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Prophase Labs Reported Results For The Third Quarter Ended September 30, 2025, And Will Hold A Virtual Conference Call Today At 2Pm ET.
| September 30, 2025 | December 31, 2024 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 405 | $ | 678 | ||||
| Accounts receivable, net | 3,284 | 20,058 | ||||||
| Inventory, net | 266 | 1,143 | ||||||
| Prepaid expenses and other current assets | 3,818 | 2,615 | ||||||
| Current assets in discontinued operations | - | 6,143 | ||||||
| Total current assets | 7,773 | 30,637 | ||||||
| Property, plant and equipment, net | 2,349 | 7,501 | ||||||
| Investment in unconsolidated affiliates | 43,657 | - | ||||||
| Prepaid expenses, net of current portion | 140 | 217 | ||||||
| Operating lease right-of-use asset, net | - | 4,115 | ||||||
| Intangible assets, net | 7,813 | 9,750 | ||||||
| Goodwill | 3,968 | 5,231 | ||||||
| Other assets | 2 | 310 | ||||||
| Non-current assets in discontinued operations | - | 5,439 | ||||||
| TOTAL ASSETS | $ | 65,702 | $ | 63,200 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 14,195 | $ | 13,717 | ||||
| Accounts payable to unconsolidated affiliates | 27,653 | - | ||||||
| Accrued diagnostic services | - | 31 | ||||||
| Accrued advertising and other allowances | 151 | 151 | ||||||
| Finance lease liabilities | 2,580 | 2,147 | ||||||
| Operating lease liabilities | - | 1,214 | ||||||
| Short-term loan payable, net of discount of $629 and $237 | 3,185 | 3,207 | ||||||
| Short-term loan payable to related party, net of discount of $188 | 437 | - | ||||||
| Short-term convertible notes payable, net of discount of 3,233 | 517 | - | ||||||
| Derivative liability | 2,688 | - | ||||||
| Deferred revenue | 1,374 | 1,698 | ||||||
| Income tax payable | 291 | 1,987 | ||||||
| Other current liabilities | 2,216 | 2,115 | ||||||
| Current liabilities in discontinued operations | - | 5,867 | ||||||
| Total current liabilities | 55,287 | 32,134 | ||||||
| Non-current liabilities: | ||||||||
| Unsecured promissory notes, net of discount of $127 | - | 9,873 | ||||||
| Unsecured long-term debt, net of discount of $- and $423 | - | 1,779 | ||||||
| Due to sellers (see Note 3) | 2,000 | 2,000 | ||||||
| Deferred revenue, net of current portion | 589 | 784 | ||||||
| Operating lease liabilities, net of current portion | - | 3,762 | ||||||
| Finance lease liabilities, net of current portion | 965 | 2,591 | ||||||
| Non-current liabilities in discontinued operations | - | 2,924 | ||||||
| Total non-current liabilities | 3,554 | 23,713 | ||||||
| Total liabilities | 58,841 | 55,847 | ||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| Stockholders' equity | ||||||||
| Preferred stock authorized 1,000,000, $0.0005 par value, no shares issued and outstanding | - | - | ||||||
| Common stock authorized 1,000,000,000, $0.0005 par value, 41,541,205 and 29,874,029 shares outstanding, respectively | 29 | 23 | ||||||
| Additional paid-in capital | 122,411 | 129,921 | ||||||
| Accumulated deficit | (65,738 | ) | (58,393 | ) | ||||
| Treasury stock, at cost, 8,692,005 and 12,940,967 shares (1), respectively | (49,643 | ) | (64,000 | ) | ||||
| Accumulated other comprehensive loss | (198 | ) | (198 | ) | ||||
| Total stockholders' equity | 6,861 | 7,353 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 65,702 | $ | 63,200 |
(1) This is net of 6,000,000 collateral shares.
See accompanying notes to these condensed consolidated financial statements
ProPhase Labs, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(in thousands, except per share amounts)
(unaudited)
| For the three months ended | ||||||||
| September 30, 2025 | September 30, 2024 | |||||||
| Revenues, net | $ | 883 | $ | 1,416 | ||||
| Cost of revenues | 1,006 | 1,201 | ||||||
| Gross profit | (123 | ) | 215 | |||||
| Operating expenses: | ||||||||
| General and administration | 4,635 | 6,573 | ||||||
| Research and development | 6 | 122 | ||||||
| Total operating expenses | 4,641 | 6,695 | ||||||
| Loss from operations | (4,764 | ) | (6,480 | ) | ||||
| Debt extinguishment gain (loss) | 220 | - | ||||||
| Loss on issuance of debt | (480 | ) | - | |||||
| Interest expense | (1,549 | ) | (993 | ) | ||||
| Change in fair value of warrant liability | (185 | ) | - | |||||
| Change in fair value of derivative liability | (618 | ) | - | |||||
| Loss from disposal of fixed assets | - | - | ||||||
| Employee retention tax credit income | 380 | - | ||||||
| Other expense | - | - | ||||||
| Loss from operations before income taxes | (6,996 | ) | (7,473 | ) | ||||
| Income tax (expense) benefit | 157 | 2,508 | ||||||
| Loss from continuing operations after income taxes | (6,839 | ) | (4,965 | ) | ||||
| Discontinued operations: | ||||||||
| Loss from discontinued operations, net of tax | - | (1,622 | ) | |||||
| Gain from disposal of discontinued operations | - | - | ||||||
| Income (loss) from discontinued operations | - | (1,622 | ) | |||||
| Net loss | $ | (6,839 | ) | $ | (6,587 | ) | ||
| Other comprehensive income: | ||||||||
| Unrealized gain on marketable securities | (2 | ) | 1 | |||||
| Total comprehensive loss | $ | (6,841 | ) | $ | (6,586 | ) | ||
| Net earnings (loss) per share: | ||||||||
| Loss from continuing operations, basic and diluted | $ | (0.16 | ) | $ | (0.26 | ) | ||
| Income (loss) from discontinued operations, basic and diluted | $ | - | $ | (0.09 | ) | |||
| Net loss per share, basic and diluted | $ | (0.16 | ) | $ | (0.35 | ) | ||
| Weighted average common shares outstanding: | ||||||||
| Basic | 41,541 | 19,079 | ||||||
| Diluted | 41,541 | 19,079 |
See accompanying notes to these condensed consolidated financial statements
ProPhase Labs, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
| For the nine months ended | ||||||||
| September 30, 2025 | September 30, 2024 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | (7,345 | ) | $ | (19,005 | ) | ||
| Less: Gain (loss) from discontinued operations, net of tax | 8,644 | (3,053 | ) | |||||
| Net loss from continuing operations | (15,989 | ) | (15,952 | ) | ||||
| Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||||||||
| Realized loss on marketable debt securities | - | 18 | ||||||
| Depreciation and amortization | 3,869 | 4,664 | ||||||
| Amortization of debt discount | 1,813 | 983 | ||||||
| Impairment loss | 1,263 | - | ||||||
| Amortization on operating lease right-of-use assets | 227 | 338 | ||||||
| Loss on issuance of debt | 480 | - | ||||||
| Stock-based compensation expense | 1,460 | 3,021 | ||||||
| Loss from lease termination | 1,357 | - | ||||||
| Employee retention tax credit income | (1,929 | ) | - | |||||
| Inventory reserve | - | (24 | ) | |||||
| Loss (gain) from disposal of fixed assets | 868 | (91 | ) | |||||
| Change in fair value of warrant liability | 225 | - | ||||||
| Change in fair value of derivative liability | 618 | - | ||||||
| Debt extinguishment loss | 498 | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (7 | ) | 4,824 | |||||
| Inventory | 313 | 587 | ||||||
| Prepaid expenses and other current assets | (1,209 | ) | (688 | ) | ||||
| Deferred tax asset | - | (7,427 | ) | |||||
| Other assets | - | 854 | ||||||
| Accounts payable and accrued expenses | 565 | 4,820 | ||||||
| Accrued diagnostic services | (5 | ) | (276 | ) | ||||
| Accrued advertising and other allowances | - | 98 | ||||||
| Deferred revenue | (519 | ) | (907 | ) | ||||
| Deferred tax liability | - | - | ||||||
| Lease liabilities | (151 | ) | (1,404 | ) | ||||
| Income tax payable | (1,696 | ) | (1,004 | ) | ||||
| Other liabilities | 238 | (1,022 | ) | |||||
| Net cash used in operating activities - continuing operations | (7,711 | ) | (8,588 | ) | ||||
| Net cash provided by (used in) operating activities - discontinued operations | 597 | (5,432 | ) | |||||
| Net cash used in operating activities | (7,114 | ) | (14,020 | ) | ||||
| Cash flows from investing activities | ||||||||
| Proceeds from sales of marketable securities | - | 3,374 | ||||||
| Proceeds from sales of fixed assets | 120 | 229 | ||||||
| Capital expenditures | - | (866 | ) | |||||
| Net cash provided by investing activities - continuing operations | 120 | 2,737 | ||||||
| Net cash provided by (used in) investing activities - discontinued operations | 800 | (275 | ) | |||||
| Net cash provided by investing activities | 920 | 2,462 | ||||||
| Cash flows from financing activities | ||||||||
| Proceeds from issuance of note payable, net | 2,914 | 8,334 | ||||||
| Proceeds from issuance of note payable to related party, net | 500 | - | ||||||
| Proceeds from issuance of convertible notes payable | 3,000 | - | ||||||
| Proceeds from issuance of common shares, net | 3,558 | 4,624 | ||||||
| Repayment of note payable | (4,016 | ) | (2,492 | ) | ||||
| Net cash provided by financing activities - continuing operations | 5,956 | 10,466 | ||||||
| Net cash used in financing activities - discontinued operations | (35 | ) | (16 | ) | ||||
| Net cash provided by financing activities | 5,921 | 10,450 | ||||||
| Decrease in cash and cash equivalents | (273 | ) | (1,108 | ) | ||||
| Cash and cash equivalents at the beginning of the period | 678 | 1,609 | ||||||
| Cash and cash equivalents at the end of the period | $ | 405 | $ | 501 | ||||
| Supplemental disclosures: | ||||||||
| Cash paid for income taxes | $ | 1,094 | $ | 860 | ||||
| Interest payments | $ | 1,161 | $ | 2,126 | ||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Issuance of common stock as commitment fee for future financing | $ | 158 | $ | - | ||||
| Issuance of liability classified warrants associated with notes payable | $ | 230 | $ | - | ||||
| Net unrealized (gain) loss, investments in marketable debt securities | $ | - | $ | 267 | ||||
| Deconsolidation of subsidiaries assets and liabilities | $ | (16,003 | ) | $ | - | |||
| Recognition investment in nonconsolidated subsidiaries | $ | 43,657 | $ | - |
See accompanying notes to these condensed consolidated financial statements
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 | ||||||||
| September 30, 2025 | September 30, 2024 | |||||||
| GAAP loss from continuing operations (1) | $ | (6,839 | ) | $ | (4,965 | ) | ||
| Interest, net | 1,549 | 993 | ||||||
| Income tax benefit | (157 | ) | (2,508 | ) | ||||
| Depreciation and amortization | 2,387 | 3,059 | ||||||
| EBITDA | (3,060 | ) | (3,421 | ) | ||||
| Share-based compensation expense | 431 | 796 | ||||||
| Non-cash rent expense (2) | 122 | 67 | ||||||
| Adjusted EBITDA from continuing operations | $ | (2,507 | ) | $ | (2,558 | ) |
(1)We believe that net loss from continuing operations 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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