XML 33 R20.htm IDEA: XBRL DOCUMENT
v3.25.1

Leases | 12 Months Ended
--- | ---
Dec. 31, 2024
Leases [Abstract] |
Leases | Leases Operating Leases New Jersey Laboratory Lease On October 23, 2020, the Company completed the acquisition of CPM, which included the acquisition of a 4,000 square foot CLIA accredited laboratory located in Old Bridge, New Jersey, which was owned by CPM (which is now known as ProPhase Diagnostics NJ, Inc.). The lease was renewed in February 2023, for an additional 36 months until February 2026. The monthly base rent remains the same at $5,500 per month. The lease renewal resulted in the recognition of an additional right-of-use asset and operating lease liability of $170,000, respectively in Fiscal 2023. New York Second Floor Lease On December 8, 2020, the Company entered into a Lease Agreement (the “NY Second Floor Lease”) with BRG Office L.L.C. and Unit 2 Associates L.L.C. (the “Landlord”), pursuant to which the Company leases certain premises located on the second floor (the “Second Floor Leased Premises”) of 711 Stewart Avenue, Garden City, New York (the “Building”). The Second Floor Leased Premises serve as the Company’s second location and corporate headquarters, offering a wide range of laboratory testing services for diagnosis, screening and evaluation of diseases, including COVID-19 and Respiratory Pathogen Panel Molecular tests. On June 10, 2022, the Company entered into a First Amendment to the NY Second Floor Lease (the “Second Floor Lease Amendment”). The Second Floor Lease Amendment amends the NY Second Floor Lease to provide that any uncured default by the Company or any of its affiliate under the NY First Floor Lease (defined below) will constitute a default by the Company under the NY Second Floor Lease. New York First Floor Lease On June 10, 2022, the Company entered into a second Lease Agreement (the “NY First Floor Lease”) with Landlord, pursuant to which the Company leases approximately 4,516 sq. feet located on the first floor (the “NY First Floor Leased Premises”) of the building. As described above, the Company currently leases space on the second floor of the building. The First Floor Leased Premises will be used to expand the Company’s in-house lab capabilities to include traditional clinical testing across multiple specialty areas and Next Generation Sequencing (NGS) to perform Whole Genome Sequencing (WGS) and an array of genetic diagnostic test offerings for both clinical and research purposes. The NY First Floor Lease became effective as of June 10, 2022 and will commence upon the date of the Landlord’s substantial completion of certain improvements to the NY First Floor Leased Premises (the “First Floor Commencement Date”), as set forth in the NY First Floor Lease, targeted to be approximately five months from the execution of the NY First Floor Lease. The initial term of the NY First Floor Lease will expire on July 15, 2031, unless sooner terminated as provided in the NY First Floor Lease. The Company may extend the term of the NY First Floor Lease for one additional option period of five years pursuant to the terms described in the NY First Floor Lease. The Company has the option to terminate the NY First Floor Lease effective July 31, 2027 (the “Early Termination Date”), provided the Company gives the Landlord written notice not less than nine months and not more than 12 months prior to the Early Termination Date and pays the Landlord a termination fee as more particularly described in the Lease. For the first year of the NY First Floor Lease, the Company will pay a base rent of $11,290 per month (subject to an eight month abatement period), with a gradual rental rate increase of approximately 2.75% for each twelve month period thereafter, culminating in a monthly base rent of $14,026 during the final months of the initial term of the NY First Floor Lease. In addition to the monthly base rent, the Company is responsible for its proportionate share of real estate tax escalations in accordance with the terms of the NY First Floor Lease. The Landlord will provide a construction allowance to the Company in an aggregate amount not to exceed $203,000, to reimburse the Company for the cost of certain improvements to be made by the Company to the First Floor Leased Premises. During the year ended December 31, 2023, the Company recognized additional $0.8 million right-of-use asset and operating lease liability for the NY First Floor Lease. At December 31, 2024 and 2023, the Company had operating lease liabilities for the New York and New Jersey leases of approximately $5.0 million and $5.2 million, respectively, and right of use assets of approximately $4.1 million and $4.6 million, respectively, which were included in the consolidated balance sheets. Finance Leases On April 19, 2023, the Company entered into a master lease agreement for a laboratory equipment (the "First Equipment Lease") with a vendor. The First Equipment Lease has a 5-year term and is recognized as a finance lease under ASC 842. The present value of the minimum future obligations of $1.5 million was calculated based on an interest rate of 8.0%, which was recognized in finance lease liabilities in the consolidated balance sheet. On July 21, 2023, the Company entered into a master lease agreement for a laboratory equipment (the "Second Equipment Lease") with a vendor. The Second Equipment Lease has a 4-year term and is recognized as a finance lease under ASC 842. The present value of the minimum future obligations of $5.1 million was calculated based on an interest rate of 7.4%, which was recognized in finance lease liabilities in the consolidated balance sheet. At December 31, 2024 and 2023, the Company had finance lease liabilities of approximately $4.7 million and $5.9 million, respectively, and finance lease assets within property and equipment, net of approximately $4.2 million and $5.8 million, respectively, which were included in the consolidated balance sheets. Finance Leases - Held-for-Sale On September 26, 2023, the Company entered into a master lease agreement for a laboratory equipment (the "Third Equipment Lease") with a vendor. The Third Equipment Lease had a 3-year term starting on the commencement date. The commencement date is when the equipment is shipped and installed, then the Company will provide Final Acceptance Certificate to the vendor. On May 14, 2024, all three Final Acceptance Certificates in connection with certain Amended and Restated Lease Schedules to the Third Equipment Lease was delivered by the Company. The amended lease term for each lease schedule is 18-months with 6 quarterly payments. The aggregate present value of the minimum future obligations under these three lease schedules are approximately $3.3 million based on an interest rate of 12.3%, which was recognized in finance lease liabilities in the consolidated balance sheet. The Company also recognized an additional $0.5 million in finance lease assets, which was reclassed from prepaid expenses as of the commencement date. At December 31, 2024, the Company had finance lease assets and liabilities of approximately $2.4 million and $2.4 million, respectively, which were both reclassed to assets held-for-sale and liabilities held-for-sale as a result of the disposal of PMI and PREH, which was closed on January 16, 2025 (see Note 17). Depreciation and interest expense related to the Equipment Lease in continuing operation was $1.8 million and $1.0 million for the year ended December 31, 2024 and 2023, respectively. The following summarizes quantitative information about the Company's operating and finance leases (in thousands):
| For the Years Ended
| December 31, 2024 |  | December 31, 2023
Operating leases: |  |  |
Operating lease cost | $ | 956 |  |  | $ | 956 |
Total operating lease expense | $ | 956 |  |  | $ | 956 |
Finance leases: |  |  |
Interest lease cost | $ | 399 |  |  | $ | 259 |
Depreciation expense | 1,356 |  |  | 760 |
Total finance lease expense | $ | 1,755 |  |  | $ | 1,019 |
Finance leases held-for-sale: |  |  |
Interest lease cost- discontinued operations | $ | 199 |  |  | $ | — |
Depreciation lease cost- discontinued operations | 1,394 |  |  | — |
Total finance lease expense - discontinued operations | $ | 1,593 |  |  | $ | — |
Other information related to the Company’s leases is shown below (dollar amounts in thousands):
| For the Years Ended
| December 31, 2024 |  | December 31, 2023
Operating cash flows used in operating leases | $ | (716) |  |  | $ | (839) |
| December 31, 2023 |  | December 31, 2022
Weighted-average remaining lease term – operating leases (in years) | 6.5 |  | 7.4
Weighted-average remaining lease term – finance leases (in years) | 2.2 |  | 3.8
Weighted-average discount rate – operating leases | 10.00 | % |  | 10.00 | %
Weighted-average discount rate – finance leases | 9.13 | % |  | 7.56 | %
Finance lease asset (1) | $ | 4,242 |  |  | $ | 5,809 |
Finance lease asset held-for-sale (2) | $ | 2,389 |  |  | $ | — |
(1) As of December 31, 2024 and 2023, the Company had recorded accumulated depreciation of approximately $2.3 million and $0.8 million, respectively for the finance lease asset. Finance lease assets are recorded within property and equipment, net on the Company’s consolidated balance sheets. (2) As of December 31, 2024, the Company had recorded accumulated depreciation of approximately $1.4 million for the finance lease asset held-for-sale. Finance lease assets held-for-sale are recorded within other assets held-for-sale on the Company’s consolidated balance sheets. Minimum lease payments over the remaining lease periods as of December 31, 2024 are as follows (amounts in thousands):
| Operating Lease |  | Finance Lease |  | Total
Year Ended December 31, 2025 | $ | 1,214 |  |  | $ | 4,606 |  |  | $ | 5,820 |
Year Ended December 31, 2026 | 941 |  |  | 1,840 |  |  | 2,781 |
Year Ended December 31, 2027 | 955 |  |  | 1,188 |  |  | 2,143 |
Year Ended December 31, 2028 | 982 |  |  | 121 |  |  | 1,103 |
Year Ended December 31, 2029 | 1,009 |  |  | — |  |  | 1,009 |
Thereafter | 1,661 |  |  | — |  |  | 1,661 |
Total lease payments | 6,762 |  |  | 7,755 |  |  | 14,517 |
Less present value discount | (1,786) |  |  | (661) |  |  | (2,447) |
Less liabilities held-for-sale | — |  |  | (2,356) |  |  | (2,356) |
Total | $ | 4,976 |  |  | $ | 4,738 |  |  | $ | 9,714 |
Leases | Leases Operating Leases New Jersey Laboratory Lease On October 23, 2020, the Company completed the acquisition of CPM, which included the acquisition of a 4,000 square foot CLIA accredited laboratory located in Old Bridge, New Jersey, which was owned by CPM (which is now known as ProPhase Diagnostics NJ, Inc.). The lease was renewed in February 2023, for an additional 36 months until February 2026. The monthly base rent remains the same at $5,500 per month. The lease renewal resulted in the recognition of an additional right-of-use asset and operating lease liability of $170,000, respectively in Fiscal 2023. New York Second Floor Lease On December 8, 2020, the Company entered into a Lease Agreement (the “NY Second Floor Lease”) with BRG Office L.L.C. and Unit 2 Associates L.L.C. (the “Landlord”), pursuant to which the Company leases certain premises located on the second floor (the “Second Floor Leased Premises”) of 711 Stewart Avenue, Garden City, New York (the “Building”). The Second Floor Leased Premises serve as the Company’s second location and corporate headquarters, offering a wide range of laboratory testing services for diagnosis, screening and evaluation of diseases, including COVID-19 and Respiratory Pathogen Panel Molecular tests. On June 10, 2022, the Company entered into a First Amendment to the NY Second Floor Lease (the “Second Floor Lease Amendment”). The Second Floor Lease Amendment amends the NY Second Floor Lease to provide that any uncured default by the Company or any of its affiliate under the NY First Floor Lease (defined below) will constitute a default by the Company under the NY Second Floor Lease. New York First Floor Lease On June 10, 2022, the Company entered into a second Lease Agreement (the “NY First Floor Lease”) with Landlord, pursuant to which the Company leases approximately 4,516 sq. feet located on the first floor (the “NY First Floor Leased Premises”) of the building. As described above, the Company currently leases space on the second floor of the building. The First Floor Leased Premises will be used to expand the Company’s in-house lab capabilities to include traditional clinical testing across multiple specialty areas and Next Generation Sequencing (NGS) to perform Whole Genome Sequencing (WGS) and an array of genetic diagnostic test offerings for both clinical and research purposes. The NY First Floor Lease became effective as of June 10, 2022 and will commence upon the date of the Landlord’s substantial completion of certain improvements to the NY First Floor Leased Premises (the “First Floor Commencement Date”), as set forth in the NY First Floor Lease, targeted to be approximately five months from the execution of the NY First Floor Lease. The initial term of the NY First Floor Lease will expire on July 15, 2031, unless sooner terminated as provided in the NY First Floor Lease. The Company may extend the term of the NY First Floor Lease for one additional option period of five years pursuant to the terms described in the NY First Floor Lease. The Company has the option to terminate the NY First Floor Lease effective July 31, 2027 (the “Early Termination Date”), provided the Company gives the Landlord written notice not less than nine months and not more than 12 months prior to the Early Termination Date and pays the Landlord a termination fee as more particularly described in the Lease. For the first year of the NY First Floor Lease, the Company will pay a base rent of $11,290 per month (subject to an eight month abatement period), with a gradual rental rate increase of approximately 2.75% for each twelve month period thereafter, culminating in a monthly base rent of $14,026 during the final months of the initial term of the NY First Floor Lease. In addition to the monthly base rent, the Company is responsible for its proportionate share of real estate tax escalations in accordance with the terms of the NY First Floor Lease. The Landlord will provide a construction allowance to the Company in an aggregate amount not to exceed $203,000, to reimburse the Company for the cost of certain improvements to be made by the Company to the First Floor Leased Premises. During the year ended December 31, 2023, the Company recognized additional $0.8 million right-of-use asset and operating lease liability for the NY First Floor Lease. At December 31, 2024 and 2023, the Company had operating lease liabilities for the New York and New Jersey leases of approximately $5.0 million and $5.2 million, respectively, and right of use assets of approximately $4.1 million and $4.6 million, respectively, which were included in the consolidated balance sheets. Finance Leases On April 19, 2023, the Company entered into a master lease agreement for a laboratory equipment (the "First Equipment Lease") with a vendor. The First Equipment Lease has a 5-year term and is recognized as a finance lease under ASC 842. The present value of the minimum future obligations of $1.5 million was calculated based on an interest rate of 8.0%, which was recognized in finance lease liabilities in the consolidated balance sheet. On July 21, 2023, the Company entered into a master lease agreement for a laboratory equipment (the "Second Equipment Lease") with a vendor. The Second Equipment Lease has a 4-year term and is recognized as a finance lease under ASC 842. The present value of the minimum future obligations of $5.1 million was calculated based on an interest rate of 7.4%, which was recognized in finance lease liabilities in the consolidated balance sheet. At December 31, 2024 and 2023, the Company had finance lease liabilities of approximately $4.7 million and $5.9 million, respectively, and finance lease assets within property and equipment, net of approximately $4.2 million and $5.8 million, respectively, which were included in the consolidated balance sheets. Finance Leases - Held-for-Sale On September 26, 2023, the Company entered into a master lease agreement for a laboratory equipment (the "Third Equipment Lease") with a vendor. The Third Equipment Lease had a 3-year term starting on the commencement date. The commencement date is when the equipment is shipped and installed, then the Company will provide Final Acceptance Certificate to the vendor. On May 14, 2024, all three Final Acceptance Certificates in connection with certain Amended and Restated Lease Schedules to the Third Equipment Lease was delivered by the Company. The amended lease term for each lease schedule is 18-months with 6 quarterly payments. The aggregate present value of the minimum future obligations under these three lease schedules are approximately $3.3 million based on an interest rate of 12.3%, which was recognized in finance lease liabilities in the consolidated balance sheet. The Company also recognized an additional $0.5 million in finance lease assets, which was reclassed from prepaid expenses as of the commencement date. At December 31, 2024, the Company had finance lease assets and liabilities of approximately $2.4 million and $2.4 million, respectively, which were both reclassed to assets held-for-sale and liabilities held-for-sale as a result of the disposal of PMI and PREH, which was closed on January 16, 2025 (see Note 17). Depreciation and interest expense related to the Equipment Lease in continuing operation was $1.8 million and $1.0 million for the year ended December 31, 2024 and 2023, respectively. The following summarizes quantitative information about the Company's operating and finance leases (in thousands):
| For the Years Ended
| December 31, 2024 |  | December 31, 2023
Operating leases: |  |  |
Operating lease cost | $ | 956 |  |  | $ | 956 |
Total operating lease expense | $ | 956 |  |  | $ | 956 |
Finance leases: |  |  |
Interest lease cost | $ | 399 |  |  | $ | 259 |
Depreciation expense | 1,356 |  |  | 760 |
Total finance lease expense | $ | 1,755 |  |  | $ | 1,019 |
Finance leases held-for-sale: |  |  |
Interest lease cost- discontinued operations | $ | 199 |  |  | $ | — |
Depreciation lease cost- discontinued operations | 1,394 |  |  | — |
Total finance lease expense - discontinued operations | $ | 1,593 |  |  | $ | — |
Other information related to the Company’s leases is shown below (dollar amounts in thousands):
| For the Years Ended
| December 31, 2024 |  | December 31, 2023
Operating cash flows used in operating leases | $ | (716) |  |  | $ | (839) |
| December 31, 2023 |  | December 31, 2022
Weighted-average remaining lease term – operating leases (in years) | 6.5 |  | 7.4
Weighted-average remaining lease term – finance leases (in years) | 2.2 |  | 3.8
Weighted-average discount rate – operating leases | 10.00 | % |  | 10.00 | %
Weighted-average discount rate – finance leases | 9.13 | % |  | 7.56 | %
Finance lease asset (1) | $ | 4,242 |  |  | $ | 5,809 |
Finance lease asset held-for-sale (2) | $ | 2,389 |  |  | $ | — |
(1) As of December 31, 2024 and 2023, the Company had recorded accumulated depreciation of approximately $2.3 million and $0.8 million, respectively for the finance lease asset. Finance lease assets are recorded within property and equipment, net on the Company’s consolidated balance sheets. (2) As of December 31, 2024, the Company had recorded accumulated depreciation of approximately $1.4 million for the finance lease asset held-for-sale. Finance lease assets held-for-sale are recorded within other assets held-for-sale on the Company’s consolidated balance sheets. Minimum lease payments over the remaining lease periods as of December 31, 2024 are as follows (amounts in thousands):
| Operating Lease |  | Finance Lease |  | Total
Year Ended December 31, 2025 | $ | 1,214 |  |  | $ | 4,606 |  |  | $ | 5,820 |
Year Ended December 31, 2026 | 941 |  |  | 1,840 |  |  | 2,781 |
Year Ended December 31, 2027 | 955 |  |  | 1,188 |  |  | 2,143 |
Year Ended December 31, 2028 | 982 |  |  | 121 |  |  | 1,103 |
Year Ended December 31, 2029 | 1,009 |  |  | — |  |  | 1,009 |
Thereafter | 1,661 |  |  | — |  |  | 1,661 |
Total lease payments | 6,762 |  |  | 7,755 |  |  | 14,517 |
Less present value discount | (1,786) |  |  | (661) |  |  | (2,447) |
Less liabilities held-for-sale | — |  |  | (2,356) |  |  | (2,356) |
Total | $ | 4,976 |  |  | $ | 4,738 |  |  | $ | 9,714 |

X
- References No definition available. + Details
Name: | us-gaap_LeasesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/842-20/tableOfContent + Details
Name: | us-gaap_LesseeFinanceLeasesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/842-20/tableOfContent + Details
Name: | us-gaap_LesseeOperatingLeasesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration