Quarterly Highlights
- Net sales demonstrated sequential quarterly stabilization. For the first quarter ended
June 30, 2026 , net sales were$41.0 million compared to$51.2 million for the prior year period, a decrease of 19.9%, as lower consumer promotional usage was more than offset by a decline in prescription medication sales. - Net loss for the quarter ended
June 30, 2026 , was$6.1 million , or$(0.28) per diluted share, compared to a net loss of$34.2 million , or$(1.65) per diluted share, for the prior year period. The decrease in net loss was primarily driven by the absence of the prior-year goodwill and trade name impairment charges and to a lesser extent lower general and administrative expenses and advertising expenses. These favorable factors were partially offset by lower gross profit primarily driven by lower manufacturer rebates as a percentage of sales, partially offset by lower net freight costs per order. - Adjusted EBITDA1 was
$(3.4) million compared to$(2.7) million in the prior year period.
“Our first quarter results reflect continued progress toward our goal of establishing a direct, clear path back to sustainable profitability,” said
Earnings Webcast
A webcast reviewing financial results for the first quarter fiscal year ended
About
Founded in 1996,
Forward Looking Statement
This press release may contain “forward-looking statements”, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve a number of risks and uncertainties, including the Company’s ability to meet the objectives included in its business plan. Important factors that could cause results to differ materially from those indicated by such forward-looking statements are set forth in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections in the Company’s Annual Report on Form 10-K to be filed for the year ended
Investor Contact:
(646) 277-1260
investor@petmeds.com
CONSOLIDATED BALANCE SHEETS (In thousands, except for share and per share amounts) (Unaudited) | ||||||||
2026 | 2026 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 13,079 | $ | 21,412 | ||||
| Accounts receivable, less allowance for credit losses of | 1,706 | 1,908 | ||||||
| Inventories, net | 8,468 | 13,608 | ||||||
| Prepaid expenses and other current assets | 4,256 | 6,378 | ||||||
| Prepaid income taxes | 96 | 258 | ||||||
| Total current assets | 27,605 | 43,564 | ||||||
| Noncurrent assets: | ||||||||
| Property and equipment, net | 25,213 | 26,326 | ||||||
| Intangible and other assets, net | 10,549 | 10,789 | ||||||
| Operating lease right-of-use assets, net | 395 | 512 | ||||||
| Total noncurrent assets | 36,157 | 37,627 | ||||||
| Total assets | $ | 63,762 | $ | 81,191 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 12,298 | $ | 20,906 | ||||
| Sales tax payable | 20,603 | 22,261 | ||||||
| Accrued expenses and other current liabilities | 6,654 | 7,665 | ||||||
| Current operating lease liabilities | 414 | 493 | ||||||
| Deferred revenue | 629 | 689 | ||||||
| Income taxes payable | — | 20 | ||||||
| Total current liabilities | 40,598 | 52,034 | ||||||
| Deferred tax liabilities, net | 175 | 175 | ||||||
| Operating lease liabilities, net of current lease liabilities | — | 42 | ||||||
| Total liabilities | $ | 40,773 | $ | 52,251 | ||||
| Shareholders’ equity: | ||||||||
| Preferred stock, | ||||||||
| Convertible preferred stock, | 9 | 9 | ||||||
| Series A Junior Participating Preferred Stock, | — | — | ||||||
| Common stock, | 22 | 21 | ||||||
| Additional paid-in capital | 19,840 | 19,647 | ||||||
| Retained earnings | 3,118 | 9,263 | ||||||
| Total shareholders’ equity | 22,989 | 28,940 | ||||||
| Total liabilities and shareholders’ equity | $ | 63,762 | $ | 81,191 | ||||
CONSOLIDATED STATEMENTS OF (LOSS) INCOME (In thousands, except for share and per share amounts) (Unaudited) | ||||||||
| Three Months Ended | ||||||||
| 2026 | 2025 | |||||||
| Net sales | $ | 41,015 | $ | 51,180 | ||||
| Cost of sales | 29,682 | 36,777 | ||||||
| Gross profit | 11,333 | 14,403 | ||||||
| Operating expenses: | ||||||||
| General and administrative | 11,197 | 12,948 | ||||||
| Advertising | 4,220 | 6,046 | ||||||
| Depreciation and amortization | 2,148 | 2,283 | ||||||
| Impairment of goodwill and intangible assets | — | 27,258 | ||||||
| Total operating expenses | 17,565 | 48,535 | ||||||
| Loss from operations | (6,232 | ) | (34,132 | ) | ||||
| Other income: | ||||||||
| Interest (expense) income, net | (338 | ) | (198 | ) | ||||
| Other, net | 438 | 187 | ||||||
| Total other income (expense) | 100 | (11 | ) | |||||
| Loss before provision for income taxes | (6,132 | ) | (34,143 | ) | ||||
| Provision for income taxes | 13 | 9 | ||||||
| Net loss | $ | (6,145 | ) | $ | (34,152 | ) | ||
| Basic and diluted net loss per share | $ | (0.28 | ) | $ | (1.65 | ) | ||
| Basic and diluted weighted-average common shares outstanding | 21,682,381 | 20,755,416 | ||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) | ||||||||
| Three Months Ended | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (6,145 | ) | $ | (34,152 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 2,148 | 2,283 | ||||||
| Impairment of goodwill and intangible assets | — | 27,258 | ||||||
| Share based compensation | 198 | 591 | ||||||
| Bad debt (recovery) expense | — | (6 | ) | |||||
| (Increase) decrease in operating assets and increase (decrease) in operating liabilities: | ||||||||
| Accounts receivable | 202 | 718 | ||||||
| Inventories | 5,140 | (2,156 | ) | |||||
| Prepaid income taxes | 162 | — | ||||||
| Prepaid expenses and other current assets | 2,122 | (1,170 | ) | |||||
| Operating lease right-of-use assets, net | 117 | 112 | ||||||
| Accounts payable | (8,608 | ) | (3,523 | ) | ||||
| Sales tax payable | (1,658 | ) | 127 | |||||
| Accrued expenses and other current liabilities | (1,164 | ) | (1,287 | ) | ||||
| Lease liabilities | (121 | ) | (113 | ) | ||||
| Deferred revenue | (60 | ) | (977 | ) | ||||
| Income taxes payable | (20 | ) | 24 | |||||
| Net cash used in operating activities | (7,687 | ) | (12,271 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | (641 | ) | (1,292 | ) | ||||
| Net cash used in investing activities | (641 | ) | (1,292 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Dividends paid | — | (1 | ) | |||||
| Cash paid for tax withholding on net settlement of restricted stock | (5 | ) | (29 | ) | ||||
| Net cash used in financing activities | (5 | ) | (30 | ) | ||||
| Net decrease in cash and cash equivalents | (8,333 | ) | (13,593 | ) | ||||
| Cash and cash equivalents, at beginning of period | 21,412 | 54,720 | ||||||
| Cash and cash equivalents, at end of period | $ | 13,079 | $ | 41,127 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for income taxes net of refunds | $ | (120 | ) | $ | (4 | ) | ||
| Dividends payable in accrued expenses and other current liabilities | $ | — | $ | 23 | ||||
| Non-cash investing activity for property and equipment additions | $ | 155 | $ | 478 | ||||
Non-GAAP Financial Measures
To provide investors and the market with additional information regarding our financial results, we have disclosed (see below) adjusted EBITDA, a non-GAAP financial measure that we calculate as net income excluding share-based compensation expense (benefit), depreciation and amortization; income tax provision, interest income (expense), and other non-operational expenses. We have provided reconciliations below of net (loss) income to adjusted EBITDA, the most directly comparable GAAP financial measures.
We have included adjusted EBITDA, herein, because it is a key measure used by our management and Board of Directors to evaluate our operating performance, generate future operating plans, and make strategic decisions regarding the allocation of capital. In particular, the exclusion of certain expenses in calculating adjusted EBITDA facilitates operating performance comparability across reporting periods by removing the effect of non-cash expenses and other expenses. Accordingly, we believe that adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors.
We believe it is useful to exclude non-cash charges, such as share-based compensation expense (benefit) and depreciation and amortization from our adjusted EBITDA because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations. We believe it is useful to exclude income tax provision and interest income (expense), as neither are components of our core business operations. We also believe that it is useful to exclude other non-operational expenses, employee severance, impairment of goodwill and intangible assets, and interest expense relating to an estimated unremitted prior sales tax accrual as these items are not indicative of our ongoing operations. Adjusted EBITDA has limitations as a financial measure, and these non-GAAP measures should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:
- Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future and adjusted EBITDA does not reflect capital expenditure requirements for such replacements or for new capital expenditures;
- Adjusted EBITDA does not reflect net share-based compensation. Share-based compensation has been, and will continue to be for the foreseeable future, a material recurring expense in our business and an important part of our compensation strategy;
- Adjusted EBITDA does not reflect interest income (expense), net; or changes in, or cash requirements for, our working capital;
- Adjusted EBITDA does not reflect transaction related costs and other items which are either not representative of our underlying operations or are incremental costs that result from an actual or planned transaction and include litigation matters, integration consulting fees, internal salaries and wages (to the extent the individuals are assigned full-time to integration and transformation activities) and certain costs related to integrating and converging IT systems;
- Adjusted EBITDA does not reflect certain non-operating expenses including the employee severance which reduces cash available to us;
- Adjusted EBITDA does not reflect certain non-operating expenses (income) including sales tax expense (income) relating to recording a liability for sales tax we did not collect from our customers;
- Other companies, including companies in our industry, may calculate adjusted EBITDA differently, which reduces the measures usefulness as comparative measures.
Because of these and other limitations, Adjusted EBITDA should only be considered as supplemental to, and alongside with other GAAP based financial performance measures, including various cash flow metrics, net income, net margin, and our other GAAP results.
The following table presents a reconciliation of net loss, the most directly comparable GAAP measure to Adjusted EBITDA for each of the periods indicated:
| Reconciliation of Unaudited Non-GAAP Measures | ||||||||||||||||
| Three Months Ended | ||||||||||||||||
| ($ in thousands, except percentages) | $ Change | % Change | ||||||||||||||
| Consolidated Reconciliation of GAAP Net Loss to Adjusted EBITDA: | ||||||||||||||||
| Net loss | $ | (6,145 | ) | $ | (34,152 | ) | $ | 28,007 | 82 | % | ||||||
| Add (subtract): | ||||||||||||||||
| Stock-based Compensation | 198 | 591 | (393 | ) | (66 | ) | % | |||||||||
| Income Taxes | 13 | 9 | 4 | 44 | % | |||||||||||
| Depreciation and Amortization | 2,148 | 2,283 | (135 | ) | (6 | ) | % | |||||||||
| Interest Expense (Income), Net | 338 | 198 | 140 | 71 | % | |||||||||||
| Employee Severance | — | 95 | (95 | ) | n/m | |||||||||||
| Professional Fees (1) | — | 1,021 | (1,021 | ) | n/m | |||||||||||
| Impairment of goodwill and intangible assets | — | 27,258 | (27,258 | ) | n/m | |||||||||||
| Adjusted EBITDA | $ | (3,448 | ) | $ | (2,697 | ) | $ | (751 | ) | 28 | % | |||||
(1) Consists of professional fees related to the investigation as previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended | ||||||||||||||||
________________________________________
1 Adjusted EBITDA is a non-GAAP financial measure. See “Non-GAAP Financial Measures” for additional information on non-GAAP financial measures and a reconciliation to the most comparable GAAP measures.
