, those numbers start to pick up, and then where they really start to pick up is in first quarter. So I would expect a significant increase in revenues and actual profitability for Pharmaloz. And I would also expect a significant pickup in revenues and profitability for Nebula.

Not [counting] -- I don't know what the number's going to be relative to our overhead. So whether we're going to be profitable, I don't want to be quoted on which quarter we're going to be profitable, but the revenues are going to improve significantly in the first quarter.

I believe -- these are my estimates, again, forward-looking statements -- but I believe based on the indicated demand and I'm talking about it, as you know, first of all the demand that Pharmaloz has, as I said, we have demand already for when we build our capacity in the second quarter when we get up to $30 million. We already have that $30 million of demand in contracts.

Alright, and then we have these two large lozenge brands who are about to go into contract with us, and it's just a matter of how much we business we can even do with them. So we're basically locked in on Pharmaloz.

With Nebula, this is such a dynamic situation. It's evolving on a daily basis. As I said, Jason and Jed and the rest of our team -- and I don't want to call them all by name -- but they were just at this once a year major genomics conference, and honestly, we were the hit of the conference. Everybody wanted to meet with us.

And everybody knows -- the word's getting out very quickly -- that we're the low-cost provider of whole genome sequencing. So how quickly can we build the capacity? How quickly can we hire more people? How quickly can we get more organized and more efficient, and all that's going to happen in the next few months.

We're going to have growing pains similarly to the experience we had with COVID testing. The first few months, we had growing pains, and then the revenues in our [range] just exploded. I expect the same thing to happen with Nebula. I can't tell you how many growing pains. I can't tell you which month.

So I hope that that was a long-winded way of answering your question. I can't give you more more specifics on a breakdown of revenues than what's reported. But if you do need more information. I'm happy to connect you with our CFO after the call.

Thank you. Will the company feel comfortable to provide some kind of revenue guidance on the 2023 full year results earnings call?

Well, I'm certainly not going to do it on this call, and I'm not going to make up a number. And to be honest with you, Yi, we have never given specific revenue guidance. In fact, even stating -- I state the capacity numbers, I say we have demand for the capacity -- I have never actually given the numbers.

So let me look into it, but you should have an idea that the, as I said, in the third quarter, there was very minimal contribution from our COVID testing. And you can assume that both Pharmaloz and Nebula Genomics revenues will grow in the fourth quarter, but where they will really take off is in the first quarter. So you can expect a little improvement in the fourth quarter, in the revenues of those two subsidiaries, and then in the first quarter, it takes off in a really nice way.

Okay, got it. Thank you.

Yi, thanks so much. I always appreciate your support in following our company.

Nick, if we can go to the next question, please.

Hunter Diamond, Diamond Equity.

Hi, great update today, and thank you for the shout out. So I wanted to maybe get some information on the supply demand imbalance for Nebula Genomics and the whole genome sequencing. Because you've kind of broken it out for the other businesses. And I wanted to see where you're seeing demand from insurers. Is it from just big corporations? And what are your thoughts on insurers potentially covering whole genome sequencing in the future?

Yes, great question. So none of our business -- the beauty of our genomics business -- is that none of it is reliant on insurance right now. And so this is an industry that literally is in its infancy. When I talk about us being in the first inning, we literally -- we're in the first inning here.

I talk about whole genome sequencing, and I've been talking about it for three years, and George Church has been talking about for 20 years, and Nebula Genomics, our company that we acquired, was actually founded six years ago, but it's in its infancy.

And the gating factor was the price. And that's why, for instance, the ancestry companies, none of them did a whole genome sequencing. They built their model. They completely built a completely different model around what are called snips. It's a type of genomic testing that studies less than 1% of your genome, which is all you really need for ancestry anyway, but you don't get a lot of great data for health.

And so we're just going and we're in the first inning of going in a health direction with learning about your genetic makeup, how your genetic makeup plays a role to diseases that you're predisposed to, and which drugs or therapies to take based on their genetic makeup.

And I always love to say -- I mean, I hate that people get cancer -- but two people get cancer, they get the exact same cancer. They take the exact same drug, and it works on one. It doesn't work on the other. Or it works on both, sort of works better on one and worse on the other, and one needs more one needs less.

How do you figure that out? Which drug? What therapy to take, and what the dosing should be? Dosing is critically important with cancer drugs because they're deadly. They're not only killing cancer cells, they're killing healthy cells. These are critically important questions that doctors don't know the answers to.

And so that's why all the research is going in this direction, and it's huge. And so what's happening is when you say the supply-demand, the demand really is based on the pricing. And so it's opening up doors to companies that didn't even think about this before.

So what's interesting is we're seeing demand from telemedicine companies. These are companies that have networks of not only hundreds, if not thousands, of physicians, but have millions of patients.

And just imagine if we did a deal to telemedicine company that has access to millions of patients and says, hey, it goes through their physician, so their physician says to the patient, hey, we got this whole genome sequencing test. You should get it, it's actually at a very reasonable price right now. We can do this with no advertising on our part.

And so just imagine the unlimited demand that can come in from that, and all we have to do -- what we have to do? It's continue to build out our state of the art lab that nobody in the country can compete with. It's such an incredible statement. I can't believe I'm making it, but I am making it.

And everybody remember this a year from now, that I told you today, and I told you three months and six months ago, we are in the right place at the right time. And we are the leading lab in the country in my opinion, in whole genome sequencing based on price.

Yes, you can go to other labs to get whole genome sequencing and it costs a fortune. But for the masses, if you want whole genome sequencing, it was always too expensive, so nobody even considered it. So it's like a whole new industry. It's a whole new business that is just starting up.

So it's interesting where the demand is coming from. It's not just coming from academic institutions doing research. We're having other types of interest, and it's all coming out of the woodwork now that we have this great pricing.

They're saying, oh, my God, we already have the platform to roll out your whole genome sequencing testing, potentially to millions of patients. So we're in the first inning of figuring this all out. There are going to be some growing pains for a couple of quarters. But I'm telling you if I know anything, I know the Nebula Genomics business is going to be incredibly valuable over the next six months, to 12 months, to 18 months.

And if people really are long-term investors, this is exactly what you want to invest in. But it's just amazing people love to buy high and sell low. So here we are, we have a low price stock. I don't want to talk about the stock as CEO. I don't even think I should talk about the stock, and yet the stock's not trading and people don't understand the potential we have here.

And as long as I don't have to dilute the shareholders, the risk reward is phenomenal. So Hunter, I hope I answered your question, but I really love your support and I really love your work. And so thanks for being on the call and asking those questions. Do you have one more before we go to the next one?

Absolutely. Yes, that was my only question. I guess it sounds like from what I heard from you, that you're seeing -- which I always thought made sense -- the enterprise model is kind of the most efficient way, meaning going to the bigger enterprises versus the DTC, direct-to-consumer, with ads. That one has worked. But it seems like the easier -- the layup -- is sort of reaching all these telemedicine companies that already have the patients.

Hunter, you said it better than I could have. Spot on. So I inherited -- when we acquired Nebula Genomics -- I inherited a direct-to-consumer model where you have to advertise. And then we built out a lab.

So when we first bought the business, I don't know the exact numbers -- probably around a breakeven business -- when we built the lab, we took on an enormous amount of overhead and built in the genomics lab. We also converted a COVID testing lab to some of the people transferred over, but understand now, well, all of a sudden, we're not doing COVID testing and we have all the overhead expenses of the genomics lab, and we're not doing the business to support it.

And so all of a sudden, we're losing money and that's the situation we're in now. But what's interesting is we're coming to a point in time where now that we built it, it's only a matter of months, not quarters, before that business starts to really take off.

And you're exactly right. It's going after these bigger enterprises that don't require advertising, that have the platforms, that have access to thousands of physicians and millions of patients. And so that's one of the main avenues that I'm excited about. Not the only one.

And again, academic institutions and others -- also countries. There are countries that want to do whole genome sequencing on their population, or a percentage of their population. So there are some monster opportunities out there. And now as the pricing has come down significantly. People are starting to take notice.

Hunter, Thank you so much. Let me go to the next question, we're going to run out of time and there's still a couple of more questions here. Really appreciate your support and I hope you have a great day.

Nick, if you could go to the next question, please.

Dennis Waldman, Barrett Productions LLC.

Hi, Ted. Thank you for a great presentation. I am a Nebula user, and I sometimes think that people don't understand the capabilities and what is affordable to us as a user. The information we receive is just amazing. I think about the fact that there's these million dollar researches on genetics going on, and I'm able to see how I fit into that.

But I did want to comment to reinforce what you're saying, is that my friends in the business -- in the research business -- are telling me because of the drop in price, that finally, the genetic researches, the amount that's going on is just exploding.

This reconfirms what's going on, and the fact that it's being done domestically, it makes it so much attractive to Nebula. So the question I have for you is you talked about where we're going to be a year from now. So I'm going to be more specific. We're going to be on this conference call a year from now. What are you going to be telling me about Nebula and how profitable we are?

So it's interesting. Your commentary is spot on, and you just sort of proved my point that this business is in its infancy. We're just getting started here, and the demand is about to explode and we quickly learned it is going to spread around the country. We are the low-cost provider. What a great business to be in.

But while you were speaking, it reminded me -- this is critically important -- we are about to get into genetic counseling. And so the beauty of that is people that don't really know anything about whole genome sequencing, they get their reports, it's like, okay, what's the next step? What do you do with these reports? They will have a genetic counselor review their reports with them.

So we're going to build a business model around that, and a partnership around that. That's only going to make our offerings even more attractive. That's primarily on the consumer side, but also understand, when I start talking about these physician networks and telemedicine platforms that genetic counseling could also play an important role there as well.

I mean, after all, physicians typically are not experts in genetics, and so genetic counselors could play a nice role, really complementing the physicians. So we're going to be developing that business well. I'm really excited about that. When you say a year from now, what am I going to be saying about Nebula?

Well, that is honestly, I could be saying, boy, wasn't a great business that we acquired for so little and sold for so much? That literally could be the conversation that we could have a year from now. Another conversation we could be having is well, I can't believe how significant the revenues are, where do we go from here?

And it will only be up, because at that point, that's when the big labs are going to say, well, now we really have to get into this business, how do we get into it? And the largest labs in the country, I think, will be knocking on our door, saying we want to buy your business.

And as far as the revenues are concerned, I think they're going to be dramatic. I don't want to put a number on it. It makes no sense. We're in the infancy of building this business. We're at the starting point. I'm telling you it's like when we built out the COVID business three years ago, I didn't know we were going to build $100 million in revenues.

I had no idea. I would have been happy with $10 million a year in revenues, and we did $100 million. Well, it's the same dynamics with our whole genome sequencing business. So I have no idea. I truly don't.

What I'm doing is I'm building the capacity, the infrastructure, the efficiency, the pricing, putting all that in place, we have a great team in place to execute. We have a team that's executed on the COVID testing, now they're going to execute on the Nebula genomics business.

We have great people in place -- took three years to get the right people in place. And now we're going to do the same thing we did with COVID, we're gonna do Nebula Genomics. So it's not like we're new to this business, but we're as experienced in genomic testing at this point, as anybody in the country.

So not only do we have the best equipment and the lowest pricing, but there isn't anybody that's more of an expert than we are in the lab and actually doing on the whole genome sequencing. In fact, we are at the forefront in the state of New York, which is the most highly regulated, the strictest. We're basically setting precedence with the State of New York that everybody else is going to follow. That's how big this is and how serious we are about it.

I just can't believe that I'm the person sitting here in our microcap company, talking about this. I hope that answers your question. I'm certainly not giving you specifics, given those dynamics -- what our revenues are going to be 12 months from now -- I don't know how to put it. It's going to be a hell of a lot greater than what it is right now.

Thank you. Great. Let me we're almost out of time if we can get to the next question -- hey, Dennis, as always, appreciate your support. Those are great questions and great commentary. Thank you very much.

Nick, back to you.

Fred McDonald, Retail Investor.

Hi Ted, how are you doing? Ted, you commented numerous times about the profits of Pharmaloz. biopharma. Nebula -- but the separate work is greater than the current value of ProPhase. Now you say you're not going to an equity raise at these prices, would you consider doing an IPO or a spinoff, on or one or all of these divisions to raise their value?

Yes. So that's a great question. I don't know the exact SEC rules, but in general, SEC frowns upon talking about IPOs and things of that nature ahead of when you file. And so I can't comment other than to say, you hit the nail on the head that we will have potentially all of these opportunities and options at our fingertips.

And you can bet, given my Wall Street background and given our relationships with some great investment banks, and as I said, I've I've worked daily with ThinkEquity for more than three years now, and they are experts and microcap development stage biotech and life science companies, so we're in great hands. We have a great working relationship.

And I'm sure based on everything that I described, there are going to be lots of opportunities next year. And we'll just have to wait and see what they are, and we'll weigh our options at the time. But the beauty is that's why I am very confident that we're never going to have to do anything dilutive for our shareholders. And the reason is because we're building all this underlying value in our company.

And what's nice, see, unlike a pure biotech company, that's spending a fortune developing a cancer drug that knows they're going to have to raise more money, if they don't do a deal with major pharma, people are going to be scared to invest in their company, knowing that there's a raise coming. In our situation, we're building underlying -- yes, we do have the cancer drug that we're developing, but that's at minimal cost -- it's a rounding error in the scheme of things of everything else we're doing.

But we have these two subsidiaries where the revenues are about to take off. And then the earnings will follow right behind. And when you have subsidiaries where the revenues and earnings are taking off, and there's a perspective that the future is bright and when you start seeing the demand.

I mean our lozenges, we have demand for when we build our capacity out a year from now. And when you have that type of visibility, investors will pay big for that because you're not risking something like a biotech drug that will fail. You're talking about a business model where you can visibly see the revenues and earnings growing, and you're getting a nice return on your investment.

So my point simply being I can't tell you if we're going to do IPOs or spin outs -- I shouldn't even comment on that kind of stuff. But what I can tell you is that those will be options that will be available to us, whether we're in a bull market or a bear market, because we will have businesses that are generating revenues and earnings, and have visibility for significantly greater demand.

So I hope that answers your question. It's a spot on question. It's absolutely the way investors should be thinking about our company, and we'll see.

And I believe we have time next -- thank you so much for the question and always really appreciate your support. And Nick, I think we have time for one more question.

Paul Berger, PLA Associates.

Hey, Ted, thanks for taking the call. So I'm still a little unclear on the accounts receivable issue, and it looks like -- you certainly sound like you have a lot of potential with a lot of things and I hope that works out.

But we also have to look on how execution happens. And one, I don't know where you got the number $33 million for your accounts receivable. In your financials that's $38 million at September 30.

Then I apologize, I misquoted. If it's $38 million at the end of the quarter, let me look at the data.

And I don't know what level --

You know what, Paul, let me cut to the chase, and that's really funny because I thought we were out of time, I said, let me squeeze in one more question. I hope it's going to be a good question. I've spent an enormous amount of time on our accounts receivable already. I'm sorry if this is the last question. I have given you the answer. These are high quality insurance companies. I can't guarantee we're going to collect on all the accounts receivable.

We will make that decision at year end, but we have money coming in every week from our accounts receivable. So it's not like it's not a real accounts receivable, and the amount of money coming in is greater than our negative cash flow.

What are you? What are your (multiple speakers)

Let me put it this way. I'm sorry this is the last question. I don't want to cut you off. But what is your question that you're looking for an answer that I didn't already go over ad nauseam?

Well, to me, it looks like you've got at least half the accounts receivables that are over a year old, or certainly nine months.

Okay so, we did. Okay, so let me explain, I've explained this on prior calls. We did a significant amount of COVID testing in the first half of the year. So we collected on a significant amount of accounts receivable from last year, and it was replaced by new accounts receivable from this year. So it's not the same accounts receivable.

So do we still have some accounts receivable from last year? Yes. Are we collecting on it? Yes. In fact, I'm not going to go into details. We have one major insurance company that owes us a big block of money for last year, and we've been negotiating with them, and they agree that they owe us the money, but they want to go specimen by specimen now and drag it out instead of come to a settlement, but they're going to pay us off substantially all of what they owe us, but it's coming in drips and drabs.

I'm frustrated by it, obviously it sounds like you are, but I don't know what else do you want me to tell you.

I mean, I just have a whole -- (multiple speakers)

-- accounts receivable and it's flowing in. Whatever rate of flows in, it flows in. What I'm building, what I believe, are multi-$100 million businesses. I believe that we're going to collect substantially on our accounts receivable. I don't know what the exact number, but money is coming in every week. That's it's paying the bills every week.

Alright, well, we'll wait to see what the accountants say at year end.

Alrght. Thank you. I think that was my point and it killed my thunder. Nick, if you want to ask if there are any more questions or I'm happy to wrap up.

One moment please. (Operator Instructions)

It looks like we're done with questions, and we've come up on the hour anyway. So let me just wrap it up.

It looks like we have one more question. Go ahead. Why don't you bring in one last question, Nick.

Patrick Patterson, Ion Publishers, LLC.

Ted, I love what you're doing with every one of the subsidiaries, the intrinsic value is phenomenal. I know you're going to realize all that money for us one day, and everybody is so excited about Nebula, and me too, but I want to ask you about the esophageal cancer test.

You know, it's just such a life-saving thing. We already know it works, and I know you're having to wait for these last samples and things. So my question is, we did 20 million endoscopies last year. I mean, I know that was one of them, but just how do you manage to tell all the GI doctors in America that this test is going to be there, and that there is a CPT code and that they ought to do it? In other words, how do you pull it out? Can you talk all about it?

So that's a great, great, great question. Great question on. Okay. Here we go.

First of all, we, one of our senior executives at our company just attended a CEO conference for healthcare companies and health insurance companies. And universally, what all the insurance companies said to us was if you have a test, we're happy that the test will tell you whether or not you have cancer definitively.

And understand right now if you get an endoscopy, and that's a tissue specimen that's studied under a microscope, two pathologists can study that specimen and tell you different outcomes. You have false positives and false negatives. It's really bad.

Our test is virtually 100% accurate for telling you whether or not you have cancer now, which is critically important. But what the insurance companies say is, well, if you tell us that the person has cancer now. that's great, but they already have cancer. And once you get diagnosed with esophageal cancer, you die 80% to 90% of the time.

So there isn't much that the insurance companies can do with that, other than say, it's disappointing. It's too bad that the person has has esophageal cancer. It's too bad it wasn't caught sooner. But that's what our test does. It can catch it sooner.

All right, so what the insurance companies said was, it's nice if you can recognize whether or not you have cancer now, but the Holy Grail would be is if you could tell us whether you're at high risk or low risk. If your a test can do that, we will tell -- we will mandate to the physicians that they have to order your test when somebody comes in for an endoscopy.

That's where we're going with this. So what's interesting is we're already talking to a potential very large company where this test would fit right in in their wheelhouse. If we wanted to sell it, lock stock and barrel, for a block of money upfront and a royalty. And it's possible we go that route and the shareholders would be very happy if we go that route.

And what we're doing right now, we hired an independent, highly-regarded statistics company to go through all the numbers to give a potential acquirer exactly what they would need. And that's actually why we mentioned in our press release that we hired this statistics company.

Now, what's interesting though, is -- and I've touched on this in the past -- but this was just confirmed by the CEOs of some of the largest insurance companies in the country who said, if our tests can tell you're a high or low risk, that's the Holy Grail.

And guess what, that's the other part of the study that we're doing right now, is to figure out since our test already -- and we have the IP on this -- we isolated the proteins that cause, that shift, that give you the indication that you're developing esophageal cancer. So what we're working on right now are the statistics involved in figuring out how big a shift in those proteins tells you whether or not you're going to get esophageal cancer whether you're high risk or low risk.

Because one thing that I realized a while ago, which I discussed with our team, was the fact that what if people, two people, are at high risk of esophageal cancer, and one changes their lifestyle and their eating habits and their risk goes down? And the other person instead is nervous, depressed, whatever the reason is, eats more, and accelerates the growth of the cancer, of the cancer cell,s and gets esophageal cancer?

That's out of the control of the test, to read the mind of the person taking the test. So I was thinking there's got to be a gray area here. What we call the yellow orange area, which is the warning zone, where our test will tell you if you're in the warning zone, but we can't tell you what the person is going to do.

So what we can do though, is review the studies that have already been done and do more studies. And again, these are studies on people where in some cases, we can go back two, three, five years. These are people that may have been biopsied years ago, and we can actually see the outcomes. And we can see based on the shifts in the proteins where they had high risk and low risk.

So that's what we're developing right now with the statistics, so that this is more than just a test to tell you whether or not you have cancer now, but whether you are at high risk or low risk. Once we perfect that, it's quite possible as the insurance companies are so excited about this, that we don't need to sell this to a major company for a big amount of money.

We'll be able to -- because I don't know that I want to build a sales force with 100 people that go call on physicians around the country to say, hey, we have this great test. You should really use it and blah blah blah blah blah -- so that just wouldn't be efficient, and that that would be a reason to partner with a major cancer testing company.

Alright, but on the other hand, if the insurance companies say they're going to mandate the GIs and the physicians, that's a whole different ballgame. Now in addition to that, with the work that we're doing, because we isolated the proteins and now we've also developed I mean, I could go on and on about this.

But very quickly, we are developing a brush technique where you don't even have to get an endoscopy. So that we're developing right now. If that happens, you can go into a GIs office -- not going to get an endoscopy.

You have rumbling in your stomach, you have symptoms or you've had an endoscopy in the past, you have Barrett's esophagus, which is a precursor to esophageal cancer, and you will have a brush that goes down your throat. And with the specimens that we've picked up from that brush, we'll be able to run that on a test without an endoscopy, which would be incredible.

Because then you're talking about the market for this, I mean, the numbers would be so big, it's ridiculous. So that's game changing. And then the last piece of this, I don't want to get into this, but the last piece of this, is with the research we're doing and with the IP that we have, and with the proteins that we've isolated, it's possible that we could actually develop a therapeutic out of this. So that's much further down the road.

My point to all this is simply to say that our esophageal cancer test has enormous potential. Everything is going really, really well with it. The only reason I don't spend more time talking about it is because of the market environment that doesn't really care about development-stage biotech.

And we have two operating subsidiaries between Nebula Genomics and Pharmaloz that are going to generate significant revenues, and generate significant profits next year. And that's what we need for our shareholders to be very happy with me and our management team next year. The fact is we have these other wildcards that can be absolutely huge.

So I hope -- that was a great question. I appreciate you coming on at the end of the call past that, Pat. And with that, we ran I think we ran overtime if we wanted to set this to an hour. So I think we'll conclude the call.

Nick, do you see any other questions, or should we go on? Thank you, Pat.

That was the last question. There's nobody else in the queue. If you want to give closing remarks, it would be perfect right now, sir.

Perfect. Okay. Thank you so much, Nick.

Look, thank you all for joining. Look, obviously, I'm really excited about the future of the company. You know, the accounts receivable question, honestly, his question wasn't a bad question. It was asked three times on the call, but it really wasn't a bad question.

And yes, there are questions around the accounts receivable. I can't guarantee we're going to collect on all the accounts receivable. We may not. What difference does it make? If we have to write off some of it, we'll write off some of it. The point is we are collecting on a significant portion of our accounts receivable. It is from major insurance companies, and they are paying us, and the money comes in every week.

And now that we're not doing COVID testing anymore, new accounts receivable will be even more reliable than old accounts receivable. I would also tell you that one of our accounts receivable actually doesn't have anything to do with COVID testing, but I'm confident that we're going to collect it.

But I'm not going to go into it, except to tell you that the issue with the accounts receivable pales in comparison to the businesses that we're developing, I would also put it in the perspective that we did over $200 million of COVID testing, and we're down to less than what I'd say is $30 million of it is from COVID testing in accounts receivable and then the last $30 million, if we struggle with it a little bit more, so be it. It doesn't change the fact that it was a hugely successful business and we made an awful lot of money.

And right now that cash flow is paying for our businesses that are developing, and the transition to the businesses that we're developing through being a significant revenue generators and ultimately, significant profit generators is very close at hand.

So with that, I appreciate everybody's time today. As you can tell, I'm passionate. So I can get aggressive from time to time. But I think that's what you want in a CEO. If you want a CEO that actually executes, then that's what I do. Some people probably don't like that style, but if you don't, then don't invest in ProPhase Labs.

But if you want a management team that executes, that's developing businesses with enormous potential, and its enormous potential is close at hand, not something that we have to spend tens of millions of dollars over the next one, two, three years developing. This is a business where we're spending millions of dollars, not tens of millions of dollars. And we're developing businesses that I believe are going to be worth a hundred or hundreds of millions of dollars. And it's going to have those kinds of valuations in the short term and intermediate term, not in the long term.

So I can't think of a more attractive investment in the marketplace if you have the perspective for investing long-term in microcap development stage companies. And with that, I bid everybody the best of luck. There's nothing more difficult in my mind than investing -- well maybe being CEO of a public company while it's losing money -- but I wish you all the best luck. And I really appreciate everybody's support, and for listening to me talk to the last hour and 10 minutes.

Thank you, Nick. Great job setting up the conference call today, and thank you so much.

Thank you for that, sir. Conference has now concluded. Thank you for attending today's presentation. You may now disconnect.