ProPhase Labs Provides Crown Medical Collections Update; 250+ Insurance Payors Engaged, Approximately 50 Matters in Advanced Settlement Posture

Rhea-AI Summary

ProPhase Labs (OTC: PRPH) provided an update on its Crown Medical Collections initiative for legacy COVID-19 testing receivables held by its lab subsidiaries in Chapter 11.

Crown Medical is engaged with 250+ insurance payors, with ~50 matters in advanced settlement posture and anticipated resolutions in 30–90 days (initial settlements expected Q1 2026). Labs billed ~$300M during COVID-19, with ~$150M unpaid or underpaid; aggregate net cash recoveries after fees could exceed $50M, subject to negotiation and court processes.

Positive

• Engagement with >250 insurance payors
• ~50 matters in advanced settlement posture
• Crown estimates net recoveries could exceed $50M

Negative

• $150M of testing billings unpaid or underpaid
• Timing and amounts uncertain due to negotiations and court processes
• Recoveries routed through Chapter 11 subsidiaries before parent benefit

Key Figures

Insurance payors engaged: more than 250 Advanced settlement matters: approximately 50 Settlement timeline: 30 to 90 days +3 more

6 metrics

Insurance payors engaged more than 250 Commercial insurance payors in settlement negotiations

Advanced settlement matters approximately 50 Matters in advanced settlement posture

Settlement timeline 30 to 90 days Anticipated timing for initial settlement resolutions

COVID testing billings approximately $300 million Total gross billings for diagnostic testing services

Unpaid/underpaid claims approximately $150 million Claims not reimbursed or underpaid by payors

Estimated net recoveries more than $50 million Aggregate net cash recoveries after fees and costs

Market Reality Check

Price: $0.2578 Vol: Today's volume of 159,087...

low vol

$0.2578 Last Close

Volume Today's volume of 159,087 shares is below the 20-day average of 863,374, suggesting a modest participation backdrop ahead of this update. low

Technical Price at $0.2578 is trading below the 200-day MA of $3.11, reflecting a longer-term downtrend despite recent strength.

Peers on Argus

PRPH gained 20.24% while peers showed mixed moves (e.g., PRPO +1.45%, ADVB -3.86...

PRPH gained 20.24% while peers showed mixed moves (e.g., PRPO +1.45%, ADVB -3.86%, BIAF -4.93%), indicating the reaction was more company-specific than sector-driven.

Historical Context

5 past events · Latest: Jan 22 (Positive)

Pattern 5 events

Date	Event	Sentiment	Move	Catalyst
Jan 22	Market uplisting news	Positive	+53.0%	Uplist to OTC market and emphasis on Crown Medical and BE-Smart initiatives.
Jan 05	Capital structure update	Neutral	-22.8%	Details on convertible debt conversions, reverse split, and OTC move.
Dec 19	Reverse merger LOI	Neutral	-14.7%	Preliminary LOI with ABL outlining proposed reverse merger framework.
Dec 19	Partner LOI disclosure	Neutral	-14.7%	ABL Diagnostics’ parallel disclosure of the same reverse merger LOI.
Nov 26	Investor webinar plan	Neutral	+0.7%	Announcement of investor webinar covering BE-Smart and Crown receivables.

Pattern Detected

Recent news has produced mixed reactions: a strong gain on the OTC uplist, notable selloffs around the reverse merger LOI, and modest moves on other updates.

Recent Company History

Over the last few months, ProPhase has focused on capital structure cleanup, strategic transactions, and monetizing Crown Medical receivables. On Jan 22, 2026, the stock jumped 53.03% on an uplist to the OTC market and commentary highlighting Crown Medical and BE-Smart®. Earlier, a 1-for-10 reverse split, convertible debt conversions, and a proposed reverse merger with Advanced Biological Laboratories drove double‑digit declines. The current collections update builds directly on the recurring theme of extracting value from legacy COVID-19 receivables to support liquidity and restructuring.

Market Pulse Summary

This announcement centers on converting legacy COVID-19 testing receivables into cash. Crown Medical...

Analysis

This announcement centers on converting legacy COVID-19 testing receivables into cash. Crown Medical is negotiating with more than 250 insurance payors, with roughly 50 matters in advanced settlement stages and potential net recoveries above $50 million. These efforts relate to about $150 million of unpaid or underpaid claims and tie into the Chapter 11 restructuring of lab subsidiaries. Investors may watch actual settlement closures, realized cash inflows, and updates on the broader restructuring path.

Key Terms

chapter 11, litigation

2 terms

chapter 11 regulatory

"legacy COVID-19 testing receivables held by its laboratory subsidiaries currently in Chapter 11 proceedings"

Chapter 11 is a U.S. bankruptcy process that lets a financially distressed company keep operating while it reorganizes its debts and business plan under court supervision. Think of it as a formal pause that allows the company to renegotiate payments, shed contracts or assets, and seek a path to profitability instead of being liquidated; investors watch it because it can change the value and priority of claims, equity dilution, or the likelihood of recovery.

litigation regulatory

"pursue both negotiated settlements and litigation strategies designed to maximize recoveries"

Litigation is the formal process of resolving disputes through the court system, where one party sues another and a judge or jury decides the outcome. For investors it matters because lawsuits can lead to large fines, settlement costs, injunctions or changes in business operations that reduce profits or create uncertainty—like a costly, public argument that can divert management time, drain cash and change the company’s future prospects.

AI-generated analysis. Not financial advice.

UNIONDALE, NY, Jan. 26, 2026 (GLOBE NEWSWIRE) -- ProPhase Labs, Inc. (OTC: PRPH) (“ProPhase” or the “Company”), a next-generation biotech, genomics and consumer products company, today provided an operational update on the progress of its Crown Medical Collections initiative relating to legacy COVID-19 testing receivables held by its laboratory subsidiaries currently in Chapter 11 proceedings.

Crown Medical Collections (“Crown Medical”), which serves as special counsel to the Debtors for the collection of accounts receivable, is actively engaged in settlement negotiations with a broad group of commercial insurance payors in connection with outstanding ProPhase receivables arising from approved and completed COVID-19 diagnostic testing services.

According to Crown Medical:

“Crown Medical Collections, in its capacity as special counsel for the collection of accounts receivable, is actively engaged in settlement negotiations with more than 250 insurance payors relating to outstanding ProPhase receivables. Approximately 50 of these matters are presently in advanced settlement posture, with anticipated resolutions expected to close within the next 30 to 90 days. These recoveries are expected to generate substantial proceeds and materially enhance near-term liquidity in support of ongoing operations and an orderly court-supervised restructuring process.”

During the COVID-19 pandemic, the Company’s laboratory subsidiaries generated approximately $300 million in total gross billings for diagnostic testing services. Of that amount, approximately $150 million represents claims that were either not reimbursed at all or were underpaid, despite the Company’s belief that such claims were valid and, in many cases, previously approved by payors.

Crown Medical believes that, in many instances, insurance payors engaged in systematic delays, denials, or underpayments of valid claims, often without a legitimate basis for non-payment. Crown Medical’s recovery efforts are premised on the view that these actions were not the result of routine administrative errors or good-faith disputes, but rather reflected broader payment practices designed to avoid or defer payment obligations owed for services properly rendered during the COVID-19 testing surge.

The Crown Medical initiative is focused on pursuing recoveries related to this unpaid or underpaid portion of testing billings.

As previously disclosed, Crown Medical has estimated that aggregate net cash recoveries to the Company, after contingency fees and legal costs, could exceed $50 million, though the timing and ultimate amount of any such recoveries remain subject to negotiation outcomes, court processes, and other uncertainties.

The Chapter 11 reorganization of the Company’s COVID-19 testing laboratory subsidiaries was undertaken to streamline and accelerate these recovery efforts under court supervision, while insulating ProPhase Labs, Inc. at the parent-company level. Following satisfaction of creditor obligations at the subsidiary level, remaining proceeds are expected to benefit ProPhase Labs, Inc.

CEO Commentary:

“Today’s update from Crown Medical validates our strategic decision to advance this initiative through the bankruptcy process,” said Ted Karkus, Chairman and Chief Executive Officer of ProPhase Labs. “With a substantial number of payors already in advanced settlement posture, we believe the initial settlements anticipated in the first quarter of 2026 have the potential to meaningfully improve near-term liquidity and support the Company’s ongoing operations and restructuring efforts.”

Mr. Karkus added, “Crown Medical continues to pursue both negotiated settlements and litigation strategies designed to maximize recoveries efficiently, while avoiding unnecessary delays. We remain encouraged by the depth of engagement across a large and diversified group of insurance payors.”

ProPhase Labs will continue to provide updates on material developments related to the Crown Medical Collections initiative as appropriate.

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 did ProPhase Labs (PRPH) announce about Crown Medical Collections on January 26, 2026?

Crown Medical is engaged with >250 payors, ~50 matters are in advanced settlement posture, with expected resolutions in 30–90 days and potential net recoveries exceeding $50M.

How much did ProPhase Labs' laboratories bill for COVID-19 testing and how much remains unpaid?

Laboratories generated approximately $300M in gross billings, with about $150M reported as unpaid or underpaid.

When does ProPhase expect initial Crown Medical settlements to close and affect liquidity?

Initial settlements are anticipated to close within 30–90 days, with management citing potential impact in Q1 2026, subject to negotiations and court approval.

Will recoveries from Crown Medical Collections go directly to ProPhase Labs parent (PRPH)?

Proceeds flow through Chapter 11 subsidiary processes to satisfy creditor obligations first; remaining proceeds are expected to benefit the parent company.

How certain are the Crown Medical recovery estimates for ProPhase (PRPH)?

Estimates indicate net recoveries could exceed $50M, but timing and final amounts remain uncertain and depend on negotiation outcomes and court processes.