ProPhase Labs, Inc. (NASDAQ: PRPH) entered into a non‑binding Letter of Intent with Advanced Biological Laboratories S.A. (ABL), a Luxembourg‑based biotechnology and MedTech group, to pursue a reverse merger that would place ABL shareholders in control of the combined entity. The LOI values ProPhase’s legacy business at up to $30 million and allocates roughly 76 % of the post‑merger equity to ABL shareholders, while allowing ProPhase’s current management to remain in place and to continue operating a U.S. subsidiary that will house the Nebula Genomics platform, the BE‑Smart esophageal cancer test program, and selected consumer‑health businesses.
ProPhase will declare a special cash dividend of up to $10 million to its common shareholders, a distribution that is separate from the merged operating company. In addition, Crown Medical Collections receivables—estimated to net about $50 million—will be carved out for the exclusive benefit of ProPhase shareholders. The dividend and receivables carve‑out provide immediate liquidity and are designed to address the company’s short‑term cash constraints, which have been highlighted by a weak current ratio and a history of negative net margins.
ProPhase’s financial performance has been a concern in recent quarters, with revenue declining 57.5 % over the past three years and net margins turning negative. The company’s assets, particularly the Nebula Genomics platform and the BE‑Smart test, have been identified as high‑potential growth drivers. ABL brings a broader global infrastructure, established laboratory software solutions, and a diversified portfolio of diagnostics and clinical‑trial logistics subsidiaries, positioning the combined entity to accelerate commercialization of ProPhase’s platforms and to leverage ABL’s financing capabilities.
The market reacted strongly to the announcement, with ProPhase’s shares surging more than 50 % in pre‑market trading. Analysts and investors cited the immediate liquidity from the dividend and receivables carve‑out, the $30 million valuation of ProPhase’s legacy business—well above its then‑market capitalization—and the strategic fit between ProPhase’s genomics assets and ABL’s global operations as key drivers of the positive reaction.
The parties anticipate completing definitive documentation within 60 to 90 days, subject to due diligence, regulatory approvals, and Nasdaq listing requirements. If consummated, the reverse merger would provide ProPhase shareholders with a clear exit path, unlock value from its hidden assets, and position the combined company for accelerated growth in diagnostics and genomics.
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