PETMED EXPRESS INC
For the period ended Sep 30, 2025. Filed Dec 19, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2025 · Filed Dec 19, 2025
PETS$1.22-1.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-12-31; filed 2025-02-10.
0001040130-25-000014
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2025-09-30; filed 2025-12-19.
0001040130-25-000108
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 70 previous paragraphs and 74 current paragraphs.
41 unchanged; 23 reworded; 10 added; 6 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 5 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (10)
Current report
Restatement
Current report
As described in the explanatory note in Note 1 to unaudited condensed consolidated financial statements, we have restated our consolidated financial statements and Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations for the Affected Periods.
Current report
During the three months ended June 30, 2025, the Company identified triggering events for the Company’s long-lived asset group. These triggering events included a downward revision to the Company’s forecast and a decrease in the Company’s market capitalization which fell below the Company’s carrying value for a sustained period beginning in the fourth quarter of fiscal 2025. As a result of the identified triggering events, the Company performed a recoverability test for the identified long-lived asset group. The undiscounted cash flow projections were based on estimates made by management of current and future strategic and operational plans and future financial performance projected using various assumptions regarding revenues, gross profits, operating expenses, and working capital through the remaining useful life of the primary asset in the asset group. The results of the test indicated that the carrying amounts for the long-lived asset group were expected to be recoverable.
Current report
For the three months ended June 30, 2025, the Company identified potential impairment triggering events indicating that the fair value of its reporting unit was more likely than not less than its carrying value. These triggering events included a downward revision to the Company’s forecast due to continued revenue declines and a decrease in the Company’s stock price and market capitalization that was sustained in the first quarter of fiscal 2026. In accordance with Accounting Standards Codification (“ASC”) 350, Intangibles - Goodwill and Other, the Company performed a quantitative goodwill impairment test as of June 30, 2025.
Current report
The fair value of the single reporting unit was estimated using an income approach, employing a discounted cash flow model. As part of the discounted cash flow model, the Company developed estimates, assumptions and judgments about future results. The discounted cash flow projections were based on estimates made by management of current and future strategic and operational plans and future financial performance. Valuation assumptions used in the Company's discounted cash flow valuation also include projected capital expenditures, earnings before interest expense, income taxes, depreciation and amortization expense (EBITDA), working capital, discount rates, tax rates and terminal growth rates. The Company applied a terminal growth rate of 3%, income tax rate of 25.3% and discount rate of 14.0% based on a weighted average cost of capital adjusted for the relevant risk associated with the characteristics of the single reporting unit. As a result of this impairment test, the Company determined the carrying value of the reporting unit exceeded its fair value, resulting in a goodwill impairment charge of $26.7 million during the three months ended June 30, 2025, which represented the entirety of the goodwill balance previously recorded. There was no tax impact to the impairment as goodwill is not tax deductible.
Current report
In accordance with ASC 820, Fair Value Measurement, the fair value measurement for the goodwill impairment is categorized as a Level 3 fair value measurement. This is due to the significant unobservable inputs used in the valuation, including the forecasted revenues, discount rate, and terminal growth rate, which require significant management judgment and estimation.
Current report
(1) Related to the whistleblower investigation.
Current report
(1) Related to the whistleblower investigation.
Current report
General and administrative expenses increased by approximately $3.7 million, or 35.1%, to approximately $14.2 million for the quarter ended September 30, 2025, from approximately $10.5 million for the quarter ended September 30, 2024. General and administrative expenses increased by approximately$11.8 million, or 76.5%, to approximately $27.1 million for the six months ended September 30, 2025, from approximately$15.4 million for thesix months ended September 30, 2024.The increase to general and administrative expenses for the quarter ended September 30, 2025 was mainly due to a $2.3 million increase in professional fees, of which$2.1 million were related to the whistleblower investigation, a$0.4 million decreasein payroll and payroll related expenses, offset by$0.9 million increase from payroll severance, $1.2 million increase in other general and administrative expenses related to Illinois sales tax settlement gain in thequarter ended September 30, 2024, offset by a$0.3 million decreasein bank service fees.
Current report
Other (Expense) Income, Net
Removed paragraphs (6)
Previous report
The Company’s other indefinite-lived intangible assets are primarily made up of a trade name which was evaluated for impairment using a qualitative assessment and the Company concluded that it was not more likely than not that the other indefinite-lived assets were impaired as of December 31, 2024.
Previous report
(1) Included in interest income, net is $0.4 million of interest expense related to the sales tax liability and $0.5 million of interest income for the three months ended December 31, 2024. This compares to $0.4 million of interest expense related to the sales tax liability and $0.6 million of interest income for the three months ended December 31, 2023.
Previous report
(1) Included in interest income, net is $1.2 million of interest expense related to the sales tax liability and $1.5 million of interest income for the nine months ended December 31, 2024. This compares to $1.3 million of interest expense related to the sales tax liability and $1.7 million of interest income for the nine months ended December 31, 2023.
Previous report
General and administrative expenses decreased by approximately $14.9 million, or 36.4%, to approximately $26.2 million for the nine months ended December 31, 2024, from approximately $41.1 million for the nine months ended December 31, 2023. The decrease to general and administrative expenses for the nine months ended December 31, 2024 was due to a $12.4 million decrease in stock-based compensation expense, of which $8.7 million was from the stock compensation reversal associated with an executive departure, a $1.6 million decrease in payroll and payroll related expense, and a $0.9 million decrease in credit card processing fees which were driven by lower sales.
Previous report
Advertising expenses decreased by approximately $4.0 million, or 21.3%, to approximately $14.6 million for the nine months ended December 31, 2024, from approximately $18.5 million for the nine months ended December 31, 2023. The decrease can be mainly attributed to lower gross media spend, partially offset by lower marketing funded by manufacturers and advertising partners. The advertising costs of acquiring a new customer, defined as total advertising costs divided by new customers acquired, was $56 for the nine months ended December 31, 2024 compared to $53 for the nine months ended December 31, 2023. As a percentage of sales, advertising expense was 8.1% and 8.6% for the nine months ended December 31, 2024 and 2023, respectively.
Reworded paragraphs (23)
Previous wording
Presently, our product line includes approximately 12,000 of the most popular pet medications, health products, food and supplies for dogs, cats, and horses.
Current wording
Presently, our product line includes approximately 6,000 of the most popular pet medications, health products, food and supplies for dogs, cats, and horses.
Previous wording
We market our products through national advertising campaigns which aim to increase the recognition of the “PetMeds®” brand name, and "PetCareRx" brand name, increase traffic to our websites atwww.petmeds.com andwww.petcarerx.com, acquire new customers, and maximize repeat purchases. Our sales consist of products sold mainly to retail consumers. The average purchase was approximately $97 and $93 for the quarters ended December 31, 2024, and December 31, 2023, respectively.
Current wording
We market our products through national advertising campaigns which aim to increase the recognition of the “PetMeds®” brand name, and "PetCareRx" brand name, increase traffic to our websites atwww.petmeds.com andwww.petcarerx.com, acquire new customers, and maximize repeat purchases. Our sales consist of products sold mainly to retail consumers. The average purchase was approximately $98 and $96 for the quarters ended September 30, 2025, and September 30, 2024, respectively.
Previous wording
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Recoverability of assets is measured by a comparison of the carrying amount of the asset to the undiscounted cash flows expected to be generated from the asset. Management determined that no impairment of long-lived assets existed as of December 31, 2024.
Current wording
Long-lived assets, which primarily includes fixed assets, definite lived intangibles, right-of-use assets, and other assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the asset group to the undiscounted cash flows expected to be generated by the asset group from its use and eventual disposition of that asset group. Assets are considered to be impaired if the carrying amount of an asset group exceeds the future undiscounted cash flows. If impairment is determined to exist, any related impairment loss is calculated based on estimated fair value. Impairment losses on assets to be disposed of, if any, are based on the estimated proceeds to be received, less cost of disposal. The Company determined that all of its long-lived assets are part of a single entity-wide asset group for the purpose of long-lived asset impairment assessment.
Previous wording
Goodwill represents the excess of the purchase price over the fair value of net assets acquired in a business combination. The Company is required to assess goodwill and other indefinite-lived intangible assets for impairment annually, or more frequently if circumstances indicate impairment may have occurred. The Company performs its annual impairment assessment in the fourth quarter of each year. The Company has concluded that it has one reporting unit and has assigned the entire balance of goodwill to this reporting unit. If the carrying value of an indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.
Current wording
Goodwill represents the excess of the purchase price over the fair value of net assets acquired in a business combination. The Company is required to assess goodwill for impairment annually, or more frequently if circumstances indicate impairment may have occurred. The Company performs its annual impairment assessment in the fourth fiscal quarter of each year. An impairment test of goodwill consists of comparing the carrying amount of the single reporting unit to the fair value of the unit. An impairment loss is recognized by the amount that the carrying amount exceeds the fair value, limited to the amount of goodwill. The Company has concluded that it has one reporting unit and has assigned the entire balance of goodwill to this reporting unit.
Previous wording
Three Months Ended December 31, 2024 Compared With Three Months Ended December 31, 2023 and Nine Months Ended December 31, 2024 Compared With Nine Months Ended December 31, 2023
Current wording
Three Months Ended September 30, 2025 Compared With Three Months Ended September 30, 2024 and Six Months Ended September 30, 2025 Compared With September 30, 2024
Previous wording
Sales decreased by approximately$12.3 million, or 18.9%, to approximately $53.0 million for the quarter ended December 31, 2024, compared to approx imately$65.3 million for the quarter ended December 31, 2023. Sales decreased by approximately $34.1 million, or 15.9%, to approximately $180.5 million for the nine months ended December 31, 2024, compared to approx imately$214.6 million for the nine months ended December 31, 2023. The decrease in sales for the quarter ended December 31, 2024 was primarily driven by an strategic reduction in gross advertising as we reset our marketing foundation for sustainable profitability. The decrease in sales for the nine months ended December 31, 2024 reflects a strategic reduction in advertising, broader macroeconomic factors, and higher consumer promotional usage.
Current wording
Sales decreased by approximately$13.7 million, or 23.6%, to approximately $44.4 million for the quarter ended September 30, 2025, compared to approx imately$58.0 million for the quarter ended September 30, 2024. Sales decreased by approximately $28.7 million, or 23.1%, to approximately $95.5 million for the six months ended September 30, 2025, compared to approx imately$124.3 million for thesix months ended September 30, 2024. The decrease in sales for the quarter ended andsix months ended September 30, 2025 was primarily driven by a reduction in gross advertising, higher consumer promotional usage, and a decline in prescription medication sales.
Previous wording
Reorder sales decreased by approximately $9.0 million, or 16.6%, to approximately $45.1 million for the quarter ended December 31, 2024, compared to approximately $54.1 million for the quarter ended December 31, 2023. Reorder sales decreased by approximately $24.9 million, or 14.3%, to approximately $149.4 million for the nine months ended December 31, 2024, compared to approximately $174.3 million for the nine months ended December 31, 2023. The decrease in reorder sales for the three and nine months ended December 31, 2024 is primarily due to a decline in prescription medication sales.
Current wording
Reorder sales decreased by approximately $11.3 million, or 23.2%, to approximately $37.4 million for the quarter ended September 30, 2025, compared to approximately $48.7 million for the quarter ended September 30, 2024. Reorder sales decreased by approximately $22.8 million, or 22.5%, to approximately $78.7 million for the six months ended September 30, 2025, compared to approximately $101.5 million for the six months ended September 30, 2024. The decrease in reorder sales for the three and six months ended September 30, 2025 is primarily due to a decline in prescription medication sales.
Previous wording
New order sales decreased by approximately $2.7 million or 31.0%, to approximately $6.1 million for the quarter ended December 31, 2024, compared to $8.8 millionfor the quarter ended December 31, 2023. New order sales decreased by approximately $8.1 million or 24.6%, to approximately $24.9 million for the nine months ended December 31, 2024, compared to $33.1 million for the nine months ended December 31, 2023. The decrease for the quarter ended December 31, 2024 in new order sales is primarily due to a strategic reduction in advertising.
Current wording
New order sales decreased by approximately $1.9 million or 26.5%, to approximately $5.3 million for the quarter ended September 30, 2025, compared to $7.3 millionfor the quarter ended September 30, 2024. New order sales decreased by approximately $4.8 million or 26.0%, to approximately $13.6 million for the six months ended September 30, 2025, compared to $18.3 millionfor thesix months ended September 30, 2024.The decrease for thethree and six months ended September 30, 2025 in new order sales is primarily due to decreased and less efficient variable marketing spend.
Previous wording
We acquired approximately 63,000 new customers for the quarter ended December 31, 2024 compared to approximately 97,000 new customers for the quarter ended December 31, 2023. We acquired approximately 260,000 new customers for the nine months ended December 31, 2024 compared to approximately 347,000 new customers for the nine months ended December 31, 2023. The following tables illustrates revenue by various revenue classifications:
Current wording
We acquired approximately 58,000 new customers for the quarter ended September 30, 2025 compared to approximately 77,000 new customers for the quarter ended September 30, 2024. We acquired approximately 143,000 new customers for the six months ended September 30, 2025 compared to approximately 197,000 new customers for six months ended the September 30, 2024. The following tables illustrates revenue by various revenue classifications:
Previous wording
The Company changed the definition of a new order sale on July 1, 2024, to include sales from customers who have not previously ordered from the Company over the past twelve months compared to the prior definition which was thirty-six months. The reorder and new order sales amounts for the three and nine months ended December 31, 2024, and the reorder and new order sales amounts for the three and nine months ended December 31, 2023 reflect this new definition.
Current wording
The Company changed the definition of a new order sale on July 1, 2024, to include sales from customers who have not previously ordered from the Company over the past twelve months compared to the prior definition which was thirty-six months. The reorder and new order sales amounts for the three and six months ended September 30, 2025, and the reorder and new order sales amounts for the three and six months ended September 30, 2024 reflect this new definition.
Previous wording
Under the previous definition of a new customer, reorder and new order sales were $57.7 million and $5.2 million, respectively, for the three months ended December 31, 2023. Under the previous definition of a new customer, reorder and new order sales were $188.1 million and $19.2 million, respectively, for the nine months ended December 31, 2023.
Current wording
Under the previous definition of a new customer, reorder and new order sales were $52.7 million and $3.3 million, respectively, for the three months ended September 30, 2024. Under the previous definition of a new customer, reorder and new order sales were $111.1 million and $8.7 million, respectively, for the six months ended September 30, 2024.
Previous wording
Recurring net sales, which includes AutoShip & Save subscriptions, and membership revenue, as a percentage of total gross sales was 56.2% for the most recent quarter ended December 31, 2024, up from 52.2% for the same period last year.
Current wording
Recurring net sales, which includes AutoShip & Save subscriptions, and membership revenue, as a percentage of total gross sales was 60.8% for the most recent quarter ended September 30, 2025, up from 53.4% for the same period last year.
Previous wording
Cost of sales decreased by approximately$9.4 million, or 19.7%, to approximately $38.1 million for the quarter ended December 31, 2024, from approximately $47.4 million for the quarter ended December 31, 2023. Cost of sales decreased by approximately $23.8 million, or 15.4%, to approximately $130.3 million for the nine months ended December 31, 2024, from approximately $154.1 million for the nine months ended December 31, 2023. Cost of sales, as a percentage of sales, was 71.9% for the quarter ended December 31, 2024, compared to 72.6% for the quarter ended December 31, 2023. Cost of sales, as a percentage of sales, was 72.2% for the nine months ended December 31, 2024, compared to 71.8% for the nine months ended December 31, 2023. The year over year decline for cost of sales, as a percentage of sales for the quarter ended December 31, 2024 compared to the quarter ended December 31, 2023 was primarily due to lower discount activity and favorable sales mix. Theincrease in cost of sales, as a percentage of sales, for the nine months ended December 31, 2024 compared to the nine months ended December 31, 2023 was primarily due to an increase in discount activity during the first six months of the fiscal year.
Current wording
Cost of sales decreased by approximately$7.3 million, or 18.6%, to approximately $31.9 million for the quarter ended September 30, 2025, from approximately $39.3 million for the quarter ended September 30, 2024. Cost of sales decreased by approximately $17.7 million, or 20.5%, to approximately $68.7 million for the six months ended September 30, 2025, from approximately $86.4 million for the six months ended September 30, 2024. Cost of sales, as a percentage of sales, was 72.0% for the quarter ended September 30, 2025, compared to 67.7% for the quarter ended September 30, 2024. Cost of sales, as a percentage of sales, was 71.9% for the six months ended September 30, 2025, compared to 69.6% for the six months ended September 30, 2024. The year over year increase for cost of sales, as a percentage of sales for thethree and six months ended September 30, 2025 compared to thethree and six months ended September 30, 2024 was primarily due to higher discount activity and higher freight costs.
Previous wording
Gross profit decreased by approximately $3.0 million, or 16.6%, to approximately $14.9 million for the quarter ended December 31, 2024, from approximately $17.9 million for the quarter ended December 31, 2023. Gross profit decreased by approximately $10.3 million, or 17.0%, to approximately $50.2 million for the nine months ended December 31, 2024, from approximately $60.5 million for the nine months ended December 31, 2023. The gross profit decreases for the quarter and nine months ended December 31, 2024 compared to the quarter ended and nine months ended December 31, 2023 were primarily due to lower sales. The gross margin percentage increased by approximately 0.8%, to approximately 28.1% for the quarter ended December 31, 2024, from approximately 27.4% for the quarter ended December 31, 2023, primarily due to favorable sales mix and lower consumer promotional usage.
Current wording
Gross profit decreased by approximately $6.4 million, or 33.9%, to approximately $12.4 million for the quarter ended September 30, 2025, from approximately $18.8 million for the quarter ended September 30, 2024. Gross profit decreased by approximately $11.0 million, or 29.1%, to approximately $26.8 million for the six months ended September 30, 2025, from approximately $37.8 million for the six months ended September 30, 2024. The gross profit decreases for the quarter and six months ended September 30, 2025 compared to the quarter ended and six months ended September 30, 2024 were primarily due to lower sales and higher cost of sales. The gross margin percentage decreased by approximately 4.4%, to approximately 28.0% for the quarter ended September 30, 2025, from approximately 32.3% for the quarter ended September 30, 2024, primarily due to higher freight costs and higher consumer promotional usage. The gross margin percentage decreased by approximately 2.4%, to approximately 28.1% for the six months ended September 30, 2025, from approximately 30.4% for the six months ended September 30, 2024, primarily due to higher consumer promotional usage and higher freight cost.
Previous wording
General and administrative expenses decreased by approximately $2.6 million, or 19.7%, to approximately $10.8 million for the quarter ended December 31, 2024, from approximately $13.4 million for the quarter ended December 31, 2023. The decrease to general and administrative expenses for the quarter ended December 31, 2024 was due to a $1.3 million decrease in stock-based compensation expense, primarily related to reduced stock compensation associated with an executive departure, a $1.1 million decrease in payroll and payroll related expense, and a $0.4 million decrease in credit card processing fees driven by lower sales.
Current wording
The increase to general and administrative expenses for the six months ended September 30, 2025 was primarily due to a $8.5 million increase in stock-based compensation expense, primarily related to reduced stock compensation associated with an executive departure for the six months ended September 30, 2024 , a $3.2 million increase in professional fees, of which$3.1 million were related to the whistleblower investigation, a $1.7 million decrease in payroll and payroll related expenses, offset by$0.9 million increase from payroll severance, $1.2 million increase in other general and administrative expenses related to Illinois sales tax settlement gain in the six months ended September 30, 2024, offset by a 0.3 million decrease in other general and administrative expenses.
Previous wording
Advertising expenses decreased by approximately $2.8 million, or 48.2%, to approximately $3.0 million for the quarter ended December 31, 2024, from approximately $5.8 million for the quarter ended December 31, 2023. The decrease for the quarter can be mainly attributed to lower gross media spend and a higher proportion of spending funded by third party partners. We strategically reduced gross advertising as we reset our marketing foundation for sustainable profitability. As a percentage of sales, advertising expense was 5.6% and 8.8% for the quarters ended December 31, 2024 and 2023, respectively. The advertising percentage may fluctuate quarter to quarter due to seasonality and advertising availability.
Current wording
Advertising expenses decreased by approximately $1.7 million, or 28.5%, to approximately $4.3 million for the quarter ended September 30, 2025, from approximately $6.1 million for the quarter ended September 30, 2024. Advertising expenses decreased by approximately $3.7 million, or 26.5%, to approximately $10.4 million for the six months ended September 30, 2025, from approximately $14.1 million for the six months ended September 30, 2024 The decrease for the quarter ended andsix months ended September 30, 2025 can be mainly attributed to lower gross media spend. As a percentage of sales, advertising expense was 9.8% and 10.5% for the quarters ended September 30, 2025 and 2024, respectively. As a percentage of sales, advertising expense was 10.9% and 11.4% for six months ended September 30, 2025 and 2024, respectively. The advertising percentage may fluctuate quarter to quarter due to seasonality and advertising availability.
Previous wording
The advertising costs of acquiring a new customer, defined as total advertising costs divided by new customers acquired, was $47 for the quarter ended December 31, 2024 compared to $59 for the quarter ended December 31, 2023. The decrease to customer acquisition costs for the quarter ended December 31, 2024, was due to a more efficient variable marketing spend. The advertising cost of acquiring a new customer can be impacted by the advertising environment, the effectiveness of our advertising creative, spending, and price competition. Historically, the advertising environment fluctuates due to supply and demand. A more favorable advertising environment may positively impact future sales, whereas a less favorable advertising environment may negatively impact future sales.
Current wording
The advertising costs of acquiring a new customer, defined as total advertising costs divided by new customers acquired, was $75 for the quarter ended September 30, 2025 compared to $79 for the quarter ended September 30, 2024. The advertising costs of acquiring a new customer, defined as total advertising costs divided by new customers acquired, was $73 for the six months ended September 30, 2025 compared to $72 for the six months ended September 30, 2024. The decrease to customer acquisition costs for the quarter ended September 30, 2025, was due to a more efficient variable marketing spendand a higher proportion of spending funded by third party partners. The increase to customer acquisition costs for the six months ended September 30, 2025, was due to a less efficient variable marketing spend. The advertising cost of acquiring a new customer can be impacted by the advertising environment, the effectiveness of our advertising creative, spending, and price competition. Historically, the advertising environment fluctuates due to supply and demand. A more favorable advertising environment may positively impact future sales, whereas a less favorable advertising environment may negatively impact future sales.
Previous wording
Depreciation and amortization expense was $1.6 million and $1.8 million for the quarters ended December 31, 2024 and December 31, 2023, respectively. Depreciation and amortization expense was $5.0 million and $5.2 million for the nine months ended December 31, 2024 and December 31, 2023, respectively.
Current wording
Depreciation and amortization expense was $2.3 million and $1.7 million for the quarters ended September 30, 2025 and September 30, 2024, respectively. Depreciation and amortization expense was $4.6 million and $3.4 million for the six months ended September 30, 2025 and September 30, 2024, respectively.
Previous wording
Other income decreased to approximately $0.2 million for the quarter ended December 31, 2024 compared to approximately $0.4 million for the quarter ended December 31, 2023. Other income decreased to approximately $0.9 million for the nine months ended December 31, 2024 compared to approximately $1.5 million for the nine months ended December 31, 2023.The decrease to other income for the quarter andthe nine months ended December 31, 2024 was due to slightly lower invested balances, and the loss of subleasing rental revenue. Interest income may decrease in the future based on several factors, including utilization of our cash balances on future investments or partnerships, or on our operating activities. Additionally, interest income could increase or decrease if the current interest rate environment changes.
Current wording
Other income, net decreased to approximately $(0.1) million for the quarter ended September 30, 2025 compared to approximately $0.4 million for the quarter ended September 30, 2024. Other income, net decreased to approximately $(0.1) million for the six months ended September 30, 2025 compared to approximately $0.7 million for the six months ended September 30, 2024. The decrease to other income for the quarter andthe six months ended September 30, 2025 was due to lower invested balances, and higher interests expense accrual on sales tax liabilities. Interest income may decrease in the future based on several factors, including utilization of our cash balances on future investments or partnerships, or on our operating activities. Additionally, interest income could increase or decrease if the current interest rate environment changes.
Previous wording
For the quarters ended December 31, 2024 and 2023, the Company recorded an income tax provision of approximately $0.5 million and a tax benefit of approximately $0.6 million, respectively. For the nine months ended December 31, 2024 and 2023, the Company recorded an income tax provision of approximately $0.0 million and a tax benefit of approximately $0.3 million, respectively. The increase in the tax provision for the three and nine months ended December 31, 2024 is related to the cancellation of the former CEO’s performance stock units resulting in additional $8.7 million of income during the quarter. The effective tax rate for the quarter ended December 31, 2024 was approximately (192.1)%, compared to approximately 23.4% for the quarter ended December 31, 2023.
Current wording
For the quarters ended September 30, 2025 and 2024, the Company recorded an income tax provision of approximately $0.0 million and a tax benefit of approximately $1.4 million, respectively. For the six months ended September 30, 2025 and 2024, the Company recorded an income tax provision of approximately— and a tax benefit of approximately $0.4 million, respectively The increase in the tax provision for the three and six months ended September 30, 2025 is related to the cancellation of the former CEO’s performance stock units resulting in additional $8.7 million of income during the quarter. The effective tax rate for the quarter ended September 30, 2025 was approximately (0.1)%, compared to approximately (151.5)% for the quarter ended September 30, 2024. The effective tax rate for the three months ended September 30, 2025 differs from the statutory rate primarily as a result of the goodwill impairment and the Company maintaining a valuation allowance against the majority of our deferred tax assets.
Previous wording
We believe that our cash and cash equivalents currently on hand and expected cash flows from future operations will be sufficient to continue operations for at least the next twelve months. We continue to monitor, evaluate, and manage our operating plans, forecasts, and liquidity considering the most recent developments driven by macroeconomic conditions, such as supply chain challenges, inflation, rising interest rates, and geopolitical events. We proactively seek opportunities to improve the efficiency of our operations, take steps to realize internal cost savings, including aligning our staffing needs, creating a more variable cost structure to better support our current and expected future levels of operations and process streamlining.
Current wording
We believe that our cash and cash equivalents currently on hand and expected cash flows from future operations will be sufficient to continue operations for at least the next twelve months. Over the longer term, our liquidity will depend primarily on our ability to generate cash from operations, and we continue to monitor, evaluate, and manage our operating plans, forecasts, and liquidity considering the most recent developments driven by macroeconomic conditions, such as supply chain challenges, inflation, rising interest rates, and geopolitical events. We proactively seek opportunities to improve the efficiency of our operations, take steps to realize internal cost savings, including aligning our staffing needs, creating a more variable cost structure to better support our current and expected future levels of operations and process streamlining.
Previous wording
Our working capital at December 31, 2024 and March 31, 2024 was $20.4 million and $21.5 million, respectively. The $1.1 million decrease in working capital was attributable to the $25.3 million decrease in current assets, primarily inventory and prepaid expenses, which were partially offset by the $24.2 million decrease in current liabilities, primarily accounts payable. The inventory decline was attributable to the Company’s strategy to operate with fewer weeks of supply on hand, and to a lesser extent, timing of inventory receipts moving into the fourth quarter.. Net cash used in operating activities was $2.3 million for the nine months ended December 31, 2024, compared to cash used in operating activities of $2.8 million for the nine months ended December 31, 2023. The $0.5 million increase in cash provided by operating activities is due to the $7.8 million increase in net income reduced by $12.1 million of non-cash operating adjustments and partially offset by the $4.8 million increase in current liabilities net of current assets excluding cash. Net cash used in investing activities was $2.7 million for the nine months ended December 31, 2024, compared to $39.4 million used in investing activities for the nine months ended December 31, 2023. The change in net cash used in investing activities is primarily related to the PetCareRx acquisition and an additional investment in Vetster in the prior year. Net cash used in financing activities was $0.2 million and $12.4 million for the nine months ended December 31, 2024 and the nine months ended December 31, 2023, respectively, due to the payment of an aggregate $0.60 per share dividend for the nine months ended December 31, 2023.
Current wording
Our working capital at September 30, 2025 and March 31, 2025 was $2.8 million and $16.1 million, respectively. The $13.3 million decrease in working capital was attributable to the $19.4 million decrease in current assets, primarily cash, which were partially offset by the $6.1 million decrease in current liabilities, primarily accounts payable and deferred revenue. Net cash used in operating activities was $14.4 million for the six months ended September 30, 2025, compared to cash used in operating activities of $1.1 million for the six months ended September 30, 2024. The $13.3 million decrease in cash provided by operating activities is due to the $48.8 million decrease in net income reduced by $10.2 million of non-cash operating adjustments and partially offset by the $2.0 million decrease in current liabilities net of current assets excluding cash. Net cash used in investing activities was $3.9 million for the six months ended September 30, 2025, compared to $1.9 million used in investing activities for the six months ended September 30, 2024. Net cash used in financing activities was $261 thousand and $0.2 million for the six months ended September 30, 2025 and the six months ended September 30, 2024, respectively.
Previous wording
As of December 31, 2024, we had $1.1 million in outstanding lease commitments assumed as part of the PetCareRx acquisition for the leases on two buildings. Other than the foregoing leases, we are not currently bound by any material long-term or short-term commitments for the purchase or lease of capital expenditures. Any material amounts expended for capital expenditures would be the result of an increase in the capacity needed to adequately provide for any future increase in our business. To date we have paid for any needed additions to our capital equipment infrastructure from working capital funds and anticipate this being the case in the future. Our primary source of working capital is cash from operations. We presently have no alternative sources of working capital and have no commitments.
Current wording
As of September 30, 2025, we had $0.8 million in outstanding lease commitments assumed as part of the PetCareRx acquisition for the leases on two buildings. Other than the foregoing leases, we are not currently bound by any material long-term or short-term commitments for the purchase or lease of capital expenditures. Any material amounts expended for capital expenditures would be the result of an increase in the capacity needed to adequately provide for any future increase in our business. To date we have paid for any needed additions to our capital equipment infrastructure from working capital funds and anticipate this being the case in the future. Our primary source of working capital is cash from operations. We presently have no alternative sources of working capital and have no commitments.