Investment Thesis
ProPhase Labs faces critical financial distress with revenue collapsed 80.6% YoY to just $3.6M while operating losses reached $12.3M, indicating fundamental business failure. With only $405K cash, a 0.14x current ratio indicating severe liquidity crisis, and negative $7.1M operating cash flow, the company has limited runway before potential insolvency.
Strengths
- Gross margin of 31.9% suggests product has inherent value when sold
- Moderate leverage with debt-to-equity of 0.43x provides some financial flexibility
- Zero capital expenditures indicate aggressive cost-cutting measures in place
Risks
- Critical liquidity crisis: Current ratio of 0.14x leaves only 14 cents of current assets per dollar of obligations
- Catastrophic revenue decline of 80.6% YoY signals core business model failure or total loss of market position
- Negative operating cash flow of $7.1M with only $405K cash on hand creates imminent insolvency risk within weeks
- Net losses deteriorating 218% YoY with negative interest coverage of -23.9x indicates inability to service debt from operations
- Destroyed shareholder value with ROE of -107.1% and ROA of -11.2%
Key Metrics to Watch
- Cash position depletion rate and months of runway remaining
- Revenue stabilization or continued contraction trajectory
- Debt covenant compliance and refinancing ability
- Operating loss reduction path and timeline to cash flow breakeven
Financial Metrics
Revenue
3.6M
Net Income
-7.3M
EPS (Diluted)
$-0.19
Free Cash Flow
-7.1M
Total Assets
65.7M
Cash
405.0K
Profitability Ratios
Gross Margin
31.9%
Operating Margin
-346.0%
Net Margin
-206.3%
ROE
-107.1%
ROA
-11.2%
FCF Margin
-199.8%
Balance Sheet & Liquidity
Current Ratio
0.14x
Quick Ratio
0.14x
Debt/Equity
0.43x
Debt/Assets
89.6%
Interest Coverage
-23.92x
Long-term Debt
2.9M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-04-14T15:30:21.879220 |
Data as of: 2025-09-30 |
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