Voluntary Bankruptcy Filing and Deconsolidation |
12 Months Ended |
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Dec. 31, 2025 | |
| Reorganizations [Abstract] | |
| Voluntary Bankruptcy Filing and Deconsolidation | Voluntary Bankruptcy Filing and Deconsolidation On September 22, 2025 (the "Petition Date"), the Company's wholly-owned subsidiary, ProPhase Diagnostics, Inc., and two indirectly wholly-owned subsidiaries, ProPhase Diagnostics NY, Inc. and ProPhase Diagnostics NJ, Inc. (collectively the "PDX") filed for a Chapter 11 reorganization in United States Bankruptcy Court for the District of New Jersey (the "Chapter 11 case"). On September 30, 2025, the Court granted the motion for joint administration. During the Chapter 11 Case, the Company is deemed to no longer control PDX as its activities are subject to review and oversight by the Bankruptcy Court. Therefore, PDX was deconsolidated from the Company’s condensed consolidated financial statements prospectively as of September 22, 2025.
Status of the Chapter 11 Cases and Plan Development. The Chapter 11 cases are pending in the Bankruptcy Court and are being jointly administered. On November 13, 2025, the Bankruptcy Court entered an order authorizing the Debtors to retain Crown Medical Collections, LLC as special counsel for the collection of accounts receivable arising from prior COVID-19 diagnostic testing services. The Debtors are pursuing a plan of reorganization under Chapter 11. The Debtors’ plan, as currently contemplated, is intended to be funded by multiple sources including, without limitation, recoveries from the receivables collection program, recoveries from preserved estate causes of action, third-party financing made available to the Debtors in the Chapter 11 cases on terms approved by the Bankruptcy Court, and operational cash flow generated by the Debtors from the operational reorganization of their CLIA-certified laboratory infrastructure in support of additional diagnostic and testing opportunities. Specific terms of any financing arrangements and of the Debtors’ plan will be set forth in the Debtors’ filings with the Bankruptcy Court. The development, filing, and confirmation of a plan are subject to Bankruptcy Court approval and to a number of factors that are uncertain and outside the Company’s control. The Company is no longer deemed to control the Debtors; developments in the Chapter 11 cases are reflected in the Debtors’ filings with the Bankruptcy Court rather than in the Company’s reports under the Securities Exchange Act of 1934, except to the extent such developments are themselves required to be disclosed by the Company.
Deconsolidation of Bankrupt Subsidiaries
In order to deconsolidate PDX, the carrying values of the assets and liabilities of PDX were removed from the Company’s consolidated balance sheet as of September 22, 2025, in accordance with ASC 810, Consolidation. The net
impact with removing the assets and liabilities held at PDX resulted in the recognition of the investment in unconsolidated affiliates of $43.7 million, and a payable to unconsolidated affiliates of $27.7 million on the Company’s consolidated balance sheet as of September 22, 2025. Subsequent to the deconsolidation, the Company will account for the equity interest in PDX under the equity method of accounting as the Company is deemed to still have significant influence over PDX. For the period between September 22, 2025 and December 31, 2025, the Company recognized approximately $166,000 loss from investment in PDX.
All post-deconsolidation activities between the Company and PDX are reported as third-party transactions recorded within the Company's Consolidated Statement of Operations. Since the Petition Date, there were no material transactions between the Company and PDX. The intercompany payable to the Company recognized on deconsolidation, and any other amounts owed by the Debtors to the Company, are subject to administration in the Chapter 11 cases and to the priority scheme of the Bankruptcy Code, and recovery of any such amounts is uncertain.
Treatment of Intercompany Balances
The Company had total payables to PDX of approximately $27.7 million. As a result of the deconsolidation of PDX, the Company recognized $27.7 million payable to the unconsolidated affiliates on the consolidated balance sheet as of September 22, 2025.
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