ProPhase Labs Initiates Potential Sale or Strategic Partnership of BE-Smart™ and Advances Crown Medical Collections Initiative

Rhea-AI Summary

ProPhase Labs (OTC: PRPH) has begun a potential sale or strategic partnership process for BE-Smart™, a CLIA-certified, CAP-accredited LDT for esophageal cancer risk stratification, and is advancing its Crown Medical Collections recovery initiative.

ProPhase completed a clinical/commercial dossier, has contacted more than 70 potential partners, cited a Mayo Clinic pilot showing high sensitivity, and estimates an addressable opportunity up to $14 billion. The company now believes > 60% of Crown Medical claims are underpaid (not denied), and reports rising interest in recovery-based, non-recourse financing that would be repaid from recoveries only.

Positive

• Initiated sale/partnership process for BE-Smart™ with outreach to > 70 potential partners
• BE-Smart™ is CLIA-certified and CAP-accredited as a laboratory-developed test ready for commercialization
• Independent validation including a Mayo Clinic pilot reported very high sensitivity for progression prediction
• Crown Medical portfolio now estimated with > 60% underpaid claims, improving recovery prospects
• Growing interest from financing sources in recovery-based, non-recourse funding tied to Crown Medical

Negative

• Company states no assurances that a BE-Smart transaction or recovery financing will occur
• Any recovery-based financing would be repaid solely from recoveries, reflecting uncertainty in cash proceeds
• Outreach to > 70 potential partners does not guarantee a binding transaction or favorable commercial terms

News Market Reaction

-3.90%

1 alert

-3.90% News Effect

On the day this news was published, PRPH declined 3.90%, reflecting a moderate negative market reaction.

Data tracked by StockTitan Argus on the day of publication.

Key Figures

Annual endoscopies: seven million procedures BE-Smart TAM: $14 billion annually Potential partners contacted: more than 70 organizations +1 more

4 metrics

Annual endoscopies seven million procedures Upper endoscopies in U.S. for GERD and Barrett’s surveillance

BE-Smart TAM $14 billion annually Estimated addressable market opportunity for BE-Smart™ in the U.S.

Potential partners contacted more than 70 organizations Targeted outreach for BE-Smart™ sale or strategic partnership

Underpaid claims share more than 60% Portion of aggregate Crown Medical claim universe viewed as underpaid, not denied

Market Reality Check

Price: $0.1500 Vol: Volume 53,437 is well bel...

low vol

$0.1500 Last Close

Volume Volume 53,437 is well below 20-day average 436,637 (relative volume 0.12), suggesting limited participation ahead of this update. low

Technical Price 0.166475 is trading well below the 200-day MA of 3.03, reflecting a deeply broken longer-term trend.

Peers on Argus

PRPH gained 7.42% while several diagnostics peers were down (e.g., ADVB -5.37%, ...

PRPH gained 7.42% while several diagnostics peers were down (e.g., ADVB -5.37%, ISPC -6.06%), with only BIAF notably higher at 12.02%. The mixed and mostly negative peer moves point to a stock-specific reaction.

Historical Context

5 past events · Latest: Jan 26 (Positive)

Pattern 5 events

Date	Event	Sentiment	Move	Catalyst
Jan 26	Collections update	Positive	-19.3%	Detailed progress on Crown Medical COVID-19 receivables and potential net recoveries.
Jan 22	Uplisting update	Positive	+53.0%	Uplist from Pink Sheets to OTC market and strategic commentary on key assets.
Jan 05	Capital structure	Positive	-22.8%	Update on convertible debt conversions, reverse split, and focus on core assets.
Dec 19	Reverse merger LOI	Neutral	-14.7%	Non-binding LOI for reverse merger with ABL and framework for asset value and dividend.
Dec 19	Merger disclosure	Neutral	-14.7%	Disclosure by ABL Diagnostics of proposed reverse merger terms and conditions.

Pattern Detected

Recent history shows frequent negative reactions to operational and capital-structure updates, with the uplisting announcement as the lone strong positive outlier.

Recent Company History

Over the past few months, ProPhase has focused on balance sheet repair, strategic repositioning, and monetizing legacy COVID testing receivables. Updates on Crown Medical Collections highlighted potential net recoveries in the tens of millions, yet shares often fell after these announcements. The uplist from Pink Sheets to the OTC market on Jan 22, 2026 produced a sharp positive move, while news on convertible debt conversions and a proposed reverse merger drew negative reactions. Today’s partnership and liquidity-focused update on BE-Smart™ and Crown Medical fits this ongoing effort to unlock asset value and strengthen finances.

Market Pulse Summary

This announcement outlines two potential liquidity drivers: a sale or partnership for BE-Smart™ and ...

Analysis

This announcement outlines two potential liquidity drivers: a sale or partnership for BE-Smart™ and enhanced monetization of Crown Medical underpaid claims, alongside interest in recovery-based, non-recourse financing. It follows months of balance sheet actions and updates on receivables and strategic options. Investors may focus on concrete transaction milestones, realized recovery amounts, and any financing terms, plus how these initiatives interact with recent uplisting, capital-structure changes, and ongoing Nebula Genomics performance.

Key Terms

clia-certified, cap-accredited, laboratory-developed test, mass-spectrometry-based, +4 more

8 terms

clia-certified medical

"BE-Smart™ is a CLIA-certified, CAP-accredited laboratory-developed test (LDT)..."

CLIA-certified means a laboratory has passed U.S. federal standards for performing tests on human samples, showing its results are accurate, reliable and timely. For investors this matters because certification is often required to sell clinical test services, bill insurers, win hospital or physician partnerships and avoid regulatory penalties — much like a restaurant passing a health inspection or a car getting a safety sticker before it can be sold.

cap-accredited medical

"BE-Smart™ is a CLIA-certified, CAP-accredited laboratory-developed test (LDT)..."

Cap-accredited means a laboratory or diagnostic service has been inspected and certified by the College of American Pathologists (CAP) for meeting rigorous standards in testing accuracy, quality control, staff qualifications and reporting. For investors, CAP accreditation signals that the lab’s results are more reliable and that the operation meets a well-recognized regulatory benchmark, which can reduce clinical and regulatory risk and support market trust and reimbursement; think of it like a high-score health inspection for a restaurant.

laboratory-developed test medical

"laboratory-developed test (LDT) that is ready for commercialization..."

A laboratory-developed test is a diagnostic test that a single clinical laboratory designs, builds and uses in its own facility rather than buying from an outside manufacturer; think of it as a custom recipe made and run in-house for diagnosing disease. Investors care because these tests can be quicker to bring to market and create a revenue stream for labs, but they also carry regulatory and quality-risk differences that can affect demand, reimbursement and legal exposure.

mass-spectrometry-based medical

"utilizes an eight-protein mass-spectrometry-based panel performed on standard FFPE..."

Mass-spectrometry-based describes tests, devices or methods that use mass spectrometry, a laboratory technique that identifies and measures molecules by weighing charged particles—like sorting coins by weight to tell different types apart. For investors, this matters because mass-spectrometry-based approaches often offer higher accuracy, sensitivity and the ability to detect multiple substances at once, which can improve regulatory acceptance, product quality, development speed and competitive advantage.

ffpe medical

"mass-spectrometry-based panel performed on standard FFPE biopsy tissue..."

FFPE stands for formalin-fixed, paraffin-embedded, a standard laboratory method for preserving tissue samples by chemically fixing them and enclosing them in wax so they keep their structure over time. Think of it like embedding a pressed flower in wax to preserve its shape and details. For investors, FFPE matters because many diagnostic tests, drug development studies and biomarker analyses rely on these preserved samples; their quality and compatibility with laboratory assays affect clinical validation, regulatory approval and the commercial value of pathology and diagnostics products.

barrett’s esophagus medical

"designed to identify patients at elevated risk of progression from Barrett’s esophagus..."

A condition in which the normal lining of the lower esophagus is replaced by tissue more like the intestine, often from long-term acid reflux. It matters to investors because it increases the chance of developing esophageal cancer, driving demand for screening tests, medical procedures and drug development; like a warning light on a car, it signals greater need for medical care and possible regulatory activity that can affect healthcare company revenues.

esophageal adenocarcinoma medical

"progression from Barrett’s esophagus to esophageal adenocarcinoma..."

Esophageal adenocarcinoma is a form of cancer that begins in the gland-like cells lining the lower part of the esophagus, the tube that carries food to the stomach. It matters to investors because it is often aggressive and has limited treatment options, so advances, trial results, regulatory approvals, or changes in insurance coverage for new tests and therapies can materially affect the prospects and valuations of companies working on diagnostics, drugs, or procedures—like a bridge repair changing traffic for nearby businesses.

non-recourse funding financial

"potential recovery-based, non-recourse funding structures tied to the Crown Medical..."

Non-recourse funding is a loan or financing arrangement where the lender can seize only the specific asset pledged as collateral and cannot go after the borrower’s other assets or income if the loan isn’t repaid. For investors, it matters because it limits the lender’s recovery to the collateral—changing the risk and pricing of the deal, affecting expected returns and how much downside protection exists if the underlying asset loses value (think of it like a car loan where the lender can only take the car, not your other possessions).

AI-generated analysis. Not financial advice.

Each Initiative Has the Potential to Drive Significant Liquidity and Strengthen the Company’s Balance Sheet

UNIONDALE, NY, Feb. 03, 2026 (GLOBE NEWSWIRE) -- ProPhase Labs, Inc. (OTC: PRPH) (“ProPhase” or the “Company”), a next-generation biotech, genomics and consumer products company, today announced that it has initiated a potential sale or strategic partnership process for BE-Smart^™, its clinically validated esophageal cancer risk stratification test, and is advancing its Crown Medical Collections initiative, with each initiative independently offering the potential to drive significant liquidity and materially strengthen the Company’s balance sheet.

BE-Smart™ Sale and Strategic Partnership Process

ProPhase has initiated an active sale and strategic partnership process for BE-Smart^™, with the objective of generating a meaningful liquidity event for the Company while positioning the test for broader clinical adoption through an established industry platform. The Company believes that partnering with, or selling BE-Smart^™ to, an organization with existing commercial infrastructure and physician relationships could significantly accelerate market penetration, reduce ongoing development and commercialization overhead, and create both near-term liquidity and potential long-term royalty or participation-based revenue streams.

As part of this process, ProPhase Labs has recently completed a comprehensive clinical and commercial dossier and finalized an accompanying management presentation. The Company has initiated targeted outreach to more than 70 potential acquirers and strategic partners, including organizations across diagnostics, gastroenterology, oncology, pathology services, and precision medicine. ProPhase believes this broad and focused outreach reflects strong strategic interest in the BE-Smart^™ platform and its potential applications.

BE-Smart^™ is a CLIA-certified, CAP-accredited laboratory-developed test (LDT) that is ready for commercialization under the LDT regulatory framework. The assay utilizes an eight-protein mass-spectrometry-based panel performed on standard FFPE biopsy tissue, requires no additional procedures or biopsies, and can be integrated into existing pathology workflows without changes to standard endoscopic practice. The test is designed to identify patients at elevated risk of progression from Barrett’s esophagus to esophageal adenocarcinoma, enabling earlier intervention while safely reducing unnecessary surveillance in low-risk patients.

Independent clinical validation, including a recent Mayo Clinic pilot study, demonstrated very high sensitivity for progression prediction and strong prognostic performance, particularly in early-stage, nondysplastic Barrett’s esophagus. BE-Smart^™ is differentiated by its minimal tissue requirements, workflow-friendly design, and compatibility with emerging minimally invasive esophageal sampling approaches, including next-generation brush-based technologies, which may further expand adoption and reduce reliance on traditional endoscopy over time.

With approximately seven million upper endoscopies performed annually in the United States for GERD and Barrett’s surveillance, ProPhase estimates the addressable market opportunity for BE-Smart^™ at up to approximately $14 billion annually.

“We believe BE-Smart^™ represents a differentiated, clinically validated diagnostic that is ready for commercial deployment as an LDT,” said Ted Karkus, Chairman and Chief Executive Officer of ProPhase Labs. “By pursuing a sale or strategic partnership, we aim to unlock immediate liquidity, significantly reduce internal development and commercialization costs, and potentially participate in long-term royalty or revenue-sharing streams as adoption expands through a partner’s established distribution network.”

Crown Medical Collections Initiative, New Insights and Financing Opportunity

ProPhase also provided an update on the evolving profile of its Crown Medical Collections initiative, which is pursuing recovery of unpaid and underpaid COVID-19 diagnostic testing claims held by the Company’s laboratory subsidiaries.

Based on recent internal portfolio-level analysis, ProPhase now believes that more than 60% of the aggregate claim universe consists of commercial payers that partially reimbursed claims, rather than outright denials. The Company believes these underpaid claims are particularly compelling, as partial reimbursement reflects implicit acknowledgment of claim validity, narrows potential defenses available to payers, and is generally associated with higher recovery rates and more favorable settlement dynamics compared to fully denied claims.

“As we have continued to analyze the claim mix and advance execution with Crown Medical, the quality of the portfolio has become increasingly clear,” Mr. Karkus added. “The fact that a substantial majority of the claims relate to underpayments, rather than denials, materially strengthens the recovery profile of this initiative.”

The Company noted that, as execution has progressed and visibility into recoveries has improved, it has observed increasing interest from financing sources regarding potential recovery-based, non-recourse funding structures tied to the Crown Medical Collections initiative. Any such financing, if consummated, would be repaid solely from recovery proceeds and would not be dependent on the Company’s operating cash flows.

CEO Commentary

“While no assurances can be given, recovery-based financing associated with the Crown Medical initiative could represent a significant liquidity event for ProPhase Labs,” Mr. Karkus said. “Independently, a transaction involving BE-Smart^™ could also generate substantial liquidity. Either outcome has the potential to materially improve our balance sheet, strengthen our financial position, and fundamentally change the outlook for the Company. In parallel, our Nebula Genomics/DNA Complete business continues to perform ahead of internal expectations with minimal marketing spend. Our streamlined overhead and restructured subscription renewal approach are expected to further enhance profitability as we move through 2026.”

The Crown Medical Collections initiative is being pursued with Crown Medical Collections, LLC, a specialized medical collections firm serving as special counsel to the Company’s laboratory subsidiaries. The initiative is grounded in statutory reimbursement obligations under federal COVID-era legislation and is diversified across a broad base of commercial insurance payers.

ProPhase Labs stated that it intends to provide updates regarding both initiatives as material developments occur.

About ProPhase Labs Inc.

ProPhase Labs Inc. (OTC: PRPH) (“ProPhase”) is a next-generation biotech, genomics and consumer products company. Our mission is to build a healthier world through bold innovation and actionable insight. We’re revolutionizing healthcare with industry-leading Whole Genome Sequencing solutions, groundbreaking diagnostic development, such as our potentially life-saving test for the early detection of esophageal cancer, and a world-class direct-to-consumer marketing platform for cutting-edge OTC dietary supplements. We develop, manufacture, and commercialize health and wellness solutions to enable people to live their best lives. We are committed to executional excellence, smart diversification, and a synergistic, omni-channel approach. ProPhase Labs’ valuable subsidiaries, their synergies, and significant growth underscore our potential for long-term value.

www.ProPhaseLabs.com

Forward-Looking Statements

Except for the historical information contained herein, this document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our strategy, plans, objectives and initiatives, including our expectations regarding the future revenue growth potential of each of our subsidiaries, our expected timeline for commercializing our BE-Smart Esophageal Cancer Test, our expectations regarding future liquidity events, the success of our efforts to collect accounts receivable and anticipated timeline for any payments relating thereto, and our ability to successfully transition into a consumer products company. Management believes that these forward-looking statements are reasonable as and when made. However, such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from those projected in the forward-looking statements. These risks and uncertainties include but are not limited to our ability to obtain and maintain necessary regulatory approvals, general economic conditions, consumer demand for our products and services, challenges relating to entering into and growing new business lines, the competitive environment, and the risk factors listed from time to time in our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and any other SEC filings. These forward-looking statements are subject to risks and uncertainties and actual results may differ materially. Details about these risks and uncertainties can be found in our filings with the SEC. The Company undertakes no obligation to update forward-looking statements except as required by applicable securities laws. Readers are cautioned that forward-looking statements are not guarantees of future performance and are cautioned not to place undue reliance on any forward-looking statements.

This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities.

Investor Relations Contact:

Dave Gentry, CEO
RedChip Companies, Inc.
1-800-REDCHIP (733-2447)
1-407-644-4256
PRPH@redchip.com

Retail Investor Relations Contact:

Renmark Financial Communications
John Boidman: jboidman@renmarkfinancial.com
Tel.: (416) 644-2020 or (212) 812-7680
www.renmarkfinancial.com

FAQ

What is ProPhase Labs (PRPH) doing with BE-Smart™ on February 3, 2026?

ProPhase Labs has initiated a sale or strategic partnership process for BE-Smart™. According to ProPhase Labs, the company completed a clinical/commercial dossier and has targeted outreach to more than 70 potential acquirers and partners.

Is BE-Smart™ commercially ready and what validation exists for PRPH's test?

BE-Smart™ is described as a CLIA-certified, CAP-accredited LDT ready for commercialization. According to ProPhase Labs, independent validation including a Mayo Clinic pilot showed very high sensitivity for progression prediction.

What did ProPhase Labs say about the Crown Medical Collections initiative for PRPH?

ProPhase Labs reports that over 60% of the claim universe are underpaid commercial claims. According to ProPhase Labs, underpayments narrow payer defenses and are generally associated with higher recovery and settlement potential.

Could Crown Medical generate near-term liquidity for PRPH and how would financing work?

The company says recovery-based, non-recourse financing is being discussed and could provide liquidity. According to ProPhase Labs, any such financing would be repaid solely from recovery proceeds, not from operating cash flows.

How might a BE-Smart™ transaction affect ProPhase Labs (PRPH) balance sheet?

A sale or strategic partnership could generate meaningful liquidity and reduce commercialization costs. According to ProPhase Labs, such a transaction could materially strengthen the company's balance sheet and provide potential royalty or revenue-sharing streams.