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Matrixx Initiatives Files Presentation Regarding Its Offer To Acquire ProPhase Labs

Stocks in this article: PRPH

SKILLMAN, N.J., Oct. 9, 2012 /PRNewswire/ -- Matrixx Initiatives, Inc., the maker of the Zicam® cold, sinus and allergy line of products, today announced that it has filed a presentation with the Securities and Exchange Commission ("SEC") in connection with its revised offer to acquire ProPhase Labs, Inc. (NASDAQ: PRPH).  Separately today, Matrixx announced it has increased its offer to acquire all of the outstanding shares of ProPhase by 14.3% to $1.60 per share, and has sent a letter to the ProPhase Board of Directors.

Matrixx believes that its revised all-cash offer, which is not contingent on financing, is highly attractive to ProPhase shareholders, as it provides them with compelling upfront and certain value relative to a difficult, uncertain and highly speculative multi-year turnaround program recently outlined by  ProPhase's management.  Matrixx's presentation outlines the significant challenges ProPhase faces by remaining a standalone entity, including:

  • ProPhase is in a Vulnerable Market Position
    • ProPhase lacks scale to effectively compete in the highly competitive Cough Shortening / Immune Boosting market.
    • ProPhase's most comparable competitors generate 3.5x more in annual revenue and are backed by owners with substantial resources.
  • ProPhase has an Unsustainable Financial Model
    • ProPhase continues to experience substantial losses due to its financial model.
    • Greater than 80% of ProPhase's net sales are spent on operating expenses.
    • Cumulative losses from operations since 2009 amount to $12.9 million. ProPhase's stock price has declined 73.6% since June 2009, when current management assumed it role.
  • ProPhase has Placed Shareholders in a Tenuous Position
    • ProPhase has received a Non-Compliance notice from NASDAQ for failing to meet the minimum shareholders' equity requirement for continued listing on the Global Market.
    • ProPhase received a notice of de-listing as recently as July 2011.
    • The lack of analyst coverage limits any ongoing interest from the investor community.

The presentation is being filed with the SEC and will be available at

Kirkland & Ellis LLP is acting as legal counsel and Sawaya Segalas & Co., LLC is acting as financial advisor to Matrixx.

This press release and Matrixx's proposal constitute a preliminary non-binding indication of interest to acquire all of the outstanding shares of ProPhase Labs, Inc., and are not intended to create any legally binding obligations.

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