PETMED EXPRESS INC
For the period ended Mar 31, 2026. Filed Jun 2, 2026.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2026 · Filed Jun 2, 2026
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-K
Period ended 2025-03-31; filed 2025-10-14.
0001040130-25-000072
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2026-03-31; filed 2026-06-02.
0001040130-26-000019
Item 7. 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 96 previous paragraphs and 91 current paragraphs.
36 unchanged; 32 reworded; 23 added; 27 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 4 previous and 4 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 (23)
Current report
Our discussion and analysis of our financial condition and the results of our operations contained herein are based upon our consolidated financial statements and the data used to prepare them. Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. We believe that the estimates, assumptions and judgments involved in the accounting policies described below involve a significant level of estimation uncertainty and have the greatest potential impact on our financial condition and results of operations and, therefore, we consider these to be our critical accounting policies.
Current report
Critical Accounting Policies
Current report
Membership fees revenue is recognized from two models: (1) PetPlus memberships for PetCareRx customers and (2) employer-sponsored partner memberships that provide access to the PetPlus program. These memberships offer discounted pricing, free standard shipping, veterinary telehealth services and along with other benefits, which together represent a single stand-ready performance obligation.
Current report
PetPlus membership are billed annually upfront and automatically renew each year, with revenue recognized ratably over the subscription period. In addition to annual membership fees earned under the PetPlus program, PetCareRx partner memberships are earned on a month-to-month basis.
Current report
Goodwill and intangible Assets
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 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 perform sensitivity analyses around the assumptions in order to assess the reasonableness of the assumptions and the results of the testing. 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
Consistent with the indicators of impairment described above, during the first quarter of our fiscal year ending March 31, 2026, the Company performed the quantitative test which resulted in additional impairment related to the PCRx trade name of $0.6 million, due to a reduction in actual and forecasted revenues.
Current report
In accordance with ASC 820, Fair Value Measurement, the fair value measurement, on a non-recurring basis, for the goodwill and trade name impairments 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
Critical Accounting Estimates
Current report
Recently Issued Accounting Pronouncements
Current report
See Note 1 Description of Business and Summary of Significant Accounting Policies for a discussion of recently issued accounting guidance.
Current report
(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 March 31, 2025.
Current report
(2) Reversal consists of abatement of certain sales tax accruals.
Current report
Sales
Current report
Sales decreased by approximately $48.0 million or 21.1%, to approximately $179.0 million for the fiscal year ended March 31, 2026, compared to approximately $227.0 for the fiscal year ended March 31, 2025. The decrease in sales for the fiscal year ended March 31, 2026 was primarily driven by a decline in prescription medication sales slightly offset by lower consumer promotional usage.
Current report
Cost of sales
Current report
Gross profit
Current report
General and administrative expenses
Current report
As previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2025, on October 7, 2025, the Company publicly reported the conclusion of the previously disclosed investigation by the Audit Committee of the Company’s Board of Directors. Total costs incurred during the fiscal year ended March 31, 2026, in connection with the investigation, were approximately $4.5 million, consisting of $3.2 million of legal and professional fees and $1.3 million of severance-related costs. These amounts were recorded within general and administrative expenses in the Consolidated Statements of Operations. The Company does not expect to incur additional material costs related to the investigation.
Current report
Advertising expenses
Current report
Other (expense) income, net
Current report
The Company’s liquidity position at March 31, 2026 has been impacted by declining cash balances, declining net sales, recurring operating losses and for fiscal 2026, negative operating cash flows. When considered in the aggregate, these conditions raised substantial doubt about the Company's ability to continue as a going concern within the assessment period, defined as twelve months after the date that our consolidated financial statements are issued. Management evaluated the significance of these conditions in relation to the Company’s ability to meet its obligations within the assessment period and has developed a plan intended to alleviate substantial doubt. The primary elements of the plan include, among other things, advertising and media spend optimization, strategic reductions in operating expenses, including decreases in professional fees following the resolution of non-recurring matters, and reductions in capital expenditures. Management determined that these plans are probable of being effectively implemented and are probable of mitigating the conditions that raised substantial doubt and has concluded that substantial doubt about the Company’s ability to continue as a going concern for the twelve-month period following issuance of these consolidated financial statements has been alleviated.
Removed paragraphs (27)
Previous report
Restatement
Previous report
As described in the Explanatory Note above and in Note 18 to our consolidated financial statements, we have restated our consolidated financial statements and Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations for the Affected Periods.
Previous report
Completion of Audit Committee Investigation
Previous report
On October 7, 2025, the Company publicly reported the conclusion of the previously disclosed investigation by the Audit Committee of the Company’s Board of Directors (the “Audit Committee”). As previously reported, the Company was unable to file, within the prescribed time period, its Annual Report on Form 10-K for the fiscal year ended March 31, 2025, following the commencement of an investigation by the Audit Committee that was originally disclosed in the Company’s Current Report on Form 8-K filed on July 1, 2025. The Audit Committee, assisted by outside legal counsel, Foley & Lardner LLP, and forensic accountants, BDO USA, P.C., conducted during June through August 2025 an investigation into allegations raised by two separate reports submitted anonymously through the Company’s third-party-administered whistleblower hotline on April 15 and 16, 2025 regarding (i) the timing of revenue recognition with respect to certain AutoShip orders in the fiscal fourth quarter of 2025, some of which resulted in customer complaints; (ii) a fiscal fourth quarter 2025 $50 coupon promotion to customers and whether it was motivated to any extent by its potential impact on Company KPIs regarding new customers; and (iii) the Company’s culture and control environment. The investigation’s scope also ultimately included additional matters identified during the course of the investigation.
Previous report
The Audit Committee’s primary investigative findings in the investigation included the following:
Previous report
(i) The Company accelerated shipment of products to AutoShip customers from the fourth quarter of fiscal year 2025 (i.e., the quarter ending March 31, 2025) to the third quarter of fiscal year 2025 (i.e., the quarter ending December 31, 2024) (the “December Accelerated Shipments”) and again from the first quarter of fiscal year 2026 (i.e., the quarter ending June 30, 2025) to the fourth quarter of fiscal year 2025 (i.e., the quarter ending March 31, 2025) (the “March Accelerated Shipments”). The acceleration of shipments did not comply with certain provisions of the Company’s AutoShip Terms & Conditions with their customers. As a result, the Company erroneously recorded $133,189 in revenue associated with the December Accelerated Shipments in the quarter ending December 31, 2024 of fiscal year 2025 and $1,101,151 in revenue associated with the March Accelerated Shipments in its financial statements for the quarter ending March 31, 2025. Management has corrected the March Accelerated Shipments error prior to the filing this Annual Report on Form 10-K.
Previous report
(ii) On March 21, 2025, the Company issued a $50 coupon with the objective of attracting new customers to its website and encouraging previous customers who had not recently placed an order to do so. When initially launched, the coupon did not contain a minimum purchase requirement, but a $100 minimum was later added after management noted excessive use of the coupon. The coupon was utilized in the placement of approximately 30,000 total orders, only approximately 74 of which had a net sale amount (sale amount less coupon value) of $0. Prior to the investigation, management had erroneously recorded in its financial statements for the quarter ending March 31, 2025, $2,451 in expenses for the 74 orders with no net sales amount to cost of goods sold rather than to marketing expense. The Audit Committee found that the inclusion of customers with zero net sales did not have a material impact on the Company’s new customer KPI.
Previous report
(iii) The Company’s former Chief Executive Officer, Sandra Campos, hired her nephew for a mid-level position and did not follow the Company’s employee handbook as a result of her failing to inform the Company of the family relationship at the time of her nephew’s hiring and in having the nephew report directly to her for a period of time.
Previous report
(iv) Although the Audit Committee did not find that the Company’s culture fostered an environment that discouraged employees from raising concerns, the Audit Committee did find that certain members of management were concerned about the speed with which business decisions were made and the lack of adequate time to evaluate them.
Previous report
(v) The former Audit Committee Chair (Diana Purcel) and the former Chief Financial Officer (Robyn D’Elia) did not report the whistleblower complaints (referenced above) to the Company’s external auditors on a timely basis.
Previous report
(vi) In April 2025, the Company accrued $711,897 for cooperative marketing funds for the fourth quarter ended March 31, 2025 believed to be due from a vendor in connection with marketing services provided by the Company pursuant to the Company’s Retail Reseller Agreement with the vendor. Based on management’s communications to clarify the amount with the vendor during the investigation, this accrual was determined to be erroneous and to have resulted from management’s misunderstanding of an oral agreement with the vendor. In August 2025, after confirming with the vendor the amounts that the vendor did agree to pay, management corrected the error prior to the filing of its financial statements by reducing its other current assets and increased marketing expense by $287,000 for the quarter ended March 31, 2025.
Previous report
In its investigation, the Audit Committee identified certain conduct that was determined to be inconsistent with the Company’s Code of Business Conduct & Ethics and related policies involving certain members of management. The Audit Committee referred these matters to the Board of Directors of the Company for appropriate action and discipline.
Previous report
The Board of Directors, as part of its remediation plan to foster a tone at the top that exemplifies a culture of commitment to the principles set forth in the Company’s Code of Business Conduct and Ethics, requested and accepted the resignations of the former Chief Executive Officer (Sandra Campos) and the former Chief Financial Officer (Robyn D’Elia) and approved and entered into mutual separation agreements with Ms. Campos and Ms. D’Elia on August 11, 2025, as reported in a Current Report on Form 8-K filed by the Company on August 12, 2025. Also, the Board of Directors requested and accepted the resignation of the former Chair of the Audit Committee (Diana Purcel), and such resignation was previously reported in the Current Report on Form 8-K filed by the Company on July 28, 2025.
Previous report
As a result of the findings in the investigation, the Audit Committee made a number of recommendations which the Board of Directors has adopted, including: replacement of the Chief Executive Officer, Chief Financial Officer, and Chair of the Audit Committee; implementation of additional and enhanced policies, procedures, and training on the Company’s Code of Ethics & Conduct; correction of certain accounting errors as described above; and strengthening the Company’s internal controls over financial reporting and operations related to the matters investigated. The Company has reported in Item 9A of this Annual Report on Form 10-K material weaknesses in internal controls over financial reporting in connection with the findings of the investigation.
Previous report
Restatement
Previous report
As described in the Note 1 of “Notes to Consolidated Financial Statements,” we have restated our consolidated financial statements and Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations for the years ended March 31, 2024 and 2023 and the interim periods in those years and for the quarters ended June 30, 2024, September 30, 2024, and December 31, 2024.
Previous report
Our discussion and analysis of our financial condition and the results of our operations contained herein are based upon our consolidated financial statements and the data used to prepare them. Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. On an ongoing basis we re-evaluate our judgments and estimates including those related to product returns, bad debts, inventories, and income taxes. We base our estimates and judgments on our historical experience, knowledge of current conditions, and our beliefs of what could occur in the future considering available information. Actual results may differ from these estimates under different assumptions or conditions. Our estimates are guided by observing the following critical accounting policies. See Note (2) - Summary of Significant Accounting Policies, in the "Notes to Consolidated Financial Statements" included in Part II, Item 8, Financial Statements and Supplementary Data, of this 10-K Report for a description of our significant accounting policies as well as a description of recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted as of the date of this 10-K Report.
Previous report
Membership fees represent the amounts recognized periodically from two membership models. The first is the PetPlus membership for PetCareRx customers, and the second is a partner membership provided through PetCareRx. These memberships provide discounted pricing, free standard shipping, veterinary telehealth services and local Caremark Pharmacy prescription pickup which represent a single stand-ready performance obligation to provide these benefits. The PetPlus membership fee is an upfront annual charge and automatically renews one year from the initial enrollment date. The Company recognizes the revenue ratably over the term of the PetPlus membership which is generally one year.
Previous report
Goodwill
Previous report
We have performed our annual goodwill impairment testing as of January 1, 2025 using a quantitative assessment and at that time concluded there was no impairment. Since January 1, 2025, our stock price decreased from $4.82 at December 31, 2024 to $4.19 at March 31, 2025. We considered the decrease in its stock price in FY 2025 to be indicative of potential risks that the carrying amount of goodwill may not be recoverable. We performed a quantitative assessment as of March 31, 2025, and concluded that goodwill was not impaired because the market capitalization, i.e. fair value determined based on our stock price (without including a control premium), of the single reporting unit exceeded its carrying value as of March 31, 2025.
Previous report
Sales (As Restated)
Previous report
Sales decreased by approximately $47.1 million or 17.2%, to approximately $227.0 million for the fiscal year ended March 31, 2025, compared to approximately $274.1 million for the fiscal year ended March 31, 2024. The decrease in sales for the fiscal year ended March 31, 2025 reflects a strategic reduction in advertising, broader macroeconomic factors, and higher consumer promotional usage.
Previous report
Going forward sales may be adversely affected due to increased competition and consumers giving more consideration to price. The changes in consumer behavior post pandemic makes future sales somewhat challenging to predict. No guarantees can be made that sales will continue to grow in the future.
Previous report
Cost of sales (As Restated)
Previous report
Gross profit (As Restated)
Previous report
Advertising expenses (As Restated)
Reworded paragraphs (32)
Previous wording
Presently, our product line includes approximately 10,000 of the most popular pet medications, health products, and supplies for dogs, cats, and horses.
Current wording
Presently, our product line includes approximately 6,400 of the most popular pet medications, health products, 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 on our websites atwww.petmeds.comandwww.petcarerx.com, acquire new customers, and maximize repeat purchases. Our sales consist of products sold mainly to retail consumers. The twelve-month average purchase increased slightly at approximately $97 and $94 per order for the fiscal years ended March 31, 2025, and March 31, 2024, respectively.
Current wording
We market our products through national and local advertising campaigns which aim to increase the recognition of the “PetMeds” brand name and "PetCareRx" brand name, increase traffic on our websites atwww.petmeds.comandwww.petcarerx.com, acquire new customers, and maximize repeat purchases. Our sales consist of products sold mainly to retail consumers. The twelve-month average purchase increased slightly at approximately $98 and $97 per order for the fiscal years ended March 31, 2026, and March 31, 2025, respectively.
Previous wording
We account for revenue under ASC Topic 606 ("Revenue from Contracts with Customers") and generate revenue by selling pet medication products and pet supplies mainly to retail customers. Certain pet supplies offered on our website are drop shipped to customers. We consider ourself the principal in the arrangement because we control the specified good before it is transferred to the customer. Revenue contracts contain one performance obligation, which is delivery of the product; customer care and support is deemed not to be a material right to the contract. The transaction price is adjusted at the date of sale for any applicable sales discounts and an estimate of product returns, which are estimated based on historical patterns, however this is not considered a key judgment. There are no amounts excluded from the variable consideration. Revenue is recognized when control transfers to the customer at the point in time in which the shipment of the product occurs. This key judgment is determined as the shipping point, which represents the point in time where we have a present right to payment, title has transferred to the customer, and the customer has assumed the risks and rewards of ownership.
Current wording
We account for revenue under Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers and generate revenue by selling prescription and non-prescription pet medication products, pet food, supplements, supplies, membership fees, and veterinary service mainly to retail customers. Certain pet supplies offered on our website are drop shipped to customers. We are the principal in the arrangement, as we control the goods prior to transfer and are responsible for supplier selection, pricing, and returns for damaged or missing products. Revenue contracts contain one performance obligation, which is delivery of the product. The transaction price is adjusted at the date of sale for any applicable sales discounts and an estimate of product returns, which are estimated based on historical patterns, however this is not considered a key judgment. Revenue is recognized when control transfers to the customer at the point in time in which the shipment of the product occurs. This key judgment is determined as the shipping point, which represents the point in time where we have a present right to payment, title has transferred to the customer, and the customer has assumed the risks and rewards of ownership.
Previous wording
Outbound shipping and handling fees are an accounting policy election and are included in sales as we consider ourself the principal in the arrangement given responsibility for supplier selection and discretion over pricing. Shipping costs associated with outbound freight after control over a product has transferred to a customer are an accounting policy election and are accounted for as fulfillment costs and are included in cost of sales.
Current wording
Outbound shipping and handling fees are an accounting policy election and are included in product sales upon shipment. Shipping costs associated with outbound freight after control over a product has transferred to a customer are an accounting policy election and are accounted for as fulfillment costs and are included in cost of sales.
Previous wording
We maintain an allowance for credit losses that we estimate will arise from customers’ inability to make required payments, arising from either credit card chargebacks or insufficient funds checks. We determine our estimates of the uncollectability of accounts receivable by analyzing historical bad debts and current economic trends. The allowance for credit losses was approximately $91 thousand and $273 thousand at March 31, 2025 and 2024, respectively.
Current wording
We maintain an allowance for credit losses that we estimate will arise from customers’ inability to make required payments, arising from either credit card chargebacks or insufficient funds checks. We determine our estimates of the uncollectability of accounts receivable by analyzing historical bad debts and current economic trends. The allowance for credit losses was approximately $25 thousand and $91 thousand as of March 31, 2026 and 2025, respectively.
Previous wording
Goodwill represents the excess of the purchase price over the fair value of net assets acquired in a business combination. Goodwill is not amortized but instead is tested for impairment annually on January 1, or more frequently if events or changes in circumstances indicate goodwill might be impaired. When testing goodwill for impairment by determining whether the carrying value of each reporting unit exceeds its estimated fair value. we have the option to choose whether it will apply a qualitative assessment first and then a quantitative assessment, if necessary, or to apply the quantitative assessment directly. We have concluded that we have one reporting unit and has assigned the entire balance of goodwill to this reporting unit.
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
We believe that the estimates, assumptions and judgments involved in the accounting policies described below involve a significant level of estimation uncertainty and have the greatest potential impact on our financial condition and results of operations and, therefore, we consider these to be our critical accounting policies. Accordingly, we evaluate our estimates, assumptions, and judgments on an ongoing basis. Our actual results may differ from these estimates under different assumptions, judgments, and conditions.
Current wording
Our critical accounting estimates are those estimates that involve a significant level of estimation uncertainty and have the greatest potential impact on our financial condition and results of operations. On an ongoing basis we re-evaluate our judgments and estimates including those related to inventory valuation, goodwill valuation and supplier rebates. We base our estimates and judgments on our historical experience, knowledge of current conditions, and our beliefs of what could occur in the future considering available information. Actual results may differ from these estimates under different assumptions or conditions.
Previous wording
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; depreciation; income tax provision; interest income (expense); and other non-operational expenses. We have provided reconciliations below of adjusted EBITDA to net (loss) income, the most directly comparable GAAP financial measures.
Current wording
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.
Previous wording
We believe it is useful to exclude non-cash charges, such as share-based compensation expense and depreciation 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 expenses, including the investment banking fee related to the Vetster partnership, acquisition costs related to PetCareRx, employee severance and interest expense relating to an estimated unremitted prior period state 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:
Current wording
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, including the acquisition costs related to PetCareRx, employee severance, impairment of goodwill and intangible assets, and interest expense relating to an estimated unremitted prior period state 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:
Previous wording
•Although depreciation is a non-cash charge, the assets being depreciated 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;
Current wording
•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;
Previous wording
•Adjusted EBITDA does not reflect 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;
Current wording
•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;
Previous wording
•Adjusted EBITDA does not reflect non operating expenses (income) including sales tax expense (income) relating to recording a liability for sales tax we did not collect from our customers or recognizing a gain on settlement from settling a state liability for less than recorded.
Current wording
•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;
Previous wording
The following table presents a reconciliation of net loss, the most directly comparable GAAP measure to Adjusted EBITDA for each of the periods indicated:
Current wording
The following tables present a reconciliation of net loss, the most directly comparable GAAP measure to Adjusted EBITDA for each of the periods indicated:
Previous wording
Reorder sales decreased by approximately $34.6 million, or 15.5%, to approximately $188.0 million for the fiscal year ended March 31, 2025, compared to approximately $222.6 million for the fiscal year ended March 31, 2024. The decrease in reorder sales for the fiscal year ended March 31, 2025 is primarily due to a decline in prescription medication sales.
Current wording
Reorder sales decreased by approximately $40.2 million, or 21.4%, to approximately $147.8 million for the fiscal year ended March 31, 2026, compared to approximately $188.0 million for the fiscal year ended March 31, 2025. The decrease in reorder sales for the fiscal year ended March 31, 2026 is primarily due to a decline in prescription medication sales.
Previous wording
New order sales decreased by approximately $10.6 million or 25.5%, to approximately $31.1 million for the fiscal year ended March 31, 2025, compared to $41.7 million for the fiscal year ended March 31, 2024. The decrease for the fiscal year ended March 31, 2025 in new order sales is primarily due to a strategic reduction in advertising.
Current wording
New order sales decreased by approximately $6.4 million or 20.5%, to approximately $24.7 million for the fiscal year ended March 31, 2026, compared to $31.1 million for the fiscal year ended March 31, 2025. The decrease for the fiscal year ended March 31, 2026 in new order sales is primarily due to a strategic reduction in paid media advertising.
Previous wording
We acquired approximately 351,000 new customers for the fiscal year ended March 31, 2025, compared to approximately 457,000 new customers for the same period in the prior year. The following chart illustrates sales by various sales classifications:
Current wording
We acquired approximately 266,000 new customers for the fiscal year ended March 31, 2026, compared to approximately 351,000 new customers for the same period in the prior year. The following chart illustrates sales by various sales 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 years ended March 31, 2025 reflect this new customer definition change. Under the previous definition of a new customer, reorder and new order sales were $241 million and $23.7 million, respectively, for the year ended March 31, 2024.
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 both periods presented reflect this new definition.
Previous wording
The Company offers an AutoShip & Save subscription program (“AutoShip”) on our website. AutoShip is a convenient way for our loyal customer base to have future pet medication orders delivered directly to them without the need to place an order each time. We are encouraged by the adoption of our AutoShip program and have seen an increasingly positive trend since we launched this program. Recurring sales, which includes AutoShip and membership revenue, as a percentage of total gross sales was 56.1% for the most recent quarter ended March 31, 2025, up from 53.5% for the same period last year and up from 56.2% sequentially in the prior quarter.
Current wording
The Company offers an AutoShip & Save subscription program (“AutoShip”) on our website. AutoShip is a convenient way for our loyal customer base to have future pet medication orders delivered directly to them without the need to place an order each time. We are encouraged by the adoption of our AutoShip program and have seen an increasingly positive trend since we launched this program. Recurring sales, which includes AutoShip and membership revenue, as a percentage of total gross sales was 62.6% for the most recent quarter ended March 31, 2026, up from 56.1% for the same period last year and up from 61.5% sequentially in the prior quarter.
Previous wording
Cost of sales decreased by approximately $31.5 million, or 16.6% to $157.8 million for the fiscal year ended March 31, 2025, from $189.3 million for the fiscal year ended March 31, 2024. The cost of sales decrease can be directly related to the decrease in sales during fiscal year 2025. As a percentage of sales, cost of sales was 69.5% in fiscal year 2025, as compared to 69.1% in fiscal 2024. The increase in cost of sales, as a percentage of sales, for the fiscal year ended March 31, 2025 compared to the fiscal year ended March 31, 2024 was primarily due to an increase in discount activity.
Current wording
Cost of sales decreased by approximately $29.0 million, or 18.4% to $128.8 million for the fiscal year ended March 31, 2026, from $157.8 million for the fiscal year ended March 31, 2025. The cost of sales decrease can be directly related to the decrease in sales during fiscal year 2026. As a percentage of sales, cost of sales was 71.9% in fiscal year 2026, as compared to 69.5% in fiscal year 2025. The fiscal year ended March 31, 2026 includes the impact of the $2.1 million inventory write-down, primarily related to non-prescription medication products, pet food, and supplements, originally acquired for a wholesale transaction that did not materialize. The year over year increase for cost of sales, as a percentage of sales for the fiscal year ended March 31, 2026 compared to the fiscal year ended March 31, 2025 was primarily due to the impact of the inventory write-down.
Previous wording
Gross profit decreased by approximately $15.6 million, or 18.4%, to $69.1 million for the fiscal year ended March 31, 2025, from $84.8 million for the fiscal year ended March 31, 2024. The decrease in gross profit can be directly related to the decrease in sales and lower profit margins during fiscal 2025. Gross profit as a percentage of sales for fiscal 2025 was 30.5% compared to 30.9% for fiscal 2024. The gross profit and gross profit percentage decreasedfor thefiscal year ended March 31, 2025 compared to the previous fiscal year.
Current wording
Gross profit decreased by approximately $18.9 million, or 27.4%, to $50.2 million for the fiscal year ended March 31, 2026, from $69.1 million for the fiscal year ended March 31, 2025. The decrease in gross profit can be directly related to the decrease in sales and lower profit margins during fiscal 2026. Gross profit as a percentage of sales for fiscal 2026 was 28.0% compared to 30.5% for fiscal 2025. The decrease in gross profit and gross margin percentage for the fiscal year ended March 31, 2026 compared to the previous fiscal year was primarily due to the impact of the inventory write-down and lower sales.
Previous wording
General and administrative expenses decreased by approximately $16.6 million, or 30.0%, to $38.6 million for the fiscal year ended March 31, 2025, from $55.2 million for the fiscal year ended March 31, 2024. The decrease in general and administrative expenses for the fiscal year ended March 31, 2025 was primarily due to a $16.2 million decrease in payroll and payroll related expenses. The decrease in payroll and payroll related expenses primarily consisted of a $13.5 million decrease in stock compensation expense, of which $8.7 million was from the one-time non-cash stock compensation reversal associated with an executive departure. General and administrative expenses as a percentage of sales was 17.0% for the fiscal year ended March 31, 2025, compared to 20.2% for the fiscal year ended March 31, 2024.
Current wording
General and administrative expenses increased by approximately $12.1 million, or 31.3%, to $50.7 million for the fiscal year ended March 31, 2026, from $38.6 million for the fiscal year ended March 31, 2025. The increase in general and administrative expenses for the fiscal year ended March 31, 2026 was primarily due to a $8.0 million increase in stock-based compensation expense, driven by the non-recurrence of an $8.7 million one-time non-cash stock compensation reversal associated with executive departures in fiscal 2025, a $5.0 million increase in professional fees, of which $3.2 million were related to the whistleblower investigation, a $1.3 million increase in enterprise business system related expenses, a $0.6 million increase from payroll severance, offset by a $1.7 million decrease in payroll and payroll related expenses, $1.2 million decrease in bank services fees, $1.2 million decrease in other general and administrative expenses primarily related to the impact of sales tax settlements in the fiscal year ended March 31, 2026 compared to the fiscal year ended March 31, 2025, and $1.1 million decrease in other general and administrative expenses. General and administrative expenses as a percentage of sales was 28.3% for the fiscal year ended March 31, 2026, compared to 17.0% for the fiscal year ended March 31, 2025.
Previous wording
Advertising expenses, which is net of manufacturer funded advertising, decreased by approximately $6.8 million to $23.8 million for the fiscal year ended March 31, 2025, from $30.6 million for the fiscal year ended March 31, 2024. This decrease for the fiscal year ended March 31, 2025, can be mainly attributed to lower gross media spend and a higher proportion of spending funded by third party partners. As a percentage of sales, advertising expense was 10.5% and 11.2% for the fiscal years ended March 31, 2025, and 2024, respectively.
Current wording
Advertising expenses, which is net of manufacturer funded advertising, decreased by approximately $2.3 million to $21.5 million for the fiscal year ended March 31, 2026, from $23.8 million for the fiscal year ended March 31, 2025. This decrease for the fiscal year ended March 31, 2026, can be mainly attributed to lower gross media spend. As a percentage of sales, advertising expense was 12.0% and 10.5% for the fiscal years ended March 31, 2026, and 2025, respectively.
Previous wording
The advertising costs of acquiring a new customer, defined as total advertising costs divided by new customers acquired, were $68 for the fiscal year ended March 31, 2025, compared to $67 for the fiscal year ended March 31, 2024, per the new definition of new customers.
Current wording
The advertising costs of acquiring a new customer, defined as total advertising costs divided by new customers acquired, were $81 for the fiscal year ended March 31, 2026, compared to $68 for the fiscal year ended March 31, 2025. The increase in customer acquisition costs for the year ended March 31, 2026, was primarily attributed to higher digital advertising costs, including increase cost-per-click rates during peak flea and tick season, as well as lower organic traffic.
Previous wording
Depreciation and amortization expense was approximately $7.0 million and $7.1 million for the fiscal years ended March 31, 2025 and March 31, 2024, respectively.
Current wording
Depreciation and amortization expense was approximately $9.4 million and $7.0 million for the fiscal years ended March 31, 2026 and March 31, 2025, respectively.
Previous wording
Other income decreased by approximately $0.9 million, to $0.9 million for the fiscal year ended March 31, 2025, from $1.9 million for the fiscal year ended March 31, 2024. The decrease was primarily due to lower invested balances. Interest income, net may decrease in the future as we utilize our cash balances on future investments or partnerships, on our operating activities, enter a credit facility or if the current interest rate environment changes.
Current wording
Other (expense) income increased by approximately $0.4 million, to $1.3 million for the fiscal year ended March 31, 2026, from $0.9 million for the fiscal year ended March 31, 2025. The increasewas primarily due to lower invested balances, and higher interest expense accruals 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 fiscal years ended March 31, 2025 and 2024, we recorded an income tax provision of approximately $5.7 million and $1.2 million, respectively. The increase to the income tax provision for fiscal 2025 is primarily due to the Company establishing a full valuation allowance against its net deferred tax assets. Our effective tax rate for the fiscal year ended March 31, 2025 was approximately (968.3)%, compared to approximately (19.0)% for the fiscal year ended March 31, 2024. The pre-tax loss in fiscal 2024 caused unfavorable items to decrease the rate instead of increasing it. The primary drivers of the rate are related to the increase in valuation allowance against the Company's net deferred tax assets, partially offset with the non-deductible executive compensation under Sec. 162(m) of the Internal Revenue Code. This limits deductions for compensation of covered executives to $1.0 million per individual.
Current wording
For the fiscal years ended March 31, 2026 and 2025, we recorded an income tax benefit of approximately $73.0 thousand and a tax provision of $5.7 million, respectively. The decrease to the income tax provision for fiscal 2026 is primarily due to the Company establishing a full valuation allowance against its net deferred tax assets in the prior fiscal year. Our effective tax rate for the fiscal year ended March 31, 2026 was approximately 0.1%, compared to approximately (968.3)% for the fiscal year ended March 31, 2025. The Company's effective tax rate of (968.3)% differs from the U.S. statutory rate primarily due to the increase of valuation allowance against its net deferred tax assets, partially offset with the benefit related to the cancellation of the former CEO’s performance stock units during the period ended March 31, 2025.
Previous wording
Net loss decreased by approximately $1.2 million, to a loss of approximately $6.3 million for the fiscal year ended March 31, 2025, from a loss of approximately $7.5 million for the fiscal year ended March 31, 2024. The decrease to net loss was primarily related to a decrease in general and administrative expenses, including the above-mentioned $8.7 million non-cash stock compensation reversal and advertising expenses, partially offset by a decrease in sales and gross profit, and an increase in the provision for income taxes during the fiscal year.
Current wording
Net loss increased by approximately $51.0 million, to a loss of approximately $57.3 million for the fiscal year ended March 31, 2026, from a loss of approximately $6.3 million for the fiscal year ended March 31, 2025. The increase to net loss was primarily driven by the goodwill impairment charge of $26.7 million recorded in the first quarter of fiscal 2026 as well as the afore-mentioned decline in prescription medication sales, partially offset by a decrease in cost of sales directly related to the decrease in sales during fiscal 2026.
Previous wording
At March 31, 2025, we had $54.7 million in cash and cash equivalents and no debt obligations. Our working capital at March 31, 2025 and 2024 was approximately $16.1 million and approximately $21.5 million, respectively. The $5.4 million decrease in working capital was attributable to $14.8 million decrease in current assets, out of which $12.4 million from inventory and $9.4 million decrease in current liabilities, out of which $9.5 million from accounts payable and accrued expenses.
Current wording
At March 31, 2026, we had $21.4 million in cash and cash equivalents and no debt obligations. Our working capital at March 31, 2026 and 2025 was approximately $(8.4) million and approximately $16.1 million, respectively. The $24.5 million decrease in working capital was attributable to $35.3 million decrease in current assets, out of which $2.6 million from inventory and $10.8 million decrease in current liabilities, out of which $7.0 million from accounts payable and accrued expenses.
Previous wording
Net cash provided by operating activities remained essentially unchanged at $4.7 million and $4.3 million for the fiscal years ended March 31, 2025 and 2024, respectively. The $0.4 million increase in cash provided by operating activities is due to the $1.2 million decrease in net loss reduced by $7.3 million of non-cash operating adjustments and partially offset by the $6.5 million increase in current liabilities net of current assets excluding cash.
Current wording
Cash flow used by operating activities was $28.4 millionfor the fiscal year ended March 31, 2026 compared to cash flow provided of $4.7 million in the prior year period. The $33.1 million decrease in cash used to fund operating activities is due to the $51.0 million increase in net loss reduced by $30.0 million of non-cash operating adjustments and partially offset by the $12.1 million decrease in current liabilities net of current assets excluding cash.
Previous wording
Net cash used in investing activities was $5.1 million and $40.7 million for the fiscal years ended March 31, 2025 and 2024, respectively. This change in investing activities reflects the PetCareRx acquisition in the prior year.
Current wording
Net cash used in investing activities was $4.6 million and $5.1 million for the fiscal years ended March 31, 2026 and 2025, respectively.
Previous wording
Net cash used in financing activities was $0.2 million and $12.4 million for the fiscal years ended March 31, 2025 and 2024, respectively, due to the payment of an aggregate $0.60 per share dividend in fiscal year 2024.
Current wording
Net cash used in financing activities was $0.3 million and $0.2 million for the fiscal years ended March 31, 2026 and 2025, respectively.
Previous wording
On April 3, 2023, we closed on our acquisition of PetCareRx for aggregate cash consideration of approximately $36.0 million. At March 31, 2025 we had no material outstanding purchase or lease commitments. Other than the lease commitments assumed as part of the PetCareRx acquisition for the leases on two buildings, we are not currently bound by any long- or short-term agreements for the purchase or lease of property and equipment. Any material amounts expended for property and equipment 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 need for alternative sources of working capital and have no commitments.
Current wording
At March 31, 2026 we had no material outstanding purchase or lease commitments. Other than the lease commitments assumed as part of the PetCareRx acquisition for the leases on two buildings, we are not currently bound by any long- or short-term agreements for the purchase or lease of property and equipment. Any material amounts expended for property and equipment 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 need for alternative sources of working capital and have no commitments.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
General and administrative expenses (As Restated)