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UNIONDALE, NY - ProPhase Labs, Inc. (NASDAQ:PRPH), currently trading at $0.39 per share with a market capitalization of $16.22 million, announced Wednesday it has closed a $3 million private placement financing with two investors through senior secured convertible notes with accompanying warrants to purchase common stock. According to InvestingPro analysis, the company’s shares have fallen significantly over the past year, with current valuations suggesting the stock may be undervalued.
The notes were issued with a 20% original issue discount and are secured by company and subsidiary assets. They cannot be converted for the first four months after issuance but can be prepaid without penalty. The accompanying warrants are exercisable at $0.50 per share. InvestingPro data reveals the company operates with a debt-to-equity ratio of 0.93 and has experienced significant revenue decline of -67.59% in the last twelve months.
According to the terms of the Securities Purchase Agreement, investors may purchase up to an additional $3 million in notes. The company plans to use proceeds for working capital, general corporate purposes, and repayment of existing debt. InvestingPro analysis indicates the company is quickly burning through cash, with weak gross profit margins of 7.46%. Subscribers can access 8 additional ProTips and comprehensive financial metrics in the Pro Research Report.
Ted Karkus, Chief Executive Officer of ProPhase Labs, said the financing provides "important bridge capital" as the company pursues potential near-term liquidity events, including collection of up to $50 million in Covid accounts receivable and the potential sale of Nebula Genomics.
The company also indicated the funds will support recently announced initiatives exploring potential crypto strategies that could leverage blockchain expertise from Nebula Genomics.
The securities were offered through a private placement under Regulation D of the Securities Act of 1933 and have not been registered under the Securities Act or applicable state securities laws.
ProPhase Labs develops and commercializes health and wellness solutions through its subsidiaries, including genomics services and consumer products.
The transaction details will be filed with the Securities and Exchange Commission within four business days, according to the press release statement. The company’s next earnings report is scheduled for August 7, 2025, which will provide further insight into its financial health and strategic initiatives.
In other recent news, ProPhase Labs reported its first-quarter 2025 earnings, revealing an earnings per share (EPS) of -0.13, which exceeded analysts’ expectations of -0.18. Despite this positive earnings surprise, the company experienced a significant revenue miss. Additionally, ProPhase Labs announced a potential reverse merger with a digital asset-focused company, aiming to complement its existing businesses. The company also received a 180-day extension from Nasdaq to meet the minimum $1.00 bid price requirement, with a new compliance deadline set for December 22, 2025. In corporate governance updates, ProPhase Labs appointed Carolina Abenante as an independent director, and she will serve on several committees. The company has also established a Clinical Science Advisory Board to support the commercialization of its BE-Smart™ molecular test for esophageal disease. These developments highlight ProPhase Labs’ strategic efforts to enhance shareholder value and expand its business operations.
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