PETMED EXPRESS INC
For the period ended Jun 30, 2026. Filed Aug 13, 2026.
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.
Jun 30, 2026 · Filed Aug 13, 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-Q
Period ended 2025-12-31; filed 2026-02-05.
0001040130-26-000007
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-13.
0001040130-26-000041
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 79 previous paragraphs and 65 current paragraphs.
32 unchanged; 22 reworded; 11 added; 25 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 5 previous and 3 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 (11)
Current report
The Company’s fiscal year end is March 31, and references herein to fiscal 2027 or fiscal 2026 refer to the Company's fiscal years ending March 31, 2027 and 2026, respectively.
Current report
Critical Accounting Policies and Estimates
Current report
Gross profit decreased by approximately $3.1 million, or 21.3%, to approximately $11.3 million for the three months ended June 30, 2026, from approximately $14.4 million for the three months ended June 30, 2025. The gross margin percentage decreased by approximately 0.5%, to approximately 27.6% for the three months ended June 30, 2026, from approximately 28.1% for the three months ended June 30, 2025. Gross profit and gross margin percentage decreased primarily due to lower manufacturer rebates as a percentage of sales, partially offset by lower net freight costs per order.
Current report
General and administrative expenses decreased by approximately$1.8 million, or 13.5%, to approximately $11.2 million for the three months ended June 30, 2026, from approximately$12.9 million for thethree months ended June 30, 2025. The decrease to general and administrative expenses for the three months ended June 30, 2026 was primarily driven by the decrease of non operating professional fees of $(1.0) million and severance of $(0.1) million, as well as a decrease of share-based compensation of $(0.4) million, lower credit card processing fees of ($0.2M), and ($0.1M) lower other general and administrative expenses.
Current report
Depreciation and amortization expense was $2.1 million and $2.3 million for the three months ended June 30, 2026 and June 30, 2025, respectively.
Current report
Other (expense) income, net increased to approximately $0.1 million for the three months ended June 30, 2026 compared to approximately $(11) thousand for the three months ended June 30, 2025. The increase to other (expense) income forthe three months ended June 30, 2026 was due to higher interest expense accruals on sales tax liabilities which was slightly offset by an increase in rental income from the Delray Beach property. Interest income may increase or decrease in future periods based on several factors, including changes in our cash balances driven by operational cash flows, future investments, or proceeds from potential asset dispositions, as well as shifts in the prevailing interest rate environment.
Current report
During the three months ended June 30, 2026, the Company experienced a lower year-over-year rate of net sales decline as net sales declined 19.9% compared with 22.7% during the three months ended June 30, 2025. Net cash used in operating activities declined to $7.7 million compared to $12.3 million used during the prior-year period. At June 30, 2026, cash and cash equivalents declined to $13.1 million compared to $21.4 million at March 31, 2026. The Company continued to experience recurring declining net sales, recurring operating losses and negative operating cash flow. Management determined that the continued execution of its strategic plan, the primary elements of which include optimizing advertising and media spending, reducing operating expenses, and limiting capital expenditures, remains probable of both being effectively implemented and of mitigating the conditions that raised substantial doubt. As of the issuance of these financials, management has concluded that substantial doubt about the Company’s ability to continue as a going concern for the next twelve months is alleviated by management’s plan.
Current report
Subsequent to quarter end, on July 23, 2026, the Company, through a wholly-owned subsidiary, entered into a purchase and sale agreement under which the Company agreed to sell its properties located at 410 and 420 South Congress Avenue, Delray Beach, Florida, which includes the Company's headquarters and Florida distribution center buildings, for an aggregate purchase price of $37.0 million. The contract also provides that, upon the closing of the sale, the Company will enter into a 10-year triple-net lease agreement with the Buyer to lease back 100,519 square feet of space at 420 South Congress Avenue. The Company anticipates the transaction to close in the third quarter of fiscal 2027, subject to a customary due diligence period, execution of a definitive lease agreement, and other customary closing conditions.
Current report
Net cash used in operating activities was $7.7 million for the three months ended June 30, 2026, compared to cash used in operating activities of $12.3 million for the three months ended June 30, 2025. The $4.6 million decrease in cash used in operating activities was primarily due to the $28.0 million decrease in net loss and $7.3 million decrease in cash used to fund inventories, partially offset by the absence of the prior-year non-cash impairment charge of $27.3 million and a $5.1 million decrease in cash used to fund account payable.
Current report
Net cash used in investing activities was $0.6 million for the three months ended June 30, 2026, compared to $1.3 million in the prior-year period.
Current report
Net cash used in financing activities was$4.9 thousand and$30.0 thousand for the three months ended June 30, 2026 and June 30, 2025, respectively.
Removed paragraphs (25)
Previous report
Restatement
Previous report
As described in the explanatory note in Note 1 to the 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.
Previous report
Critical Accounting Policies
Previous report
Our discussion and analysis of our financial condition and the results of our operations contained herein are based upon our condensed consolidated financial statements and the data used to prepare them. Our condensed 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.
Previous report
Long-lived Assets
Previous report
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 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. During the third quarter of fiscal year 2026, there was no impairment triggering event identified.
Previous report
Goodwill and Intangible Assets
Previous report
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 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.
Previous 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.
Previous report
During the first quarter of our fiscal year ending 2026, because of the triggering events 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. During the third quarter of fiscal year 2026, there was no impairment triggering event identified.
Previous 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 are 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.
Previous report
(1) Related to the whistleblower investigation.
Previous report
(2) Included in interest expense (income), net is $0.4 million of interest expense related to the sales tax liability and $0.2 million of interest income for the three months ended December 31, 2025. Included in interest expense (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.
Previous report
(1) Related to the whistleblower investigation.
Previous report
(2) Included in interest expense (income), net is $1.5 million of interest expense related to the sales tax liability and $0.8 million of interest income for the nine months ended December 31, 2025. Included in interest expense (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
Previous report
Under the previous definition of a new customer, reorder and new order sales were $47.0 million and $3.1 million, respectively, for the three months ended December 31, 2024. Under the previous definition of a new customer, reorder and new order sales were $158.1 million and $11.8 million, respectively, for the nine months ended December 31, 2024.
Previous report
Gross profit decreased by approximately $6.7 million, or 41.4%, to approximately $9.5 million for the quarter ended December 31, 2025, from approximately $16.1 million for the quarter ended December 31, 2024. Gross profit decreased by approximately $17.7 million, or 32.8%, to approximately $36.3 million for the nine months ended December 31, 2025, from approximately $53.9 million for the nine months ended December 31, 2024. The gross profit decreases for the quarter and nine months ended December 31, 2025 compared to the quarter ended and nine months ended December 31, 2024. The gross margin percentage decreased by approximately 7.8%, to approximately 23.3% for the quarter ended December 31, 2025, from approximately 31.0% for the quarter ended December 31, 2024. The gross margin percentage decreased by approximately 4.0%, to approximately 26.6% for the nine months ended December 31, 2025, from approximately 30.6% for the nine months ended December 31, 2024. The decrease in gross profit and gross margin percentage for the three and nine months ended December 31, 2025 compared to the three and nine months ended December 31, 2024 were primarily due to the impact of the inventory write-down, higher consumer promotional usage and lower sales.
Previous report
General and administrative expenses increased by approximately $1.4 million, or 13.1%, to approximately $12.2 million for the quarter ended December 31, 2025, from approximately $10.8 million for the quarter ended December 31, 2024. General and administrative expenses increased by approximately$13.2 million, or 50.3%, to approximately $39.3 million for the nine months ended December 31, 2025, from approximately$26.2 million for thenine months ended December 31, 2024.
Previous report
The increase to general and administrative expenses for the quarter ended December 31, 2025 was mainly due to a $2.0 million increase in professional fees, a $0.4 million increase in enterprise business system related expenses, offset by a $0.2 million decrease in bank service fees, a $0.2 million decrease in payroll severance and a $0.6 million decrease in other general and administrative expenses.
Previous report
The increase to general and administrative expenses for the nine months ended December 31, 2025 was primarily due to a $8.3 million increase in stock-based compensation expense primarily associated with executive departures, a $5.1 million increase in professional fees, of which$3.2 million were related to the whistleblower investigation, a$1.1 million increase in enterprise business system related expenses, a$0.7 million increase from payroll severance, $1.3 million increase in other general and administrative expenses primarily related to Illinois sales tax settlement gain in the nine months ended December 31, 2024, offset by a $1.7 million decrease in payroll and payroll related expenses, $1.0 million decrease in bank services fees, and $0.5 million decrease in other general and administrative expenses.
Previous report
Depreciation and amortization expense was $2.4 million and $1.6 million for the quarters ended December 31, 2025 and December 31, 2024, respectively. Depreciation and amortization expense was $7.0 million and $5.0 million for the nine months ended December 31, 2025 and December 31, 2024, respectively.
Previous report
Other (expense) income, net decreased to approximately $(0.1) million for the quarter ended December 31, 2025 compared to approximately $0.2 million for the quarter ended December 31, 2024. Other (expense) income, net decreased to approximately $(0.2) million for the nine months ended December 31, 2025 compared to approximately $0.9 million for the nine months ended December 31, 2024. The decrease to other (expense) income for the quarter andthe nine months ended December 31, 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 report
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.
Reworded paragraphs (22)
Previous wording
Certain information in this Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. You can identify these forward-looking statements by the words "believes," "intends," "expects," "may," "will," "should," "plans," "projects," "contemplates," "intends," "budgets," "predicts," "estimates," "anticipates," or similar expressions. These statements are based on our beliefs, as well as assumptions we have used based upon information currently available to us. Because these statements reflect our current views concerning future events, these statements involve risks, uncertainties, and assumptions. Actual future results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of our 2025 Form 10-K under the heading “Risk Factors.” A reader, whether investing in our common stock or not, should not place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report on Form 10-Q. We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law.
Current wording
Certain information in this Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. You can identify these forward-looking statements by the words “believes,” “intends,” “expects,” “may,” “will,” “should,” “plans,” “projects,” “contemplates,” “budgets,” “predicts,” “estimates,” “anticipates,” or similar expressions. These statements are based on our beliefs, as well as assumptions we have used based upon information currently available to us. Because these statements reflect our current views concerning future events, these statements involve risks, uncertainties, and assumptions. Actual future results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of our 2026 Form 10-K under the heading “Risk Factors.” A reader, whether investing in our common stock or not, should not place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report on Form 10-Q. We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law.
Previous wording
When used in this Quarterly Report on Form 10-Q, unless otherwise stated or the context otherwise indicates, "PetMed Express," "PetMeds," "PetMed," "the Company," "we," "our," and "us" refers to PetMed Express, Inc. and its direct and indirect wholly owned subsidiaries, taken as a whole.
Current wording
When used in this Quarterly Report on Form 10-Q, unless otherwise stated or the context otherwise indicates, “PetMed Express,” “PetMeds,” “PetMed,” “the Company,” “we,” “our,” and “us” refer to PetMed Express, Inc. and its direct and indirect wholly owned subsidiaries, taken as a whole.
Previous wording
Presently, our product line includes approximately 7,200 of the most popular pet medications, health products and food for dogs, cats, and horses.
Current wording
Presently, our product line includes approximately 6,500 SKUs 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 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 for both the quarters ended December 31, 2025, and December 31, 2024.
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.com andwww.petcarerx.com, acquire new customers, and maximize repeat purchases. Our sales consist of products sold mainly to retail consumers. The average order value was approximately $101 and $99 per order for the quarters ended June 30, 2026, and June 30, 2025, respectively.
Previous wording
There have been no material changes to our significant accounting policies as compared to the significant accounting policies described in our Annual Report on Form 10-K, filed on October 14, 2025, except as noted below:
Current wording
There have been no material changes to our significant accounting policies as compared to the significant accounting policies described in our 2026 Annual Report on Form 10-K, filed on June 2, 2026.
Previous wording
Macroeconomic factors, including inflation, increased interest rates, significant capital market and supply chain volatility, and political, global economic and geopolitical developments, have direct and indirect impacts on our results of operations that are difficult to isolate and quantify. In addition, rising fuel, utility, and food costs, rising interest rates, and recessionary fears may impact customer demand and our ability to forecast consumer spending patterns. We also expect the current macroeconomic environment and enterprise customer cost optimization efforts to impact our revenue growth rates. We expect some or all of these factors to continue to impact our operations for the remainder of fiscal 2026.
Current wording
Macroeconomic factors, including inflation, increased interest rates, significant capital market and supply chain volatility, and political, global economic and geopolitical developments, have direct and indirect impacts on our results of operations that are difficult to isolate and quantify. In addition, rising fuel, utility, and food costs, rising interest rates, and recessionary fears may impact customer demand and our ability to forecast consumer spending patterns. We also expect the current macroeconomic environment and consumer discretionary spending to impact our revenue growth rates. We expect some or all of these factors to continue to impact our operations for the remainder of fiscal 2027.
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 (benefit), depreciation and amortization, income tax provision, interest income (expense), and other non-operational expenses. We have provided reconciliations below of net income to adjusted EBITDA, 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 from net loss, the most directly comparable GAAP financial measure, to adjusted EBITDA.
Previous wording
We believe it is useful to exclude non-cash charges, such as net stock-based compensation expense (benefit), 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 acquisition costs related to PetCareRx, employee severance and estimated state sales tax accruals and settlements 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, employee severance, impairment of goodwill and intangible assets, and interest expense relating to an estimated unremitted prior sales tax accrual as these items are not indicative of our ongoing operations. Adjusted EBITDA has limitations as a financial measure, and these non-GAAP measures should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:
Previous wording
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 in connection with the investigation through the nine months ended December 31, 2025, were approximately $4.5 million, consisting of $3.3 million of legal and professional fees and $1.2 million of severance-related costs. These amounts were recorded within general and administrative expenses in the Condensed Consolidated Statements of Operations. The Company does not expect to incur additional material costs related to the investigation.
Current wording
(1) Consists of professional fees related to the completed Audit Committee investigation as previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2025.
Previous wording
Three Months Ended December 31, 2025 Compared With Three Months Ended December 31, 2024 and Nine Months Ended December 31, 2025 Compared With December 31, 2024
Current wording
Three Months Ended June 30, 2026 Compared With June 30, 2025
Previous wording
Sales decreased by approximately $11.3 million, or 21.7%, to approximately $40.7 million for the quarter ended December 31, 2025, compared to approximately $52.0 million for the quarter ended December 31, 2024. Sales decreased by approximately $40.0 million, or 22.7%, to approximately $136.2 million for the nine months ended December 31, 2025, compared to approx imately$176.2 million for thenine months ended December 31, 2024. The decrease in sales for the quarter ended and nine months ended December 31, 2025 was primarily driven by a decline in prescription medication sales and higher consumer promotional usage.
Current wording
Sales decreased by approximately $10.2 million, or 19.9%, to approximately $41.0 million for the three months ended June 30, 2026, compared to approx imately$51.2 million for thethree months ended June 30, 2025. The decrease in sales for the three months ended June 30, 2026 was primarily driven by a decline in prescription medication sales slightly offset by lower consumer promotional usage.
Previous wording
Reorder sales decreased by approximately $10.2 million, or 23.0%, to approximately $34.0 million for the quarter ended December 31, 2025, compared to approximately $44.2 million for the quarter ended December 31, 2024. Reorder sales decreased by approximately $33.0 million, or 22.6%, to approximately $112.7 million for the nine months ended December 31, 2025, compared to approximately $145.7 million for the nine months ended December 31, 2024. The decrease in reorder sales for the three and nine months ended December 31, 2025 is primarily due to a decline in prescription medication sales.
Current wording
Reorder sales decreased by approximately $8.5 million, or 20.5%, to approximately $32.8 million for the three months ended June 30, 2026, compared to approximately $41.3 million for the three months ended June 30, 2025. The decrease in reorder sales for the three months ended June 30, 2026 is primarily due to a decline in prescription medication sales.
Previous wording
New order sales decreased by approximately $0.9 million or 15.5%, to approximately $5.0 million for the quarter ended December 31, 2025, compared to $6.0 million for the quarter ended December 31, 2024. New order sales decreased by approximately $5.7 million or 23.4%, to approximately $18.6 million for the nine months ended December 31, 2025, compared to $24.3 million for the nine months ended December 31, 2024. The decrease for the quarter ended December 31, 2025 in new order sales is primarily due to less efficient variable marketing spend. The decrease for the nine months ended December 31, 2025 in new order sales is primarily due to decreased and less efficient variable marketing spend.
Current wording
New order sales decreased by approximately $1.7 million or 20.2%, to approximately $6.6 million for the three months ended June 30, 2026, compared to $8.2 million for the three months ended June 30, 2025. The decrease for the three months ended June 30, 2026 in new order sales is primarily due to decreased variable marketing spend.
Previous wording
We acquired approximately 59,000 new customers for the quarter ended December 31, 2025 compared to approximately 63,000 new customers for the quarter ended December 31, 2024. We acquired approximately 202,000 new customers for the nine months ended December 31, 2025 compared to approximately 260,000 new customers for nine months ended the December 31, 2024. The following tables illustrate revenue by various revenue classifications:
Current wording
We acquired approximately 70,000 new customers for the three months ended June 30, 2026 compared to approximately 85,000 new customers for three months ended June 30, 2025. The following tables illustrate 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, 2025, and the reorder and new order sales amounts for the three and nine months ended December 31, 2024 reflect this new definition.
Current wording
The Company defines new order sales as sales from customers who have not previously ordered from the Company over the past twelve months.
Previous wording
Recurring net sales, which includes AutoShip & Save subscriptions, and membership- related revenue, as a percentage of total gross sales was 61.5% for the most recent quarter ended December 31, 2025, up from 56.2% for the same period last year.
Current wording
Recurring net sales, which includes AutoShip & Save subscriptions, and membership- related revenue, as a percentage of total gross sales was 61.5% for the most recent quarter ended June 30, 2026, up from 57.6% for the same period last year.
Previous wording
Cost of sales decreased by approximately $4.6 million, or 12.9%, to approximately $31.2 million for the quarter ended December 31, 2025, from approximately $35.8 million for the quarter ended December 31, 2024. Cost of sales decreased by approximately $22.3 million, or 18.3%, to approximately $99.9 million for the nine months ended December 31, 2025, from approximately $122.3 million for the nine months ended December 31, 2024. Cost of sales, as a percentage of sales, was 76.7% for the quarter ended December 31, 2025, compared to 69.0% for the quarter ended December 31, 2024. Cost of sales, as a percentage of sales, was 73.4% for the nine months ended December 31, 2025, compared to 69.4% for the nine months ended December 31, 2024. The three and nine months ended December 31, 2025 includes the impact of the inventory write-down (see Note 2 for additional information). The year over year increase for cost of sales, as a percentage of sales for the three and nine months ended December 31, 2025 compared to the three and nine months ended December 31, 2024 was primarily due to the impact of the inventory write-down and higher promotional usage.
Current wording
Cost of sales decreased by approximately $7.1 million, or 19.3%, to approximately $29.7 million for the three months ended June 30, 2026, from approximately $36.8 million for the three months ended June 30, 2025. Cost of sales, as a percentage of sales, was 72.4% for the three months ended June 30, 2026, compared to 71.9% for the three months ended June 30, 2025. The year over year increase for cost of sales, as a percentage of sales for the three months ended June 30, 2026 compared to the three months ended June 30, 2025 was primarily due to lower manufacturer rebates as a percentage of sales, partially offset by lower net freight costs per order.
Previous wording
Advertising expenses increased by approximately $1.1 million, or 26.7%, to approximately $5.3 million for the quarter ended December 31, 2025, from approximately $4.2 million for the quarter ended December 31, 2024. The increase for the quarter ended December 31, 2025 can mainly be attributed to higher gross media spend. Advertising expenses decreased by approximately $2.6 million, or 14.2%, to approximately $15.7 million for the nine months ended December 31, 2025, from approximately $18.3 million for the nine months ended December 31, 2024. The decrease for the nine months ended December 31, 2025 can be mainly attributed to lower gross media spend. As a percentage of sales, advertising expense was 13.1% and 8.1% for the quarters ended December 31, 2025 and 2024, respectively. As a percentage of sales, advertising expense was 11.5% and 10.4% for nine months ended December 31, 2025 and 2024, respectively. The advertising percentage may fluctuate quarter to quarter due to seasonality and advertising availability.
Current wording
Advertising expenses decreased by approximately $1.8 million, or 30.2%, to approximately $4.2 million for the three months ended June 30, 2026, from approximately $6.0 million for the three months ended June 30, 2025. The decrease for the three months ended June 30, 2026 can be mainly attributed to the strategic reduction in gross media spend and the elimination of unproductive media spend. As a percentage of sales, advertising expense was 10.3% and 11.8% for three months ended June 30, 2026 and 2025, 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 $90 for the quarter ended December 31, 2025 compared to $66 for the quarter ended December 31, 2024. The advertising costs of acquiring a new customer, defined as total advertising costs divided by new customers acquired, was $78 for the nine months ended December 31, 2025 compared to $70 for the nine months ended December 31, 2024. The increase to customer acquisition costs for the quarter and nine months ended December 31, 2025, was due to 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.
Current wording
The advertising costs of acquiring a new customer, defined as total advertising costs divided by new customers acquired, was $60 for the three months ended June 30, 2026 compared to $71 for the three months ended June 30, 2025. The decrease to customer acquisition costs for the three months ended June 30, 2026, was due to advertising and media spend optimization, including the elimination of unproductive media spend and overall strategic reductions in certain other marketing costs. 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
For the quarters ended December 31, 2025 and 2024, the Company recorded an income tax provision of approximately $11 thousand and a tax provision of approximately $0.5 million, respectively. For the nine months ended December 31, 2025 and 2024, the Company recorded an income tax provision of approximately $29 thousand and a tax provision of approximately $22 thousand, respectively The increase in the tax provision for the three and nine months ended December 31, 2025 is related to the cancellation of the former CEO’s performance stock units resulting in additional $8.7 million of income during the period. The effective tax rate for the quarter ended December 31, 2025 was approximately (0.1)%, compared to approximately (192.1)% for the quarter ended December 31, 2024. The effective tax rate for the three months ended December 31, 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.
Current wording
For the three months ended June 30, 2026 and 2025, the Company recorded an income tax provision of $13 thousand and $9 thousand, respectively. The effective tax rate for the three months ended June 30, 2026 was approximately (0.2)%, compared to approximately 0.0% for the three months ended June 30, 2025. The effective tax rate for the three months ended June 30, 2026 differs from the statutory rate primarily as a result of the Company maintaining a valuation allowance against its deferred tax assets.
Previous wording
Our working capital at December 31, 2025 and March 31, 2025 was $6.3 million and $16.1 million, respectively. The $22.4 million decrease in working capital was attributable to the $30.4 million decrease in current assets, primarily cash, which were partially offset by the $8.0 million decrease in current liabilities, primarily accounts payable and deferred revenue. Net cash used in operating activities was $23.7 million for the nine months ended December 31, 2025, compared to cash used in operating activities of $2.3 million for the nine months ended December 31, 2024. The $21.4 million decrease in cash used in operating activities is due to the $58.6 million decrease in net income reduced by $39.5 million of non-cash operating adjustments and partially offset by the $2.3 million decrease in current liabilities net of current assets excluding cash. Net cash used in investing activities was $3.9 million for the nine months ended December 31, 2025, compared to $2.7 million used in investing activities for the nine months ended December 31, 2024. Net cash used in financing activities was $0.3 million and $0.2 million for the nine months ended December 31, 2025 and the nine months ended December 31, 2024, respectively.
Current wording
Our working capital at June 30, 2026 and March 31, 2026 was $(13.0) million and $(8.4) million, respectively. The $4.6 million decrease in working capital was attributable to the $16.0 million decrease in current assets, primarily cash, which were partially offset by the $11.4 million decrease in current liabilities, primarily accounts payable.
Previous wording
As of December 31, 2025, we had $0.7 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 June 30, 2026, we had $0.4 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.