ProPhase Labs Inc. reported third‑quarter 2025 results that saw net revenue fall to $0.9 million, a sharp decline from $1.4 million in the same period a year earlier. Gross margin profit slipped to $0.1 million, compared with a $0.2 million loss in Q3 2024, and the company posted a net loss from continuing operations of $6.8 million, a 48% increase in loss compared with the $4.5 million loss reported in Q3 2024.
The company’s consumer‑product segment generated the entire $0.9 million in revenue, while diagnostic services produced no revenue. Gross margin for the consumer segment collapsed to 13.1% from 65.3% in Q3 2024, a result of a shift toward lower‑margin product mix and higher cost of goods sold. The absence of diagnostic revenue left the company with no offsetting high‑margin income, amplifying the margin squeeze. Operating expenses dropped to $4.6 million from $6.6 million a year earlier, largely due to a $1.9 million reduction in personnel and overhead costs and the divestiture of the Pharmaloz manufacturing unit, which generated approximately $23 million in proceeds in January 2025.
Research and development spending fell dramatically to $6,000 from $122,000, reflecting a leaner focus on core product development. Cash on hand was $405,000, down from $678,000 at the end of 2024, but the company raised $10 million in convertible notes and common stock for the nine months ended September 30, 2025, providing a short‑term liquidity cushion. The $3 million private placement of senior secured convertible notes mentioned in the original article is part of this broader capital‑raising effort, though the exact terms were not disclosed in the filing.
Management highlighted three strategic initiatives that could reverse the current financial trajectory. CEO Ted Karkus emphasized the Crown Medical Collections program, which is targeting the recovery of more than $50 million in uncollected COVID‑19 testing receivables, and described it as a “non‑dilutive” source of capital. He also underscored the BE‑Smart esophageal cancer test, validated by Mayo Clinic and poised for commercialization, and noted that Nebula Genomics, acquired in 2021, is now profitable on a pro‑forma basis. Karkus stated that these initiatives “provide a clear path to value creation that far exceeds our current share price.”
The company said it would discuss guidance for the next quarter during the earnings call, but no specific numbers were released. Analysts and investors will be watching for any upward revision to revenue or margin targets, as the company’s focus on high‑margin diagnostics and genomics could signal a turnaround if the strategic initiatives gain traction. The Q3 results underscore the urgency of the company’s restructuring efforts and the importance of the Crown Medical and BE‑Smart programs in restoring profitability.
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